Article
Exploring the differential impact of environmental sustainability, operational efficiency, and corporate reputation on market valuation in high-tech-oriented firms
International Journal of Production Economics
(2019)
Abstract
In this paper, we explore the strategic significance of three factors – operational efficiency, measured by data
envelope analysis; environmental sustainability, represented by Newsweek's Green Rankings; and corporate reputation, based on Fortune's list of most admired companies in the world –and their relationship to the market
valuation of high-tech-oriented companies. In particular, we estimate the impact of these factors on Tobin's Q,
which represents the overall technological and market strength of a firm as a forward-looking market performance
reflecting stakeholders' expectations of the value of a firm. Using complementary regression and a neural
network approach, we find that operational efficiency has the largest impact on Tobin's Q, followed by corporate
reputation and environmental sustainability. In addition to its findings on the relative importance of these
strategic factors, the paper's findings also suggest that operational efficiency, which reflects efficiency-driven
best practice and managerial proficiency, is a crucial determinant of the market-facing measure of Tobin's Q in
high-tech industries. Using models to estimate the interaction between these variables, we find that environmental
sustainability and its interaction with reputation has the largest synergistic effect on Tobin's Q, followed
by the interaction of reputation and operational efficiency. Our results show that the interaction of unique
performance metrics can provide insights that differ from those derived from models for which the interaction is
not included. Furthermore, the discovery of varying impact patterns under distinguishable capabilities is another
significant finding of the paper.
Keywords
- Corporate reputation,
- Environmental greening,
- Neural networks,
- Operational efficiency,
- Tobin's Q
Disciplines
Publication Date
January 28, 2019
DOI
10.1016/j.ijpe.2019.01.034
Citation Information
He-Boong Kwon and Jooh Lee. "Exploring the differential impact of environmental sustainability, operational efficiency, and corporate reputation on market valuation in high-tech-oriented firms" International Journal of Production Economics Vol. 211 (2019) p. 1 - 14 Available at: http://works.bepress.com/jooh-lee/30/