The effect of carbon management systems on environmental performance in Malaysia: the mediating role of manufacturing firms' technological capability

Abstract

In the pursuit of development and technological advancements for a competitive business environment, manufacturing firms face challenges in balancing environmental degradation with sustainability goals. Stakeholders also pressure firms to manage carbon emissions more efficiently and reduce their environmental impact. Therefore, this research is both relevant and timely in addressing these issues. This study aims to investigate the effect of carbon management systems on the environmental performance of manufacturing firms in Malaysia, specifically focusing on the mediating role of technological capability. Based on insights from the literature review and perspectives derived from the Natural Resource-Based View theory, a theoretical model was constructed to explain these relationships. A total of 220 usable questionnaires from manufacturing firms registered under the Federation of Malaysian Manufacturers were analyzed in the study. This study employed Structural Equation Modeling and SPSS as statistical tools to validate the constructs and test the proposed relationships. The findings of the study indicate that carbon management systems significantly influence the environmental performance of manufacturing firms. Moreover, there is an association between carbon management systems and technological capability as revealed by the findings of the study. The study also reveals that firms possessing technological capabilities demonstrate enhanced environmental performance. Furthermore, the study identifies the mediating role of technological capability on the relationship between carbon management systems and environmental performance. This implies that comprehensive carbon management systems significantly enhance the environmental performance of manufacturing firms in Malaysia, with technological capability acting as a mediator. This study contributes to the literature by establishing an integrated framework that combines carbon management systems with technological capability to enhance environmental performance. The study provides valuable insights for industry players and policymakers to enable the development of an effective carbon management strategy for managing the environment towards achieving net zero carbon emissions.