The Role of Stakeholder Engagement in Environmental Sustainability: A Moderation Analysis of Chain Affiliation

Abstract

It has been widely recognized that corporate efforts to engage with primary stakeholders is vital when seeking to develop environmentally sustainable businesses. This study proposes a testable model that incorporates causal and outcome variables for stakeholder engagement to investigate the moderating effect of chain affiliation on the relationship between the significant variables; managements’ environmental values and leadership (casual factors), stakeholder engagement, environmental performance, and restaurant performance (outcome factors). A web-based survey was administered to top restaurant managers in the United States, and multigroup structural equation modeling was used to analyze the data. It was found that chain affiliation significantly moderated the relationships between the variables in the proposed model. Specifically, managers’ environmental values were found to be important predictors of stakeholder engagement for chain restaurants compared with independent restaurants, and that managers’ environmental leadership was an essential determinant of stakeholder engagement for independent restaurants rather than for chain restaurants. Even though it was not statistically significant, stakeholder engagement was found to be a more critical factor in promoting a restaurant’s environmental sustainability in chain restaurants than in independent restaurants. The effect of environmental sustainability on the financial and nonfinancial performance was found to be similar for both chain and independent restaurants. Theoretical and managerial implications are also offered.

Keywords

environmental leadership environmental sustainability environmental values restaurant performance stakeholder engagement

Introduction

As the environment has become of greater concern in other industries such as manufacturing, it has also become a crucial influence on the future of the hospitality industry. The restaurant industry is a hospitality sector that can cause significant harm to the environment as it generates huge quantities of food waste and recyclable trash, and uses massive amounts of energy and water (Kasim & Ismail, 2012; Nielsen, 2004). Therefore, the restaurant industry has significant potential to reduce its harmful environmental effects by reducing its extensive use of water/energy and recycling and reusing recyclable products. To demonstrate social responsibility and/or to meet the stakeholders’ growing environmental expectations, restaurant companies have begun to develop sustainable management strategies and adopt sustainable practice standards (Buysse & Verbeke, 2003; DiPietro et al., 2013; Hu et al., 2010; Jang et al., 2015; Sigala, 2014). To promote their environmental strategies and practices, many firms have realized the importance of considering their multiple stakeholders as partners (Sigala, 2014).

Environmental sustainability refers to corporate strategies and practical activities that are designed to minimize the detrimental effects on the natural environment so as to contribute to improvements in the quality of life for current and future generations (Brundtland, 1987; International Union for Conservation of Nature/United Nations Environment Programme/World Wildlife Fund, 1991). Recent environmental sustainability studies have emphasized the significant role of diverse stakeholder participation and support when developing organizational environmental sustainability strategies (Sigala, 2014; Waligo et al., 2013) and promoting sustainable organizations.

Even though stakeholder involvement has been seen to be vital to the development of sustainable hospitality, there has been little research to date focused on this specific area. Specifically, the causal and consequential factors influencing stakeholder engagement have received little empirical research attention, with most previous studies being mainly theoretical. Therefore, there is a need to develop a framework for managing stakeholder environmental sustainability involvement (e.g., Waligo et al., 2013) in the restaurant industry. While some studies have offered meaningful insights into the diverse variables related to organizational sustainability (Banerjee et al., 2003; Chan & Wong, 2006; El Dief & Font, 2010a, 2010b; Garay & Font, 2012; Lopez-Gamero et al., 2011; Park, 2009; Park & Kim, 2014; Tzschentke et al., 2008), many have overlooked the role of key decision-makers such as top managers. Furthermore, even though contextual factors such as chain affiliation may moderate the extent to which restaurant companies engage with stakeholders and execute environmental performance, the differences between chain and nonchain restaurants has been significantly underexplored in previous sustainability studies.

To fill this research gap, this study identifies the important causal and managerial variables for stakeholder engagement (managers’ values and leadership) and the associated outcome variables (environmental sustainability and restaurant performance) and proposes a conceptual framework for stakeholder engagement. The main purpose of this study is to investigate the moderating effect of chain affiliation on the relationships between a manager’s environmental values and leadership, stakeholder engagement, environmental sustainability, and restaurant performance.

