Social Capital, Waste Generation, and Firm Performance

This study explores how social capital influences the relationship between waste generation and firm performance. Using data from 2973 non-financial firms across 50 countries from 2010 to 2020, we find that the adverse effects of waste generation on firm performance are more pronounced in countries with high social capital. Specifically, the interaction term between social capital and waste generation is significantly negative, suggesting that firms in these countries experience a greater decline in performance due to waste generation. Our results are robust across various estimation strategies, including Fama–MacBeth, pooled OLS, and panel regressions, and hold under different sample structures and proxies for waste generation. These findings underscore the critical role of social capital in moderating the environmental impact on firm performance, highlighting the need for stricter waste management regulations in countries with low social capital.

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