Profitability and leverage in eco-efficiency and quality management system for increasing the firms’ performance

Abstract

This research aims to analyze the moderating effects of profitability and leverage on the relationship between the quality management system and eco-efficiency toward the firm’s performance. The research sample consists of 75 firms listed on the Indonesia Stock Exchange as of 2017. Data concerning eco-efficiency and the quality management system are collected from the firm's annual report. This research utilizes a multiple linear regression model. The result shows that eco-efficiency and quality management system do not affect the firm’s performance. Profitability has a negative and significant moderating effect on the relationship between eco-efficiency toward the firm’s performance. Further, the moderating variable also positively and significantly moderates the relationship between the quality management system and the firm's performance. Leverage, on the other hand, is found to have no moderating effect on the relationship between eco-efficiency and quality management systems toward the firm's performance.  This study contributes and extends previous research by exploring eco-efficiency and quality management systems toward the firm’s performance simultaneously. Besides, it also examines the moderating relation of profitability and leverage in relationship with eco-efficiency and quality management system toward a firm's performance by using the sample from all firms which are listed on the Indonesia Stock Exchange and have implemented the system.