Abstract
Purpose – This study aims to examine how environmental, social and governance (ESG) initiatives and ISO
14001, which is an internationally agreed standard to set out the requirements for an environmental
management system, affect firm performance in the context of the Industry 4.0 supply chain.
Design/methodology/approach – The authors develop a new chance-constrained network data envelopment
analysis (DEA) in the presence of non-positive data to estimate innovation, operational and profitability
performances for three main relation groups (suppliers, partners and customers) in Microsoft’s supply chain.
Findings – Results of this study show the following: (1) the application of ISO 14001 will reduce profitability but
increase overall performance (OP); (2) ESG implementation has a convex U-shaped influence on profitability and
OP, which means that firms will benefit when ESG investment goes beyond a particular level; (3) the nonlinear
U-shape is presented in the E and G components, but not in the S of the individual ESG initiatives, and (4) only
specific subcomponents of S and G in the subcomponent of individual ESG initiatives are nonlinearly connected to
OP. Research’s results reveal that the customer group has a higher performance value than the other two groups,
which suggests that this group will create competitive advantages for Microsoft.
Originality/value – Overall, the authors provide an insightful viewpoint into supply chain management by
examining the ESG initiatives, ISO 14001 and performances of Microsoft’s supply chain.
Keywords: Supply chain, Data envelopment analysis, ISO 14001, ESG initiatives, Firm performance,
Sustainable development