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

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Author Info

  • 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)

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    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.

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    Bibliographic Info

    Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-026/2/DSF 9.

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    Date of creation: 10 Feb 2011
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    Handle: RePEc:dgr:uvatin:20110026

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    Web page: http://www.tinbergen.nl

    Related research

    Keywords: Sustainable development; innovation; firm performance; Tobin’s q; moderation and mediation;

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