Sustainable supply chain and companyperformanceA global .docx

Sustainable supply chain and company
performance
A global examination
Eduardo Ortas and José M. Moneva
Department of Accounting and Finance, University of Zaragoza,
Huesca, Spain, and
Igor Álvarez
Department of Accounting and Finance, Basque Country
University, San Sebastian, Spain
Abstract
Purpose – This paper aims to investigate the link between a
sustainable supply chain and companies’ financial performance
(FP) and provide
empirical evidence about the relationship between these two
constructs. This link is an important, but still unclear, subject.
Design/methodology/approach – Multivariate measures of
sustainable supply chain performance and companies’ FP are
used for Granger
causality tests on a large, diverse sample of 3,900 companies in
a time frame of eight years (2004-2011).
Findings – Results indicate general bidirectional causality
between sustainable supply chain performance and companies’
margins and revenue.
However, the link between firms’ profitability and sustainable
supply chain performance is unidirectional. In addition, the
recent financial crisis
altered this link between the studied constructs. Finally, a wide
diversity in relationship patterns between sustainable supply

chain performance and
companies’ FP emerges when the full sample is divided into
different geographical regions and economic sectors as
specified by the Global Industry
Classification Standard system.
Practical implications – This research makes recommendations
for improving several processes, such as stakeholder evaluation
of the sustainable
supply chain performance of companies worldwide and manager
testing of environmental policy outcomes.
Originality/value – Building on the mostly qualitative literature
on sustainable supply chain performance and companies’ FP,
this research provides
quantitative evidence of the gaps between these constructs. This
research contributes to the discussions of supply chain
management, environmental
practices and the drivers of companies’ environmental and
financial success.
Keywords Corporate responsibility, Sustainability, Corporate
social responsibility, Business administration, Environmental
management,
Environmental performance, Company performance, Sustainable
supply chain management, Green supply chains, Sustainable
supply chain
performance, Granger causation
Paper type Research paper
1. Introduction
Supply chain management (SCM) is an important
environmental and social subject relating to corporate
sustainability (Ashby et al., 2012). Companies’ interest in
SCM has increased in recent decades because of growing
global competition, outsourcing of companies’ non-core
activities and the shortening of product life cycles

(Skjøtt-Larsen et al., 2007). More importantly, companies’
close, long-term relationships with suppliers and other
strategic partners have become a key factor in competitiveness
(Christopher, 2005; Andersen and SkjOEtt-Larsen, 2009). At
the same time, companies have become more deeply
committed to corporate social responsibility (CSR) and
sustainability (Freeman et al., 2010) by refusing to implement
a reductionist corporate management model focused only on
shareholders’ interests (Wood, 2008).
Under this scenario, sustainable management of supply
chains has become a core strategic factor for companies
worldwide (Seuring, 2012). Companies have progressively
broadened their approach to SCM by embracing social and
environmental concerns (Svensson, 2007; Gimenez and
Tachizawa, 2012), giving rise to a new concept: sustainable
supply chain management[1] (SSCM) (Carter and Easton,
2011; Ashby et al., 2012). SSCM is defined as reformist SCM
“which manages the material, information and capital flows as
well as cooperation among companies along the supply chain
The current issue and full text archive of this journal is
available at
www.emeraldinsight.com/1359-8546.htm
Supply Chain Management: An International Journal
19/3 (2014) 332–350
© Emerald Group Publishing Limited [ISSN 1359-8546]
[DOI 10.1108/SCM-12-2013-0444]
The authors would like to thank the anonymous reviewers for
their
insightful comments and feedback on the earlier versions of this
paper. The
authors also are grateful for financial help from the Spanish

Education
Ministry (research projects SIRCARSO SEJ2006-08317,
SEJ2006-0395,
MTM 2008-00625 and ECO2011-26171) and from the Zaragoza
University (research projects UZ2009-SOC-08 and UZ2010-
SOC-04).
The usual disclaimer applies.
Received 8 December 2013
Revised 8 February 2014
28 February 2014
Accepted 8 March 2014
332
http://dx.doi.org/10.1108/SCM-12-2013-0444
while taking goals from all three dimensions of sustainable
development, i.e. economic, environmental and social, into
account which are derived from customer and stakeholder
requirements” (Seuring and Müller, 2008, p. 1,700).
In recent years, SSCM has driven the development of
innovative tools which allow measuring companies’
sustainability
performance, being this fact essential to improve companies’
social and environmental performance, including sustainable
suppliers, modal and carrier selection, environmentally friendly
vehicle routing and location decision and packaging choices
(Carter and Easton, 2011). Increasingly, managers consider
SSCM issues for not only their company but also their supply
chain partners (Vachon and Klassen, 2006). This process is a
logical result of the perception by academics and practitioners
that SSCM is a critical corporate competitive factor that
improves corporate social and environmental performance,

