An Empirical Evaluation of Environmental Efficiencies and Firm Performance: Pollution Prevention versus End-of-Pipe Practice

Joseph Sarkis and James Cordeiro

Proceedings of the Annual Decision Sciences Institute National Meeting, 1997

The introduction of environmentally conscious business practices into organizations have major operational and strategic implications. In addition to regulatory and competitive pressures, pressures for organizations to consider the natural environment in their planning and operations has originated from such stakeholders as employees, customers, and even stockholders. Environmental advocates maintain that waste minimization, recycling, remanufacturing and other environmental practices will greatly enhance the "bottom-line" for organizations. The long-term effectiveness of an organization may depend on how well they integrate these natural environment concerns into policy and practice. We investigate the relationships of some environmental practices in organizations with their "short-run" performance, using return-on-sales (ROS) as the financial performance measure. Environmental efficiency scores are used to evaluate environmental performance and calculated using data envelopment analysis (DEA). Both pollution prevention and end-of-pipe efficiencies are evaluated in these comparisons.

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