From efficiency-driven to low-carbon operations management: Implications for labor productivity

We use 9 years of dynamic panel data (4,090 observations) to explore how decarbonization moderates the association between a selection of efficiency-driven shop-floor initiatives and labor productivity. The results are mixed: the relationship between materials efficiency and labor productivity is positively moderated by decarbonization, but the relationship between increases in inventory turnover or the average firm wage as a multiple of average sector wages are negatively moderated by decarbonization. Overall, we find that decarbonization leads to an average drop in sales of 1.8% per worker. This evidence therefore suggests that climate change goals impacting industrial firms might be difficult to accomplish if managers expect to achieve decarbonization for free with current organizational best practices.