Green CEO, managerial ability and environmental performance

Abstract

Purpose This research aims to examine the moderating role of green chief executive officer (CEO) in the effect of managerial ability (MA) on environmental performance (ENV). Design/methodology/approach This research’s sample consists of 197 manufacturing firm-years that are listed on the Indonesian Stock Exchange and the Program Penilaian Peringkat Kinerja Perusahaan Dalam Pengelolaan Lingkungan Hidup (PROPER) participants. Data analysis use industry- and year-effect regression analysis. Findings The result shows that MA improves ENV when led by a green CEO. It indicates that a green CEO with higher MA considers environmental responsibilities as a valuable investment to create business competitive advantages and sustainability. Research limitations/implications First, this research only uses the PROPER participants as the research sample. Second, by nature, MA measurement errors might still exist because it is hard to determine the MA with qualitative factors. Third, this research does not split the environmental responsibilities into a wider spectrum, such as environmental–business, environmental–regulation or environmental–ethical spectrum. Originality/value This research provides new evidence that higher MA by green CEO increases ENV in Indonesia. This research also gives a contribution to fill the inconsistent previous findings of MA and ENV.