The Concept of Environmental Performance and Its Measurement in Empirical Studies

We discuss the measurement of environmental performance (EP) in quantitative empirical research. Initially, we review and classify existing EP measures. Based on that, we analyze their validity and reliability. To provide a clear conceptualization of EP, we mainly refer to the framework of Wood (1991) and conceive EP as a multidimensional construct representing the extent to which companies meet the environmental expectations of their stakeholders. Finally, we discuss the operationalization of EP by examining stakeholders' expectations in detail and investigating qualitative characteristics of EP measures used within empirical research. Our analysis leads to the conclusion that measures based on inputs and outputs, operational processes and strategic EP provide construct validity. Generic EP measures used in large-scale studies should adequately represent stakeholders' environmental expectations, in particular referring to prospective indicators. Our study contributes to the research on EP measurement by providing an extensive literature overview, improving the theoretical understanding of the EP construct and providing basic recommendations for coherent EP measurement for empirical analysis