Topmanagers’environmentalvalues,leadership,andstakeholder engagementin

promotingenvironmentalsustainabilityinthe restaurantindustry
YoonJungJang∗,TianshuZheng,RobertBosselman
Departmentof Apparel,Events,andHospitalityManagement, Iowa StateUniversity,Ames,IA50011,USA

ar t i cl e i n fo ab st r act
Article history: This study examines the role of top managers’ values and leadership in advancing environmental sustainability. It also investigates the
Received27October2016 effects of stakeholder engagement on restaurants’ environmental sustainability and assesses the impact of related practices on
Receivedinrevisedform23February2017 restaurant performance. A web-based survey was administered to collect data from top-level restaurant managers in the United States.
Accepted20March2017 Available
Thesample wasselected frompanels recruitedbya researchcompanyspecializing inpanelsurveys. Invitationemails were sentto 2500
online4 April2017
managers and 240 responses were returned, 218 of which were retained for final analysis (response rate: 8.7%). Structural equation
modeling was used for testing hypothetical relationships among keyconstructs in the proposed research model:environmental values,
Keywords: leadership, stakeholder engagement, environmental sustainability, and restaurant performance. Findings confirmed the significant
Topmanagement
role of top management values and leadership in advancing environmental commitment. The results also demonstrated the strong
Environmental values
impact of stakeholder engagement on restaurants’ commitment to environmental sustainability. Finally, they indicated the positive
Leadership
influence of restaurants’ environmental sustainability performance on both financial and nonfinancial performance. The study
Stakeholderengagement
presents atheoreticalframework, integratingtheoriesor models fromextant literature,andcontributes toanenhanced understandingof
Environmentalsustainability Restaurant
performance restaurants’ environmentalsustainability. Thefindingssuggestseveralpracticalimplications formanagers inthe restaurant industry.
©2017 Elsevier Ltd. Allrightsreserved.

