The influence of board characteristics on environmental performance: evidence from East Asian manufacturing industries

Abstract

Purpose

The purpose of this study is to examine the influence of board characteristics on environmental performance in manufacturing firms of the emerging East Asian markets. The authors adopt a triple perspective of environmental performance that focusses on three major environmental areas including resource reduction, emission reduction and product innovation.

Design/methodology/approach

The authors consider three main board characteristics, namely, board size, board independence and board leadership structure, and investigate their impacts on a multidimensional construct of environmental performance. Specifically, both linear and quadratic functions are applied to address a possibility of the non-linear relationship between board size and environmental performance. The authors use fixed-effects estimations on a sample of manufacturing firms in the emerging East Asian countries between 2011 and 2016.

Findings

The study explores an inverse U-shaped relationship between board size and environmental performance. The authors also reveal that manufacturing firms are more likely to have better environmental performance when the proportion of independent directors on board increases. However, the separation of CEO and board chair roles has no impact on environmental performance.

Practical implications

The findings have important implications by identifying the role of a board of directors in implementing environmental protection strategies and by providing a foundation for corporate efforts to enhance sustainable development.

Originality/value

The study provides complete understanding of environmental performance as a multidimensional construct and sheds light on the influence of board characteristics, especially the inverse U-shaped influence of board size, on environmental performance in the East Asian manufacturing industries.

Citation

Nguyen, L.-T. and Thanh, C.-L. (2022), "The influence of board characteristics on environmental performance: evidence from East Asian manufacturing industries", International Journal of Emerging Markets, Vol. 17 No. 10, pp. 2702-2720. https://doi.org/10.1108/IJOEM-07-2020-0744