minimizes spending on waste and improves the corporate image
(Seuring et al., 2008; Rao and Holt, 2005). The literature also
suggests that companies’ improvements of sustainable supply
chain performance (SSCP) can sharpen their competitiveness
and financial and operational performance (Keating et al.,
2008).
SSCP is “a company’s capacity to reduce the use of materials,
energy, or water and to find more eco-efficient solutions by
improving supply chain management”.
Although the literature contains many studies on SSCP,
these hypothesized relationships are still underdeveloped
(Ashby et al., 2012), partly because theory in SSCM is still
under development and inductive research methods such as
case studies dominate the SSCM field (Ashby et al., 2012;
Seuring and Müller, 2008). Although case studies represent a
good path to insight into complex, contemporary phenomena
(Yin, 2009), and have revealed very relevant findings in
SSCM and SSCP, they often lack generalizability to other
contexts and overall conclusions (Eisenhardt, 1989). For
theories, SSCM and SSCP have generally relied on adjacent
fields (Carter and Easton, 2011). Moreover, sustainability
performance literature lacks global studies that assess
the potential relationship between SSCP and company
performance. This paper is placed in the field of sustainability
performance management and measurement (Figge et al.,
2002; Schaltegger et al., 2006), which represents an emerging
field that addresses the social, environmental and economic
performance issues of corporate management in general and
of corporate sustainability management in particular
(Schaltegger and Wagner, 2006). In particular, sustainability
performance measurement is implemented to companies’
SSCP to show managers and stakeholders the possible
dependence patterns between corporate financial performance
(FP) and SSCP due to two factors:
1 a diverse sample of 3,900 companies from multiple

economic sectors in most of the world’s developed and
emerging markets; and
2 coverage of a period of economic growth and financial
crisis to analyze whether market conditions influence the
relationship of SSCP and FP.
This work aims to explore the broad relationships between
these constructs, taking into account companies worldwide
from many industries. It does not impose ex-ante causal
relationships between SSCP and companies’ FP and remains
flexible to capture the complete dependence structure
between these constructs.
The work uses multivariate measures for SSCP and FP.
Carroll (1979) and Moneva and Ortas (2010) argue that
multivariate measures are necessary to handle the complex
taxonomy of proxies related to FP and companies’ social and
environmental performance. It will provide relevant
implications for improving several processes, such as
stakeholders’ evaluation of the SSCP of companies worldwide
and managers’ testing of the results of incorporating SSCP
processes into company policy.
The rest of the paper is organized as follows. The next
section analyses the previous literature on this topic and
introduces research hypotheses. The third section focuses on
sample selection, data description and applied methods. The
fourth describes the results obtained. The last covers
conclusions, implications of the work and further research
opportunities in this field.
2. Background

2.1 Theoretical framework
In recent decades, SSCM has received attention from both
academics and practitioners because of its potential to make
corporate behavior more sustainable (Seuring et al., 2008;
Sarkis et al., 2011). Moreover, the potential link between
SSCP and companies’ FP has become a popular research
topic because of its implications for corporate strategy, policy
and economic sustainability (Fawcett et al., 2008).
This context brings up the role of CSR and sustainable
development (Figge and Hahn, 2001). CSR in the 1960s and
1970s was mainly motivated by social considerations. Its
current performance orientation supposes a change from a
macro to an organizational level (Carroll and Shabana, 2010).
Given this inherent instrumentality (Hahn and Figge, 2001),
many argue that companies will only contribute to sustainable
development if they perceive an incentive to do so (Epstein
and Roy, 2003; Husted and de Jesus Salazar, 2006; Rowley
and Berman, 2000). Schaltegger and Synnestvedt (2002) note
that an environmentally friendly company that is not
economically friendly will sooner or later disappear from the
market along with its environmentally beneficial activities.
This consideration is similar to the business-case model of
CSR defined by Berger et al. (2007) that considers CSR
initiatives as adopted for pure rational and economic reasons.
Thus, the link between a good environmental performer and a
good financial performer has been a core topic in the corporate
environmental management literature for years (Schaltegger
and Synnestvedt, 2002). Despite the great number of
academic contributions, links between corporate social and
environmental performance (CSP) and companies’ FP are still
not clear (Brammer and Millington, 2008; Hahn and Figge,
2011; Lockett, et al., 2006; Orlitzky et al., 2003; Ullman,
1985; Waddock and Graves, 1997; Wu, 2006). On one hand,
several empirical papers assume environmental performance
improvements generate new costs, while on the other, many

papers have confirmed empirically that environmentally
friendly activities generally payoff and improve companies’ FP
(Porter and van der Linde, 1995). The direction of this
relationship is still unclear. Do improvements in CSP generate
better levels of companies’ FP? Or do improvements in
Sustainable supply chain and company performance
Eduardo Ortas, José M. Moneva and Igor Álvarez
Volume 19 · Number 3 · 2014 · 332–350
333
companies’ FP generate better levels of CSP? (Brammer and
Millington, 2008; Scholtens, 2008; Waddock and Graves,
1997).
To explain the potential relationship between CSP and
companies’ FP, we will address the theories that explain the
two directions of this relationship. Stakeholder theory
proposes that satisfying stakeholders’ interest will improve
companies’ FP (Freeman, 1984; Porter and van der Linde,
1995; Waddock and Graves, 1997). It also argues that
bilateral stakeholder management relationships monitor
managers and keep their attention on broad organizational
financial goals (Hill and Jones, 1992; Jones, 1995). Managing
the claims of stakeholders could increase efficiency by
speeding up adaptation to changes in external demands
(Freeman and Evan, 1990), such as new technologies or
product developments. The instrumental dimension of
stakeholder theory (Clarkson, 1995; Cornell and Shapiro,

