The role of corporate sustainability performance for economic performance: A firm-level analysis of moderation effects

This paper analyses the link between sustainability management and economic performance. Its main research question concerns the association of social responsibility and environmental management with economic performance, determinants of the latter and possible moderation effects. Based on data collected from financial databases and Kinder Lydenberg Domini for the period 1992 to 2003, the paper analyses the link of corporate sustainability performance with economic performance using panel estimation techniques. The analysis shows that advertising intensity moderates the association of corporate sustainability performance and economic performance as measured by Tobin's q. For research and development efforts relative to firm size, no moderating role on the link between corporate sustainability and economic performance is identified. A sensitivity analysis using separate measures for social and environmental performance reveals that the latter only has a direct effect and the former only a fully moderated effect on economic performance. Policy and management implications of these findings are discussed.

[1]  C. Shapiro.  Premiums for High Quality Products as Returns to Reputations , 1983 .

[2]  J. Schumpeter.  Capitalism, Socialism and Democracy , 1943 .

[3]  David A. Whetten,et al.  Family Firms and Social Responsibility: Preliminary Evidence from the S&P 500 , 2006 .

[4]  Tyson B. Mackey,et al.  Corporate Social Responsibility and Firm Performance: Investor Preferences and Corporate Strategies , 2007 .

[5]  A. Shleifer,et al.  Investor Protection and Corporate Valuation , 1999 .

[6]  Malte Schwoon,et al.  Simulating the adoption of fuel cell vehicles , 2006 .

[7]  Clayton M. Christensen.  The Innovator's Dilemma , 1997 .

[8]  Andreas R. Ziegler,et al.  The influence of different characteristics of the EU environmental management and auditing scheme on technical environmental innovations and economic performance , 2006 .

[9]  J. D. Margolis,et al.  Misery Loves Companies: Rethinking Social Initiatives by Business , 2003 .

[10]  David L. Levy,et al.  A Neo‐Gramscian Approach to Corporate Political Strategy: Conflict and Accommodation in the Climate Change Negotiations* , 2003 .

[11]  John D. Benjamin,et al.  Corporate Social Performance and Firm Risk: A Meta-Analytic Review , 2001 .

[12]  Xueming Luo,et al.  Corporate Social Responsibility, Customer Satisfaction, and Market Value , 2006 .

[13]  Clyde Eiríkur Hull,et al.  Firm performance: the interactions of corporate social performance with innovation and industry differentiation , 2008 .

[14]  Tom R. Burns,et al.  The Management of Innovation. , 1963 .

[15]  Jari Kaivo-oja,et al.  Decomposition Analysis of Finnish Material Flows: 1960–1996 , 2000 .

[16]  T. Feddersen,et al.  Saints and Markets: Activists and the Supply of Credence Goods , 2001 .

[17]  Arieh A. Ullmann.  Data in Search of a Theory: A Critical Examination of the Relationships Among Social Performance, Social Disclosure, and Economic Performance of U.S. Firms , 1985 .

[18]  Shameek Konar,et al.  Does the Market Value Environmental Performance? , 2001, Review of Economics and Statistics.

[19]  D. Llerena,et al.  Organisational mechanisms in environmental management: an evolutionary analysis confronted with empirical facts , 2001 .

[20]  S. Winter,et al.  Evolutionary theorizing in economics , 2002 .

[21]  J. Heckman.  The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models , 1976 .

[22]  David L. Levy.  The environmental practices and performance of transnational corporations , 1995 .

[23]  Stuart L. Hart,et al.  Do Corporate Global Environmental Standards Create or Destroy Market Value , 2000 .

[24]  Mansour Javidan,et al.  Components of CEO Transformational Leadership and Corporate Social Responsibility , 2006 .

[25]  Stefanie Kirchhoff,et al.  Green Business and Blue Angels , 2000 .

[26]  Samuel B. Graves,et al.  The corporate social performance-financial performance link , 1997 .

[27]  James M. Utterback,et al.  Mastering the Dynamics of Innovation , 1996 .

[28]  Joop de Boer,et al.  Sustainability labelling schemes: the logic of their claims and their functions for stakeholders , 2003 .

[29]  S. West,et al.  Multiple Regression: Testing and Interpreting Interactions. , 1994 .

[30]  Frederic M. Scherer,et al.  Schumpeter and Plausible Capitalism , 1992 .

[31]  Michael J. Lenox,et al.  Does It Really Pay to Be Green? An Empirical Study of Firm Environmental and Financial Performance: An Empirical Study of Firm Environmental and Financial Performance , 2001 .

[32]  Joëlle Noailly,et al.  Coevolution of economic and ecological systems , 2008 .

[33]  Richard Schmalensee,et al.  Inter-industry studies of structure and performance , 1987 .

[34]  G. Dosi.  Technological Paradigms and Technological Trajectories: A Suggested Interpretation of the Determinants and Directions of Technical Change , 1982 .

[35]  John G. Riley,et al.  Silver Signals: Twenty-Five Years of Screening and Signaling , 2001 .

[36]  Tom Tietenberg,et al.  The International Yearbook of Environmental and Resource Economics 1999/2000 , 1999 .

[37]  Bert Scholtens,et al.  A note on the interaction between corporate social responsibility and financial performance , 2008 .

[38]  Andreas R. Ziegler,et al.  Integrated Product Policy and Environmental Product Innovations: An Empirical Analysis , 2007 .

[39]  Aseem Prakash,et al.  Bargains Old and New: Multinational Corporations in Global Governance , 2003, Business and Politics.

[40]  Andrew A. King,et al.  The effect of certification with the ISO 9000 Quality Management Standard: A signaling approach , 2006 .

[41]  Julien Labonne,et al.  Why do manufacturing facilities introduce environmental management systems? Improving and/or signaling performance ☆ , 2009 .

[42]  Renato J. Orsato.  Competitive Environmental Strategies: When Does it Pay to Be Green? , 2006 .

[43]  F. Schmidt,et al.  Corporate Social and Financial Performance: A Meta-Analysis , 2003 .

[44]  Thomas H. Johnson,et al.  Relevance Lost: The Rise and Fall of Management Accounting , 1987 .

[45]  G. Dosi.  Technological Paradigms and Technological Trajectories , 1993 .

[46]  T. Takala,et al.  Individual, collective and social responsibility of the firm , 2000 .

[47]  K. Rennings,et al.  Lead markets and regulation: a framework for analyzing the international diffusion of environmental innovations , 2005 .

[48]  J. Horbach.  Determinants of Environmental Innovation - New Evidence from German Panel Data Sources , 2006 .

[49]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[50]  David L. Levy.  Business and International Environmental Treaties: Ozone Depletion and Climate Change , 1997 .

[51]  F. Figge.  Value‐based environmental management. From environmental shareholder value to environmental option value , 2005 .

[52]  J. Schumpeter,et al.  The Theory of Economic Development , 2017 .

[53]  Virginia W. Gerde,et al.  Measuring environmental performance: use of the toxics release inventory (TRI) and other US environmental databases , 2001 .

[54]  Andreas R. Ziegler,et al.  The Effect of Environmental and Social Performance on the Stock Performance of European Corporations , 2007 .

[55]  K. Rennings.  Redefining innovation -- eco-innovation research and the contribution from ecological economics , 2000 .

[56]  D. Turban,et al.  Corporate Social Performance And Organizational Attractiveness To Prospective Employees , 1997 .

[57]  Abagail McWilliams,et al.  Corporate social responsibility and financial performance: correlation or misspecification? , 2000 .

[58]  D. North.  Institutions, Institutional Change and Economic Performance: Economic performance , 1990 .