Business Strategy and the Environment

Bus. Strat. Env. (2014)

Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/bse.1850

A Fresh Approach to Context Inuence, Development

and Performance in Environmental Management
Josep Llach,1*Maria Del Mar Alonso-Almeida,2Antoni Garca-Castellv3
and Lloren Bagur-Femenias4
1

Universitat de Girona, Escola Politcnica Superior, Campus Montilivi, Girona 17007, Spain
Universidad Autnoma de Madrid, Faculty of Economics and Business Administration, Madrid
28049, Spain
3
Universitat de Barcelona, Accounting department, Facultat dEconomia i Empresa, Barcelona
08034, Spain
4
Barcelona School of Management, Universitat Pompeu Fabra, Barcelona 08008, Spain
2

ABSTRACT
Respect for the environment has rapidly gained importance in the context of rms, regardless of their pollution levels. Most of the existing research has related to the most polluting
sectors and has been limited to the effect that the adoption of cleaner practices has on
performance, primarily in terms of operations, nancial performance and competitiveness.
This paper expands the research towards a more complete picture of environmental
management by examining context, development and performance to understand how other
factors can inuence the development of cleaner practices. In addition, we focus our
research on the service sector. In our analysis, we differentiated between the afliation and size
of the studied companies to better understand their specicities. Based on a sample of 374
restaurants, the results show the importance of the inuence of institutions and the limited
inuence of competitors in encouraging rms to adopt a strategic, clean approach, especially
for the smallest rms. Copyright 2014 John Wiley & Sons, Ltd and ERP Environment
Received 3 August 2013; revised 4 February 2014; accepted 10 February 2014
Keywords: environmental approach; institutional support; environmental performance; environmental context; afliation; environmental
standard

Introduction

HE ADOPTION OF ENVIRONMENTAL PRACTICES IS A KEY STRATEGY FOR COMPANIES, REGARDLESS OF WHETHER THEY HAVE

been high-level polluters (Bernardini Seiffert, 2008). The major reason for this, beyond the macroeconomic
aspects of global climate change, is that cleaner practices allow for consumption savings, improved operations and increased competitiveness (see, e.g., Jani and Han, 2011; Wilson et al., 2012; Kurapatskie and
Darnall, 2013). With respect to other new societal expectations of green-based sustainability, rms face pressure
from both governments and competitors (see Lozano, 2013, for a compilation). A number of authors have suggested
*Correspondence to: Llach, Josep, Universitat de Girona. E-mail: josep.llach@udg.edu

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J. Llach et al.
that companies that are not involved in environmentally sound practices are losing economic competitiveness
(Fernndez-Vi et al., 2013).
There are still in gaps in the research on this issue. Whereas the direct effects of cleaner practices on operations,
nancial performance and competitiveness have been widely studied, other factors, such as institutional roles,
competitive pressure and the adoption of standardized environmental management systems, have been poorly
tested. Cleaner practices have been studied from partial viewpoints, predominantly those of adoption and performance, but there is little research about the role that other factors have in the development of cleaner practices.
The differences among companies in adopting environmental practices and the effects of these practices on large
and small companies are unclear. The major reason for this is that, in previous research, environmental development and performance have been analyzed separately for large and small companies (e.g. Brammer et al., 2012).
The primary focus has been on larger companies and/or on those companies that have produced greater pollution,
and thus differences and similarities in how companies conduct environmental management in a particular industry remain substantially unexamined. It appears that there is room for improvement.
This paper has three aims. Taking into account the complete picture of strategic environmental management, namely,
contextdevelopmentperformance, the rst aim is to analyze the role of the environmental context in environmental
development and performance. The second aim is to conduct a structural equation multigroup analysis to compare
differences in environmental management in identical industries, distinguishing among companies according to their
afliations. Afliation is considered to be a suitable variable for size because it allows a comparison of business units with
a similar number of employees; independent companies are in one class, and all of the business units with headquarters
ofces that manage their strategy and inuence their behavior are in the other. Finally, we aim to study the inuence of
the adoption of a standardized environmental management system on environmental development.
This paper extends the previous research in a number of ways. First, it provides a complete picture of the chain of
environmental contextdevelopmentperformance, which reinforces previously identied insights and provides
new insights that are critical for managerial practice. Second, it reassesses the role of the environmental context
and gives new directions for analysis. Third, it provides a multigroup analysis and supplies evidence of the inuence
of a contingency factor, afliation, which has been little studied to date. Finally, the role of a standardized management system in environmental development sheds light on this open issue.
The following section of this paper discusses the theoretical arguments concerning the proposed model. The next
section describes the studys empirical design. The fourth section presents a quantitative analysis, and the fth
section presents the study ndings. The nal section offers a number of conclusions drawn from the research on
observed business practice.

