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Does It Pay to Be Green? A Total Quality Perspective

Author

Listed:
  • Christine Reitmaier
  • Wolfgang Schultze
  • Ramona Paul
  • Jennifer Weißinger

Abstract

The question of whether, when, and how efforts for better corporate environmental performance (CEP) improve corporate financial performance (CFP) remains controversial. We revisit this question from a total quality perspective, which unites previous research and highlights interdependencies between mediators of the CEP–CFP relationship. Total quality comprises internal process and product quality as well as stakeholders' perceptions. We use structural equation modeling in a German survey dataset and analyze two sample periods with different regulations and stakeholder expectations on CEP (2005–2010 and 2017–2022). For both samples, we find that better CEP leads to significantly better internal and external quality and also increased costs. For the early period, the improvements translate into higher revenues via external quality. For the more recent period, the improvements decrease costs via process quality. In both samples, we find a neutral effect on net CFP, implying that the documented cost or revenue benefits of green investments are counterbalanced by the associated additional costs.

Suggested Citation

  • Christine Reitmaier & Wolfgang Schultze & Ramona Paul & Jennifer Weißinger, 2025. "Does It Pay to Be Green? A Total Quality Perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 34(7), pages 8590-8619, November.
    • Handle: RePEc:bla:bstrat:v:34:y:2025:i:7:p:8590-8619
    DOI: 10.1002/bse.70019
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