Literature Review

Stakeholders and Stakeholder Engagement

Stakeholders are individuals, groups, or organizations that can either affect or be affected by corporate decisions (Freeman, 1984), and therefore may include customers, suppliers, employees, local communities, governments, or shareholders (Berman et al., 1999). In agreement with previous studies, while other stakeholders are also important, in this study, customers, shareholders, and local communities were selected as the primary stakeholders affecting a restaurant’s commitment to environmental sustainability (Lo, 2013; Park & Kim, 2014; Rodriguez-Melo & Mansouri, 2011; van Rheede & Blomme, 2012).

As part of strategic management theory, stakeholder theory (Wilson, 2003), was first mooted by Freeman (1984). Several researchers also saw stakeholder theory as part of ethics and morality theory (Berman et al., 1999; Jones & Wicks, 1999; Parmar et al., 2010). They argued that truthful relationships with stakeholders should be the basis for corporate strategy, implying that a corporation that sustains its stakeholder relationships based on a moral commitment gains a more sincere reputation and has a greater competitive advantage than those only using stakeholders to maximize profits. Therefore, the way corporations respond to and handle stakeholder demands can positively affect sustainability and future financial performance (Berman et al., 1999).

The important role of stakeholders in promoting sustainability has become conspicuous in the hospitality industry. Proactive environmental strategies can be achieved with a high level of involvement of stakeholder (Hart, 1995). In order for managers to solve environmental problems, they should thus cultivate collaborative relationships with stakeholders, helping them become more actively engaged with developing a corporate environmental sustainability strategy. Buysse and Verbeke (2003) argued that firms with proactive environmental management require the effective stakeholder management while addressing expectations of various stakeholders. They further discussed that effective stakeholder management necessities the identification of primary stakeholder groups, who can play the greatest impact on formulating environmental strategy, and the development of formal and sincere relationships with them. Sigala (2014) identified all sustainable design processes (from service design to distribution and promotion process) that primary stakeholders can participate in and contended that in order for firms to develop creative sustainable initiatives, they should dynamically collaborate with diverse stakeholders with different values and interests in each process.

For this study, stakeholder engagement was defined as “collaborative or participative actions which stakeholders undertake for the purpose of helping a corporation find solutions to environmental problems and develop a proactive environmental strategy” (Jang, 2016).

Stakeholder Engagement and Its Antecedents

Management variables such as values and leadership have been identified as significant antecedent variables for the promotion of stakeholder engagement (Waligo et al., 2013). It has been found that managers who have high environmental values (or ecocentric views) tend to take greater responsibility for environmental actions, exhibit greater environmentally responsible leadership, while paying attention to the key stakeholder demands by involving them in the environmental decision-making process (Nordlund & Garvill, 2002; Stern et al., 1999). Leaders with higher environmental values and leadership tend to prioritize environmental sustainability when formulating their strategies and then promote environmental awareness in their stakeholders by enabling them to actively participate in the achievement of the organization’s long-term environmental goals (Epstein & Buhovac, 2014; Maak, 2007; Waldman & Siegel, 2008). Voegtlin et al. (2012) also found that environmentally responsible leadership was vital in elevating stakeholder organizational sustainability awareness. Epstein and Buhovac (2014) highlighted the critical role of management, and argued that sustainability could only be achieved by top management environmental leadership and a commitment to environmental sustainability goals because top managers who have strong environmental leadership are able to encourage employees to improve their own sustainability performances and elicit positive stakeholder reactions (e.g., consumer purchase and employee loyalty), which could result in better corporate financial performance (e.g., profit increase, cost reduction).

Waligo et al. (2013) proposed a framework for “multistakeholder involvement management” that could encourage and enhance the active engagement of target stakeholders in the development of sustainable tourism, in which antecedent factors such as leadership qualities and managerial decisions and actions were seen to have a significant influence on the degree of multistakeholder involvement in promoting environmental sustainability. Sigala (2014) also developed a framework that identified the important motivational factors for stakeholder (customer) involvement in sustainable supply chain management, which included the leader’s sustainable values and degree of social responsibility as well as leadership strategies that facilitated increased stakeholder involvement.

