Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/335584 
Year of Publication: 
2025
Citation: 
[Journal:] Business Strategy and the Environment [ISSN:] 1099-0836 [Volume:] 34 [Issue:] 7 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2025 [Pages:] 8590-8619
Publisher: 
Wiley, Hoboken, NJ
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.
Subjects: 
corporate environmental performance
corporate financial performance
structural equation modeling
sustainable development
total quality
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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