1. Introduction
Sales in the U.S. restaurant industry have continued to grow, with a 2016 sales
projection of$783billion (NationalRestaurant Association, 2016). Accordingto
the National Restaurant Association (2016), approximately 60% of consumers
are more likely to choose a restaurant that offers locally sourced or
environmentally friendly food. Today’s consumers are willing to pay a premium
torestaurantcompaniesthatengageinenvironmental sustainabilitypractices(Hu
et al., 2010 ; Jang et al., 2015). Following this trend, restaurant companies are
adopting initiatives related to environmental sustainability. Competent
managers now recognize that there can be no long-term financial growth without
consideration ofsocialandenvironmentalresponsibility.However,
∗ Correspondence to: Hotel, Restaurant & Institutional Management, Yonsei Graduate School of
Human Environmental Sciences,50Yonsei-ro, Seodaemun-gu, Seoul, 120-749,Korea.
E-mailaddresses:yjjang@iastate.edu,yoonjj923@gmail.com(Y.J.Jang),
tzheng@iastate.edu(T.Zheng),drbob@iastate.edu(R.Bosselman).
http://dx.doi.org/10.1016/j.ijhm.2017.03.005 0278-4319/©2017
Elsevier Ltd. Allrightsreserved.
top managers, thecentralplayers in advancingenvironmental sustainability, often do
notknowhowtoimproveenvironmental performance.
Many hospitality studies have attempted to explore the factors that prompt
restaurants’ adoption ofsustainablepractices (Bohdanowicz, 2006; ElDiefandFont,
2010a, 2010b; Nicholls and Kang, 2012; Tzschentke et al., 2008). In particular,
researchers have identified critical factors (e.g., stakeholder pressure, public
concerns, regulatory forces, competitive advantage, top management commitment,
managers’ values, beliefs) affecting environmental sustainability and enhancing
corporate environmental behavior (Chan and Wong, 2006; Garay and Font, 2012;
Lopez-Gamero et al., 2011; Park, 2009; Park and Kim, 2014; Tzschentke et al., 2008).
The literature has also paid special attention to the impacts or outcomes of corporate
environmental programs, including cost savings, improved profits, and improved
market share (ClaverCortes et al., 2007; Garay and Font, 2012; Kang et al., 2010; Lee
andPark,2009;RodriguezandCruz,2007;Tarietal.,2010).
However, most studies lacked a theoretical grounding and failed to suggest
testable frameworks that would enhance the understanding of corporate
environmental sustainability. Prior studies emphasized the role of top managers in
promoting corporate environmental sustainability, but literature on their leadership
has been very limited in environmental studies. The stakeholder is also a central
variableincorporateenvironmentalstrategies; however,limitedstudieshavefocused
on the effect of stakeholder engagement on the implementation of environmental
strategies and practices. To fill this research gap, this study proposed a conceptual
framework for understanding the relationships among the key variables of top
managers’ environmental values and leadership, stakeholder engagement,
environmentalsustainability performance,andrestaurantfinancialandnonfinancial
performance.
Thespecificobjectives ofthestudywereto(a)develop andtest aconceptualmodel
of environmental sustainability; (b) examine the effect of top managers’
environmentalvaluesandleadership onstakeholderengagement;(c)evaluatetherole
102 Y.J.Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111
of top managers’ environmental values and leadership in restaurants’ environmental
sustainability; (d) examine how stakeholder engagement affects restaurants’
environmental sustainability; and, (e) investigate how restaurants’ environmental
sustainabilityinfluencesboththeir financialandnonfinancialperformance.
2. Reviewofliterature
2.1. Corporateenvironmentalsustainability
Sustainability is based on the verb sustain meaning “to maintain, nourish, or
encourageaphenomenon,and/orstrengthenor improveit”(Sumner,2007,p.77).The
most widely accepted definitions of sustainability focus on improving the quality of
human life without harming the environment and the capability of natural systems
(Brundtland, 1987; IUCN/UNEP/WWF, 1991). The sustainability approach helps
corporations work toward the goals of economic, social, and environmental
sustainability and equally emphasize three pillars, which are triple-bottom line on a
corporation(PerezanddelBosque,2014;Wilson,2003).
Scholars who attempted to explain corporate sustainability − sustainability at the
corporate level − stressed that people inside and outside corporations (stakeholders)
shouldbeconsideredandtreatedethically, andinaresponsiblemannerwhile working
toward three dimensions of sustainability (Dyllick and Hockerts, 2002; Wilson,
2003). According to their definitions, corporate sustainability can comprise all
corporate activities related to the pursuit of economic, social, and environmental
health with the aim of raising standards of living for shareholders, employees,
customers, pressure groups, and communities (Dyllick and Hockerts, 2002; Van
Marrewijk,2003).
Corporateenvironmentalsustainability,thefocusofthis study,couldbedefinedas
corporate-level activities that preserve resources and protect the environment, while
considering improvements in living standards for people within and outside the
corporation (Perez and del Bosque, 2014; Van Marrewijk, 2003; Van Rheede and
Blomme,2012).
2.2. Restaurants’environmentalsustainability
Significant growth of the restaurant industry has created serious environmental
problems through excessive energy and water consumption, and the generation of
large amounts of non-recyclable trash and wasted food (Hu et al., 2013). The Green
Restaurant Association has attempted to improve restaurants’ environmental
sustainability performance by providing environmental guidelines that enumerate
seven indicators of environmental sustainability: energy, water, waste, disposables,
chemical and pollution reduction, sustainable food, and sustainable furnishings and
building materials (Green Restaurant Association, 2015). Many studies have also
described the objectives that restaurant companies must accomplish to achieve
environmental sustainability (Choi and Parsa, 2006; Hu et al., 2010; Park, 2009;
Schubert, 2008; Szuchnicki, 2009). For example, Choi and Parsa (2006) proposed
three domains of sustainable practices in the restaurant industry: serving organic or
locally grown food, engaging in environmentally friendly practices, and donating
money and time to the community. In this study, environmental sustainability
describes a restaurant company’s attempts to mitigate its negative environmental
impact by, for instance, serving sustainable food, promoting energy efficiency and
conservation, promoting water efficiencyand conservation, reducing waste, reusing
andrecycling,andsupportingthecommunity’seffortstoenhancetheenvironment.
2.3. Topmanagers’environmentalvalues
Eco-oriented managers’ values have a decisive influence on corporate
environmental sustainability (Egri and Herman, 2000; El Dief and Font, 2010a;
Han, 2015; Han et al., 2015; Park and Kim, 2014). The theoryof altruistic behavior
emphasizes the importance of environmental values in explaining pro-
environmental behaviors. For example, Schwartz’s (1977) norm-activation
theory of altruism argues that individual altruistic behavior is activated bya moral
norm or moral obligation resulting froman individual’s relevant values (Nordlund
and Garvill, 2002). Stern et al.’s (1999) value-belief-norm (VBN) theory of
environmentalism—an extended model of Schwartz’s (1977) normactivation
theory—links personal values, the New Environmental Paradigm (NEP), beliefs
about the biophysical environment, the pro-environmental personal norm, and
environmental behavior. According to the VBN theory, individuals with strong
environmental values are likely to know the consequences of an environmental
problem, to take responsibility for environmental actions, and to participate in or
supportpro-environmentalactions(Stern,2000; Stern etal.,1999).
The theory of planned behavior (Ajzen, 1991) also explains the relationship
between values and behavior. These theories state that individuals’ beliefs and
attitudes toward a specific behaviordetermine their behavioral intention to engage
in that behavior. Many environmental studies applying these theories confirmed
that individuals’ normative beliefs and attitudes toward pro-environmental
behavior were proven tobe themost importantantecedents oftheir environmental
