From Demand Stability to Environmental Responsibility: How Ordered Backlogs Shape Firm Behaviour

ABSTRACT

Ordered backlogs are the confirmed and yet to be delivered customer orders, which may have multiple advantages to firms. We investigate how ordered backlogs influence firms' future environmental misconduct. Drawing on organisational slack theory, we argue that ordered backlogs as a form of demand‐side slack can reduce environmental misconduct. We combine data from Violation Tracker, Compustat, ExecuComp and IBES to construct a longitudinal panel of US publicly traded firms spanning the period from 2000 to 2024. Using high‐dimensional fixed effects models, we find that higher levels of ordered backlogs are associated with significantly lower future environmental misconduct. Building on resource orchestration theory, we further examine how internal resource configurations condition this relationship by altering managerial discretion and resource deployment. We show that the negative association between ordered backlogs and environmental misconduct is attenuated in firms with higher R&D intensity, greater gross profitability and higher current asset intensity, suggesting that active resource deployment can override the stabilising influence of demand‐side slack. On the other hand, buffering capacity based on inventory makes the negative link between ordered backlogs and environmental misconduct even stronger. We use the Gaussian copula method to deal with endogeneity concerns. Our findings demonstrate that operational demand conditions and internal resource orchestration jointly shape firms' environmental behaviour.