An extension of lean and green: From eco-efficiency to eco-effectiveness

Concerns regarding deteriorating climate conditions have heightened pressure on companies to mitigate the environmental impact of their operations. As a result, firms have employed quality management practices such as lean in their sustainable operational framework. However, there are contradictory studies reporting on the positive impact of lean operations on environmental performance. This study aims to contribute to this debate by: 1) understanding the impact of lean operations on environmental performance; and 2) examining the environmental (boundary) conditions, such as munificence, dynamism, and complexity, that moderate the relationship between lean operations and environmental performance. We draw on contingency theory to theorize that the effectiveness of lean depends on its alignment with external environmental conditions rather than operating uniformly across contexts. Using secondary data from Compustat and the Carbon Disclosure Project (CDP), our hypotheses are tested using hierarchical linear regression models with random effects. The statistical results show that lean operations have a positive impact on environmental performance. Furthermore, our results show that munificence and dynamism substantially hinder firms’ ability to achieve eco-effectiveness, revealing the paradox of munificence and underscoring the need for managers to consider environmental context when implementing lean systems.