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The Impact of Sustainability Practices on Corporate Financial Performance: Literature Trends and Future Research Potential
TL;DR: In this paper, the authors present an analysis of the literature concerning the impact of corporate sustainability on corporate financial performance, and find that 78% of publications report a positive relationship between corporate sustainability and financial performance.
Abstract: This paper presents an analysis of the literature concerning the impact of corporate sustainability on corporate financial performance. The relationship between corporate sustainable practices and financial performance has received growing attention in research, yet a consensus remains elusive. This paper identifies developing trends and the issues that hinder conclusive consensus on that relationship. We used content analysis to examine the literature and establish the current state of research. A total of 132 papers from top-tier journals are shortlisted. We find that 78% of publications report a positive relationship between corporate sustainability and financial performance. Variations in research methodology and measurement of variables lead to the divergent views on the relationship. Furthermore, literature is slowly replacing total sustainability with narrower corporate social responsibility (CSR), which is dominated by the social dimension of sustainability, while encompassing little to nothing of environmental and economic dimensions. Studies from developing countries remain scarce. More research is needed to facilitate convergence in the understanding of the relationship between corporate sustainable practices and financial performance.
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TL;DR: In this article, the authors reviewed 129 research papers published in different journals and attempted to identify drivers, issues, barriers, tensions, practices, and performances related to social sustainability in multi-tier supply chains.
160 citations
TL;DR: In this paper, the influence of management innovation and technological innovation on organization performance with the mediating role of sustainability is examined, and the results indicate that sustainability plays a partial mediator role between management innovations and organization performance.
Abstract: Organizations have several objectives, including competitiveness, high profit and long-term survival. However, sustainability has become a diligent act of business and non-business organizations because it moves organizations toward superior performance. Sustainability does not come itself; it requires enough resources and capabilities. Extant studies have examined the factors that influence sustainability, but have rarely touched on innovation in this perspective. The present study examines the influence of management innovation and technological innovation on organization performance with the mediating role of sustainability. To test the model, we applied structural equation modeling in the analysis of a moment structures (AMOS) on the empirical evidence collected from 304 Pakistani CEOs and top managers. The results indicate that management innovation and technological innovation significantly positively contribute to sustainability and organization performance. Sustainability plays a partial mediating role between management innovation and organization performance and also a partial mediating role between technological innovation and organization performance. We recommend CEOs and top managers to give due attention to management innovation and technological innovation to enhance sustainability and survive the long run. Implications are discussed.
110 citations
TL;DR: In this paper, the authors analyzed 56 relevant journal articles from the period 2015-2020 to determine to what ends the United Nations Sustainable Development Goals (SDGs) have impacted CSR research.
Abstract: Amidst a contemporary culture of climate awareness, unprecedented levels of transparency and visibility are forcing industrial organizations to broaden their value chains and deepen the impacts of Corporate Social Responsibility (CSR) initiatives. While it may be common knowledge that the 2030 agenda cannot be achieved on a business-as-usual trajectory, this study seeks to determine to what ends the United Nations Sustainable Development Goals (SDGs) have impacted CSR research. Highlighting linkages and interdependencies between the SDGs and evolution of CSR practice, this paper analyzes a final sample of 56 relevant journal articles from the period 2015–2020. With the intent of bridging policy and practice, thematic coding analysis has supported the identification and interpretation of key emergent research themes. Using three descriptive categorical classifications (i.e., single-dimension, bi-combination of dimensions, sustainability dimension), the results of this paper provide an in-depth discussion into strategic community, company, consumer, investor, and employee foci. Furthermore, the analysis provides a timely and descriptive overview of how CSR research has approached the SDGs and which ones are being prioritized. By deepening the understanding of potential synergies between business strategy, global climate agendas and the common good, this paper contributes to an increased comprehension of how CSR and financial performance can be improved over the long-term.
90 citations
TL;DR: In this paper, the authors found empirical support for their contention that the link between stakeholder integration and financial performance is mediated by a firm's environmental sustainability orientation (ESO), and they also demonstrated that competitive intensity moderates the indirect relationship between stake-holder integration, in such a way that the indirect effect through environmental sustainability orientations is stronger for higher levels of industry competition.
84 citations
TL;DR: In this paper, the authors identified the specific goals considered by Japanese manufacturing multinational enterprises as a priority when establishing or significantly expanding operations in developing countries, such as the Philippines, Indonesia, Thailand and Vietnam.
76 citations
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TL;DR: In this article, the authors report the results of a rigorous study of the empirical linkages between financial and social performance, finding that corporate social performance (CSP) is positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related.
Abstract: Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.? 1997 by John Wiley & Sons, Ltd
5,922 citations
TL;DR: In this paper, the authors discuss how the concept of sustainable development has evolved over the past three decades and particularly how it can be applied to the business level and describe the three types of capital relevant within the corporate sustainability: economic, natural and social capital.
Abstract: The article is intended as a contribution to the ongoing conceptual development of corporate sustainability. At the business level sustainability is often equated with eco-efficiency. However, such a reduction misses several important criteria that firms have to satisfy if they want to become truly sustainable.
This article discusses how the concept of sustainable development has evolved over the past three decades and particularly how it can be applied to the business level. It then goes on to describe the three types of capital relevant within the concept of corporate sustainability: economic, natural and social capital.
From this basis we shall then develop the six criteria managers aiming for corporate sustainability will have to satisfy: eco-efficiency, socio-efficiency, eco-effectiveness, socio-effectiveness, sufficiency and ecological equity. The article ends with a brief outlook towards future research. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment
3,136 citations
TL;DR: In this article, the authors review the corporate social responsibility literature based on 588 journal articles and 102 books and book chapters and offer a multilevel and multidisciplinary theoretical framework that synthesizes and integrates the literature at the institutional, organizational, and individual levels of analysis.
2,592 citations
TL;DR: In this paper, the authors present a review of existing research and tools related to the business case for corporate sustainability, including theoretical frameworks, instrumental studies aiming to either prove or disprove a hypothesized causal sequence between corporate social or environmental performance and financial performance.
878 citations
TL;DR: This article provided a meta-analytic review of CEP and CFP literature and identified potential moderators to the CEP-CFP relationship including environmental performance type (e.g., reactive vs. proactive performance), firm characteristics (i.e., large vs. small firms), and methodological issues (i., self-report measures).
Abstract: Review of extant research on the corporate environmental performance (CEP) and corporate financial performance (CFP) link generally demonstrates a positive relationship. However, some arguments and empirical results have demonstrated otherwise. As a result, researchers have called for a contingency approach to this research stream, which moves beyond the basic question “does it pay to be green?” and instead asks “when does it pay to be green?” In answering this call, we provide a meta-analytic review of CEP–CFP literature in which we identify potential moderators to the CEP–CFP relationship including environmental performance type (e.g., reactive vs. proactive performance), firm characteristics (e.g., large vs. small firms), and methodological issues (e.g., self-report measures). By analyzing these contingencies, this study attempts to provide a basis on which to draw conclusions regarding some inconsistencies and debates in the CEP–CFP research. Some of the results of the moderator analysis suggest that small firms benefit from environmental performance as much or more than large firms, US firms seem to benefit more than international counterparts, and environmental performance seems to have the strongest influence on market-measures of financial performance.
501 citations