The Linkage Between Environmental Management Systems Implementation and Firms’ Economic Performance: an Empirical Analysis
The linkage between Environmental Management Systems implementation and Firms’ economic performance: an Empirical Analysis
The summary version
Author:
K. Nishitani
Student:
Dang Tien Loc
SUBMITTED TO UNIVERSITY OF ECONOMICS
HO CHI MINH CITY VIETNAM
THE NETHERLAND PROGRAMME 1. Paper’s objective the purpose of this paper is to answer the question whether EMS implementation can improves a firm’s performance or not by using panel data from Japanese manufacturing firms during 1996-2007. The theoretical model used is derived from the Cobb-Douglas production function and the inverse demand function, and predict that it increases firm value added after implementing EMS through the rise of demand and improvement in productivity. 2. The Approach
A simple theoretical economic model is developed takes into account the impact and simultaneously empirically estimates their parameters in the model. The value added is used to represent firm’s economic performance and it is revenue minus material cost. The value added is distributed through profits and wages.
The regression model to estimate the effects of EMS implementation on value added is derived from a Cobb–Douglas production function and inverse demand function. The Cobb–Douglas production function with labor, capital and material for firm is:
Where, X is output, L is labor, K is capital, M is materials, A is total factor productivity (TFP), 0<α <1, 0<β <1and 0<α+β<1.Given total revenue Yi = piXi where p is the price of output, labor cost Wi= wLi where w is the wage rate, capital cost Ri=r Ki where r is the implicit rental rate of capital and materials cost Qi=q Mi where q is the price of materials, it follows that:
The inverse demand function pi= a Xi-Y yields the price, and then the total revenue is expressed as follows:
Where, 1−γ>0. Accordingly, the value added is:
If is the ratio of the value added over the material cost, Eq.4 is transformed to:
The summary version
Author:
K. Nishitani
Student:
Dang Tien Loc
SUBMITTED TO UNIVERSITY OF ECONOMICS
HO CHI MINH CITY VIETNAM
THE NETHERLAND PROGRAMME 1. Paper’s objective the purpose of this paper is to answer the question whether EMS implementation can improves a firm’s performance or not by using panel data from Japanese manufacturing firms during 1996-2007. The theoretical model used is derived from the Cobb-Douglas production function and the inverse demand function, and predict that it increases firm value added after implementing EMS through the rise of demand and improvement in productivity. 2. The Approach
A simple theoretical economic model is developed takes into account the impact and simultaneously empirically estimates their parameters in the model. The value added is used to represent firm’s economic performance and it is revenue minus material cost. The value added is distributed through profits and wages.
The regression model to estimate the effects of EMS implementation on value added is derived from a Cobb–Douglas production function and inverse demand function. The Cobb–Douglas production function with labor, capital and material for firm is:
Where, X is output, L is labor, K is capital, M is materials, A is total factor productivity (TFP), 0<α <1, 0<β <1and 0<α+β<1.Given total revenue Yi = piXi where p is the price of output, labor cost Wi= wLi where w is the wage rate, capital cost Ri=r Ki where r is the implicit rental rate of capital and materials cost Qi=q Mi where q is the price of materials, it follows that:
The inverse demand function pi= a Xi-Y yields the price, and then the total revenue is expressed as follows:
Where, 1−γ>0. Accordingly, the value added is:
If is the ratio of the value added over the material cost, Eq.4 is transformed to: