Linking Green Hrm And Green Intellectual Capital With Corporate Environmental Citizenship Behaviour

Abstract

Many studies on green management (GM) focusing on behaviour of organizations in relation to external and internal pressure agreed that organization behaviour can vary according to institutional environments. Some studies argued that Corporate Environmental Citizenship Behaviour (CECB) can be viewed by categories of regulative, normative and cognitive adoption. While, researchers in the area of human resource management argued that Green HRM should be employed in order to effectively implement GM initiatives. Whiles others postulated that GM needs high level of knowledge, skills and competencies as resources for further implement green management. It is important to explore how Green HRM specifically contribute to effective implementation of GM by observing CECB. We need to understand as well, how Green Intellectual Capital (GIC) being influenced by Green HRM and in turn how these variables affect CECB. This study proposed to explore the mediating effect of GIC in the relationship between Green HRM and CECB. Based on previous literature, a researchable framework was developed. Data from Malaysian Electric and Electronics industry was collected to test these relationships. This study found that GIC do significantly mediates the relationship between Green HRM and CECB.

Keywords: Green HRMgreen intellectual capitalcorporate environmental citizenship behaviourelectric & electronics

Introduction

Green management (GM) has become essential part of the business practices. Many businesses embedded environmental friendly management practices as part of their initiatives, voluntarily or as a compliance to external pressure imposed to them. Some researchers found that being environmental friendly companies would contributed to economic benefit (Molina-Azor´ın et al., 2009) and escalate the company manufacturing effectiveness, supporting cost reduction, quality enhancements and the creation of new products and processes (Yang et al., 2010).

GM is described as the organization broad process, practically to attain sustainability, waste reduction, social obligation and a competitive benefit through a continuous learning and development and captivate environmental initiatives that are fully synchronised with organizations’ objectives and procedures (Haden et al., 2009). There is an increasing pressure from external business environment that force business to engage in environmental management initiatives (Clark, 2005). GM behaviour vary from obligatory or compliance to voluntary dimensions (Ozen & Kusku, 2008).

On the other hand, to effectively implement GM initiatives, organizations would need specific and high level knowledge, skills and competencies among the employees (Renwick et. al., 2008). To facilitate the implementation of GM, human resource practices should be employed systematically and strategically which allow the firms to realize and use the knowledge and expertise (Scarbrough, 2003). Many researchers also argued that to effectively implement GM, organization requires specific knowledge and skills that formed green intellectual capital (GIC) in the organization.

This paper explored the linkages of managing green human resource practices that contribute to green human capital and in turn contribute to corporate environmental behaviour. This paper reviewed the existing literature to maps the current thinking of corporate environmental citizenship behaviour and its linkages to human resources practices and intellectual capital; proposed a researchable framework and tested their relationships using data collected from the Malaysian Electric and Electronics (E&E) industry.

Corporate Environmental Citizenship Behaviour (CECB)

In many studies (Clark, 2005), the impact of corporate environmental behaviour is largely pressured by government restrictions. While in developed countries, it is found that community and market were another active indicator towards environmental protection. This behaviour, sometime termed in the literature as corporate environmental citizenship behaviour (CECB) is a result of a broad concept of corporate social responsibility (Garriga & Mele, 2004). However, in the early 1990s, corporate citizenship has been used to describe the ability of the organization to manage its relationships with society in the process of minimizing its negative impacts while maximising its positive benefits. By definition (Ozen & Kusku, 2008), corporate environmental citizenship is “all of the precautions and policies corporations need to implement in order to reduce the hazards they give to the environment’’. They argued that, institutional environments to which organizations conform may affect the variations of CECB and this inconsistency can be categorised into three groups of adoption designs; regulative, normative and cognitive adoption. This study used Ozen and Kusku’s categorisation to measure the level of CECB adoption. Regulative adoption involves the implementation of environmental initiatives as authorised by environmental regulations. Normative adoption refers to the embracing of practices that are estimated as adequate behaviour by other significant stakeholders in the industry. While, cognitive adoption involves the implementation of practices that are presumed as the actual way of doing things. In this study, we operationalized the continuum adoption pattern into internal aspects of CECB as postulated by Ozen and Kusku (2008) which comprises technical-environmental precautions, structural precautions, strategic precautions, external relationship activities and attitude of top management to environmental activities.

Green Human Resource Management (GHRM)

In order for a corporate GM system to be successfully executed, it is imperative for all organization members to retain ample technical and management knowledge, skills and competencies (Unnikrishnan & Hedge 2007) that will provide great influence towards firm’s sustainability, hence lead to a sustainable competitive advantage (Lin et al., 2001). These improvement require high level of knowledge, skills and competencies and, many researchers argued that, these could only be acquired using systematic human resource management that embed green practices along the line.

Green HRM can be viewed as a whole and integrated human resource activities that involved in development, implementation and continuing maintenance of a system, that ensuring employees of an organization able to perform the effectively. Some researchers refer Green HRM as the policies, practices and systems that develop environmentally sustained employees, for the value of the individual, society, natural environment, and the business (Dumont et al., 2016; Renwick, et al., 2013) and human resource (HR) practices needs to support the organizations to implement sustainability (Daily & Huang, 2001).

Paauwe and Boselie (2003) stated that HR practices are normally deployed with the strategic systems that are appropriate with the culture and business policy. Thus far, previous studies have proposed that there are a number of captivating probabilities at the link between detailed HRM functional area such as staffing, training and development, performance management and compensation towards environmental sustainability (Renwick et al., 2008; Huffman et al., 2009).

Based on the literature review, this study explored the following HR practices and how they relate to the Green IC and CEB. This study selected the HRM practices based on the argument in the literature that these practices are the most pertinent and will influence the implementation GM and behaviour adoption (Sudin, 2011). The HRM practices are Recruitment, Selection, Training and Development, Performance Management, Compensation and Employee Involvement.

Recruitment

Recruitment is a process to attract a potential and quality candidates to apply for vacancies. It may influence the types, quantity, and quality of candidates for certain vacancies (Bohlander et al, 2007). When recruitment and environmental dimension incorporates, the company environmental performance will be the element to attract talented candidates. Recruitment is where an environmental goals is being set to attract the future candidates.

Selection is a process of selecting a future employee from a pool of potential candidates whereas when the selection are made candidates that may able to align with the environmental goals of the organization from the short listing. Organization should use advanced methodologies for selecting candidates that incorporate environmental reporting roles, as well as health and safety task, which may visible staff to dangerous element. Furthermore, by allocating some investment on specific technology, individual traits can be matched with the desirable environmental competencies required for the respective position.

Training and Development

Training and Development is an exercise which emphases on expansion of employees’ skills, knowledge, attitudes, including competencies (Zoogah, 2012). Green training and development increase employee’s understanding concerning to value of green management, train them in operationalised approaches that save the energy, reduce waste, disperse environmental consciousness in the organization, and provide opportunity to involve employees in environmental problem-solving (Zoogah, 2012).

Performance Management

Performance Management is the procedures whereby employees are motivated to improve their professional competencies that inspired through appropriate ways of organizational goals and objective attainment. Green performance management focusing on the use of environmental responsibilities as a key performance indicators and criteria for managing the employees’ performance, should be fixed for managers achieving green result as well as being embed in performance appraisal system.

Compensation

Compensation is a process of rewarding employees who accomplish their targeted goals. Achievement of certain environmental behaviour must be incorporated within the compensation plan which rewards employees with bundle of benefit upon their green initiative activities. Rewarding employees for such initiative thru monetary based reward systems have established significant impact on performance outcomes in environmental management (Milliman & Clair, 1996). Many firms in the developed countries are reported practicing a rewards system that incorporate environmental goals achievement as criteria for performance based compensation (Ramus, 2001).

Employee Involvement

Employee Involvement - Encouraging all employees to participate in GM initiatives has been reported as improving the key outcomes of GM initiatives, including: efficient resource usage (Florida, 1996); reducing waste (May & Flannery, 1995); and reducing pollution from workplaces (Johnson, 1999). Extensive employee involvement in environmental management, relatively to restricting participation to managers and specialists, is frequently found as significant to successful results (Remmen & Lorentzen 2000).

Green Intellectual Capital (GIC)

Findings from previous researches proven that intellectual capital (IC) positively influence the firm’s competitive advantage (Davenport & Prusak, 1998). IC is conceptually derived as the total shares of all intangible assets, knowledge, and capabilities of a firm that possibly could contribute to the value creation of competitive advantages, hence fit the purpose of gaining its organizational performance goals (Masoulas, 1998).

However, a very limited research has examined whether IC in environmental management has a positive effect on organizational performance or competitive advantage of firms (Chen, 2008). Hence, this paper proposed to explore and fill this research gap. This study proposed to support a novel construct of green intellectual capital (GIC), the significant positive relationship between intellectual capital in GM initiatives or environmental management system and sustainable competitive advantages of firms. This paper incorporated the classification of IC adopted by Bontis (1999) which categorise Green IC into green human capital, green structural capital and green relational capital. This further explored whether the three types of green IC have positive effects on CECB as one important factor of competitive advantages of firms. This study also explored the relationships of Green HRM and environmental consciousness on three types of green intellectual capital on Corporate Environmental Citizenship Behaviour (CECB).

Based on the above literature review and arguments, this study proposed the following research framework (Figure 01 ).

Figure 1: Theoretical Framework of the Relationship between Green Human Resource Management (GHRM), Green Intellectual Capital (GIC) and Corporate Environmental Citizenship Behaviour (CECB)
Theoretical Framework of the Relationship between Green Human Resource Management (GHRM), Green Intellectual Capital (GIC) and Corporate Environmental Citizenship Behaviour (CECB)
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Based on the above arguments and the theoretical framework as in Figure 01 , this study proposes the following hypotheses;

H1:Green HRM which consists of Recruitment, Selection, Training, Rewards, Performance Management, and Employee Involvement will has a positive significant relationship to Corporate Environmental Citizenship Behaviour which consists of Technological Precautions, Structural Precautions, Strategic Precautions, External Relationship Activities, and Attitude of Top Management.

H2:Green HRM which consists of Recruitment, Selection, Training, Rewards, Performance Management, and Employee Involvement will has a positive significant relationship to Green Intellectual Capital which consists of Human, Structural, and Relationship .

H3:Green Intellectual Capital which consists of Human, Structural, and Relationship will has a positive significant relationship to Corporate Environmental Citizenship Behaviour which consists of Technological Precautions, Structural Precautions, Strategic Precautions, External Relationship Activities, and Attitude of Top Management .

H4:Green Intellectual Capital which consists of Human, Structural, and Relationship will mediates the relationship between Green HRM which consists of Recruitment, Selection, Training, Rewards, Performance Management, and Employee Involvement and Corporate Environmental Citizenship Behaviour which consists of Technological Precautions, Structural Precautions, Strategic Precautions, External Relationship Activities, and Attitude of Top Management .

Problem Statement

Researchers in the area of GM argued that organizations choose to behave in a certain way based on how their perceived and react to external forces. Some companies tend to adopt obligatory behaviour or compliance adoption to law and regulations that force them to do so, while others do it as normative adoption and even as cognitive adoption at the highest level. Many researchers argued that all these adoption of behaviours are as a result of internal factors that react to external pressures. The way they manage internal processes and systems as well as the level of knowledge they possessed and managed will affect the way they behave in relation to GM practices in their organization. Many researchers posited to this thinking and postulated the relationship of these constructs but the proposed theoretical frameworks seldom been tested using empirical data. This study proposed a researchable framework to discover the relationship between Green HRM, Green Intellectual Capital and Corporate Environmental Citizenship Behaviour, and test these relationships using quantitative data collected from Malaysian Electric and Electronics industry.

Research Questions

This study tends to answer the important research questions as the following;

  • What are the construct of Green Human Resource Management?

  • What are the construct of Green Intellectual Capital?

  • What are the construct of Corporate Environmental Citizenship Behaviour?

  • What are the relationship between Green HRM, Green Intellectual Capital and Corporate Environmental Citizenship Behaviour?

  • Do Green Intellectual Capital mediates the relationship between Green HRM and CECB?

Purpose of the Study

The main purpose of this research is to investigate how CECB are being influenced by the strategic practices of Green Human Resource Management (GHRM) that focusing on developing and implementing GM initiatives and linking them to Green Intellectual Capital. Specifically the objectives of this study are;

  • To explore the relationship between Green HRM and Corporate Environmental Citizenship Behaviour.

  • To explore the relationship between Green HRM and Green Intellectual Capital.

  • To explore the relationship between Green Intellectual Capital and Corporate Environmental Citizenship Behaviour.

  • To test the mediating effect of Green Intellectual Capital between Green HRM and Corporate Environmental Citizenship Behaviour.

Research Methods

Instruments

To test the above framework, a self-administered questionnaire was designed according to the objectives and framework of the study. It comprised particulars of respondent and company background, followed by questions concerning Green Human Resource Management practices (adapted from various literatures such as Renwick et al., 2013, 2016), questions regarding Green Intellectual Capital (Bontis, 1999) and questions regarding Corporate Environmental Citizenship Behaviour developed based on Ozen and Kusku (2008) . It used Likert-type scale rating (1 for strongly disagree and 5 for strongly agree).

Sampling and Data Collection

Since this is an explorative study, a purposive non-probability sampling method is employed. The target population for the study was the Malaysian Electric and Electronics (E&E) manufacturing companies located in Penang industrial areas, at the northern part of Peninsular Malaysia. The questionnaire was distributed to a sample of 36 companies selected from the Federation of Malaysian Manufacturers (FMM) member directory list (FMM, 2015). These organizations have been chosen according to the conditions that they hired a large number of employees (considered as organization with systematic and organized HRM practices), existent of dedicated HR department and Occupational Safety and Health (OSH) department, their willingness to participate, their current commitment to environmental obligation and strategic aims to enhance environmental sustainability.

This study analysed data analysis in two stages. Firstly, we checked for data entry which included validity and reliability of variables, identification outliers and normality of the data. Secondly, we examined for correlations and regression (simple and multiple) to test of all the hypotheses and check for mediating effect in the relationship.

Findings

This study analysed the Cronbach’s alpha for reliability of all variables in question and the result is presented in Table 01 . Hair et al. (2009) suggested that usual lower limit for Cronbach’s alpha is 0.70 and it may decrease to 0.60 in the exploratory study, while Malhotra (2010) suggested that Cronbach’s alpha value of 0.6 or less generally indicates unsatisfactory internal consistency reliability. This study found that the Cronbach’s alpha of all the variables are 0.80 or above which were considered reliable and good for further analysis.

To test the relationship of all variables, correlations analysis was conducted and the results are presented in Table 02 . The purpose of correlation analysis is to summarise the strength of association between variables (Malhotra, 2010).

In summary, from the correlations analysis results presented in Table 02 , it was found that all variables were significantly related to all dependent variables in the study, except for Recruitment and Selection. We could conclude that Green HRM which consists of only Training, Rewards, Performance Management, and Employee Involvement, significantly correlated to GIC and CECB at the 0.01 level.

Table 1 -
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Figure 2: Correlations Analysis for All Variables
Correlations Analysis for All Variables
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In testing the mediation, this study used methods as proposed by Baron and Kenny (1986) and further deliberation by Preacher and Hayes (2004), an approach that used four steps which conduct several regression analyses and examine significance of the coefficients at each step as the followings;

A simple regression analysis was conducted with Green HRM predicting CECB. It was found that Green HRM is significantly related to CECB. This is also to test for H1, and from the analysis it was found that H1 is accepted . Refer to Table 03 .

A simple regression analysis was conducted with Green HRM predicting GIC. It was found that Green HRM is significantly related to GIC. This is also to test for H2, and from the analysis it was found that H2 is accepted . Refer to Table 04 .

A simple regression analysis was conducted with GIC predicting CECB. It was found that GIC is significantly related to the CECB. This is also to test for H3, and from the analysis it was found that H3 is accepted . Refer to Table 05 .

Finally, a multiple regression analysis was conducted with Green HRM and GIC predicting CECB. When controlling for the effects of the GIC as mediating variable on the CECB as dependent variable, the effect of the Green HRM on CECB is no longer significant. This show the effect of mediating variable of GIC, therefore H4 is accepted . Refer to Table 06 .

Table 2 -
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Table 3 -
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Table 4 -
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Table 5 -
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Conclusion

In this study, we explored the question of what the variations of CECB and how green HRM and GIC influence this variation. Based on the literature review, this study proposed a framework that draw a mediating relationship of GIC between the GHRM and CECB. This framework contributes to our understandings of the corporate environmental citizenship behaviour variation and how green HRM and green intellectual capital contribute to these variations.

As argued by many researchers in the area of GHRM (Chen, 2008), strategic and systematic HRM practices is significantly relate to the green IC and in turn contribute to high level of CECB. Data collected from this study also shows that, there is no significant relationship of between recruitment and selection to green IC and CEB. Specifically, only Training, Rewards, Performance Management, and Employee involvement are found to be significantly correlated to green IC and CEB.

This study also found that, GIC mediates the relationship between GHRM and CECB. As argued by some researchers, green HRM do not directly influence corporate environmental citizenship behaviour but instead green HRM influence green IC and in-turn green IC influence the variation of CECB.

Findings from this study is important for our understanding on how green HRM contributes to the GM initiatives and affect the behaviour of organizations in adopting and implementing GM activities. This study also revealed that not all human resources practices do really create a significant effect in implementing GM and adopting green behaviour. As in this case, data from Malaysian E & E show that recruitment and selection did not play a significant role in the green intellectual capital accumulation neither it influence the adoption of corporate environmental citizenship behaviour.

Acknowledgments

Authors would like to thank sponsors of this study, a Fundamental Research Grant Scheme (FRGS/2/2014/SS05/UNITEN/02/2) from the Ministry of Higher Education, Malaysia and Universiti Tenaga Nasional.

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Publisher

Future Academy

First Online

18.12.2019

Doi

10.15405/epsbs.2018.07.02.45

Online ISSN

2357-1330