BSE MR SA MH Per implications of an env policy - Accepted.pdf (585.65 kB)
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The product-market performance benefits of environmental policy: Why customer awareness and firm innovativeness matter

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journal contribution
posted on 30.01.2020, 09:39 by Mahabubur Rahman, Saqib Aziz, Mathew HughesMathew Hughes
Researchers have widely studied the nexus between corporate environmental (‘green’) policy and its green performance and firm financial performance, but with mixed findings. A potential explanation for these mixed findings is the focus of extant studies on the direct and immediate impact of environmental performance on financial performance to the exclusion of firm-specific boundary conditions. Furthermore, all prior research study the effect of environmental performance on either stock market-based performance measures (i.e. stock return) or accounting-based performance measures (i.e. ROA). A missing third dimension of firm performance, product–market-based performance (i.e. market share) has so far remained unexplored despite representing a crucial objective when innovating. Using Newsweek’s annual green ranking as a novel measure of environmental performance for a panel of U.S. firms from 2010 to 2015, this paper attempts to fill these voids in the literature. The results show a positive relationship between firms’ environmental performance and market share as a measure of product–market-based performance. The findings further demonstrate that this relationship is positively moderated by the level of customer awareness and innovativeness of the firm: the higher the level of awareness of a firm’s environmental credentials and innovativeness, the stronger the effects of environmental performance on market share. Our results are robust against endogeneity concerns and alternative measures of firm financial and environmental performance.

History

School

  • Business and Economics

Department

  • Business

Published in

Business Strategy and the Environment

Volume

29

Issue

5

Pages

2001 - 2018

Publisher

Wiley

Version

AM (Accepted Manuscript)

Rights holder

© John Wiley & Sons, Ltd and ERP Environment

Publisher statement

This is the peer reviewed version of the following article: RAHMAN, M., AZIZ, S. and HUGHES, M., 2020. The product-market performance benefits of environmental policy: Why customer awareness and firm innovativeness matter. Business Strategy and the Environment, 29 (5), pp.2001-2018, which has been published in final form at https://doi.org/10.1002/bse.2484. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.

Acceptance date

29/01/2020

Publication date

2020-02-11

Copyright date

2020

ISSN

0964-4733

eISSN

1099-0836

Language

en

Depositor

Prof Mat Hughes. Deposit date: 29 January 2020