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A Triptych Inquiry: Rethinking Sustainability, Innovation, and Financial Performance

Author

Listed:
  • Timo Busch

    (ETH Zuerich, Switzerland)

  • Bryan T. Stinchfield

    (Franklin & Marshall College, Lancaster, Carbondale)

  • Matthew S. Wood

    (Cameron School of Business, University of North Carolina Wilmington)

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.

Suggested Citation

  • Timo Busch & Bryan T. Stinchfield & Matthew S. Wood, 2011. "A Triptych Inquiry: Rethinking Sustainability, Innovation, and Financial Performance," Tinbergen Institute Discussion Papers 11-026/2/DSF 9, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20110026
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    Cited by:

    1. Will, Matthias Georg & Hielscher, Stefan, 2013. "How do companies invest in corporate social responsibility? An ordonomic contribution for empirical CSR research," Discussion Papers 2013-3, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.
    2. Matthias Georg Will & Stefan Hielscher, 2014. "How do Companies Invest in Corporate Social Responsibility? An Ordonomic Contribution for Empirical CSR Research," Administrative Sciences, MDPI, vol. 4(3), pages 1-23, July.
    3. Esben Rahbek Gjerdrum Pedersen & Wencke Gwozdz & Kerli Kant Hvass, 2018. "Exploring the Relationship Between Business Model Innovation, Corporate Sustainability, and Organisational Values within the Fashion Industry," Journal of Business Ethics, Springer, vol. 149(2), pages 267-284, May.
    4. Will, Matthias Georg & Hielscher, Stefan, 2012. "How do companies invest in corporate social responsibility? An ordonomic contribution for empirical CSR research," Discussion Papers 2012-2, Martin Luther University of Halle-Wittenberg, Chair of Economic Ethics.

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    More about this item

    Keywords

    Sustainable development; innovation; firm performance; Tobin’s q; moderation and mediation;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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