An empirical study of impact of a preventive environmental strategy on environmental and organization performance in the chemical industry

Increased environmental legislation and enforcement and customers' pressure have prompted many firms to use environmental challenges as a strategic competitive weapon. Nevertheless, most managers still have reservations about the implementation of a proactive environmental strategy on a firm's financial performance. Therefore, this research examines the impact of preventive environmental strategy on both environmental and organizational performance of U.S. chemical firms. The primary research tasks are: (1) to examine the relationship between the degree of environmental and organizational performance; (2) to examine determinants of the preventive environmental management strategy; and (3) to identify obstacles to implementing preventive environmental programs. The major objective is to examine the impact of a preventive environmental strategy on a strategic advantage. This research utilizes a cross sectional survey of chemical companies in the U.S. that have implemented environmental strategies. A structured survey questionnaire was mailed to 1,250 chemical manufacturing firms, of which 87 firms responded. Simple and multiple regression analyses were utilized to test determinants of preventive environmental strategy on environmental and financial performance. This research provides strong evidence that higher preventive implementation can lead to better environmental performance in terms of the EPA TRI data, reduction in consumption of hazardous materials, reduction in the amount of chemical spills, total number of regulatory violations, and reduction in the amount of total emissions. The other findings provide a strong relationship between preventive environmental programs and organizational performance in terms of manufacturing cost, plant efficiency, product yield, process yield, and product quality. Finally, the results of analyses revealed that both attitude towards environmental issues and human resource investment were significant determinants of preventive programs.