Stakeholder Engagement and the Outcome Variables

Stakeholder engagement should be a central component in an organization’s strategy to ensure a sustainable hospitality company (Waligo et al., 2013) as the extent to which the stakeholders engage in the environmental decision-making process will determine the level of the organization’s environmentally sustainable performance; that is, organizations that ethically address their stakeholder interests will achieve a higher performance from their environmental strategy than those who do not (Lopez-Gamero et al., 2011).

Flannery and May (1994) argued that stakeholder (customers, community) involvement was a key variable in the development of proenvironmental strategies and behavior. Sigala (2014) identified improved sustainable performance and financial (operational efficiency) and nonfinancial variables (enhanced image, customer loyalty) as the outcome factors related to stakeholder involvement in sustainable supply chain management. Previous studies that have investigated the links between sustainable or environmentally aware performance and financial/nonfinancial performance also found that the level of sustainable or environmental performance positively influenced performance variables such as competitive performance (reduced operational costs, increased gross profit) and stakeholder relationships (satisfaction and loyalty; Kang et al., 2010; Lee & Park, 2009; Luo & Bhattacharya, 2009; Segarra-Ona et al., 2012; Wong & Gao, 2014).

In sum, little hospitality research has paid attention to the role of the stakeholder engagement variable when formulating environmental strategies and practices (Sigala, 2014; Waligo et al., 2013). The extent to which organizations include stakeholder needs in the decision-making process depends on variables such as the top manager’s environmentally sustainable values and leadership as these influence the extent to which the organization engages the stakeholders’ environmental needs in its environmental management decision-making (Epstein & Buhovac, 2014; Flannery & May, 1994). It has been surmised that leaders and managers who include the environmental needs of their multiple stakeholders in their decision making are able to achieve environmental sustainability, which in turn would lead to greater long-term financial and nonfinancial benefits than managers who only focused on short-term returns (De Luque et al., 2006). Therefore, the proposed stakeholder engagement framework has the following significant constructs; managerial values, leadership, stakeholder engagement, environmental sustainability, financial performance, and nonfinancial performance.

The Influence of Restaurant Chain Affiliations

This study also examines the possible moderating effect of chain affiliation on the relationships between the significant constructs in the proposed stakeholder engagement framework, as the extent to which a restaurant company responds to environmental issues may be associated to whether it is chain-affiliated or independent. Specifically, managers’ values and leadership may influence stakeholder engagement and restaurant environmental sustainability performance differently depending on the restaurant company’s characteristics, which could affect the restaurants’ financial (sales growth, profit, cost advantages) and nonfinancial performances (customer satisfaction, employee satisfaction).

There has to date been little research on the moderating effect of chain affiliation. Park and Kim (2014) found that there was a significant moderating effect of hotel ownership type (chain affiliation) on the relationship between managerial attitudes toward environmental programs and the hotel companies’ environmental commitment. Because parent companies had more generous resources than self-managed companies, chain-affiliated companies were found to have more advanced environmental management capabilities and were therefore able to apply more proactive environmental practices to empower managers to develop stronger environmental values or leadership and to more actively engage with stakeholders to address their environmental demands (Park & Kim, 2014; Pereira-Moliner et al., 2015). Unlike previous findings, Park et al. (2014) found that independent hotels, which made up a higher proportion of upscale properties, were more involved in environmental management than chain-affiliated hotels. They argued this result was because independent hotels could more easily implement environmental management than chain hotels that operated under a parent company’s regulations.

This study, therefore, attempted to clarify the role of chain affiliation in restaurant environmental sustainability by investigating the moderating effect, with the expectation that a restaurant’s characteristics could regulate the extent to which the management variables influenced stakeholder engagement and the extent to which stakeholder engagement affected environmental sustainability and financial/nonfinancial performances. It was therefore hypothesized that there is a moderating effect of chain affiliation on the relationships between managerial values, leadership, stakeholder engagement, environmental sustainability, and financial and nonfinancial performance. The following hypotheses are thus formulated:

Hypothesis 1₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between top managers’ environmental values and environmental leadership.