1987; Donaldson and Preston, 1995; Freeman, 1984; Jones,
1995; Mitchell et al., 1997) suggests a positive relationship
between CSP and companies’ FP (Preston, 1978; Anderson
and Frankle, 1980; Freedman and Stagliano, 1991; Graves
and Waddock, 2000; Griffin and Mahon, 1997; Berman et al.,
1999; Van de Velde et al., 2005; Wu, 2006).
To analyze the direction of the causality, two views are
examined:
1 Slack resources theory: This theory argues that better FP
can make slack financial and other resources available to
invest in CSP, making companies’ FP a predictor of CSP
(McGuire et al., 1990; Waddock and Graves (1997). This
view is often based on the belief that good environmental
performance is a kind of Giffin good for a company after
it has reached high economic success (Schaltegger and
Synnestvedt, 2002). The most successful companies have
the most financial resources and can spend the most on
CSR activities (Brammer and Millington, 2008; Waddock
and Graves, 1997). This view is supported by Margolis
et al. (2007), indicating that companies with superior FP
are more likely to engage in CSR-related activities
(Allouche and Laroche, 2005). However, if companies
have fewer financial resources and consider social and
environmental issues unnecessary, they would of course
reduce the funding for CSR activities.
2 Good management theory: This theory proposes a high
correlation between good management practices and CSP
because attention to CSP improves relationships with key
stakeholders (Freeman, 1984), thereby improving firms’
FP (McGuire et al., 1990; Waddock and Graves (1997).
Kurucz et al. (2008) also support this effect based on the
following arguments:
● CSR lowers cost and risk;

● CSR creates competitive advantage;
● CSR boosts legitimacy and reputation; and
● CSR creates win – win situations for the company and
society.
Burritt and Schaltegger (2010) indicate that sustainability
practices may improve the basis for companies’ decisions to
improve performance, (eco-) efficiency or reputation or decide
an improvement is not worth pursuing.
Margolis et al. (2007) also support this view by suggesting
three plausible motivations. First, risk mitigation could be
reputational (Peloza, 2006) or related to environmental
management developed to reduce environmental risks.
Second, CSP could generate benefits or reduce costs, both of
which improve companies’ FP (Margolis et al., 2007). For
example, it could mitigate the effects of negative regulatory or
legislative actions (Freeman, 1984; Berman et al., 1999).
Furthermore, positive community relationships may lead to
company tax advantages. Third, if companies reach successful
levels of FP, they could then be asked for social and
environmental investments (Campbell, 2006). Generalized
reciprocity may also motivate companies that do well to do
good (Margolis et al., 2007). Kurucz et al. (2008) consider the
reduction of cost and risk key to the positive relationship
between CSP and companies’ FP.
2.2 Literature review: interactions between CSP,
SSCP and firms’ FP
Previous research comprises an important number of studies
that confirm environmental proactivity reduces costs and risks
(Berman et al., 1999; Dechant et al., 1994). Similarly, several
works support that the costs of social responsibility are
minimal, and potential benefits include employee satisfaction

and productivity (Moskowitz, 1972; Parket and Eilbirt, 1975;
Solomon and Hanson, 1985; McGuire et al., 1988; Wu,
2006). Another set of papers suggests that the appeal of CSP,
rather than its substantive impact, generates financial returns.
In this view, not the actual effect of doing good but the
appearance of it, especially to shareholders, raises stock price,
raises demand for products and makes workers more
committed (Margolis et al., 2007). Pivato et al. (2008) claim
that social performance benefits brand loyalty by building
trust in customers. Similarly, Ribstein (2005) considers that
CSR benefits companies’ FP by improving strategy processes
and raising employee, customer and society loyalty.
Furthermore, managing the claims of companies’ stakeholders
could cause adaptation to external demands that increases
efficiency (Freeman and Evan, 1990). Companies can be
more successful by developing (up to some margin)
relationships with customers, employees, communities and
governments (Harrison and St. John, 1994; Kotter and
Heskett, 1992) which differentiate their products/services
(Kapstein, 2001). A perception as “ethical” improves a
company’s reputation (Klein and Dawar, 2003; Fombrun and
Shanley, 1990; Peloza, 2005; Turban and Greening, 1996)
and attracts socially responsive investors (Kapstein, 2001).
Porter and Kramer (2002) argue that philanthropy and
competitive advantage become mutually reinforcing, a
virtuous cycle.
Specific SCM literature in this field usually hypothesizes
that high levels of SSCP can reduce monetary risks and
increase companies’ FP (Owens, 1972; Ashby et al., 2012).
The main theoretical perspective testing the impact of supply
chain environmental performance on FP is the natural
resource-based view of companies (Vachon and Klassen,
2006). An environmental management strategy founded on
resources can theoretically create sustained strategic
advantages. Klassen and Whybark (1999) found evidence that

