Take actions or outsource? An empirical examination of strategic environmental options on greenhouse gas emissions

Purpose: The purpose of this study is to examine the effects of three strategic environmental options on reducing greenhouse gas (GHG) emissions. Namely, we examine the effects of pollution prevention and waste management (PPWM) practices, green supply chain (GSC) practices, and outsourcing on reducing local and supply chain GHG emissions. Design/methodology/approach: Using ASSET4 and deploying first-differencing fixed-effects panel data models, the study conducts a large-scale empirical examination on the effects of these focal strategic environmental options on GHG emissions. Findings: This study finds that PPWM practices reduce local GHG emissions and that GSC practices reduce supply chain GHG emissions. The results also show that outsourcing does not reduce local GHG emissions and has an adverse effect on supply chain GHG emissions. Practical implications: The study findings indicate that environmental practices are effective in reducing GHG emissions. However, they are effective only in their corresponding domain. Further, outsourcing is not a viable strategic option, and managers should be mindful of its undesired environmental consequences. Originality/value: Firms undertake strategic environmental options, such as implementing environmental practices and reallocating production activities, to improve their environmental performance. Nevertheless, the effectiveness of these options on reducing GHG emissions has not been thoroughly examined.