behavioral intentions (Flannery and May, 1994; Han et al., 2010; Han et al., 2015;
Park and Kim, 2014). For example, Han et al. (2015) showed that hotel guests’
moral norm along with their attitude was the most influential antecedent in
predicting their behavioral intention to stay at environmentally friendly hotels,
implying that individuals’ ethical obligation plays a crucial role in their
environmentallyresponsiblebehavior.
Studies of the psychological determinants of pro-environmental behavior
have identified individual values as an important factor in individuals’
commitment to environmentally responsible behaviors (Nordlund and Garvill,
2002). Nordlund and Garvill (2002) tested the existence of causal links between
individuals’environmentalvalues and theirproblem awareness, personal norms,
and pro-environmental behavior. Those findings supported the predicted causal
relations among variables and implied that leaders’ environmental values may
affect their awareness with regard to environmental problems and their moral
obligation to work to protect the environment, which are considered
environmentally responsible leadership behaviors. Managers with strong
environmental or ethical values are also more likely to address stakeholders’
environmental interests and to have genuine and ethical relationships with them,
thereby helping a corporation formulate a more practical environmental strategy
(Blackand Hartel, 2003). Stern et al. (1999)contendedthatindividuals with well-
developedenvironmentalvaluesarelikelytoacceptpublic valuesorthoseofsocial
movements and may experience a moral obligation with respect to pro-
environmental actions, usually supporting them. Finally, a manager’s personal
eco-centric values explained the degree to which a corporation is committed to its
environmentaloperations (e.g., energyandwaterefficiencypractices).ElDiefand
Font (2010a) supported the notion that managers’ altruistic values may have a
significant impact on their environmental planning, leading to activities like
regularenvironmental auditsandenvironmentalawarenessseminars.
2.4. Topmanagers’environmentalleadership
Because environmental issues have become critical, companies have
recognized the vital role of leadership in addressing them (Banerjee et al., 2003;
EpsteinandBuhovac,2014;Metcalfand Benn,2013;Strand,2011;Waldmanand
Siegel, 2008). Epstein and Buhovac (2014) emphasized the importance of
leadership in developing and implementing sustainability strategy as well as in
communicatingcorporatesustainabilitywithinternalandexternal stakeholders.
In leadership literature, responsible leadership has been proposed to improve
the company’s social or environmental performance (Voegtlin et al., 2012). Maak
(2007) defined responsible leadership as “the art and ability involved in building,
cultivating and sustaining trustful relationships to different stakeholders, both
inside and outside the corporation, and in coordinating responsible action to
achieve a meaningful, commonly shared business vision” (p. 334). Therefore,
environmental leadership—environmentally responsible leadership—can be
defined as the art or ability to mobilize stakeholders inside and outside the
corporationtoachieve businessgoalsrelatedtoenvironmentalsustainability.
 Y.J. Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111
Environmentallyresponsibleleadership is, thus, associated with theabilityto
engage with internal and external stakeholders. Environmentally responsible
leaders are expected to consider the consequences of their actions for all
stakeholders outside the corporation, listen to the interests of their claims, and
engage with them in formulating corporate strategy (Epstein and Buhovac, 2014;
Voegtlin et al., 2012). Moreover, environmentally responsible leaders should be
able to convince their employees that environmental sustainability is a
corporation’s core value and communicate its importance, allowing them to
recognize such issuesaspart of their dailypractice and to become more engaged in
environmental actions(Banerjeeetal.,2003).
Prior studies have also shown that leadership style is significantly related to
corporate performance (De Hoogh and Den Hartog, 2008; Khuntia and Suar,
2004). Voegtlin et al. (2012) argued that sociallyresponsible leadership isclosely
related to corporate social or environmental performance. In CSR studies, De
Hoogh and Den Hartog (2008) demonstrated positive relationships between
ethical leadership (e.g., morality and fairness, role clarification) and leaders’
socially responsible behaviors. Khuntia and Suar (2004) investigated the effects
of leadership styles of Indian managers on corporate performance, and their
findings showed that empowerment and altruistic motive/character were
significantly correlated with corporate performance. Therefore, it was expected
that managers who exhibit stronger environmental leadership were most likelyto
respond to stakeholder expectations on environmental sustainability and to show
greatercommitmenttoenvironmental sustainability.
2.5. Stakeholderengagementandenvironmentalsustainability
Stakeholder refers to individuals, groups, or organizations that can be affected by
corporate decisions and can also possibly affect them (Freeman, 1984). A variety of
stakeholders are involved in a large corporation, including customers, employees,
shareholders, suppliers, communities, and governmental bodies. From the
stakeholdertheory,thecorporationareexpectedtoreconsiderthe importanceofsilent
stakeholders (customers, employees, suppliers) as well as the traditional interest
group (e.g., shareholders), and to manage responsiblyto address the needs of a variety
of stakeholders while creating as much value as possible for each (Freeman, 1984;
Parmar et al., 2010). In other words, the theoryargues that top management must keep
the balance among the incompatible claims of these multiple stakeholders to achieve
long-term success of the corporation and to maintain sustainable businesses
(Freeman,1984;FreemanandMcVea,2001).
Stakeholder theory has been applied in earlier studies of corporate social
responsibility and performance (Abreu et al., 2005; Longo et al., 2005). It explains
corporationsshouldadoptsocially desirableperformancetofollowsociallyaccepted
values, meet the needs of primary stakeholders, and finally achieve business
objectives (El Dief and Font, 2010a; Wilson, 2003). A corporation whose strong
relationships with its critical stakeholders have been built by responding to
stakeholder demands will achieve better corporate performance, resulting in long-
termsuccess(Lo,2013).
To form collaborative relationships with stakeholders, corporations should
engage stakeholders in the development of corporate strategy, while addressing their
expectationsforamoresustainable societyorenvironment.Stakeholderengagement
canbedefinedas collaborativeorparticipativeactionsthatstakeholdersundertake for
the purpose of helping a corporation find solutions to environmental problems and
develop a proactive environmental strategy (Grafe-Buckens and Hinton, 1998;
Lopez-Gamero et al., 2011). These activities may involve cooperating with the
corporation through forums to share their expectations, providing new ideas to
improve corporate environmental management practices, and participating in
identifying the policies, objectives, and programs of the corporate environmental
managementsystems(Greenwood, 2007;O’RiordanandFairbrass,2014).
Smith (2003) contended that engagement of stakeholders will help companies
respondtostakeholders’needsandmodifytheir actions,therebyburnishingcorporate
reputation and improving profit. Black and Hartel (2003) studied the roles of
stakeholder engagement with respect to corporate ability to respond to social needs.
Theyarguedthattheextenttowhichafirmconforms tostakeholders’expectationsand
incorporates management of stakeholder relationships into corporate strategy
influences a corporation’s ability to be socially and ethically responsible. In the
103
hospitality sector, Rodriguez-Melo and Mansouri (2011) argue that stakeholder
cooperation has been one of the most valuable contributors to competitive advantage
through helpingcompanies improvein thearea ofactivesustainablepractices. In Park
and Kim’s study (2014), stakeholder pressure was found to be the most significant
factor in increasing managers’ awareness and enhancing the corporate adoption of
environmentalsustainabilityprograms.
