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date: 05 December 2020

Abstract and Keywords

Three main theoretical strands propose a mutually reinforcing relationship between corporate environmental performance (CEP) and financial performance (CFP): the natural resource-based view of the firm, Porter’s extensions of the industrial organization model, and instrumental stakeholder theory. In contrast, neoclassical economics is the major theory invoked by researchers that argue for an inverse relationship between CEP and CFP. Like other literature reviews, this chapter identifies a small positive relationship between the two constructs. At the same time, numerous contingency factors (e.g. measurement differences in CEP and CFP) hint at the project specificity of economic payoffs from environmental management. Finally, we also raise questions about the objectivity of this research stream because the research community’s institutional logics may significantly affect the conclusions. So, we are left to wonder whether the conclusions about CEP and CFP mirror researchers’ value commitments rather than capture, camera-like, objective reality.

Keywords: corporate environmental performance, corporate financial performance, environmental management, industrial organization theory, natural resource-based view of the firm, stakeholder theory, sustainability

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