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How Does Corporate Environmental Performance Contribute to Firm Performance and Customer Satisfaction? A Longitudinal Investigation

Author

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  • Mansour Alyahya

    (Management Department, College of Business Administration, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

  • Gomaa Agag

    (Nottingham Business School, Nottingham Trent University, Nottingham NG1 4FQ, UK
    SK Research, Oxford Business College, Oxford OX1 2BQ, UK)

Abstract

This research adopted a distinctive approach to explore the link between corporate environmental performance, customer satisfaction, and firm performance. It also examines the moderating role of digital transformation on these relationships. We collected longitudinal data covering 2745 firm-year observations from the U.S. Standard & Poor’s (S&P) 500. Our study utilised “the generalised method of moments (GMM) technique” to analyse the longitudinal data. The results revealed that a one-unit enhancement in CEP results in, on average, a 10.1% rise in the growth rate of ROA, a 13.40% increase in Tobin’s Q, and a 14.2% increase in customer satisfaction. Moreover, digital transformation moderates the links between CEP, firm performance, and customer satisfaction. The findings of our study guide policymakers, researchers, shareholders, and managers in addressing the challenge of corporate environmental performance.

Suggested Citation

  • Mansour Alyahya & Gomaa Agag, 2025. "How Does Corporate Environmental Performance Contribute to Firm Performance and Customer Satisfaction? A Longitudinal Investigation," Sustainability, MDPI, vol. 17(4), pages 1-22, February.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:4:p:1644-:d:1592616
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    References listed on IDEAS

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