Toward green production practices: empirical evidence from Thai manufacturers' technical efficiency

Abstract

Purpose: The development of green manufacturing has become essential to achieve sustainable development and modernize the nation’s manufacturing and production capacity without increasing nonrenewable resource consumption and pollution. This study investigates the effect of green industrial practices on technical efficiency for Thai manufacturers. Design/methodology/approach: The study uses stochastic frontier analysis (SFA) to estimate the stochastic frontier production function (SFPF) and inefficiency effects model, as pioneered by Battese and Coelli (1995). Findings: This study shows that, on average, Thai manufacturing firms have experienced declining returns-to-scale production and relatively low technical efficiency. However, it is estimated that Thai manufacturing firms with a green commitment obtained the highest technical efficiency, followed by those with green activity, green systems and green culture levels, compared to those without any commitment to green manufacturing practices. Finally, internationalization and skill development can significantly improve technical efficiency. Practical implications: Green industry policy mixes will be vital for driving structural reforms toward a more environmentally friendly and sustainable economic system. Furthermore, circular economy processes can promote firms' production efficiency and resource use. Originality/value: To the best of the authors' knowledge, this study is the first to investigate the effect of green industry practices on the technical efficiency of Thai manufacturing enterprises. This study also encompasses analyses of the roles of internationalization, innovation and skill development.