The purpose of this study is to explore how corporate environmental sustainability impacts firm performance in the automobile industry across the dimensions of emissions, resource use, and innovation. The research comprises two steps of a methodological framework. First, the Data Envelopment Analysis (DEA) approach with BBC model is used to evaluate firm efficiency, considering four inputs: fixed assets, operating expense, energy used, and employee, along with two output variables: market value and operating income. Then, truncated regression analysis is employed to analyze the impact of corporate environmental sustainability practices on firm performance.
The findings reveal a complex understanding of the relationship between the variables. Innovation emerges as the key factor because emissions reduction and resource utilization show no significant influence on firm performance. Innovative strategies in the corporate environment sustainability yield significant coefficients in impacting firm performance. This aids in gaining competitiveness advantages and boosting firm performance.
The results of this research will contribute to the research on the transformation of corporate environmental sustainability into corporate performance. The research results redefine the importance of innovation and emphasize the strategic priorities when companies implementing sustainable practices. This is aimed not only at reducing their impact on the environment, but also improving their competitive position and corporate reputation in the market, thereby enhancing financial performance.