Literature Review
Environmental Context
The environmental context explains the external factors that stimulate or inhibit the adoption of certain practices
that govern how companies operate. External pressures necessitate that companies make internal changes to
respond to such pressures (Delmas and Toffel, 2004; Maximiano, 2007; Herremans et al., 2009). Previous research
has stressed that, in the case of environmental management, external pressure and more specically hard regulation
is the major promoter (Martin and Rice, 2010; Hofmann et al., 2012). Hard regulation is mandatory for all companies, whereas in numerous countries cleaner practices are based on soft regulation and recommendations. In such a
case, institutional support could encourage or discourage cleaner behavior (Revell and Rutherfoord, 2003).
Malik and Kotabe (2009) dened institutional support as the extent to which government institutions facilitate
the adoption of a business practice, innovation or technology as a matter of legal compliance, in this case cleaner
development. This paper accepts this denition of institutional support. Institutional support can encourage rms
to adopt cleaner strategy in a number of ways, including (see Malik and Kotabe, 2009; Fernndez-Vi et al., 2013)
(1) sharing information about appropriate environmental technologies for more effective use, (2) encouraging the
creation of cleaner distribution chains to create new market segments, (3) providing incentives to promote cleaner
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Bus. Strat. Env. (2014)

DOI: 10.1002/bse

The Importance of Institutional Support for Smaller Companies

practices and (4) supporting companies using technical and trained staff. Loorbach et al. (2010) suggested another
reasons. On the one hand, external cooperation and discussion can increase sensitivity related to environmental
issues; on the other hand, they can offer opportunities to deploy new strategies.
In accordance with previous research, the following hypothesis is proposed.
H1: Institutional support has a positive inuence on the adoption of cleaner practices.
The environmental context includes other companies, which can be direct or indirect competitors and other
companies operating in the eld. These companies can inuence each other.
Previous research suggested that mimetic behavior is produced within the same industry or companies in a eld
to provide solutions to environmental challenges. Thus, management-driven changes to the standards used by
competitors encourage other companies to act in a similar manner. This is particularly true in the case of small
rms, because small rms may nd it difcult to understand completely the strategic benets of adopting certain
practices, such as cleaner ones (Hofmann et al., 2012).
When competitors and other companies in a eld encourage cleaner practices, it generally takes other companies
more time to adopt these practices than when the pressure comes from an institutional focus (Herremans et al.,
2009. The major reason for this is that companies need time to observe the development of cleaner practices in
other organizations before they are ready to adopt new practices. Moreover, cleaner practices may be adopted under
indirect pressure from competitors to preserve a certain competitive advantage and eliminate competitor differentiation (Revell and Rutherfoord, 2003; Bernardini Seiffert, 2008; Martin and Rice, 2010).
Thus, competitors and companies in the eld can inuence the environmental context of a company and its
decisions about environmental development. Therefore, the leading hypotheses are as follows.
H2: Competitors and other companies operating in a sector have a positive, direct inuence on the adoption of cleaner
practices.
H3: The inuence on cleaner practices of competitors and institutional support are correlated.

Environmental Development
Environmental development includes both a companys adoption of cleaner practices and the direct effects of these
practices.
The adoption of cleaner practices is strategic for all types of company, although it is more important for higher
polluters or waste generators (Marimon et al., 2012). Companies formerly adopted cleaner practices as a rst, basic
strategy that included the adoption of lower-order sustainability practices, such as the use of low-consumption
lamps, water savers and recycling (Alonso-Almeida, 2012; Kurapatskie and Darnall, 2013). This strategy has been
called eco-efciency, and it seeks economic and competitive advantages (De Marchi et al., 2013). These practices
constitute a basic hard foundation for implementing more advanced cleaner practices. Nevertheless, FernndezVi et al. (2013) found that SMEs believe that advanced cleaner practices presuppose an extra cost due to the need
to improve or change infrastructure and technology. Thus, it is only with these basic core practices that companies
can achieve an effect on operational performance (Trung and Kumar, 2005; Zeng et al., 2010; Hsieh, 2012; BagurFemenias et al., 2013), which is considered a direct effect of cleaner practices that is termed environmental or
cleaner performance (Aragn-Correa et al., 2008; Brammer et al., 2012).
Cleaner performance involves a number of benets, including a reduction in energy and water consumption and
a reduction in waste generation (Bernardini Seiffert, 2008; Alonso-Almeida, 2012; Hsieh, 2012). Through the
application of more efcient environmental methods, a reduction in consumption cost and therefore a reduction
in total operational costs can be achieved (Aragn-Correa et al., 2008; Zeng et al., 2010; Alonso-Almeida, 2012).
Moreover, a strategy based on environmental development can both attract new customers who value cleaner production and product concepts, and lead to an advantage over competitors (Lopez-Gamero et al., 2009; Han et al.,
2010; Jang et al., 2011; De Marchi et al., 2013). The adoption of cleaner practices may increase the sense that a
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DOI: 10.1002/bse

J. Llach et al.
company provides its customers with added value. This strategy may be the optimal method of maintaining market
position and increasing business, particularly in times of crisis (Lee et al., 2013).
Cleaner development may facilitate achieving higher standards in work conditions and access to institutional
support to accelerate cleaner production practices (Chan and Hawkins, 2010; Brammer et al., 2012). Therefore,
the adoption of cleaner practices may be part of a companys virtuous cycle on its path to sustainability.
On the basis of the previous evidence, the following hypothesis is proposed.
H4: The adoption of cleaner practices has a direct, positive effect on cleaner performance.

