Does environmental leadership affect market and eco performance? Evidence from Korean franchise firms

Purpose: External economic and social forces compel foodservice enterprises to be environmentally friendly, bringing environmental issues to the forefront of managerial policies. Reflecting on this phenomenon, this paper aims to investigate the role that the environmental leadership of the top management at the franchise headquarters and the companies’ environmental orientation play in enhancing the company’s market and eco performances. Design/methodology/approach: The research model was tested based on responses from 196 regional foodservice franchising headquarters in South Korea. Structural equation modeling, namely, confirmatory and path analysis, was the primary method of data analysis in the study. Findings: Results indicate that the top management’s environmental transformational leadership influences the internal and external environmental orientation of a foodservice franchise firm. Also, the two types of environmental orientation improve the market and eco performances of the firm. Finally, two dimensions of environmental orientation, internal and external, act as full mediators of the relationship between environmental transformational leadership and the performance of the firm. Practical implications: The positive link between environmental leadership, environmental orientation and market performance seems to indicate that individual franchisees may be receptive to rules and regulations associated with green practices and be willing to incorporate the green business procedures of their franchisor into their day-to-day operations. Originality/value: Given the lack of empirical research that investigates environmental policies in the foodservice industry in the international context, this study contributes to an understanding of how foodservice franchising firms view the environmental leadership of the company’s top management and its impact on a company’s environmental orientation and market performance.