2.6. Environmentalsustainabilityandcorporateperformance
Socially responsible corporate activities may contribute to a firm’s performance
through improved corporate image and reputation, reduced operational costs,
enhancedresourceefficiency, improved relationshipswithstakeholders(Alonsoand
Ogle, 2010; Park andKim,2014;Revell andBlackburn,2007;Wongand Gao, 2014).
Empiricalstudiesoftherelationshipbetweensocially orenvironmentallyresponsible
behavior and corporate financial performance have indicated inconsistent results
(Kang et al., 2010; Lee and Park, 2009). Overall, many studies have demonstrated a
positive relationship (Kang et al., 2010; Lee and Park, 2009; Rodriguez and Cruz,
2007; Segarra-Ona et al., 2012). For example, Garay and Font (2012) investigated the
impact of sustainability management on financial performance of small- and
medium-sized accommodation enterprises. They demonstrated that practices such
assavingenergyandwaterhaveastrongcorrelationwith financialgainandmanagers’
satisfactionwithfinancialperformance.
These financial measures, however, reflect the effects of both past and current
activities, whereas nonfinancial measures, associated with customer satisfaction or
corporate improvement activities, reflect the effect of current managerial actions that
may not show up in financial performance measurements until some future time
(Kaplan and Norton, 1992). Banker et al. (2005) suggested that nonfinancial
measures,suchasthoserelatedtocustomersatisfaction,areassociatedmorewithlong-
term profits than with immediate financial performance. Many researchers and
practitioners now use nonfinancial measures, such as product quality, customer
satisfaction, and employee satisfaction, to evaluate managerial performance (Banker
etal.,2005;Wangetal.,2013).Luoand Bhattacharya(2009)reportedthatCSRactivity
increases customer satisfaction as well as brand and customer loyalty, thereby
improving financial performance. Based on the previous literature, this study
incorporated both financial and nonfinancial performance measures to evaluate a
firm’sperformance.
Basedonthediscussionabove,thisstudyproposedthefollowing hypotheses.
H1. Top managers’ environmental values will significantly influence environmental
leadership.
H2. Top managers’ environmental values will significantly influence stakeholder
engagement.
H3. Top managers’ environmental values will significantly influence restaurants’
environmentalsustainability.
H4. Top managers’ environmental leadership will significantly influence
stakeholderengagement.
H5. Top managers’ environmental leadership will significantly influence
restaurants’environmentalsustainability.
H6. Stakeholder engagement will significantly influence restaurants’ environmental
sustainability.
H7. Restaurants’ environmental sustainability will significantly influence their
financialperformance.
H8. Restaurants’ environmental sustainability will significantly influence their
nonfinancialperformance.
Fig.1showsthehypotheticalrelationshipsproposedinthis study.
104 Y.J.Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111
3. Methodology
3.1. Sampleanddatacollection
The sample for this study was top-level restaurant managers from all types of
restaurants (fast food, casual, and upscale) in the United States. Top-level managers
are responsible for the operation of restaurants and can be general managers,
owner/managers, front-of-the-housemanagers,andback-of-the-housemanagers.
A web-based survey was used to collect the data between December 10th to 30th,
2016. The sample was selected from panels recruited by a market research company in
the U.S. that retains more than 4000 restaurant managers in its panels. Respondents
Fig.1.Research model.
were recruited from customer lists (e.g., airline, online shopping mall). These
respondents were accepted theinitial invite and were then confirmed through another
verificationemail.Allwere screenedandtheirpositionortitleverified.
Invitational emails were sent by the research company to panel members in
restaurant managerial positions. Participants were invited to participate
voluntarily in the survey; they were excluded from the sample if they did not meet
thescreeningcriteria.The screeningquestionsincludedinformationonthecurrent
position of participants and years of adoption of environmental practices in their
current operation. To be eligible for the survey, participants had to be in top
managerial positions in their current operation and should have been
implementing environmental practices for at least one year prior to the survey. All
respondents not meeting the selection criteria were screened out from the sample;
those who did meet the qualifying criteria were allowed to continue and complete
thesurvey.Outofatotalof2500invitationssent,240 questionnaireswerereturned.
After deleting 22 invalid responses, 218 responses were retained for final analysis
(response rate of 8.7%). Approximately 65% were female, 69.2% were younger
than 40 years of age, and 71.5% had two or four year college degrees. Participants
fromfourregionsoftheU.S.wereevenlydistributed:
27.5% from the Northeast, 26.6% from the South, 22.9% from the Midwest, and
22.0%fromtheWest.Ofsamplerestaurantssurveyed,approximatelyhalf(51.8%)
werechainrestaurants.About two-thirdofresponses(67.4%)werecollectedfrom
casual and upscale restaurant type. The sample represented nationwide U.S.
restaurants fairly well in terms of chain-affiliation given NPD’s 2015 restaurant
census data (NPD, 2015); NPD reported 46.5% were chain restaurants. However,
the sample had a slightly higher proportion of casual and upscale restaurants
compared to NPD data. The NPD report showed that 45.4% were casual and
upscalerestaurants (NPD,2015).
3.2. Surveyinstrument
The survey included the following components: environmental
sustainability, stakeholder engagement, managers’ environmental values and
leadership, restaurants’performance, restaurants’ characteristics, and managers’
demographic information. The initial questionnaire items were adapted from
previous studies. Environmental sustainability was measured with 22 items
adaptedfromEl DiefandFont(2010a);Park(2009);Parketal.(2014);andWang et
al. (2013). For twenty-two environmental sustainability items, six separate
measureswereconstructedbaseduponpreviousliterature(Jang,2016;Park,2009;
Wang et al., 2013); environmental strategy, sustainable food, energy/water
efficiency, waste management, reuse & recycle, and community support.
Respondentswere askedtoconsidera restaurant’sperformanceand evaluateeach
item on a seven-point Likert-type scale (1 = to no extent and 7 = to a very great
extent).
Managers’ environmental values were then measured using three items
adapted from Stern et al.’s (1999) study, based on the New Ecological Paradigm
(NEP)ScaledevelopedbyDunlapetal.
(2000). Three environmental leadership items were adapted from De Hoogh and
Den Hartog’s (2008) scale and Voegtlin’s (2011) scale and slightlymodified to fit
the purpose of this study. For measuring each of the above items, a seven-point
Likert-type scale was used, where 1 = strongly disagree and 7 = strongly agree.
Stakeholder engagement was measured with four items adapted from Lopez-
Gamero et al.’s study (2011) and from Black and Hartel (2003). All items were
measured using a seven-point Likert-type scale (1 = strongly disagree and 7 =
strongly agree). Restaurant performance was measured in terms of both financial
and nonfinancial outcomes. Financial performance measures were based on Lo’s
(2013) study. The performance measures included four items: average sales
growth,totalgrossprofit,returnoninvestment, andcostadvantages.Nonfinancial
performance measures were adapted from Tari et al.’s (2010) study and included
four items: employee satisfaction, employee motivation, customer satisfaction,
and customer retention. Both performance measures were scored using a seven-
point Likert-type scale where 1 = strongly disagree and 7 = strongly agree.
Objective measures of performance are not easily attainable, especially in small,
individually owned restaurants, so subjective measures in the form of managers’
perceptions were used. Venkatraman (1989) reported that subjective
measurementoffinancialperformancecanreflectorbecloselyrelatedto objective
measurement. Finally, variables related to restaurants’ and managers’
characteristics were included. Restaurant variables included restaurant type
 Y.J. Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111 105

