Does it Really Pay to Be Green? Determinants and Consequences of Proactive Environmental Strategies

By Peter M. Clarkson, Yue Li, Gordon Richardson, F. Vasvari. 2011

1,090 citations recorded by the source corpus.

This study examines what factors affect firms' decisions to adopt a proactive environmental strategy and whether pursuing proactive environmental strategies leads to improved financial performance. Using longitudinal data from 1990 to 2003 for the four most polluting industries in the US (Pulp & Paper, Chemical, Oil & Gas, and Metals & Mining), this research empirically models the causal relations between firms' environmental performance and their financial resources and management capability. Our results show that positive (negative) changes in firms' financial resources in the prior periods are followed by significant improvements (declines) in firm's relative environmental performance in the subsequent periods. In addition, we also find that significant improvements (declines) in environmental performance in the prior periods can lead to improvements (declines) in financial performance in the subsequent periods after controlling for the impact of Granger causality. Finally, 3SLS analysis suggests that the positive association between environmental performance and financial performance is robust. Overall, our results are consistent with predictions of the resource-based view of the firm and indicate that although becoming "green" is associated with improvement in firm performance, such a strategy cannot be easily mimicked by all firms.

Subfields: Marketing, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/ddb21e60a0cef50d297dcbbd1c17783900dcb1f2

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Marketing

In Strategy and Management

Citations in the corpus

Corporate Carbon and Financial Performance: A Meta‐analysis (2018, background): “Even though the issue of simultaneous causality has been analyzed in other empirical studies (e.g., Clarkson et al. 2011; Waddock and Graves 1997) and meta-studies (e.g., Endrikat et al. 2014), apart from a few studies (e.g., Griffin et al. 2016, Gallego-Álvarez et al. 2014), it is largely ignored…”
Green Management Matters Only if it Yieds More Green: An Economic/Strategic Perspective (2009, background): “Barney (1991) conjectured that if such resources and capabilities are valuable, rare, inimitable, and nonsubstitut-”
Relations between corporate economic performance, environmental disclosure and greenhouse gas emissions: new insights. (2018, background): “Van Beurden and Gossling (2008) find a positive association between corporate social responsibility and economic performance, a result supported by the findings of Clarkson et al. (2011b) among others.”
The Valuation Relevance of Greenhouse Gas Emissions under the European Union Carbon Emissions Trading Scheme (2015, neutral): “Studies that examine the relationship between environmental and financial performance include Jaggi and Freedman (1992), Hart and Ahuja (1996), and Clarkson et al. (2011). For example, using Toxic Release Inventory (TRI) data reported to the U.S. EPA to measure environmental performance, Clarkson et”