We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 -termed as High Sustainability companies -exhibit by 2009, distinct organizational processes compared to a matched sample of firms that adopted almost none of these policies -termed as Low Sustainability companies. We find that the boards of directors of these companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. Moreover, High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance.

We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 US companies, we find that corporations that voluntarily adopted sustainability policies by 1993 -termed as High Sustainability companies -exhibit by 2009, distinct organizational processes compared to a matched sample of firms that adopted almost none of these policies -termed as Low Sustainability companies. We find that the boards of directors of these companies are more likely to be formally responsible for sustainability and top executive compensation incentives are more likely to be a function of sustainability metrics. Moreover, High Sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market as well as accounting performance.

This review article focuses on the three control mechanisms that govern economic transactions between actors: price, authority, and trust. In contrast to conventional approaches that view market and hierarchy as mutually exclusive control mechanisms (or as poles of a continuum), we argue that price, authority, and trust are independent and can be combined in a variety of ways. For instance, price and authority are often played off each other within firms, while trust and price are sometimes intertwined to control transactions between firms. We also identify a type of organization largely ignored in the literature: the plural form. In the plural form, organizations simultaneously operate distinct control mechanisms for the same function. For example, organizations operate franchises and company-owned units under the same trademark, and companies sometimes make and buy the same part. To understand this form, the analytic focus must move from individual transactions to the broader architecture of control mechanisms

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