Resource utilization for sustainability enhancement in Japanese industries

Recently, many studies have applied environmental assessment based upon data envelopment analysis to measure the performance of various organizations. An important feature of the approach is that it evaluates their economic activities which use inputs to produce desirable (e.g., electricity) and undesirable (e.g., CO2 emission) outputs. To document the practicality, this study discusses the corporate sustainability of Japanese industries. In the application, we need to overcome the three methodological difficulties related to the approach at the initial stage: how to handle zero and/or negative values, how to unify inputs, desirable, and undesirable outputs within a synchronized framework, and how to identify a possible occurrence of a production limit and to identify that of green technology innovation. This study obtains the three empirical findings. First, Japanese firms put more strategic weights on their operational achievements than environmental ones. Second, manufacturing firms outperform non-manufacturing ones, including services, energy utilities and information technology industries, in their operations. Finally, the production limit may occur in most industries under current business surroundings. However, they may overcome the difficulty by investing for production or service assets and green technology. The empirical results are consistent with the current Japanese industrial policy, or so-called “Abenomics,” which centers upon the performance improvement in non-manufacturing industries. We also discuss a significant potential of green technology innovation that the Japanese government does not consider in the current policy agendas.