‘Too-much-of-a-good-thing’? The role of advanced eco-learning and contingency factors on the relationship between corporate environmental and financial performance

Abstract

Inspired by the natural-resource-based view (NRBV) theory, we attempt to shed light on a controversy which has been persistent over the last decade, concerning the relationship between corporate environmental performance (CEP) and corporate financial performance (CFP). Using the 'too-much-of-a-good-thing' (TMGT) concept, which suggests that "too much can be worse than too little," we link mixed results and consider the roles of advanced eco-learning and contingency factors in influencing the CEP-CFP relationship. Based on a sample composed of ISO 14001 certified companies in Indonesia, and analyzing the data using consistent Partial Least Squares (PLSc), we found that: the CEP-CFP relationship follows an inverted U-shape; advanced eco-learning is a significant predictor of the CEP-CFP relationship, meaning that organizations able to develop higher eco-learning capability will be better able to identify the ideal boundaries of investment in environmental performance without reducing their financial performance; and that contingency factors such as environmental strategy and firm size have a significant role in influencing the CEP-CFP relationship. The study's limitations, implications for practitioners and a future research agenda are also detailed.

Lean manufacturing and business performance: testing the S-curve theory

“…An HTMT value of < 0.90 between constructs indicates good discriminant validity (Benitez et al, 2019;Latan et al, 2018).…”

Corporate social responsibility and firm performance in the hotel industry. The mediating role of green human resource management and environmental outcomes

“…Likewise, several studies found a positive relationship between environmental outcomes and firm performance (Li and Ramathan, 2018;Journeault, 2016;Ambec and Lanoie, 2008;Russo and Fouts, 1997;Waddock and Graves, 1997). Nevertheless, other investigations described these relationships as nonsignificant (Al-Tuwaijri et al, 2004;Henri and Journeault, 2010;Wagner, 2015) or even negative (Qi et al, 2014;Tan et al, 2017;Vastola et al, 2017;Latan et al, 2018). For this reason, it is our intention to confirm whether a positive relationship exists between environmental outcomes and firm performance, additionally focusing on the extent to which the variables GHRM and environmental outcomes act as play a mediating role in the relationship between CSR and firm performance.…”

Environmental Performance and Green Culture: The Mediating Effect of Green Innovation. An Application to the Automotive Industry

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