Environmental Performance
Environmental management encompasses the effects not directly produced by the adoption of cleaner development
on both nancial performance and market success factors.
In addition to reductions in daily operating costs, cleaner performance allows rms to achieve higher standards
and possible differentiation from competitors by creating value for customers (Lopez-Gamero et al., 2009; Jani and
Han, 2011; De Marchi et al., 2013). Pleasant illumination, a comfortable temperature or more natural products may
have a positive effect on a customers intention to purchase and repurchase as a repeat customer (Alonso-Almeida,
2012) and, consequently, may also have a positive effect on a rms nancial performance.
Molina-Azorn et al. (2009a), in a review of the literature on environmental management and nancial performance, found that studies nding a positive effect of environmental concern on nancial performance are predominant. The latest research has shown a positive relationship between environmental management and nancial
performance (e.g. Pereira-Moliner et al., 2012; Kurapatskie and Darnall, 2013). The following hypothesis is proposed.
H5: Cleaner performance has a positive, direct effect on nancial performance.
Companies that have a good environmental reputation have a more valuable market image (Jang et al. 2011). By
having an explicitly green image an ecobranding strategy (De Marchi et al., 2013) or by silently adopting environmental management a company may see its customers perceive added value and experience customer satisfaction
when they consume a product or service; the image of the company can be improved in the eyes of its customers
and be more positive than the image of those rms that either have not adopted environmental management or do
not have a positive environmental image (Kassinis and Soteriou, 2003; Longart, 2010; Hyun and Kim, 2011; BagurFemenias et al., 2013). The adoption of cleaner practices could create new skills and an easier workload for employees
(Kassinis and Soteriou, 2003; Hofmann et al., 2012), thereby improving worker satisfaction (Bagur-Femenias et al.,
2013). Based on the ndings listed above, the following hypothesis is proposed.
H6: Cleaner performance has a positive direct effect on market success factors.
Cleaner performance can provide better company performance in two direct ways: developing market success
factors and improving nancial performance. Furthermore, cleaner performance may have an indirect effect on
nancial performance through market success factors.
From an internal perspective, on the one hand, satised employees project more satisfaction with their job and
perform better work (Jang et al., 2011). In addition, employees can achieve or reinforce some capabilities (Hofmann
et al., 2012). On the other hand, customers may encounter a better buying experience and gain increased satisfaction, which increases customer intentions to purchase (Hu et al., 2010; Longart, 2010; Jani and Han, 2011). Good
service can have a positive effect on a companys nancial performance by encouraging sales (Susskind et al.,
2007; Alonso-Almeida, 2012).
From an external perspective, consumers usually have condence in a company with a strong market image,
such as a strong brand, even when they have never had direct contact with that company (Jang et al., 2011).
Consumers are more willing to look for and patronize a company with a strong environmental market image
(Hu et al., 2010; Bagur-Femenias et al., 2013; De Marchi et al., 2013). Sales gures and other nancial factors can
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Bus. Strat. Env. (2014)

DOI: 10.1002/bse

The Importance of Institutional Support for Smaller Companies

improve when a company develops an environmental awareness that is recognized and valued by the market.
Hence, the following hypothesis is proposed.
H7: Cleaner performance has an indirect impact on nancial performance through market success factors.

Companies Afliation and Environmental Management

Size is one of most relevant factors used to explain organizational behavior. Large companies have more visibility
and can feel more external pressure to answer to stakeholders demands (Marimon et al., 2012). Large companies
tend to be better positioned to adopt more advanced management practices because they have more economic
and human resources at their disposal (Alvarez-Gil et al., 2001; Molina-Azorn et al., 2009a; Brammer et al., 2012).
In some industries, size can be measured not only by traditional measures, such as number of employees,
amount of activity and sales, but also by afliation. Afliation is a key variable in the motivation, development
and performance of a specic practice because it can inuence the adoption of practices independent of a dealer
or business units actual size (Cordano et al., 2010; Oberhofer and Frst, 2013), which typically tends to be small
(Aragn-Correa et al., 2008).
Previous research suggested that, despite the benets of joining a company group (Ma et al., 2006), companies in
a group do not always achieve better performance than independent companies (Khanna and Palepu, 2000). The
major reason for this is associated with macroeconomic issues (Khanna and Rivkin, 2001), but in addition independent companies typically have been pioneers in the adoption of management practices (Alvarez-Gil et al., 2001;
Molina-Azorn et al., 2009b).
An afliation-based business group is dened by Khanna and Rivkin (2001) as a set of rms, which are legally
either independent or dependent, that take coordinated actions and are bound by a constellation of formal and
informal ties. These authors asserted that members share a brand, have a common management team to manage
strategy and may exchange resources internally. In a number of industries, chain afliation is a common form of
business group (e.g. in the tourism, retail, apparel and transportation industries).
Ingram and Baum (1997) dened chain afliation as collections of service organisations, doing substantially the
same thing (often the only differentiation is in physical space), that are linked together into a larger organisation.
The relationships between the components of a chain are horizontal, although typically there are centralised parts of
the chain, such as a distribution facility, that have vertical relationships to the components. As these authors asserted,
a chain can affect the fate of its components by giving them resources, reputation, and market power. By altering the
competitive strengths of their components, chains may also inuence the competitive dynamics of industries.
Regarding environmental management, the limited research that takes afliation into account showed mixed
results, although a positive relationship was predominant. Chain afliation appears to deepen environmental
development (Alvarez-Gil et al., 2001; Molina-Azorn et al., 2009b; Pereira-Moliner et al., 2012) and environmental
performance (Molina-Azorn et al., 2009b; Oberhofer and Frst, 2013). Aragn-Correa et al. (2008) found that the
inuence of dealer afliation was not signicant in the automotive repair sector. A study on the inuence of
afliation on the environmental context has not been conducted, and the following hypotheses are enunciated.
H8a: Environment context applies different pressure depending on afliation.
H8b: Environmental development is different depending on afliation.
H8c: Environmental performance is different depending on afliation.