the selection of pollution prevention technologies enabled
manufacturers to do things competitors find difficult to
replicate. Christmann (2000) argued that companies can
Volume 19 · Number 3 · 2014 · 332–350
334
develop new capabilities that improve their competitive
advantages from environmental management to other
management areas and, therefore, improve their FP.
Specifically, Zhu and Cote (2004) demonstrate that SSCM
allows companies to concurrently improve their economic and
environmental performance. This claim is in line with
previous findings that SSCM can yield not only environmental
but also financial benefits (Walton et al., 1998). Several case
studies suggest that SSCM, including the use of standards (i.e.
ISO 14000), improves efficiency and reduces costs (Handfield
et al., 1997; Walton et al., 1998). Carter and Ellram (1998)
found that SSCM that reduces resource consumption through
recycling, reuse and appropriate waste management saves
costs and increases FP. Carter et al. (1999, 2000) support this,
noting that poor SSCM can cause costs, including fines and
liabilities. Alvarez Gil et al. (2001) and Sroufe (2003) argue
that environmental practices, such as SSCM, have a
significant impact on companies’ competitiveness, risk
exposure and FP. Similarly, Bowen et al. (2001) and Hall
(2003) suggest that SSCM allows companies to reduce costs

by including suppliers in a participative decision-making
process that promotes environmental innovations. Zhu and
Cote (2004) show how companies can improve their FP
through SSCM that transforms waste into resources.
Furthermore, Rao and Holt (2005) associated the results of
SSCP, including cost and risk reductions and improved
corporate image and environmental performance, with
better FP.
SCM literature has found some negative consequences from
effective SSCM. Min and Galle (1997) identified different
costs, including those stemming from environmental
programs and uneconomical recycling and reuse, as the main
barriers to SSCM’s implementation, which could reduce FP.
This finding agrees with that of the study by Walley and
Whitehead (1994), who argue that environmental challenges
have always been costly and offered little financial payback.
From a different perspective, Zhu and Sarkis (2007) found
that when market pressures improve SSCP, companies’ FP
tends to deteriorate.
The following seven are among the principal reasons of why
the link between FP and CSP remains unclear:
1 Schaltegger and Synnestvedt (2002) and Ullman (1985)
have criticized empirical studies for lacking theoretical
foundation.
2 Other authors have concluded that the positive
relationship between CSP and FP resulted from poor
event study methodology (Lockett et al., 2006;
McWilliams and Siegel, 1998, 1998).
3 Brammer and Millington (2008) and Waddock and
Graves (1997) indicate that the fundamental reason for
the uncertainty about the relationship between CSP and

FP refers to some methodological problems measuring
CSP.
4 Aupperle et al. (1985), Brammer and Millington (2008),
Carroll (1979), Waddock and Graves (1997) and Wood
(1991) reveal that CSP is a multidimensional construct,
with behaviors ranging across a huge variety of related
inputs.
5 According to Barnett (2007), the impact of CSP on FP
varies from one firm to the other, indicating inconclusive
results attributable to situational factors.
6 Pivato et al. (2008) drew attention to the importance
of moderating variables such as industry- and
country-specific factors.
7 other authors have found the relationship between CSP
and FP non-progressive (Barnett and Salomon, 2012;
Schaltegger and Synnestvedt, 2002; Wagner and Blom,
2011; Wagner et al., 2002).
For Barnett and Salomon (2012), the link between FP and
CSP is U-shaped: companies with low CSP have higher FP
than companies with moderate CSP, but companies with
high CSP have the highest FP. Schaltegger and Synnestvedt
(2002) found a curvilinear relationship between CSP and
firms’ FP.
2.3 Hypotheses development
Although claims of a positive relationship between SSCP and
FP have gained relative strength in the field, the link between
them is still ambiguous. Most of the research reviewed
consisted of case studies of only one or two companies (Carter
and Easton, 2011; Seuring, 2012), and thus provided limited
support for global conclusions. Schaltegger and Synnestvedt

(2002) argue that this relationship may differ depending on
the regulatory regime, cultural setting, customer behavior,
type of industry and size of company. Carroll and Shabana
(2010), Barnett (2007) and Pivato et al. (2008) support this
view, indicating that one depicts this relationship better by
accounting for moderating variables and situational
contingencies. Furthermore, some questions about this topic
remain open, and answering them will yield a better
understanding of this phenomenon:
● Is the relationship between SSCP and firms’ FP
bidirectional?
● Has the financial crisis changed it?
● Does it vary among international markets? and
● Can it be influenced or moderated by the economic sector
in which companies operate?
Few studies have focused on testing the possible bidirectional
relationship between CSP and firms’ FP. Orlitzky et al. (2003)
noted that both instrumental stakeholder theory and
slack resources descriptions were accurate, suggesting
bidirectionality. Surroca et al. (2010) argue for giving it a
bidirectional framework. Hart (1995), Shrivastava (1995a,
1995b) and Karagozoglu and Lindell (2000) provide a
theoretical basis for the bidirectional win-win perspective,
arguing that CSP improvements can improve firms’ FP, which
then enhances CSP. Schreck (2011) theorized that improved
CSP might improve profitability through increased
operational efficiency and consumer or employee satisfaction,
in line with slack resource theory.
The studies that try to explain the influence of the financial
crisis on this relationship are few (Theotokas and Giannarakis,
2011). Singh (2013) analyzed the FP of some socially
responsible investments, compliant with CSR issues, before

and after the financial crisis and concludes that companies
who complied with environmental, social and governance
(ESG) principles could mitigate the harm to FP in bear
Volume 19 · Number 3 · 2014 · 332–350
335
market periods. Karaibrahimoglu (2010) also considers the
effects of the financial crisis on CSP and CSR, concluding that
companies’ slack resources available to invest in CSP
significantly decreased during the financial downturn, more so
in the USA than in Europe and other countries. Other works
also examined the impact of the crisis on CSR projects
(Arevalo and Aravind, 2010; Yelkikalan and Köse, 2012).
Njoroge (2009) claimed that in times of crisis, reduced
investment in CSR and CSP is needed to reduce costs and,
consequently, improve FP. Gallego et al. (2013) found that
CSP has no influence on a company’s FP during the financial
crisis period. Based on these findings, we propose to test the
following hypothesis:
H1. The possible bi-directional relationships between SSCP
and corporate FP vary depending upon financial
market growth patterns.
There is general agreement that corporate culture
influences firms’ FP (Deshpande et al., 1993; Denison and