Hypothesis 1_a: Restaurant characteristics such as chain affiliation moderate the relationship between top managers’ environmental values and environmental leadership.

Hypothesis 2₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between top managers’ environmental values and stakeholder engagement.

Hypothesis 2_a: Restaurant characteristics such as chain affiliation moderate the relationship between top managers’ environmental values and stakeholder engagement.

Hypothesis 3₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between top managers’ environmental values and restaurant environmental sustainability.

Hypothesis 3_a: Restaurant characteristics such as chain affiliation moderate the relationship between top managers’ environmental values and restaurant environmental sustainability.

Hypothesis 4₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between top managers’ environmental leadership and stakeholder engagement.

Hypothesis 4_a: Restaurant characteristics such as chain affiliation moderate the relationship between top managers’ environmental leadership and stakeholder engagement.

Hypothesis 5₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between top managers’ environmental leadership and restaurant environmental sustainability.

Hypothesis 5_a: Restaurant characteristics such as chain affiliation moderate the relationship between top managers’ environmental leadership and restaurant environmental sustainability.

Hypothesis 6₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between stakeholder engagement and restaurant environmental sustainability.

Hypothesis 6_a: Restaurant characteristics such as chain affiliation moderate the relationship between stakeholder engagement and restaurant environmental sustainability.

Hypothesis 7₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between environmental sustainability and restaurant financial performance.

Hypothesis 7_a: Restaurant characteristics such as chain affiliation moderate the relationship between environmental sustainability and restaurant financial performance.

Hypothesis 8₀: Restaurant characteristics such as chain affiliation have no impact on the relationship between environmental sustainability and restaurant nonfinancial performance.

Hypothesis 8_a: Restaurant characteristics such as chain affiliation moderate the relationship between environmental sustainability and restaurant nonfinancial performance.

Method

Sample and Data Collection

Data were obtained through a U.S. research company for a web-based survey that had been administered to top restaurant managers in three types of restaurants (fast-food, casual, and upscale) in the United States. Respondents were screened out based on two screening questions: current position and year(s) of environmental performance. Participants were required to be in top management positons (e.g., general manager/owner) and to have been implementing environmental measures (e.g., recycling, using local or organic food, using energy/water efficient equipment) for at least a year. E-mails were sent to approximately 2,500 managers. Of the 240 returned questionnaires, 27 responses with inconsistent responses were discarded, with 213 being used for the final analysis (response rate of 8.5%). A majority of the respondents were female (64.7%), under 40 years old (69.2%), and with 2-year college degrees or below (62.8%). Approximately half the respondents were from independent restaurants (47.4%) or from chain restaurants (52.6%).

Measurements

Environmental sustainability

Environmental sustainability was assessed using 22 items extracted from previous studies (El Dief & Font, 2010a; Park, 2009; Park et al., 2014; Wang et al., 2013), with the wording of some items being slightly modified to fit the restaurant context. Respondents were asked to indicate the level of their performance on a 7-point Likert-type scale (1 = to no extent, 7 = to very great extent). The measures included items such as “uses energy-efficient products and equipment (e.g., cooler, freezer, air conditioner, ice machine, or steamer),” “composts kitchen waste,” “purchases used or recycled-content products (e.g., napkins or take-out containers made with postconsumer products),” “uses high-energy-efficient lighting,” or “implements recycling programs.”

Stakeholder engagement

Stakeholder engagement was measured using four items adapted from Black and Hartel (2003) and Lopez-Gamero et al. (2011). Respondents were asked to indicate their agreement with each statement on a 7-point Likert-type scale (1 = strongly disagree and 7 = strongly agree). Sample items were “our stakeholders provide their perspectives about how to successfully solve the firm’s environmental problems” and “our stakeholders provide new ideas for improving environmental management practices.”

Environmental values

The managers’ environmental values were assessed using two items from a study by Stern et al. (1999) on a 7-point Likert-type scale (1 = strongly disagree and 7 = strongly agree). Sample items included “if things continue on their present course, we will soon experience a major ecological catastrophe” and “humans are severely abusing the environment.”