Environmental Management System Standards and Environmental Development

One aspect of business practice that has been analyzed in recent years is the adoption of standardized management
systems (Castka and Balzarova, 2008). The application of the well-known standardized environmental management
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J. Llach et al.
system ISO 14001 has increased in all industries and countries (Marimon et al., 2011), and other nationwide environmental management systems are also increasing in use (Rodriguez-Antn et al., 2012). Previous research found that
companies with a standardized environmental management system develop a stronger environmental compromise
regarding cleaner practices and obtain a better cleaner performance (Yin and Schmeidler, 2009; Molina-Azorn et al.,
2009a). The adoption of a standardized environmental management system can foster environmental development
through cleaner practices. The main reason for this is that a standardized environmental management system provides
a company with not only a public expression of goodwill through environmental protection but also environmental
knowledge, of which the company can take greater advantage (Simpson and Samson, 2010).
In the aforementioned improvements related to cleaner performance, brand image benets from the introduction
of an environmental management system because companies tend to display their certicates and use them for the
purpose of green positioning (Terlaak and King, 2006). Rodriguez-Antn et al. (2012) found that hotel companies
incorporating a standardized environmental management system perceived that they improved their hotels public
image. These authors note that such certicates can be used to advertise to consumers who seek out companies with
a certain environmental image. Because the existing evidence shows that companies that adopt an environmental
management system can obtain higher environmental development, the hypothesis proposed is the following.
H9: Companies adopting a standardized environmental management system have greater environmental development
than other companies in terms of cleaner practices and performance.
Figure 1 summarizes the proposed model.

Research Methodology and Development of Measures

The eldwork was conducted during November and December 2010 through personal surveys of each studied
rms general manager. Ultimately, 374 valid responses were included in the analysis. The questionnaire gathered
data about each studied companys environmental management and prole. All of the items were measured on a
seven-point Likert scale, where 1 represented completely disagree and 7 represented completely agree, except for
the nancial performance items, for which we categorized the answers in ve intervals to collect richer data. To

Figure 1. Proposed model

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Bus. Strat. Env. (2014)

DOI: 10.1002/bse

The Importance of Institutional Support for Smaller Companies

ensure the validity of the data, the research team trained the interviewers on the objective of the analysis. During the
interviews, all of the respondents were informed of the purpose of the research and the condentiality of the
collected data.
The reason that we focused our research on the restaurant industry is twofold. First, Spain has the highest
number of restaurants per capita in the EU. In 2001, there was one registered establishment per 169 inhabitants,
for a total of 279 443 restaurants, which contributed more than 7% of the national GDP (FEHR, 2012; La Caixa,
2013). Second, the tourist industry is the greatest source of waste (Trung and Kumar, 2005).
The sample was composed of casual restaurants (52.94%) and restaurants (47.06%). The average number of
employees per rm for the entire sample was 8.26 (standard deviation = 7.11). On average, the restaurants tended
to be larger (12 employees) than the casual restaurants (six employees), but all were small business units.
A casual restaurant in Spain is a restaurant in which the quality of the food and the prices tend to be higher than
those of a conventional fast-food restaurant but may be lower than those of a restaurant that offers full table service.
In the North American context, a casual restaurant is commonly referred to as a casual dining establishment,
whereas a restaurant may be referred to as a formal restaurant.
Finally, by typology, most of the businesses were independent rms (70.92%), and the rest belonged to a chain.
In the sample, 28.96% of the businesses claimed to have implemented one environmental standard. With regards
to the scale for all of the dimensions, we considered the variables used in several previous studies. We asked the
interviewees not to value their perceptions about what their rms should do, but rather what their rms actually
did with regard to the environment.

Results
Validity and Reliability of the Instruments
A principal component analysis with varimax rotation was conducted for each dimension. Each item loaded on one
dimension. A minimal loading of 0.40 was used in the interpretation of these factors. The exploratory factor
analysis structure of the dimensions was examined by a conrmatory factor analysis. The maximum likelihood
method of estimation was used, which indicated that each item loaded on the identical factor that emerged in the
exploratory factor analysis. Table 1 presents the items, the values of the internal consistency and reliability, and
the literature from the items based on the resulting factors.
Because all of the items had factor loadings greater than 0.40, they were summed to form a measure. The
internal consistency and reliability of the resulting factors were assessed using Cronbachs alpha, the composite
reliability (CR) and the average variance extracted (AVE). In all the cases, the values exceed the minimum internal
consistency criterion: >0.7 for Cronbachs alpha (Malhotra, 2004), 0.7 for the CR (Nunnally and Bernstein, 1994)
and 0.5 for the AVE (Barclay et al., 1995).
To determine the relationships between the dimensions and the discriminant validity, Table 2 presents the
results of the correlation analysis, the mean values and the standard deviation of the observed dimensions and
the square root of AVE in the diagonal. The results of the comparison conrm that each construct is more closely
related to its own dimensions than to the dimensions of the other constructs, because in all cases the square root
of each dimensions AVE is higher than the correlation between the dimensions.
Analysis of the Causal Model
The hypotheses were tested using EQS software (Bentler, 1995). In accordance with Table 3, an overall conclusion
about the t of the model can be obtained by considering these indices simultaneously, as recommended by
Schermelleh-Engel et al. (2003), and by obtaining at least three t statistics that indicate an acceptable t.
In the chi-square test divided by degrees of freedom, the values are smaller than 3, as proposed by Carmines and
McIver (1981). The root mean square error of approximation (RMSEA) has a value of 0.06 or less, which indicates a
good t model, as indicated by Hu and Bentler (1999). The comparative t index (CFI) value is, in all cases, higher
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Bus. Strat. Env. (2014)

