Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2011-02-10
Number: 11-026/2/DSF 9
Author-Name: Timo Busch
Author-Workplace-Name: ETH Zuerich, Switzerland
Author-Name: Bryan T. Stinchfield
Author-Workplace-Name: Franklin & Marshall College, Lancaster, Carbondale
Author-Name: Matthew S. Wood
Author-Workplace-Name: Cameron School of Business, University of North Carolina Wilmington
Title: A Triptych Inquiry: Rethinking Sustainability, Innovation, and Financial Performance
Abstract: Management scholars have sought to answer the question: is there a financial payoff for ad-dressing ecological and social issues? We move beyond this question and include a time com-ponent for corporate financial performance (CFP) and a firm’s innovativeness in order to ask: when does it pay? Combining a contingency perspective with the resource-based view of the firm clarifies the positive relationship between corporate environmental and social perform-ance (ESP) and CFP, which only holds in the long-term but not in the short-term.  Further, we find support for a moderating effect of innovation on the relationship between the ESP and short-term CFP as suggested by the literature. However, we empirically show that in the long-term, innovation mediates the ESP-CFP relationship suggesting that innovation should be considered as a long-term investment required to unlock the full potential of ESP initiatives.
Classification-JEL: G30, M14, L20, Q01
Keywords: Sustainable development, innovation, firm performance, Tobin’s q, moderation and mediation
File-Url: https://papers.tinbergen.nl/11026.pdf
File-Format: application/pdf
File-Size: 223523 bytes
Handle: RePEc:tin:wpaper:20110026