Environmental leadership

Two environmental leadership items were borrowed from Voegtlin (2011) and modified to fit the study context. Each item was evaluated on a 7-point Likert-type scale (1 = strongly disagree and 7 = strongly agree). The two items were; “I am aware of key stakeholder demands related to environmental problems” and “I consider the consequences of environmental decisions for the key stakeholders.”

Restaurant performance

Restaurant performance was measured on two dimensions for both financial and nonfinancial outcomes. Financial performance was measured using four items adapted from Lo (2013): average sales growth, total gross profit, return on investment, and cost advantages. Nonfinancial performance was assessed using four items borrowed from Tari et al. (2010): employee satisfaction, employee motivation, customer satisfaction, and customer retention. Respondents were asked to indicate their opinions using a 7-point Likert-type scale (1 = strongly disagree and 7 = strongly agree).

Data Analysis

The data were analyzed using SPSS version 19.0 and AMOS version 7.0. A two-step approach was taken to test the measurement and the structural equation model (Anderson & Gerbing, 1988; Arbuckle, 2007). Confirmatory factor analysis (CFA) was used to test the measurement model, with the results indicating that that the model fit the data well; chi-square/degrees of freedom (df) = 1.691; comparative fit index (CFI) = .95, Tucker–Lewis Index (TLI) = .94, root mean square error of approximation (RMSEA) = .06. The construct reliability values for all constructs ranged from .70 to .89, indicating that all met the suggested criteria of .70 (Hair et al., 2006). The average variance extracted ranged from .52 to .70, which was greater than the suggested 0.5 minimum cutoff value for all constructs, indicating that there was discriminant validity. The square root of the average variance extracted for each construct exceeded the correlation values between each pair of constructs, which also demonstrated discriminant validity of the measurement items.

A multigroup structural equation modeling analysis (Byrne, 2009; Jöreskog & Sörbom, 1993) was performed to examine the moderating effect of chain affiliation on the relationships between management values, leadership, stakeholder engagement, environmental sustainability, and restaurant performance. The respondents were divided into two groups depending on their restaurant chain affiliation. Group 1 was the independent restaurant group (n = 101) and Group 2 was the chain restaurant group (n = 112). For the multigroup analysis, a free model, in which all path coefficients were set to differ between the two groups, was compared with a constrained model in which all path coefficients were constrained to be equal (Jöreskog & Sörbom, 1993). The differences between the chi-square statistics were examined to assess whether the structural model was invariant between the two restaurant groups.

Results

Measurement Invariance Testing Across the Groups

Before conducting the structural model test, a measurement invariance test was conducted, which involved testing for an invariant factor structure between the two groups. Metric invariance was tested for by constraining all factor loadings as equal for both groups; that is a full-metric constrained model; which was then compared with the unconstrained model that had no constraining factor loadings for either group. In the unconstrained model, χ²(378) = 607.857, p < .001, CFI = .92, TLI = .90, RMSEA = .05, and in the full-metric invariance model, χ²(394) = 633.832, p < .001, CFI = .91, TLI = .90, RMSEA = .05. Any evidence of noninvariance was evaluated based on the χ² difference (Δχ²) and the CFI difference (ΔCFI) as a statistically significant chi-square difference could indicate that there may be noninvariance in the groups (Byrne, 2009), with a CFI value less than the .01 cutoff point indicating that the measurement model is completely invariant (Cheung & Rensvold, 2002). The results showed that the chi-square difference between the unconstrained model and the full-metric invariance model was not significant, Δχ²(16) = 25.97, p > .01. As the difference in the CFI (ΔCFI) was .004, less than the cutoff point of .01, the existence of measurement invariance was supported.

Multiple Group Structural Equation Modeling

After the measurement invariance test, a multigroup analysis structural equation modeling was conducted to examine whether the structural relationships between the constructs differed significantly between the two groups.

