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Early mover advantage in Roundtable on Sustainable Palm Oil certification: a panel evidence of plantation companies

Author

Listed:
  • Yeong Sheng Tey

    (Universiti Putra Malaysia)

  • Mark Brindal

    (University of Adelaide)

  • Suryani Darham

    (Universiti Putra Malaysia)

  • Shaufique Fahmi Ahmad Sidique

    (Universiti Putra Malaysia)

  • Marcel Djama

    (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Cirad-ES - Département Environnements et Sociétés - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement)

Abstract

The adoption of sustainable palm oil standards remains voluntary. It is unclear whether early adopters achieve better financial performance than those who lag in adopting. This study examines how the profitability, in terms of the return on invested capital (ROIC) of plantation companies is impacted by the entry order of the adoption of the Roundtable on Sustainable Palm Oil (RSPO) sustainability standard. Based on the 2000-2016 panel data of the 39 plantation companies listed on the Kuala Lumpur Stock Exchange, this study has demonstrated profitability as being influenced by the timing of entry (adoption), related resource allocation, business efficiency, and the price of crude palm oil. Since early adopters (plantation companies) realised a positive relationship with ROIC, the presence of an early mover advantage can be hypothesised. This positional advantage is likely to yield both operating and capital efficiencies, such as those predicated in the good management practices of the RSPO standard. This finding is useful as a motivational strategy to augment the acceptance of international palm oil standards among plantation companies, which are often a nucleus to smallholders. The implications for firms adopting other sustainability standards are also discussed.

Suggested Citation

  • Yeong Sheng Tey & Mark Brindal & Suryani Darham & Shaufique Fahmi Ahmad Sidique & Marcel Djama, 2020. "Early mover advantage in Roundtable on Sustainable Palm Oil certification: a panel evidence of plantation companies," Post-Print hal-02544243, HAL.
    • Handle: RePEc:hal:journl:hal-02544243
    DOI: 10.1016/j.jclepro.2019.119775
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    Citations

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    Cited by:

    1. Lim, Chun Hsion & Lim, Steven & How, Bing Shen & Ng, Wendy Pei Qin & Ngan, Sue Lin & Leong, Wei Dong & Lam, Hon Loong, 2021. "A review of industry 4.0 revolution potential in a sustainable and renewable palm oil industry: HAZOP approach," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    2. Abdul-Hamid, Asma-Qamaliah & Ali, Mohd Helmi & Osman, Lokhman Hakim & Tseng, Ming-Lang & Lim, Ming K., 2022. "Industry 4.0 quasi-effect between circular economy and sustainability: Palm oil industry," International Journal of Production Economics, Elsevier, vol. 253(C).
    3. Shahida Shahimi & Hafizuddin-Syah B.A.M. & Hanisah S.F., 2023. "Sustainability Practices and Financial Profitability: The Case of the World’s Top 20 Crude Palm Oil Producers," SAGE Open, , vol. 13(4), pages 21582440231, October.
    4. Patricia YinYin Lau & Sunyoung Park & Yen-Chen Hsu & Bella Ya-Hui Lien & Jo Ann Ho, 2023. "Does Investment in Green Employee Development Climate Matter for Environmental Commitment and Green Well-Being? A Case Study of a Palm Oil Company in Malaysia," SAGE Open, , vol. 13(4), pages 21582440231, October.
    5. Yeong Sheng Tey & Mark Brindal, 2021. "Sustainability stewardship: Does roundtable on sustainable palm oil certification create shareholder value?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(2), pages 786-795, March.

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