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Productive inefficiency analysis and toxic chemical substances in US and Japanese manufacturing sectors

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Abstract

Corporate social responsibility is imperative for manufacturing companies to achieve sustainable development. Under a strong environmental information disclosure system, polluting companies are disadvantaged in terms of market competitiveness, because they lack an environmentally friendly image. The objective of this study is to analyze productive inefficiency change in relation to toxic chemical substance emissions for the United States and Japan and their corresponding policies. We apply the weighted Russell directional distance model to measure companies’ productive inefficiency, which represents their production technology. The data encompass 330 US manufacturing firms observed from 1999 to 2007, and 466 Japanese manufacturing firms observed from 2001 to 2008. The article focuses on nine high-pollution industries (rubber and plastics; chemicals and allied products; paper and pulp; steel and non-ferrous metal; fabricated metal; industrial machinery; electrical products; transportation equipment; precision instruments) categorized into two industry groups: basic materials industries and processing and assembly industries. The results show that productive inefficiency decreased in all industrial sectors in the United States and Japan from 2001 to 2007. In particular, that of the electrical products industry decreased rapidly after 2002 for both countries, possibly because of the enforcement of strict environmental regulations for electrical products exported to European markets.

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Notes

  1. This is so because the linear expansion of pollution abatement costs and pollution reduction does not necessarily change the pollution reduction per abatement cost (Pethig, 2006).

  2. Reports for the TRI must be filed by the owners and operators of facilities that meet all of the following criteria: (1) TRI reporting requirements are limited to manufacturing facilities with major standard industrial classification (SIC) code groups 20–39. In 1997, the USEPA added another seven industry sectors to the TRI requirements. These sectors started to submit reports from 1998. (2) The number of full-time employees must be 10 (or the equivalent of 20 000 hours of work per year) or more. (3) Any facility that manufactured or processed more than 25 000 pounds or otherwise used more than 10 000 pounds of a listed toxic chemical during the course of the calendar year is required to submit a report.

  3. The RoHS, REACH and ELV were promulgated in 2003, 2006 and 2000 and came into force in 2006, 2007 and 2003, respectively.

  4. The JCIA has nearly 180 member companies, with 80 organizations engaged in the manufacturing and handling of chemical products and related services. The JCIA has actively undertaken activities to fulfill its mission of promoting the balance between economic development and environmental protection.

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Authors and Affiliations

  1. Graduate School of Environmental Studies, Tohoku University, 6-6-20 Aramaki-Aza Aoba, Aoba-Ku, 980-8579, Sendai, Japan

    Hidemichi Fujii & Shunsuke Managi

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  1. Hidemichi Fujii
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  2. Shunsuke Managi
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Correspondence to Hidemichi Fujii.

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Fujii, H., Managi, S. Productive inefficiency analysis and toxic chemical substances in US and Japanese manufacturing sectors. Asian Bus Manage 11, 291–310 (2012). https://doi.org/10.1057/abm.2012.8

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