Internal Determinants and Effects of Firm-Level Environmental Performance: Empirical Evidences from Vietnam

By Anh, Pham Quynh | Asian Social Science, February 2015 | Go to article overview

Internal Determinants and Effects of Firm-Level Environmental Performance: Empirical Evidences from Vietnam


Anh, Pham Quynh, Asian Social Science


Abstract

The paper explores the internal determinants of a manufacturing firm's environmental performance indexed by acquiring government or ISO 14001 certificate and its impacts on the firm's competitiveness in Vietnam, using a panel logistic and a modified Cobb-Douglas model respectively. It is found that firm size; environmental management system (EMS), foreign ownership, environmental staff, high technology level and middle age are factors increasing a firm's possibility conforming to the ISO 14001 standards while domestics' private ownership and low-or medium technology levels are constraints. There is no conclusive relationship between firm's environmental performance, state ownership and old, young age. Firm's environmental performance has no significant impact on its competitiveness measured by labor productivity.

Keywords: environmental performance, pollution reduction, environmental management system, government environmental certificate, ISO 14001 certificates, firm's competitiveness

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The implementation of the open-door policy since the late 1990s has led to dramatic economic changes in Vietnam, characterized by flows of foreign direct investment, an explosion of newly established private domestic firms and the acceleration of industrialization. Manufacturing sector's gross output as well as value-added has achieved relatively high annual growth rates of 10-12 percent during 1991-2008, except the Asian financial crisis year of 1998. Nevertheless, like many other industrializing countries, green growth has been a crucial challenge for manufacturing firms and the entire economy in Vietnam. Annual environmental survey (GSO, 2009) indicates that only around one-third of manufacturing firms had expenditures on pollution reduction. The most recent investigation conducted by the Environmental Police Department (National Center for Socio-Economic Information and Forecast, 2014) revealed polluted fluid flowing direct to environment from two-third of 232 industrial zones, account for approximately 40 percent of Vietnam's total industrial output.

The serious pollution has stimulated growing studies on environment problem in Vietnam, most of which, however, approach this from a technical view, focusing on emission magnitude and its impacts on living conditions of community as well as technology solutions to problem. There has been a research gap with few studies investigating the relationships between pollution and economic and management factors that are founded by number of researches as the most important for pollution reduction in developing countries (Dasgupta, Hettige, & Wheeler 2000; Ruiz-Tagle, 2006). This paper is, therefore, the first to identify the determinants of firm-level environmental performance and its impact on manufacturing firms' competitiveness in Vietnam from the management and economic perspectives, especially using advanced econometric analysis method and panel data. Additionally, the paper contributes to world-wide environment-related literatures in highlighting internal factors that affect firm-level environmental performance indexed by achieving ISO 14001certification and examining its impact on firm's competitiveness measured by productivity.

The paper is organized as follows. The next session reviews background studies and demonstrates conceptual framework. Session 3 explains data and research methods. Session 4 presents and discusses research results on characteristic, internal determinants of manufacturing firm's environmental performance and its impact on firm' competitiveness. The last session-session 5 summarizes the research findings and gives relevant policy implications.

2. Background Studies and Conceptual Framework

2.1 Definition and Measure of Environmental Performance

Environmental performance has attracted a substantial amount of studies over the world since the 1990s. …

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