An unconstrained structural model (baseline model) was assessed in which all structural estimates were not set as equal across the groups. The baseline model was found to have an acceptable fit to the data, χ²(406) = 689.738, p < .001, CFI = .918, TLI = .899, RMSEA = .057. This unconstrained model was then compared with the fully constrained model in which all structural estimates were set as equal. The chi-square difference between the constrained model and the unconstrained model was found to be statistically significant, Δχ²(1) = 9.931, p < .05. Table 1 indicating that further analysis was necessary for the significance testing of the individual structural paths.

Table 1

Results of Multigroup Analysis

	Path		Chi-Square Statistic	Chi-Square Difference
	Unconstrained model		χ² = 689.738, df = 406	—
	Full-constrained		χ² = 699.669, df = 407	Δχ²(1) = 9.931, p < .05
	Constraint on
Hypothesis 1	Environmental values	⇒ Environmental leadership^a	χ² = 689.838, df = 407	Δχ²(1) = 0.100, n.s.
Hypothesis 2	Environmental values	⇒ Stakeholder engagement^a	χ² = 696.013, df = 407	Δχ²(1) = 6.275, p < .05
Hypothesis 3	Environmental values	⇒ Environmental practices^a	χ² = 689.742, df = 407	Δχ²(1) = 0.004, n.s.
Hypothesis 4	Environmental leadership	⇒ Stakeholder engagement ^a	χ² = 695.085, df = 407	Δχ²(1) = 5.347, p < .05
Hypothesis 5	Environmental leadership	⇒ Environmental practices^a	χ² = 691.101, df = 407	Δχ²(1) =1.363, n.s.
Hypothesis 6	Stakeholder engagement	⇒ Environmental practices^a	χ² = 692.267, df = 407	Δχ²(1) = 2.592, n.s.
Hypothesis 7	Environmental practices	⇒ Financial performances^a	χ² = 690.465, df = 407	Δχ²(1) = 0.727, n.s.
Hypothesis 8	Environmental practices	⇒ Nonfinancial performances^a	χ² = 689.750, df = 407	Δχ²(1) = 0.012, n.s.

Note: df = degrees of freedom; n.s. = nonsignificant.

The path was constrained to be equal across the two groups.

Therefore, the individual structural relationships were examined to determine which paths had significant differences. To do this, a specific structural path was constrained to be equal in each constrained model, after which each constrained model was then compared with the unconstrained model, the freely estimated baseline model, using a chi-square difference test. The results are summarized in Table 1, and the standardized structural coefficients for both groups are also shown in Table 2, and Figures 1 and 2. The chi-square difference test revealed significant differences for two of the eight structural paths across the two groups; the path from values to stakeholder engagement, and the path from leadership to stakeholder engagement.

Table 2

Standardized Structural Coefficients for Independent and Chain Restaurants

Path		Independent Restaurants		Chain Restaurants
Path		β	t	β	t
Environmental values	⇒ Environmental leadership	.429**	3.070	.483***	3.764
Environmental values	⇒ Stakeholder engagement	−.151 n.s.	−1.255	.276*	2.635
Environmental values	⇒ Environmental practices	−.153 n.s.	−1.219	−.152 n.s.	−.1.266
Environmental leadership	⇒ Stakeholder engagement	.842***	6.483	.574***	5.145
Environmental leadership	⇒ Environmental practices	.601**	2.625	.332*	2.413
Stakeholder engagement	⇒ Environmental practices	.243 n.s.	1.283	.578***	3.827
Environmental practices	⇒ Financial performances	.649***	5.554	.675***	5.625
Environmental practices	⇒ Nonfinancial performances	.612***	5.265	668***	5.558

Note: n.s. = nonsignificant.

p < .05. **p < .01. ***p < .001.

Figure 1

Structural Equation Modeling Model for Independent Restaurants

Figure 2

Structural Equation Modeling Model for Chain Restaurants

Specifically, the path from values to stakeholder engagement was found to be significantly different in the two groups, thus null Hypothesis 2₀ was rejected and alternative Hypothesis 2_a was supported. The χ² statistical difference between the free model (χ² = 689.738, df = 406) and the constrained model (χ² = 696.013, df = 407) was significant (Δχ² = 6.275, df = 1, p < .05). The relationship values had with stakeholder engagement was found to be stronger for chain restaurants (β = 0.296, t = 2.635) than for the independent restaurants (β = −0.151, t = −1.255); that is, the chain-affiliated restaurant group showed a stronger impact for values on stakeholder engagement than the independent restaurant group. However, the impact of values on the two other factors, the path from values to leadership (Δχ² = 0.100, df = 1, n.s.) and the path from values to environmental practices (Δχ² = 0.004, df = 1, n.s.), did not differ between the two groups. Thus, null Hypotheses 1₀ and 3₀ were not rejected.