(upscale, casual, fast food) and chain affiliation (independent, chain restaurants),
whilemanagement variablesincludedgender,age,andeducation.
The initial questionnaire was reviewed by five professors of hospitality
management and modified to accommodate their comments and suggestions. For
example, definitions of key terms, such as environmental strategy and
environmental practices, were added at the beginning of the survey. The revised
questionnaire was then pilot-tested with 20 top-level restaurant managers (14
general managers and 6 owner/managers) chosen at random from restaurant
manager panels registered with the research company. They were asked to
comment on the questionnaire content to ensure its clarity and appropriateness of
statements and scalesused. Taking their comments intoaccount, nochanges were
made in the wording of statements or scales, but font size was increased to enhance
readability. Those whoparticipatedinthepilot test were excluded from thesurvey
sample.

3.3. Dataanalysis

SPSS 20 and AMOS 20.0 were used for data analyses. Using descriptive
statistics, frequencies of the respondents’ demographic variables and means and
standard deviations of each construct were calculated. Based on Anderson and
Gerbing’s (1988) two-step approach, confirmatory factor analysis (CFA) was
performed to test the measurement model. Structural equation modeling (SEM)
was then used to test the proposed research hypotheses. Garver and Mentzer
(1999)and Hoelter (1983) proposed that the minimum sample size for use of SEM
should be about 200, suggesting that a sample size of 200 or more would provide
sufficient statistical power with a given SEM model. Many hospitality studies
have followed this recommendation and conducted SEM with sample sizes of
200–250 (Chen, 2008; Lee et al., 2014; Park et al., 2014; Song, 2010). This study
wasthereforetargetedatcollecting200–250 responses.
To test normality of variable distributions, skewness and kurtosis was examined.
Valuesofskewnessandkurtosisfallingwithin arecommendedcut-offpointof±2.0are
considered acceptable (George and Mallery, 2001). The results of skewness and
kurtosis tests on this study’s data demonstrated that skewness values for all variables
fell within ±1.0, whilekurtosis values for allvariables fell within ±1.0. Overall, results
of kurtosis and skewness tests demonstrated that all variables met normal distribution
assumptions.

4. Results

4.1. Measurementmodel

Prior to testing the hypothesized relationships proposed in the research model,

confirmatory factor analysis (CFA) was conducted to test the appropriateness of the
measurement model (Anderson and Gerbing, 1988). The model was evaluated based
on model fit, reliability, convergence validity, and discriminant validity. CFA was
performedusingthemaximumlikelihoodestimationmethod.The originalmodelwas
modified; one value item was deleted because its factor loading was less than 0.5, and
one leadership item was deleted because it loaded on multiple latent variables
(leadership, stakeholderengagement).
The CFA results showed that the 2/df was 1.691, the compara-

tivefitindex(CFI) was 0.952,thenon-normed fitindex(NNFI) was 0.941, and theroot

mean square error of approximation (RMSEA) was 0.056 (Table 1). All model fit
statistics fell within recommended criteria, indicating that the model fit the data fairly
well(Huand Bentler,1999).
106 Y.J.Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111

Table1
Confirmatoryfactoranalysisresults: Measurementproperties.
Constructsanditems Mean SD Standardized CR AVE
Factorloading

EnvironmentalValues(˛ =.700) .703 .543

Ifthingscontinueontheirpresentcourse,wewillsoonexperiencea majorecologicalcatastrophe. 6.00 1.071 .706

Humansareseverelyabusingtheenvironment. 6.30 .925 .766

Environmental Leadership(˛=.819) .821 .696

Iamawareof keystakeholderdemandsrelatedtoenvironmentalproblems. 5.70 1.217 .835

Considertheconsequencesofenvironmentaldecisionsforthe keystakeholders. 5.77 1.142 .834

StakeholderEngagement(˛=.895) .891 .672

Providetheirperspectivesabouthowtosuccessfullysolvethefirm’senvironmentalproblems. 5.14 1.316 .793

Providenewideasforimprovingenvironmental managementpractices. 5.34 1.205 .795

Participateindefiningenvironmentalperformanceindicatorsacorporationshoulduseandreporton. 5.06 1.469 .864

Participateinidentifyingpolicies,objectives,and programsofcorporateenvironmental managementsystems. 5.06 1.478 .824

