Risk and benefits brought by formal sustainability programs on fashion enterprises under market disruption

Wing Yan Li, Tsan Ming Choi, Pui Sze Chow

Research output: Journal article publicationJournal articleAcademic researchpeer-review

15 Citations (Scopus)

Abstract

The recent global 2008 financial crisis created a big market disruption to the fashion industry. Since then, it has seriously hurt the performance of many companies in the fashion industry. It is known that implementation of formal sustainability programs of most fashion companies relate a lot to their resource management as well as supply chain structure. A natural question on "how the formal sustainability program affects the fashion enterprises under the market disruption" hence arises. To answer this question, we collect publicly available real data of 45 listed fashion enterprises and conduct an empirical statistical study. To be specific, we compare the business performances of the fashion groups with and without formal sustainability programs before and after the market disruption. We find some statistically significant results which reveal that fashion enterprises which have not established formal sustainability programs perform relatively well under the market disruption. After that, we drill deeper and show that the "fashionable" fashion groups (SFFGs) which have developed sustainability programs suffer a drop in ROE and there is no enhancement in any other dimensions. For the "basic" fashion groups (SBFGs), their sales drop after market disruption but actually they can reduce cost and maintain profitability. We further discuss our findings and generate important managerial insights.
Original languageEnglish
Pages (from-to)348-353
Number of pages6
JournalResources, Conservation and Recycling
Volume104
DOIs
Publication statusPublished - 1 Nov 2015

Keywords

  • Business performance
  • Fashion enterprises
  • Market disruption
  • Risk
  • Sustainability programs

ASJC Scopus subject areas

  • Waste Management and Disposal
  • Economics and Econometrics

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