DOI: 10.1002/bse

Environmental
development

Environmental
context

Copyright 2014 John Wiley & Sons, Ltd and ERP Environment

Cleaner
performance

Cleaner
practices

Institutional
support

Competitors

Dimensions
Competitors adopt environmental
protection measures
Many tourism businesses adopt
environmental protection measures
The organizations in this eld adopt
environmental protection measures
Government frequently issues reminders
of the moral obligation to protect the
environment
Government informs about how to protect
the environment
Government encourages identication of
rms as green businesses
Government promotes activities for
industry to protect the environment
Your organization buys ecological products
Your organization has reduced the use of
cleaning products that are harmful to the
environment
Your organization implements energysaving practices
Your organization implements water
-saving practices
Your organization implements the
selective collection of solid residues
Environmental protection activities
allow your organization to reduce the
total cost of its operations
Environmental protection activities
allow your organization to reduce
water and electricity consumption
Environmental protection activities allow
your organization to attract new
customers and keep current ones
Environmental protection
activities allow
your organization
to differentiate itself from
its competitors

Description

0.815

0.842

0.745

0.743

0.726

0.807

0.769

0.661
0.703

0.664

0.748

0.822

0.739

0.827

0.719

0.864

Load

0.917

0.796

0.830

0.844

0.918

0.853

0.832

0.846

CR

0.619

0.54

0.555

0.649

AVE

Alvarez-Gil et al. (2001);

Molina-Azorn et al.
(2009b); Pereira-Moliner
et al. (2012); Aragn-Correa
et al. (2008); Chan and
Hawkins (2010)

Malik and Kotabe,

2009; Fernndez-Vi
et al. (2013)

References

J. Llach et al.

Bus. Strat. Env. (2014)

DOI: 10.1002/bse

Copyright 2014 John Wiley & Sons, Ltd and ERP Environment

Financial
performance

Market success
factors

0.792

Environmental protection activities allow

your organization to reduce the risk of
accidents and legal action
Environmental protection activities allow
your organization to improve business
Environmental protection activities allow
your organization to enable its
management to win public support for
cleaner production
Your companys image has been improved
Your customer satisfaction level is higher
than that of competitors
Employee satisfaction level is higher than
that of competitors
Sales have increased over the last two years
Prots have increased over the last two years
Customer occupancy rates have increased
over the last two years
0.809
0.921
0.784

0.831

0.748
0.861

0.675

0.878

Load

Description

Table 1. Factor loadings and internal and reliability statistics

Environmental
performance

Dimensions

0.873

0.852

0.877

0.911

CR

0.705

0.773

AVE

Alvarez-Gil et al. (2001);

Aragn-Correa et al. (2008);
Molina-Azorn et al. (2009b);
Lopez-Gamero et al. (2009);
Zeng et al. (2010);
Pereira-Moliner et al. (2012)

References

The Importance of Institutional Support for Smaller Companies

Bus. Strat. Env. (2014)

DOI: 10.1002/bse

J. Llach et al.
Competitors

Competitors
Institutional support
Cleaner practices
Cleaner performance
Market success factors
Financial performance
Mean
Standard deviation

0.806a
0.654**
0.270**
0.480**
0.044
0.168**
3.217
1.776

Institutional
support

Cleaner
practices

0.745
0.335**
0.522**
0.042
0.162**
2.873
1.896

0.735
0.559**
0.246**
0.050
4.735
1.982

Cleaner
performance

0.787
0.213**
0.088
3.654
1.930

Market success
factors

0.879
0.148**
5.716
1.336

Financial
performance

0.840
1.681
0.952

Table 2. Correlation analysis and discriminant validity

a
Square root of average variance extracted in the diagonal.

Assessment item

Values

2 (chi-square)a
2/df (normed chi-square)
BB-NN (BentlerBonett non-normed t index)
CFI (comparative t index
RMSEA (root mean square error of approx.)

538.6676
2.009
0.907
0.917
0.060

Table 3. Indices tested for model t

a
SatorraBentler scaled chi-square.

** p-value significant at 0.05 level (robust method)

Figure 2. Standardized solution of the causal model

than 0.90, indicating a better model t (Hu and Bentler, 1999). Because more than three statistics in the model
have values that are greater than the recommended values, we can afrm that these measures of overall tness
reect the explanatory power of the proposed model. The standardized solution of the causal model is presented
in Figure 2.
Once the model was assessed and validated, the analysis was extended to examine the effects of (a) being an
independent business or belonging to a chain and (b) having implemented an environmental standard. These
two variables were examined because, according to the literature review, they are important.
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The Importance of Institutional Support for Smaller Companies