Environmental SustainabilityPerformance(˛=.829) .825 .516

Environmentalstrategy 4.85 1.271 .859

Sustainablefood 5.26 1.532 .566

Energy/Waterefficiency 5.42 1.245 .648

Waste management 4.90 1.406 .565

Reuse &Recycle 5.24 1.239 .655

Communitysupport 4.69 1.619 .669

FinancialPerformances (˛=.869) .863 .616

Contribute to enhancingaveragesales growth. 5.17 1.396 .746

Contribute to increasingtotal grossprofit. 5.27 1.451 .829

Contribute to improvingreturnoninvestment(ROI). 5.32 1.339 .907

Contribute to reducingoperationalcosts. 5.65 1.305 .631

NonfinancialPerformances(˛=.874) .858 .605

Contribute to enhancingemployeesatisfaction. 5.53 1.281 .860

Contribute to enhancingemployee motivation. 5.50 1.365 .869

Contribute to enhancingcustomersatisfaction. 5.91 1.205 .706

Contribute to improvingcustomerretention. 5.76 1.287 .654

Note:2 (189) =319.638(p<.001),2/df=1.691,CFI=.952,NNFI=.941, RMSEA=.056. CR=composite
reliability; AVE =average varianceextracted.
Construct reliability was assessed using composite reliability (CR) values. CR
valuesequaltoorgreaterthan0.7arerecommended,althoughvaluesapproaching0.90
indicatehigh levelsof reliability(Nunnally, 1978). As shown in Table1,theCR values
of all constructs ranged from 0.703 to0.891, indicatingthat all met the recommended
minimum criterion of 0.70 (Hair et al., 2006). The internal consistency of the
measurements was examined using Cronbach’s alpha. Values ranged from 0.700 to
0.895, exceeding the suggested minimum cut-off of 0.70 (Nunnally, 1978) and
reflecting internalconsistencyamongthescaleitems.
Convergent validity was evaluated using factor loading and average variance
extracted (AVE) (Fornell and Larcker, 1981). All factor loadings (0.565–0.907)
exceeded the recommended minimum cut-off level of 0.5 (Hulland, 1999) and were
significantat p<0.001,witht-valuesrangingfrom5.411to15.871(Table1).The AVE
rangedfrom0.516to0.696,greaterthantherecommended minimum0.5cut-offforall
constructs. Given these factor loadings and AVE values, the measurement items met
conditionsfor convergentvalidity.
For discriminant validity, the square root of the AVE of the construct should be
greaterthanthecorrelationvaluebetweenthe
 Y.J. Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111 107

Table2 SEM analysis results confirmed that the model fit of the proposed model was
Correlationoflatent variablesanddiscriminant validity.
satisfactory (2 =387.486, df=196, 2/df=1.977,
construct and other constructs (Fornell and Larcker, 1981). The AVE square roots
of each construct (the diagonal values in Table 2) exceeded the correlation values
between a pair of constructs, indicating discriminant validity of the measurement CFI = 0.930, NNFI = 0.917, RMSEA = 0.067). The hypotheses test results for the
scales(Table2).
finalmodelarepresentedinFig.2andTable3.With regard to squared correlation
(R2), for financial and nonfinancial
4.2. Structuralmodelandhypothesestests

This study proposed a path model to test research hypotheses depicting performance, thevariances attributabletoenvironmentalpractices were 41% and
relationships among managers’ environmental values, leadership, stakeholder 45%,respectively. Forenvironmentalpractices,the amountofvarianceexplained
engagement, environmental sustainability, and financial/nonfinancial by value, leadership, and stakeholder engagement was 61%. For stakeholder
performance. engagement,theamountof varianceexplainedbyvalueandleadershipwas54%.
Variable 1 2 3 4 5 6

1.Values (0.737)

2.Leadership .477** (0.835)

3.Stakeholderengage .387* .732 ** (0.820)

4.Environmentalperformances .208* .651** .658** (0.668)

5.Financialperformance .265** .571** .529** .546** (0.785)

6.Nonfinancialperformance .325** .536** .671** .563** .649** (0.778)

* **
Note: p <.05; p <.01.

Diagonal values(inbold)arethesquarerootoftheaverage varianceextracted(AVE).

2
Fig. 2. Resultsoftestingthe SEM model. =387.486 (p < .001), 2/df=1.977, CFI=.930, NNFI=.917, RMSEA=.067.
(196)
108 Y.J. Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111

Allhypothesizedpathsweresignificantexceptfortwo(Table3). Environmental Table3

Pathestimatesofthestructural model.
value significantly influenced environmental leadership ( = 0.477, t = 4.614, p <
sustainability performance. Stakeholder engagement was positively related to
0.001), supporting H1. However, environmental value did not affect stakeholder
environmental sustainabilityperformance ( = 0.456, t = 4.199, p < 0.001), providing
engagement
supportforH6.This provesthatstakeholderengagementisasignificantpredictor of
0.613, p > 0.05) and environmental
enhancing environmental sustainability performance. Environmental
sustainability performance 0.123, t = −1.526, p > 0.05);
sustainability performance was significantly related to financial performance ( =
hence, H2 and H3 were not supported.Meanwhile, environmental leadership had a
0.641, t = 6.333, p < 0.001), supporting H7. Environmental sustainability
positiveeffect on stakeholderengagement (= 0.709,t =7.850, p< 0.001), supporting
performance was also closely associated with nonfinancial performance ( = 0.672, t
H4. The effect of environmental leadership on environmental sustainability
= 6.596, p < 0.001), thus supporting H8. That is, restaurants’ environmental
performance was also significant ( = 0.436, t = 3.657, p < 0.05), supporting H5. In
sustainabilityperformancewas proven tobea significant anddirect determinantofa
other words, top managers’ environmental leadership directly contributed to
company’sfinancialandnonfinancialoutcomes.
enhancingstakeholderengagementandenvironmental

Path Standardized

coefficient t-value Results

H1 Environmental values ⇒Environmental leadership .477*** 4.614 Supported

H2 Environmental values ⇒Stakeholderengagement .051ns .613 Notsupported

H3 Environmental values ⇒Environmental sustainability ⇒ −.123ns −.1.526 Notsupported
H4H5 EnvironmentalleadershipEnvironmental Supported
Stakeholderengagement .709*** .436*** 7.8503.657.
H6 leadership Supported
.456*** 4.1996.333
H7 Stakeholderengagement ⇒Environmental sustainability Supported
.641*** 6.596
H8 Environmentalsustainability Supported
⇒Environmental sustainability .672***
Environmentalsustainability Supported
⇒Financialperformance

⇒Nonfinancialperformance
Note: * p <.05; ** p<.01; *** p <.001;n.s.=non-significant.
Table4
Resultsof mediationeffecttest.
Independent variables Dependent variables Indirect effect Confidenceinterval(CI)a

