Corporate Environmental Responsibility and Firm Productivity: Examining the Role of Green Organizational Practices in Developing Economies

This study examines the empirical link between Corporate Environmental Responsibility (CER) and Total Factor Productivity (TFP) among 1,450 manufacturing firms operating across six emerging market economies (Brazil, India, Indonesia, Mexico, South Africa, and Vietnam) over the 2010–2019 period. Drawing on the Natural Resource-Based View (NRBV), Stakeholder Theory, and Enterprise Risk Management (ERM) frameworks, we analyze how green organizational practices—specifically ISO 14001 certification, green supply chain integration, internal eco-innovation, and waste reduction systems—mediate the relationship between corporate sustainability commitments and productive efficiency. Using a dynamic System General Method of Moments (GMM) estimation technique to address endogeneity, measurement error, and unobserved firm heterogeneity, our findings demonstrate a statistically significant non-linear (U-shaped) relationship between CER investments and firm productivity. While initial adoption of green practices incurs short-term capital overheads and operational friction, long-term commitment yields substantial efficiency gains through resource optimization, waste elimination, and organizational capability enhancement. Furthermore, our mediation analysis confirms that green process innovations and enterprise risk governance fully mediate this productivity payoff. The paper offers actionable insights for corporate leaders and policymakers in developing regions aiming to balance industrial expansion with environmental sustainability.