The path from leadership to stakeholder engagement also significantly differed across the two groups (Δχ² = 5.347, df = 1, p < .05); thus null Hypothesis 4₀ was rejected and alternative Hypothesis 4_a was supported. Independent restaurants were found to have (β = .842, t = 6.156) a stronger relationship between leadership and stakeholder engagement than chain-affiliated restaurants (β = 0.574, t = 5.145). However, the path from leadership to environmental practices did not differ between the two groups (Δχ² = 1.363, df = 1, n.s.), therefore, null Hypothesis 5₀ was not rejected.

The path did not significantly differ between the two group for the effect of stakeholder engagement on environmental practices (Δχ² = 2.592, df = 1, n.s.), therefore, null Hypothesis 6₀ was not rejected, even though the effect appeared to be stronger in the chain restaurant group (β = 0.578, t = 3.827) than in the independent restaurant group (β = 0.243, t = 1.283).

Last, the path from environmental practices to financial performance (Δχ² = 0.727, df = 1, n.s.) and the path from environmental practices to nonfinancial performance (Δχ² = 0.012, df = 1, n.s.) did not significantly differ between the two groups; therefore, null Hypotheses 7₀ and 8₀ were not rejected.

Discussion

Theoretical Implications

This study contributes to existing knowledge on environmental sustainability in the restaurant industry. The findings indicated that stakeholder engagement plays an important role in the implementation of environmental sustainability in restaurants. This supported arguments that a framework was needed to fully understand stakeholder involvement in environmental sustainability in the restaurant industry. The stakeholder engagement model proposed in the study will be the foundation for future studies in an attempt to identify the significant variables related to stakeholder involvement in sustainability.

The results also confirmed the significant moderating effect of chain affiliation in the relationships between the variables in the proposed model, and revealed that the effects of environmental values and leadership on stakeholder engagement differed depending on a restaurant’s chain affiliation, which indicated that restaurant characteristics such as chain affiliation were a key variable in the effect of the managerial variables on stakeholder engagement. These results supported findings in previous studies that found that chain affiliation was an important variable when seeking to understand the level of corporate environmental performance, and were also consistent with previous studies that claimed that ownership type had a differential effect on a company’s implementation of environmental management programs (Pereira-Moliner et al., 2015; Rahman et al., 2012). Given the limited research on the role of chain affiliations and the relationships between the various stakeholder engagement variables, the results of this study shed some light on the significant role of contextual factors when seeking to understand environmental sustainability in the restaurant industry.

Managerial Implications

This study also has significant managerial implications. First, the moderating analyses demonstrated that the effect of a manager’s environmental values on stakeholder engagement was significantly greater in chain restaurants than in independent restaurants, suggesting that individual ecocentric values for caring for the environment are more important variables in predicting stakeholder engagement with chain restaurants’ environmental sustainability. Previous studies have claimed that managers with higher environmental values tend to actively collaborate with stakeholders to promote environmental sustainability. Buysse and Verbeke (2003) also argued that management values were one of the crucial determinants for the level of importance placed on relevant stakeholder interests. Therefore, the parent companies of chain restaurants need to assist managers in promoting their environmental values by formulating strong environmental strategies, designing effective environmental training programs, and offering professional advice. They could also develop human resource programs to recruit and select people who have high ecocentric values.