Multigroup Analysis: Differences in Environmental Management
To test whether differences between the chain and independent restaurants are statistically signicant, we tested the
existence of structural invariance. We compare the multiple-group model with a nested model in which the relationships between COMPETITITORS and INSTITUTIONAL SUPPORT on CLEANER PRACTICES are constrained to
be equal across groups. The chi-square difference tests for the multigroup model show that the invariance test,
based on a maximum likelihood test, is not statistically signicant for the relationship between COMPETITORS
and CLEANER PRACTICES (x2 = 2.436; d.f. = 1; p = 0.118) but is statistically signicant for the relationship
between INSTITUTIONAL SUPPORT and CLEANER PRACTICES (x2 = 5.256; d.f. = 1; p = 0.021).
These results indicate that there are no differences between the independent and chain restaurants in the implementation of green practices because of COMPETITORS, but there are differences caused by INSTITUTIONAL SUPPORT.
Analyzing the differences in depth, we see that there is a signicant effect in each sub-sample. In independent
restaurants the standardized value of the effect is 0.424, and it is 0.964 in chain restaurants. Table 4 presents
the standardized values of the relationships by subsample.
The multiple-group analysis shows that identical results are obtained from separate samples and that mixing the
two types of rm in a single model does not confound the result. We detected differences of signicance according
to the subsample in the relationship between INSTITUTIONAL SUPPORT and CLEANER PRACTICES.
Analysis of the Inuence of a Standardized Environmental Management System on Environmental Development
Following the previous analysis, we studied the possible differences in the environmental development of the rms
that had implemented environmental standards. In this case, we compared the multiple-group model with a nested
model in which the relationship between CLEANER PRACTICES and CLEANER PERFORMANCE is constrained to
be equal across the groups. The chi-square difference tests for the multigroup model show that the invariance test,
based on a maximum likelihood test, is not statistically signicant (x2 = 1.115; d.f. = 1; p = 0.290).
To detect possible differences, not in the relationship but in the use of green practices and operational performance, we launched a non-parametric analysis between the subsamples for each item of CLEANER PRACTICES
and for each item of CLEANER PERFORMANCE.
In the CLEANER PRACTICES dimension, no statistically signicant differences are detected. Some differences
are detected in the CLEANER PERFORMANCE dimension, specically in the fourth and seventh items, which refer
to external environmental image (see Table 5).

Discussion of Results
Studies of environmental management have focused on the direct and indirect effects of cleaner practices on a
company, regardless of both the context in which the company operates and differences among companies. In
addition, these studies have focused on multigroup analysis. The present study responds to the unanswered
question regarding relationships within a particular industry.
Previous research has shown that external pressure is the major driver in adopting cleaner practices (Lozano,
2013). Our ndings differ partially from previous ones. Wilson et al. (2012) asserted that companies, especially small
companies, do not nd environmental legislation easy to understand and consider it to burden their day-to-day
activities. Thus, institutional support beyond pure regulation and legislation compliance can be a source of
knowledge crucial to the adoption of new strategic management practices (Bernardini Seiffert, 2008; Hofmann
et al., 2012). The possibility of counting on the latest information, resolving doubts, giving advice and helping to
nance new technology represent a key to encouraging companies to become involved in the development of
cleaner practices, and H1 is thus supported.
Previous research found that competitors were a source of pressure to adopt cleaner practices, but they are not
signicant inuences in this study (H2). Whereas institutional support is key to widespread cleaner practices,
competitors do not represent any relevant inuence. Direct competitors and other companies in an industry or eld
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Copyright 2014 John Wiley & Sons, Ltd and ERP Environment

0.830
10.947**

0.023
1
0.879

Stat.

x2
d.f.
Stat.a

Chain

Multigroup
analysis

2.436
1
0.118

0.473
1.635

0.004
0.023

COMPET.
CLEANER
PRACTIC.

5.256
1
0.021**

0.964
3.347**

0.424
2.141**

INSTITUT.
CLEANER
PRACTIC.

Table 4. Standardized values and statistics according to afliation

a
Robust method.
**Statistically signicant at 0.05 level.

0.819
16.136**

Stat.a

Indep.

COMPET.
INSTITUT.

0.297
1
0.585

0.802
6.782**

0.576
4.363**

CLEANER
PRACTIC.
CLEANER PERF.

0.389
1
0.532

0.325
2.819**

0.216
2.544**

CLEANER
PERF. MSF

0.244
1
0.621

0.070
0.654

0.008
0.101

CLEANER
PERF. FP

0.440
1
0.507

0.233
2.604**

0.211
2.431**

MSF FP

X2/df = 1.578
BB-NNFI = 0.920
CFI = 0.929
RMSEA = 0.054
X2/df = 1.628
BB-NNFI = 0.890
CFI = 0.902
RMSEA = 0.068

Fit indices

J. Llach et al.

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The Importance of Institutional Support for Smaller Companies

CLEANPRACT1

CLEANPRACT2

CLEANPRACT3

CLEANPRACT4

CLEANPRACT5

MannWhitney U
Wilcoxon W
Z
Signicance (bilateral)

10 619.500
3788.500
0.434
0.664

10 629.500
15 094.500
0.177
0.859

10 432.500
14 897.500
0.319
0.749

9722.000
1400.000
1.164
0.244

10 418.000
14 789.000
0.443
0.658

MannWhitney U
Wilcoxon W
Z
Signicance (bilateral)

ENVPERF1
9721.000
35 599.000
0.831
0.406

ENVPERF4
8218.500
34 096.500
2.888
0.004

ENVPERF5
9599.000
35 477.000
0.847
0.397

ENVPERF2
1006.500
14 338.500
0.577
0.564

ENVPERF3
1003.000
14 125.000
0.254
0.799

ENVPERF6
8981.000
34 406.000
1.291
0.197

ENVPERF7
840.000
34 051.000
2.339
0.019

Table 5. Non-parametric analysis for CLEANER PRACTICES and CLEANER PERFORMANCE dimensions

