Stakeholders’ pressure, gender diversity and voluntary environmental management systems as drivers of environmental performance of firms in Kenya

Abstract

The aim of this study is to explore whether stakeholders’ pressure, gender diversity in board and top management team (TMT), and voluntary environmental management systems (VEMS) influences corporate environmental performance (CEP). As per the stakeholder’s theory, institutional theory and the upper echelons theory (UET), this research work argues that stakeholders’ pressure is key in the implementation of environmental sustainability practices in a firm. From the perspective of gender diversity, the research demonstrates that gender diversity enriches the decision-making abilities of the board to enhance the adoption of ISO 14001. Further, under the theoretical basis of institutional theory, the study contends that voluntary environmental management systems, positively relate with a firm’s energy efficiency, resource and waste management. This thesis also assesses the manner in which various firm characteristics have an impact on CEP. Using data from 852 firm responses in Kenya, simple probit, instrumental variable probit and bivariate probit model, in the regression analysis were used to test the study postulations. It was observed that stakeholders’ pressure is a key driver of environmental performance for Kenyan companies. The pressure applied depended on the kind of stakeholder in question. Diversity of the board in terms of gender was also found to be positively associated with CEP. Also, VEMS were reported to enhance a firm's environmental sustainability. Therefore, depending on which stakeholder had more influence on the companies’ behaviors, it is expected that different organizations will react different in regard to the coercive, memetic and normative pressure from the stakeholders. Women's social characteristics make them environmental advocates on corporate echelons and this study adds to the global calls for the inclusion of gender diversity in the workplace as a means of tapping in new knowledge and skills. On voluntary environmental programs, the study concludes that such programs will encourage beyond compliance among firms. This means that, there is a growing favor for a self-regulating business environment that is probably allowing for flexibility within the firm operations in reducing environmental externalities. Notably, firm characteristics are partly attributed to the difference in environmental performance (EP) among businesses even within a similar scope of operations. This study is the first to relate three themes of gender diversity, VEMS and CEP in a developing country set up.