Mishra, 1995; Han et al., 1998). Thus, the link between
CSP and firm’s FP should also be influenced by cultural
aspects that vary between countries and geographical areas
(Sugita and Takahashi, 2013). Branzei et al. (2001) found
Chinese managers have different views on CSP than the
Japanese. Similarly, Wagner (2009) found that CSP and FP
are moderated by national culture. Ringov and Zollo (2007)
concluded that national culture (power distance,
individualism, masculinity and uncertainty avoidance)
influenced CSP in different ways in North America, Europe
and Asia. Therefore, national variations in the CSR concept
influence expectations of CSR and CSP and their impact on
FP (Scholtens and Kang, 2013). Miras et al. (2013)
investigated the moderating role of national culture in CSP
and FP, and conclude that the role exists. We extend this
debate to the relationship between SSCP and firms’ FP,
and propose to test the following hypothesis:
H2. The possible bidirectional relationships between SSCP
and corporate FP varies in different countries’ financial
markets depending upon financial market growth
patterns.
Several academics indicated exogenous factors, such as the
growth of an industry, affect the relationship between CSP
and FP (Russo and Fouts, 1997). Similarly, Freedman and
Jaggi (2005) revealed the link between firms’ FP, and their
CSP differed in chemical, energy, vehicle and insurance
companies. Furthermore, Elsayed and Paton (2005) found
CSP had a positive impact on FP in the chemical and
telecommunication industries, but a negative impact on FP in
textiles, clothing, metals and motor vehicles. We also
contribute to this debate extending the possible industry effect
on SSCP and firms’ FP, and thus propose the following
hypothesis:

H3. The possible bidirectional relationships between SSCP
and corporate FP is modified by the industry sector in
which companies operate and financial market growth
patterns.
3. Data, measures and method
3.1 Measures of FP and SSCP
Previous research addresses the complexity of measuring
multidimensional constructs such as FP, CSP and SSCP
(Waddock and Graves, 1997; Soana, 2011). Summarizing
previous works mainly uses the following five methods:
1 content analysis (Abbott and Monsen, 1979; Gray et al.,
1995; Patten and Crampton, 2004; Wolfe, 1991);
2 questionnaire surveys (Aupperle, 1991; Aupperle et al.,
1985; Maignan and Ferrel, 2000);
3 reputational measures (Bowman and Haire, 1975;
McGuire et al., 1988;
4 case studies (Clarkson, 1991; Patten, 1992; Cho, 2009);
and
5 CSR ratings of social and environmental audits (Abbott
and Monsen, 1979; Cho and Patten, 2007; Graves and
Waddock, 2000; Greening and Turban, 2000; Griffin and
Mahon, 1997; Gjølberg, 2009; Waddock and Graves,
1997).
This research uses financial and supply chain performance
indicators to evaluate the relationship between FP and SSCP.
SSCP indicators came from the ASSET4® database of
Datastream provided by Thomson Reuters Inc., which
provides objective and systematic ESG data using �280 key

performance indicators and 750 individual data points and
their original data sources from �4,000 global companies,
including MSCI World, MSCI Europe, STOXX 600,
NASDAQ 100, ASX 300 and MSCI emerging markets.
Among the many studies addressing some of the problems of
selecting adequate measures of corporate CSP (Margolis and
Walsh, 2001), the Kinder, Lydenberg and Domini[2] (KLD)
and ASSET4 measures are recognized as the most complete
ratings of CSP and social responsibility. They use a
multidimensional variable that captures a wide range of
stakeholder performance issues. Specifically, the key
performance indicators are assessed by independent external
social audits (Orlitzky et al., 2003) that apply social and
environmental screens, thus reflecting companies’ social,
environmental, economic and corporate governance strengths
and weaknesses.
SSCP was measured through a three-step procedure. First,
an intensive search of the ASSET4 ESG database identified
the key performance indicators of SSCP (see Table AI in the
Appendix for a complete description of each). Next, a factor
analysis led to a dimension reduction of all SSCP indicators.
Because the key performance indicators are binary, we
computed their matrix of tetrachoric correlations for factor
analysis (Bock and Lieberman, 1970; Knol and Berger, 1991).
The exploratory factor analysis of the SSCP construct was
satisfactory. Table AII in the Appendix reveals that only one
extracted factor had an eigenvalue higher than 1 that refers to
the scree plots of SSCP and FP. We implemented the
Kaiser-Guttman factor rotation method. However, the solution
could not be rotated because only one component was extracted.
All of these considerations indicate the unidimensionality of
the SSCP factor. This agrees with the Kaiser-Guttman
method’s tendency to overestimate the number of factors
(Courtney, 2013). The variance explained by the SSCP
factor achieves satisfactory values above 87 per cent. The