Second, the moderating analyses also revealed that the leadership effect on stakeholder engagement and environmental sustainability was somewhat greater in the independent restaurant group than in the chain restaurant group, which indicated that individual environmentally responsible leadership may play a more critical role in enhancing stakeholder engagement with environmental sustainability in independent restaurants; that is, the leaders’ willingness to aggressively address stakeholder environmental sustainability expectations significantly facilitates a greater level of stakeholder involvement in independent restaurant sustainability. This result was considered plausible as managers in independent restaurants tend to have greater individual power and authority to connect and develop stronger relationships with primary stakeholders and to include them in their environmental strategic planning and decision-making processes. Therefore, independent restaurant managers need to exert a greater level of responsible leadership if they wish to develop better collaborative relationships with their primary stakeholders, which could lead to a proactive formulation of environmental strategies and ultimately contribute to stakeholder satisfaction and improved profits. Through a sincere relationship with primary stakeholders, managers could co-create environmental sustainability values and cultivate strategies consistent with those values (Freeman et al., 2000).

Last, the effect of stakeholder engagement on environmental sustainability was found to be greater in chain restaurants than independent restaurants, even though the difference was not significant, indicating that greater stakeholder engagement is a more crucial factor for the proactive promotion of environmental sustainability in chain restaurants than in independent restaurants (Hart, 1995). Building strong stakeholder relationships requires both the individual skill of the leader as well as a proactive company strategy that formalizes the environmental management strategies, systems, and procedures (Buysse & Verbeke, 2003). In the long run, formative and proactive environmental strategies from the parent companies could allow managers to build better collaborative relationships with their various stakeholders and encourage more effective participation in environmental decision making, ultimately enhancing the company’s environmental sustainability.

Limitations and Suggestions for Future Research

This study had the following limitations. The first limitation was related to the sample and data collection. As the sample in this study was collected from panel members retained by a research company, it may not represent the whole population of restaurant managers in the United States; therefore, caution should be taken when interpreting the data. A further limitation was in the measurement items as the items used to assess stakeholder engagement were borrowed from prior studies, meaning that they had not been fully tested in the environmental sustainability context. Further subsequent studies are needed to improve the validity of the stakeholder engagement items used in this study.

Future research should also consider identifying other crucial factors that could encourage a greater level of stakeholder involvement in the environmental sustainability of the restaurant industry. For example, variables such as the managers’ individual characteristics (e.g., sense of obligation to take pro-environmental actions) or different leadership styles (e. g, transformational leadership) could assist in advancing existing knowledge on stakeholder engagement and environmental sustainability (Han et al., 2015; Stern et al., 1999; Waldman et al., 2006). Future studies should also investigate other contextual factors that could possibly regulate the effect of such variables on stakeholder involvement in environmental sustainability; for example, restaurant types such as fast-food or upscale restaurants may have different influences on the level of stakeholder engagement. Therefore, it could be worthwhile developing a comprehensive stakeholder engagement model that incorporates all significant variables to advance existing sustainability knowledge.

Concluding Summary

This study proposed a testable model that incorporates causal and outcome variables for stakeholder engagement to understand restaurant industry environmental sustainability, and specifically investigated the moderating effect of chain affiliation on the promotion of environmental sustainability. Eight hypotheses were proposed and empirically tested to examine whether chain affiliation affected the relationships between environmental values, leadership, stakeholder engagement, environmental sustainability, and financial/nonfinancial performance. Multigroup structural equation modeling analyses confirmed the significant moderating effect of chain affiliation, with significant differences being found for two of the eight structural paths for the two groups. Specifically, the path from value to stakeholder engagement was significantly different, with the effect of values on stakeholder engagement being found to be stronger for the chain restaurant group than for the independent restaurant group. The path from leadership to stakeholder engagement was also found to be significantly different, with the effect of leadership on stakeholder engagement being greater for the independent restaurant group than for the chain-affiliated restaurant group. However, while the effect of stakeholder engagement on environmental practices was not found to be significantly different, the relationship was found to be stronger in the chain restaurant group. Last, the effect of environmental practices on financial and nonfinancial performance was not significantly different between the two groups. These findings contribute to literature on environmental sustainability and offer managerial implications for restaurant managers.

Footnotes

Yoon Jung Jang (e-mail: yoonjj923@gmail.com) is an adjunct professor at Department of Hotel, Restaurant & Institutional Management, Graduate School of Human Environmental Sciences, Yonsei University, Seoul.

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