Values Leadership –

StakeholderEngagement .338*** .195–.523

Environmental Sustainability .386** .205–.586

FinancialPerformances .168** .045–.298

Nonfinancialperformances .176* .047–.313

Leadership StakeholderEngagement –

Environmental Sustainability .324** .191–.507

FinancialPerformances .487** .356–.635

Nonfinancialperformances .510** .374–.647

Stakeholder Environmental Sustainability –

engagement FinancialPerformances .292** .148–.427

Nonfinancialperformances .307** .150–.444

Note:*p<.05; ** p <.01; *** p<.001;n.s.=non-significant. a 95%confidence
interval (CI)from2000 bootstrapsamples.
4.3. Mediationeffecttesting
Mediation analysis is important in developing a model or a theory; it helps in
understanding the mechanism via which an independent variable can affect outcome
variables (Baron and Kenny, 1986). This study investigated the mediating role of
constructsto gainfurtherinsightintoallstructuralrelationships.
To test the mediation effect in this study, a bootstrapping test was conducted. This
method is especially recommended when the sample size is small, since it does not
require an assumption of normal distribution of the mediation effect and has
significant statistical power to detect mediation effects (MacKinnon et al., 2002; Ro,
2012). The significance of an indirect effect would be confirmed if the confidence
 Y.J. Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111
interval (CI) from bootstrap samples does not include zero (Preacher and Hayes,
2004).
Table 4 presents indirect effects from the bootstrapping test results. These results
show that environmental value had a significant indirect impact on stakeholder
engagement(=0.338, p<0.001),asdidenvironmentalsustainabilityperformance (=
0.386, p < 0.01), financial performance ( = 0.168, p < 0.01), and nonfinancial
performance ( = 0.176, p < 0.05). Leadership had significant and indirect influence on
environmentalsustainability performance(=0.324,p<0.01),financialperformance(
= 0.487, p < 0.01), and nonfinancial performance ( = 0.510, p < 0.01). Stakeholder
engagement significantlyand indirectly affected financial performance ( = 0.292, p <
0.001)andnonfinancialperformance (=0.307,p<0.01).
In summary, results revealed that leadership and stakeholder engagement were
significant mediators in the relationship among values, environmental sustainability
performance,andfinancial/nonfinancialperformance.
5. Conclusions
5.1. Discussionandimplications
The objective of this study was to investigate the effects of top managers’
environmental values and leadership on restaurants’ environmental sustainability.
The study then examined the effects of stakeholder engagement on environmental
sustainability, and the influence of environmental sustainability on restaurant
financial/nonfinancial performance. To examine relationships among these
variables, a conceptual model based on value, leadership, and stakeholder theory was
developed. The findings showed that all hypothesized paths were significant except
for H2 and H3. Top managers’ environmental values significantly influenced
environmental leadership, but environmental values had no direct effect on
stakeholder engagement or environmental sustainability. Meanwhile, top managers’
environmental leadership significantly influenced stakeholder engagement and
restaurants’ implementation of environmental sustainability performance. It was
alsodemonstratedthatstakeholderengagementsignificantly influenced restaurants’
commitment to the development of environmental sustainability performance,
resulting in differences in their financial and nonfinancial performance. A mediation
test confirmed the significant mediating roles of leadership and stakeholder
engagement in the relationships among values, environmental sustainability, and
restaurantfinancial/nonfinancialperformance.
This study contributes to the literature on environmental sustainability in the
restaurant context. This study revealed the mechanisms underlying the links
between managers’ values and restaurants’ environmental sustainability:
managers’ environmental values were proven to indirectly influence
environmental sustainability through leadership and stakeholder engagement.
Although much attention has been given to the role of individuals’ environmental
values, the mechanism that explains how their values are translated into
organizationalenvironmentalperformance has been rarelyexamined in previous
environmental sustainability studies. The indirect effect of environmental values
explains that top managers with higher environmental values tend to exhibit
stronger environmental leadership behavior and engage with more stakeholders,
eventually resulting in better environmental performance. This finding implies
that there is a need to focus more on mediator variables in clearly comprehending
the role of top managers’ values in promoting corporate environmental
sustainability. To explain the discrepancy between organizational members’
values and their pro-environmental behaviors, Han (2015) and Park et al. (2014)
demonstrated the importance of mediator variables such as managers’ perceived
advantages of environment management, or their obligation to take pro-
environmentalactions.
However, contrary to expectation, values had no direct effects on stakeholder
engagement and environmental sustainability performance, not supporting H2
and H3. This finding was inconsistent with previous studies that have
demonstrated that values provide a critical direct influence on environmental
practices(e.g., ElDiefandFont,2010b).Thisstudy,however,tendedtosupportthe
arguments of more recent studies (Han, 2015; Park et al., 2014) that personal eco-
109
centric values had indirect effects on pro-environmental behaviors through other
important mediating variables such as perceived advantages of environmental
behaviors orpro-environmentalpersonalenvironmentalnorm. Another possible
reason for this might be related to the reduced number of items used to access the
environmental values; only three of the five items of Stern et al. (1999) were used.
Using only three items may not reflect individuals’ environmental values with
sufficient accuracy.
This study also highlighted the role of top managers’ leadership in restaurant
companies’ implementation of environmental sustainability. There is little
research on management leadership in the context of environmental
sustainability. Managers’ environmentally responsible leadership was found to
haveapositive directinfluenceonrestaurants’environmentalsustainabilityand a
positive indirect influence on environmental sustainability via stakeholder
engagement. This result is consistent with the findings of De Hoogh and Den
Hartog (2008) that demonstrated the significant effects of leadership on
implementation of corporate socially responsible activities. This study takes the
first step in highlighting the leadership qualities required to encourage
environmental sustainability in the restaurant industry, and may serve as
groundwork forfurtherstudy.
This study emphasized the role of stakeholder engagement in restaurants’
environmental sustainability. Empirical research concerning the effect of
stakeholder engagement on the development of environmental sustainability
strategies hasbeen under-studied. In this study, stakeholderengagement hasbeen
shown to playan important role as a direct contributor and mediator in influencing