do not have a direct inuence on the adoption of cleaner practices. Contrary to the institutional theory, companies in
the studied sector do not emulate the behavior of other companies with regard to environmental practices. This
nding supports the notion that direct mimetic behavior is not always a companys selected strategy (Herremans
et al., 2009), especially when there is strong institutional support, and H2 is thus rejected.
Institutional support and the behavior of competitors are correlated, and these factors can affect each other. In an
indirect way, companies development of environmental practices can be positively inuenced by either competitors or
other companies operating in the same context. Moreover, companies can pressure institutions to nd support when
they do not have enough resources or knowledge to adopt some strategic management practices. Thus, institutional
support is critical to drive environmental practices because companies cannot engage in developing sustainable
business models without a companyinstitution relationship (Loorbach et al., 2010). Hence, H3 is supported.
Adoption of cleaner practices has a positive, direct effect on cleaner performance. This nding is consistent with
previous research (Enz and Siguaw, 1999; Chan and Hawkins, 2010; Bagur-Femenias et al., 2013). The advancement
in the adoption of cleaner practices may be a key driver of improving internal operations in a number of areas, such as
daily operating activities, energy efciency, health and safety improvements and the possibility of accessing new
sources of funding. Bagur-Femenias et al. (2013) suggested that companies that do not take environmental issues
seriously may miss strategic opportunities to achieve greater efciency and competitiveness. Thus, H4 is supported.
Although most previous research has suggested that the relationship between cleaner performance and nancial
performance is direct and positively related, our research did not nd this relationship. A similar result was found
by Pereira-Moliner et al. (2012) in a study of the hotel industry. One possible explanation could be the continuous increase in the invoiced costs of energy and water. Despite reductions in consumption, the cost of utilities is not a factor
that a company can control, and increased prices could prevent such costs from affecting prots in the companys accounting of its nancial performance. In addition to operating expenses, certain cleaner practices also require some
investment prior to the operationalization, which could annul the practices positive effect on nancial performance.
Thus, when a company primarily adopts an eco-efciency strategy, the main direct effect of cleaner practices is
internal, and other variables, such as sales or an increase in customers, are not directly affected given that customers
do not perceive or value the changes. Therefore, in this case, H5 is rejected. However, nancial direct effects
produced by another type of cleaner strategy with a direct impact on customer perceptions should be analyzed.
Nevertheless, cleaner performance has a positive direct effect on market success factors in two main ways. First,
the safety, internal learning and satisfaction of employees may be improved. Second, a companys customers may
perceive an added value relative to competitors through some characteristic of the product or service. Both aspects
are relevant to building a better company image and therefore a sense of being better positioned than other
competitors. Thus, this nding is consistent with previous research (see Jang et al., 2011; Pereira-Moliner et al.,
2012), and H6 is supported.
Market success factors have a direct positive effect on nancial performance because of cleaner development and
performance. Improvements in image and customer service by employees can increase sales and repurchases
(Bagur-Femenias et al. 2013; De Marchi et al., 2013). Likewise, this nding suggests that even companies that are
deploying a basic cleaner strategy can reinforce their market positions. Therefore, H7 is supported.
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J. Llach et al.
On the other hand, comparisons among different afliations in a particular industry have been scarce. Therefore,
this research provides a fresh approach to studying environmental management. Our ndings found a signicant
difference in the institutional support factor in the environmental context dimension. In the other dimensions
environmental development and performance no signicant differences were found. This result contradicts
previous research that reported that chain-afliated companies have more advanced environmental development
and performance (e.g. Molina-Azorn et al., 2009a; Oberhofer and Frst, 2013). Thus, small, independent companies can make the key strategic choice to achieve the same or better internal efciency and external competitiveness
than companies afliated with a chain, thanks to the independent companies environmental practices. This nding
is especially important in the current nancial crisis, in which survival is a primary strategic company objective.
Focusing on the differences found, this research showed that institutional support is key to encouraging environmental development, and chain-afliated companies feel stronger institutional support, whereas independent
companies feel that there is a degree of assistance but not as intensely as chains. These ndings suggest the need
for greater assistance from institutions to improve efciency and efcacy in small companies. Consequently, H8a is
supported, but H8b and H8c are rejected because both afliations shape the same behavior and impacts.
Finally, as previous research noted, a standardized environmental management system provides a framework by
which to deepen environmental development in two ways: practices and performance. Thus, the increase in the use
and intensity of cleaner practices can determine environmental development, and therefore the adoption of a
standardized environmental management system can exert a positive inuence in both areas (Yin and Schmeidler,
2009; Molina-Azorn et al., 2009b). Nevertheless, our ndings are mixed. On the one hand, the effect on number
and intensity of adopting cleaner practices is the same for both adopters and non-adopters of standardized environmental management systems. On the other hand, cleaner performance is signicantly higher for adopters of
standardized environmental management systems, specically in some aspects that differentiate a company from
its competitors and enable company administration to win public support for cleaner production. This nding is
supported by previous research in two ways. First, it seems clear that a standardized environmental management
system provides companies with environmental expertise that allows them to integrate environmental practices into
operations, thus achieving better performance (Simpson and Samson, 2010). Second, standardized environmental
management systems are important in that they act as a signal to the market related to a companys building of an
environmental compromise and image positioning (Terlaak and King, 2006).
Thus, an environmental management certication may be used as a strategic management tool both inside the
company particularly with respect to impact on operations and human resources and externally to develop
new products, engage in green marketing and access new markets. Therefore, H9 is partially accepted.

