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Environmental Management System Adoption and the Operational Performance of Firm in the Textile and Apparel Industry of China

Author

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  • Biao Li

    (School of Finance/MBA School, Zhongnan University of Economics and Law, No. 182 Nanhu Avenue, East Lake High-Tech Development Zone, Wuhan 430073, China)

  • Kekun Wu

    (School of Finance/MBA School, Zhongnan University of Economics and Law, No. 182 Nanhu Avenue, East Lake High-Tech Development Zone, Wuhan 430073, China
    Academy of Mathematics and Systems Science, Chinese Academy of Sciences, No. 55 Zhongguancun East Road, Haidian District, Beijing 100190, China)

Abstract

In China, more firms in the textile and apparel industry adopt environmental management systems compared to firms that manufacture other products. It is important to know how the firms’ financial and real performances are affected. We study the changes of firms’ performance in profitability, sales, and operational efficiency after environmental management system (EMS) adoption using an event study. Based on 22 events of EMS adoption, we found a significant decrease in firms’ profitability, sales, and inventory productivity. We explore the reasons which led to the decrease in firm performances. We found that the increase in sample firms’ total assets is the major reason. The loss in operational efficiency and flexibility are due to the requirements of the EMS.

Suggested Citation

  • Biao Li & Kekun Wu, 2017. "Environmental Management System Adoption and the Operational Performance of Firm in the Textile and Apparel Industry of China," Sustainability, MDPI, vol. 9(6), pages 1-11, June.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:6:p:992-:d:100953
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