Volume 19 · Number 3 · 2014 · 332–350
336
factorial loadings of each different indicator are significant.
Similarly, the factor analyses are optimal. The
Kaiser-Meyer-Olkin test value is above 0.85. The Bartlett’s
sphericity tests indicate that the correlation matrix of the
variables included in the analysis differs significantly from
the identity matrix. Internal consistency is assured because the
values provided by Cronbach’s alpha and Revelle’s beta
(Revelle, 1979) are above 0.7 (Nunnally, 1978; Table AI in
Appendix). Furthermore, composite reliability is above 0.9.
Thus, although Cronbach’s alpha tends to underestimate true
reliability (Peterson and Kim, 2013), the differences are
non-significant. The measurement scales are highly reliable,
indicating the SSCP theoretical concept seems properly
defined by the measurement variables (see Table AII and
Figure A1 in Appendix). Finally, in a third step, we obtained
the SSCP for each company by normalizing factor scores. The
SSCP factor varies from 0 to 1, reflecting companies’ lower or
higher commitment to SSCP.
Twenty-one FP indicators were obtained from the
Datastream database (see Table AIII in Appendix for their
definitions). All were classified into three different categories:
1 Margins/Performance (FP-MA), which measures a

company’s commitment to, and effectiveness at,
maintaining a stable cost base, reflecting its capacity to
increase its margins by improving its performance,
including production process innovations.
2 Profitability/Shareholder Loyalty (FP-PR), which measures
a company’s commitment to, and effectiveness at,
generating high return on investments and a loyal
shareholder base.
3 Revenue/Customer Loyalty (FP-RE), which measures a
company’s commitment to, and effectiveness at,
generating long-term revenue growth, reflecting its
capacity to grow while maintaining a loyal client
base through satisfaction programs and avoiding
anti-competitive behaviors and price fixing.
As with SSCP key performance indicators, we undertook three
factor analyses. Their results were also satisfactory, showing
high adequacy and reliability (see Table AIV and Figure A1 in
Appendix). Then the factor-normalized scores were obtained
to get the companies’ FP in three dimensions. As with the
SSCP factor, the three FP constructs range from 0 to 1,
reflecting companies’ levels of financial success. Although
these measures of FP can be biased by accounting differences
among companies, McWilliams et al. (2006) argued that other
measures of FP, such as market-based proxies, only focus on
shareholders, although sustainability and SSCP also affect
non-financial stakeholders.
3.2 Descriptive analysis
We monitored the selected companies from 2004 to 2011
using ASSET4 and DataStream databases. Instead of a
regional or industry focus as in previous research, this paper
analyzes an impressive 3,941 firms – 31,528 firm-years –

grouped in ten primary economic sectors in the Global
Industry Classification Standard system. However, there was
no match between SSCP and FP for 41 companies, resulting
in a final total of 3,900 firms and 31,200 firm-years (see
Table AV and Table AVI in Appendix for the distribution of
companies in each country and economic sector).
Table I shows the main descriptive statistics of FP and
SSCP. The maximum and minimum values of FP and SSCP
dimensions are widely diverse, a promising sign for the
investigating the dependence patterns between these
constructs.
The mean values of SSCP increased from 2004 to 2008,
coinciding with large economic growth in major world
economies. Furthermore, mean scores of SSCP decreased
from 2009 to 2011, the time of the financial crisis. This
suggests that SSCP increases while companies’ financial
success increases and the two decrease together. However,
these findings should be tested to support reliable conclusions.
Finally, FP also seems to be influenced by market conditions,
showing similar behavior to SSCP (except for the FP-PR
dimension, which displays a positive general trend for the
sample).
3.3 Econometric models
Recent meta-analyses examining the relationship between
companies’ financial success and sustainability practices
mostly used linear regression (Roman et al., 1999; Margolis
and Walsh, 2003; Orlitzky et al., 2003; Wu, 2006; Van
Beurden and Gössling, 2008). However, with very few
exceptions (Bird et al., 2006; Chatterji et al., 2007), the
literature lacks studies of causation between SSCP and FP.
Among the various methods available to analyze the causation
of these constructs and its direction, the literature highlights
the distributed-lag and Granger causality models. We found

the latter more suitable for the purposes of this research. The
distributed-lag model focuses only on timing and may require
determining how far back in time to go to find any interaction
between SSCP and FP. The Granger causality model is more
concerned with precedence than the usual sense of causation
(Scholtens, 2008). Thus, the Granger causality model should
yield convincing evidence relevant to such questions as
whether changes in SSCP cause changes in FP and vice versa.
It allows capturing bidirectional causality between SSCP and
FP (Brooks, 2002).
The Granger causality test is quite simple (Cheng and Lai,
1997). It is a convenient approach for detecting causation
between two variables (Yang, 2000): one called one called xt
(Granger-cause), and one called yt, if the prediction of the
current value of yt is improved by using several past values of
the xt variable and its own past values. Granger’s causality test
requires the series of variables to be stationary. In this
research, the Augmented Dickey and Fuller (1979) unit root
test (ADF) examines the unit roots and stationary property of
the variables (see the last column of Table I). The values of the
ADF tests for all variables indicate that all are stationary
because the null hypothesis of the ADF test – i.e. presence of
a unit root – is rejected for all variables at a 1 per cent
confidence level. Therefore, the Granger causality test will
provide robust estimates. The lag-length selection of the
model in Table II is based on Akaike’s information criterion
(AIC) and Schwarz’s information criterion (SIC).
As shown here, the AIC and SIC favor a model with three
lags. To test for Granger causation and following Scholtens
(2008), we estimate the following equations:

