Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86888
Authors: 
Busch, Timo
Stinchfield, Bryan T.
Wood, Matthew S.
Year of Publication: 
2011
Series/Report no.: 
Tinbergen Institute Discussion Paper 11-026/2/DSF 9
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.
Subjects: 
Sustainable development
innovation
firm performance
Tobin’s q
moderation and mediation
JEL: 
G30
M14
L20
Q01
Document Type: 
Working Paper

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