Untangling the relationship between Corporate Environmental Performance and Corporate Financial Performance: The double-edged moderating effects of environmental uncertainty

摘要

Is corporate environmental performance (CEP) a benefit or a cost for corporate financial performance (CFP)? Some studies have concluded that CEP nurtures good stakeholder relationships and facilitates acquisition of critical resources controlled by those stakeholders, thereby suggesting a positive CEP-CFP link. By contrast, other researchers have taken a negative stance by suggesting that commitment to improve CEP diverts limited resources from value-creating activities and damages competitive advantage. This study reconciles the longstanding debate about the CEP-CFP link by integrating and extending existing perspectives. We suggest that the CEP-CFP link can be captured by an inverse U-shape, which is steeper and of a lower plateau in higher levels of environmental uncertainty characterized by high dynamism, low munificence, and high complexity. We find strong support for these arguments using a panel dataset of 8364 firm-year observations from 1455 industrial firms. These findings encourage managers to conduct a benefit-cost analysis for determining the optimal level of commitment to CEP. Caution should be paid to the double-edged effect of high levels of environmental uncertainty, which enables CEP to bring great marginal increase (decrease) of financial performance at the left (right) side of the curve. (C) 2020 Published by Elsevier Ltd.