Volume 19 · Number 3 · 2014 · 332–350
337
SSCPi,t � �0 � �1FPi,t-1 � �2FPi,t-2 � �3FPi,t-3 �
�4SSCPi,t-1
� �5SSCPi,t-2 � �6SSCPi,t-3 � �i,t (1)
FPt � �0 � �1SSCPt-1 � �2SSCPt-2 � �3SSCPt-3 � �4FPt-
1
� �5FPt-2 � �6FPt-3 � �i,t (2)
where, SSCPi,t refers to the level of SSCP of company i in
period t; FPi,t is the level of FP of company i in period t; �i is
the regression coefficient; and �i,t and �i,t are each equation’s
residuals.
4. Results
Tables III-V show parameter estimates for the Granger
causality tests. Table III indicates bidirectional causality
between margins (FP-MA) and revenue (FP-RE) and SSCP
for two reasons. First, both margins and revenue influence
companies’ SSCP during stability and crisis. This effect
clearly supports the postulates of the slack resources theory,
which argues that the availability of slack, financial and other
resources provide the chance to invest in CSP, making FP a
predictor of SSCP. Second, SSCP caused companies’ margins
Table I Descriptive statistics for SSCP and FP measures
Total sample (n � 3,900) Minimum Maximum Mean SD

Variance Skewness Kurtosis ADF
SSCP (2011) 0.0667 0.9381 0.4982 0.3204 0.103 0.025 �1.629
�12.717a
SSCP (2010) 0.0639 0.9423 0.4993 0.3203 0.103 0.028 �1.624
�16.543a
SSCP (2009) 0.0675 0.9417 0.5005 0.3216 0.103 0.030 �1.644
�18.321a
SSCP (2008) 0.0755 0.9437 0.5058 0.3196 0.102 �0.007
�1.615 �17.520a
SSCP (2007) 0.0763 0.9496 0.5053 0.3186 0.102 �0.026
�1.590 �15.791a
SSCP (2006) 0.1035 0.9623 0.5013 0.3201 0.102 0.115 �1.640
�12.632a
SSCP (2005) 0.1021 0.9682 0.4937 0.3178 0.101 0.219 �1.615
�13.583a
SSCP (2004) 0.1193 0.9702 0.4847 0.3178 0.101 0.368 �1.596
�16.542a
FP-MA (2011) 0.0312 0.9723 0.4931 0.3037 0.0922 0.044
�1.343 �15.313a
FP-MA (2010) 0.0423 0.9801 0.4942 0.3022 0.0913 0.062
�1.331 �19.756a
FP-MA (2009) 0.0414 0.9812 0.5004 0.3029 0.0917 0.046
�1.331 �18.953a
FP-MA (2008) 0.0401 0.9816 0.5006 0.3021 0.0913 0.033

�1.317 �14.396a
FP-MA (2007) 0.0404 0.9823 0.4951 0.3020 0.0912 0.114
�1.332 �17.502a
FP-MA (2006) 0.0619 0.9901 0.4948 0.2971 0.0883 0.151
�1.253 �16.515a
FP-MA (2005) 0.0513 0.9934 0.4957 0.2929 0.0858 0.162
�1.206 �19.369a
FP-MA (2004) 0.0623 0.9922 0.4861 0.2912 0.0848 0.224
�1.181 �13.579a
FP-PR (2011) 0.0109 0.9709 0.5100 0.2999 0.0899 0.010
�1.331 �15.013a
FP-PR (2010) 0.0125 0.9676 0.5099 0.2991 0.0895 �0.041
�1.315 �14.967a
FP-PR (2009) 0.0154 0.9688 0.5098 0.3004 0.0902 �0.031
�1.311 �18.888a
FP-PR (2008) 0.0171 0.9812 0.5097 0.2978 0.0887 �0.022
�1.252 �16.531a
FP-PR (2007) 0.0243 0.9823 0.5050 0.2990 0.0894 0.004
�1.287 �15.002a
FP-PR (2006) 0.0371 0.9855 0.5034 0.2986 0.0892 0.054
�1.262 �18.396a
FP-PR (2005) 0.0491 0.9834 0.5004 0.2972 0.0883 0.072
�1.225 �19.620a
FP-PR (2004) 0.0543 0.9888 0.5001 0.2933 0.0860 0.106