Conclusions
The results of this research provide evidence supporting a number of pertinent conclusions for academics,
managers and policy makers.
First, the motivation to pursue cleaner practices is clear in the literature. Internally this motivation comes from
improvements in operations performance, whereas externally it primarily results from hard regulation and
stakeholder pressure (Hofmann et al., 2012; Lozano, 2013).
This research shows that, contrary to results of previous research, other companies exert little inuence on the
adoption of cleaner practices, and institutional support is key to fostering cleaner strategy beyond the internal
motivations of large companies; however, institutional support is more important for smaller companies.
The main reason for this conclusion is that small companies may have few resources to obtain, on their own,
support for their businesses best practices; likewise, institutional support can be an important source of learning
and business improvement. Thus, institutions should focus on small business with the aim of providing new
strategic capabilities for these businesses to remain in the market. Institutions can promote appropriate cooperation
and discussions related to companies sensitivity to environmental issues and can offer opportunities for deploying
new strategies. Consequently, institutions would truly act as change drivers, collaborating to make small companies
more competitive and generate health in their countries. On the other hand, companies need to develop openCopyright 2014 John Wiley & Sons, Ltd and ERP Environment

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The Importance of Institutional Support for Smaller Companies

minded and exible capabilities to lead organizational changes to include green practices and internalize these
practices with the goal of looking for new, cleaner approaches.
Second, environmental development, in addition to the possibility of achieving new capabilities, promotes
market success factors. These factors are critical to maintain market performance, especially in times of crisis, as
some authors have noted.
Companies should adopt cleaner practices not only because of the possibility of improved nancial performance in
terms of consumption savings (which can be eliminated when rates go up) but also because cleaner practices encourage
competitiveness through improving a companys image, promoting better service due to employee satisfaction and
leading to customers who value the company more highly than its competitors. Thus, involvement in a green strategy
seems to be key to a companys ability to face current changes in the environment. Likewise, the adoption of an environmental strategy should be a priority agency item for companies. However, there is not one unique environmental
strategy; instead, every company should look for a suitable strategy to improve performance in a broad context.
Finally, the adoption of a standardized environmental management system provides extra benets beyond
environmentally cleaner performance. Companies that do not adopt more advanced clean practices but instead
are able to utilize their existing clean practices more effectively can achieve higher external benets that they can
present to new or existing customers as proof of a specic environmental compromise.
At the same time, adoption of a standardized environmental management system enables in-depth development
of cleaner practices by emphasizing access to greater institutional support. Therefore, companies with standardized
environmental management systems could acquire additional market success factors or maximize their current
factors. As Loorbach et al. (2010) asserted, environmental issues are too complex to be addressed by single organizations,
and thus implementing a standardized environmental management system can help companies to nd novel
solutions and adopt environmental changes.
From a managerial viewpoint, a strategic environmental approach appears to be protable for business.
Companies involvement in cleaner practices leads to the acquisition of new capabilities and improvement of
existing ones. This fact is relevant for a number of reasons. First, in the restaurant industry, there is a predominance
of small businesses with high consumption of electricity and water and great waste generation, costs that these
businesses need to control. Second, the study of this industry is relevant to the Spanish economy because dayto-day operations can keep managers busy and distract them from maximizing cleaner development; thus,
institutional support for cleaner practices is a main driver for independent and chain-afliated restaurants.
Therefore, collaboration among companies and institutions is crucial for sustainable economic advancement.
This relationship between institutions and companies can build a learningaction network where companies
can develop sustainable creative innovations. In other words, independent small businesses in particular should
make an effort to approach institutions to obtain assistance on this issue. Therefore, environmental management
is an important driver for companies in achieving a level of differentiation and competitiveness, especially when
they make a strong rm commitment and feel that institutional support in a partnership in which a company can
learn and gain advantages for its business.
In addition, the implementation of a standardized environmental management system substantially reinforces
the benets of cleaner performance. Thus, it can act as a strategic management tool to help companies in their
efforts to achieve better market positioning. The reason is that, in general, environmental management systems
provide a company with an environmental policy, a continuous improvement plan and a data management system.
In other words, implementation of a standardized environmental management system increases knowledge of
environmental practices and can build expertise inside a company that could qualify it to integrate better environmental practices into its operations and, therefore, achieve a higher performance in both the short and long term.
For policy makers, this study encourages real support for companies, not merely to penalize them or be passive
participants. Active institutional support is capable of producing quicker environmental development in the entire
business system, beyond legislation. This situation will be positive both for companies and for the advancement of
national and global environmental solutions. Thus, a policy makers challenge is to show companies how cleaner
practices, even basic ones, can produce signicant rm performance. This institutional role should be focused
predominantly on small businesses because they represent more than 90% of the companies in Europe and worldwide. All over the world, the creation of wealth and growth is based on small companies. A high level of support is
required to ll critical gaps and achieve advantages in environmental development.
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J. Llach et al.
From an overall strategic and economic point of view, it can be said that there is a winwin strategy for all
of the agents analyzed in this study. The promotion of environmental measures by the political sector directly
promotes an improvement of the competitiveness of affected rms and indirectly can cause an increase in
their nancial results. Likewise, the public sector can recover its investment in promoting environmental
practices due to these practices nancial benets to the companies, and nally, society benets from the
environmental improvement resulting from the better use of resources and more ecological way of operating.
Therefore, environmental development is a global strategy that generates an economic, social and environmental virtuous circle.
This study introduces other issues to consider in future research, including whether its results are valid in the
tourist and other industries. This study is subject to certain limitations, given that the eldwork was performed
in a specic geographical region and the study results may be difcult to extrapolate to other countries. Although
restaurants were surveyed, the studys conclusions may be applied to other sectors because of the economic
importance of this industry in Spain.

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