Impact of cleaner production on business performance

Extensive research has examined the relationship between environmental management/performance and business performance but yielded no conclusive results. This paper makes two contributions to the literature. First, instead of focusing on one aspect, we try to compare using various types of cleaner production activities: low- and high-cost activities. Second, the study complements the existing literature which focuses on firms in developed countries with an analysis of firms in the Chinese manufacturing industry. In this paper, the relationship between cleaner production and business performance was analyzed using Structure Equation Model (SEM). We find an overall positive impact of cleaner production on firm's business performance. We also found that the cleaner production activities of low-cost scheme have a bigger contribution to financial performance compared to non-financial performance, while cleaner production activities of high-cost scheme have a greater contribution to non-financial performance, compared to financial performance. This study should be useful for firms that consider adopting cleaner production as well as stakeholders who aim to promote cleaner production.