corporate environmental sustainability. Therefore, this study advances the
understanding of the effects of stakeholders in environmental management
literature,suggestinganeedfordeeper research intotheirrole.
Finally, this study incorporated nonfinancial measures such as stakeholder
(customer/employee) satisfaction; these are probablymore important and longer-
term indicators. Prior studies have been limited to utilizing financial variables for
measuring performance outcomes from environmental sustainability. This study
also clarified the relationships between environmental sustainability and
corporate financial performance, a topic on which prior studies have been
somewhatunclear.
This study has important managerial implications. First, the results
demonstrated that managers’ environmental values significantly influenced
leadership, and significantly and indirectly influenced stakeholder engagement
and environmental sustainability. Managers with elevated environmental values
will be more likely to have a greater sense of environmental responsibility and,
thus, will focus on addressing stakeholder interests in solving environmental
problems by prioritizing environmental issues when establishing strategies and
operational practices. This study also examined the role of top managers’
environmental leadership and concluded that managers’ environmental
leadership directly affected stakeholder engagement and environmental
sustainabilityperformance. This meansthat leaders with stronger environmental
leadership more often consider addressing stakeholder requirements relating to
environmental protection, develop sincere relationships with them, and make
efforts to incorporate their environmental demands into corporate strategies and
practices.
These findings imply that companies should admit that achieving
environmental sustainability goals requires strategic human resource
management (Jabbourand Santos, 2008). Jurowski and Liburd (2001)contended
that placing the right people in an organization has proven to be a keyto promoting
corporate environmental sustainability. Therefore, human resource
management should make efforts to attract and retain people with competencies
needed forthedevelopment ofcorporatesustainabilityandkeep encouragingsuch
qualities to stimulate corporate environmental sustainability (Boudreau and
Ramstad, 2005). The findings of this study demonstrated that individuals
qualified for the improvement of corporate sustainability should assume greater
environmental values exhibiting greater responsibility for environmental
problems, greater concerns for key stakeholders’ environmental interests, and
more cooperative behaviors engaging the key stakeholders in environmental
decision-making. Human resource managers should thus develop management
110 Y.J.Jangetal./ InternationalJournalofHospitalityManagement63(2017)101–111
evaluation criteria that include leadership qualities required for corporate
environmental sustainability, recruit and select people based on such criteria, and
provide continuous education to reinforce those qualities (Jabbour and Santos,
2008).
In addition, the findings showed that stakeholder engagement was closely
associated with restaurants’ implementation of proactive environmental practices.
This demonstrates that, by actively engaging with key stakeholders, companies can
formulate environmental sustainability strategies that respond to stakeholder
demandsandtherebyenhancetheircorporateenvironmentalpractices.Inotherwords,
engaging key stakeholders is an effective way for companies to identify and develop
policies and programs relating to environmental issues prioritized by them (Grafe-
Buckens and Hinton, 1998). A restaurant company may thus need to develop
strategies that engage with key stakeholders in defining a company’s environmental
performance indicators, or in identifying the corporate policy, objectives, and
programsrelatingtoenvironmentalmanagement.
Forexample, a restaurant companymayuse“a stakeholder conference” todevelop
the company’s environmental sustainability indicators, or may form “an
environmental issue panel” to communicate with their key stakeholders pertaining to
theirspecific environmental initiatives. It mayalsousesocialmedia suchasFacebook
to create community where diverse stakeholders can share their ideas on
environmentalinitiativesthathashavebeenalready adopted orwillbenewlyadopted.
This study also indicated a significant positive association between
environmental sustainability performance and corporate financial and nonfinancial
performance. This implies that, to achieve benefits from sustainability performance,
managers may need to be proactive in implementing environmental sustainability.
Restaurantcompaniesmaydevelopastrategyorasystemfor auditing,measuring,and
evaluating their levels of environmental performance. To promote sustainability
performance in hotel sectors, Moreo et al. (2009) suggested the inclusion of
sustainability or environmental dimensions into a business performance evaluation
tool. Such actions will help companies develop goals relating to specific
environmental initiatives and quantify outcomes resulting from those environmental
initiatives,encouragingcompanies tocontinueworkingonmaintainingorimproving
the current level of corporate environmental sustainability. For example, Kang et al.
(2015) incorporated social and environmental aspects into organizational
performance measurement system and demonstrated that such a strategic action as
establishing sustainability performance evaluation system helped small- and
medium-sizedhospitality companiestoachievetheirsustainabilitygoals.
5.2. Limitationsandsuggestionsforfutureresearch
This study has several limitations that may present opportunities for future
research. The sample in this study was chosen from panels registered with a research
company; this may not be representative of the entire population of U.S. restaurant
managers. In futurestudies, researchers maycollaborate with restaurant associations
to obtain a more representative sample of U.S. restaurant managers. In addition, this
study used managers’ perceptions to assess restaurants’ financial and nonfinancial
performance. Future studies mayincorporatebothperceptualandobjectivevariables
to measure restaurant performance; this should lead to more valid results. Another
limitation is related to the measurement items of this study. The reduced number of
items has been used to access the environmental values, which may not reflect
environmentalvalues withsufficientaccuracy. Futureresearchersshouldusecaution
in applying the measurement items of this study and may apply all original items to
enhance assessment accuracy. In addition, items such as leadership and stakeholder
engagement were adapted from previous studies, but empirical testing with these
measurement items was very limited. Future studies may, thus, consider further
testing and validation of these measurement items. Finally, future studies may
articulate the corporate environmental sustainability framework by incorporating
other theory-based constructs (e.g., the pro-environmental personal norm, personal
obligation), thereby contributing to the development of a hospitality-specific
frameworkthatcanexplainenvironmentalsustainability.
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