�1.234 �17.060a
FP-RE (2011) 0.0111 0.9712 0.4944 0.3011 0.0907 0.055
�1.305 �20.321a
FP-RE (2010) 0.0151 0.9788 0.4951 0.2973 0.0884 0.069
�1.252 �12.363a
FP-RE (2009) 0.0154 0.9832 0.4953 0.2952 0.0871 0.150
�1.227 �13.315a
FP-RE (2008) 0.0132 0.9849 0.4950 0.2924 0.0855 0.121
�1.161 �17.513a
FP-RE (2007) 0.0159 0.9810 0.4994 0.2965 0.0879 0.045
�1.262 �14.446a
FP-RE (2006) 0.0199 0.9783 0.5040 0.3011 0.0907 �0.011
�1.323 �15.055a
FP-RE (2005) 0.0232 0.9823 0.5007 0.3012 0.0907 0.034
�1.323 �16.316a
FP-RE (2004) 0.0347 0.9799 0.4971 0.3021 0.0913 0.030
�1.331 �17.777a
Notes: This table shows the main descriptive statistics of the
SSCP measures and the three dimensions of the company’s FP
for every period of the
sample considered (2004-2011). The last column (ADF) refers
to the Augmented Dickey Fuller unit root test values; a H0 of
ADF test (presence of a unit
root) rejected at a significance level of 1 per cent
Table II Symmetric lag-length selection of the econometric
model

Lag AIC SIC
1 5.2345 5.2777
2 5.3499 5.3512
3 5.4333 5.4501
4 5.2265 5.2300
5 5.2202 5.2254
6 5.2155 5.2189
7 5.2012 5.2102
Notes: The table shows the values reached by Akaike’s
information cri-
terion (AIC) in the second column and Schwarz’s information
criterion
(SIC) in the third column for each lag of the econometric model
(first
column). The best lag-length selection is shown in bold
Volume 19 · Number 3 · 2014 · 332–350
338
and revenue, in line with good management theory, indicating
SSCP causes companies’ financial and economic
performance.
Examining the interactions between SSCP and the last

dimension of companies’ FP (i.e. companies’ profitability
[FP-PR]), slightly different behavior is appreciated than that
observed for companies’ margins and revenues because of two
observed effects. First, companies’ profitability caused SSCP
only during the pre-crisis period (2004-2008). This result can
be explained by the slack resources to theory. Second, the
results indicate that SSCP did not cause profitability in a
pre-crisis period, but preceded profitability during the crisis.
These results indicate companies’ managers should take care
of SSCM in down markets because of its influence on
profitability levels. All of these considerations indicate that the
emergence and consolidation of the financial crisis did change
the precedence link between SSCP and companies’ FP,
supporting H1.
Table IV presents the estimates of the Granger causality
tests between SSCP and FP when the selected companies are
grouped by geographical areas. It appears that SSCP and the
three FP dimensions of African companies are not related.
This indicates the absence of precedence patterns between
companies’ FP (i.e. margins, revenue, and profitability) and
SSCP. This is not in line with the premises of the slack
resources or good management theories. There was
bidirectional causality between the SSCP and FP of American
companies during the two periods of the full sample. In
addition, during market stability, there was bidirectional
causality from SSCP to the three dimensions of FP in
European companies. However, the SSCP and FP of
European companies are not associated during the financial
crisis, a result that may indicate influence on the FP of
European companies from other financial factors.
Results reveal bidirectional causation between Asian
companies’ FP and SSCP, supporting slack resources and
good management theories. The only exception is that SSCP
did not cause the profitability (FP-PR) of Asian companies

during the pre-financial crisis period. Finally, results in
Table IV suggest some interactions between the SSCP and FP
of Oceanian enterprises, namely, SSCP precedes companies’
margins and revenues. Furthermore, Oceanian companies’
profitability precedes their SSCP during the financial crisis.
However, the profitability of these companies did not predict
their SSCP during the market downturn. Yet, during the
financial crisis, the Oceanian companies’ SSCP preceded their
profitability. Finally, the results show that, during market
stability (2004-2008), SSCP and revenue were not related.
Summarizing and comparing causation patterns between
SSCP and FP across different geographical areas, it appears
that these linkages are relatively complex, presenting
bidirectional, unidirectional and missing relationships. This
suggests that SSCP – FP relationships vary among financial
markets around the world, supporting H2.
The estimates in Table V reveal the wide diversity in the
SSCP – FP relationship patterns in different economic sectors.
In general, there appears to be bidirectional causation between
companies’ margins and levels of SSCP, with the sole
exception of the telecommunications sector, where SSCP did
not cause margins during the bullish market from 2004 to
2008. This can be explained: telcos during the pre-crisis
period were dealing with the dot-com collapse beginning
around 2001. This effect also appears in this sector when
relations between SSCP and profitability and revenue are
examined to add robustness to the effects observed on those
companies’ margins.
SSCP and all other companies’ revenue seem
bidirectionally related. The results generated by the causality
tests of SSCP and companies’ profitability demonstrate a wide
range of relationship patterns between those constructs in
different economic sectors. First, companies’ profitability did

not cause SSCP during the pre-crisis period (2004-2008),
with the exceptions of the healthcare, non-cyclical consumer
goods and services, technology and utilities sectors. Moreover,
companies’ profitability did not precede the SSCP attained by
companies during the financial crisis, except for the
non-cyclical consumer goods and services and utilities sectors.
These findings may indicate that companies in non-cyclical
economic sectors were less harmed by the financial crisis. On
the other hand, companies that showed a significant link
between profitability and SSCP during the pre-crisis period
and in cyclical sectors, such as healthcare and technology,
were more market-sensitive and more likely to put economic
and financial issues ahead of social and environmental ones
during the financial crisis. Exploring the opposite relationship
reveals that SSCP causes profitability of companies operating
in the financial, non-cyclical consumer goods and services and
utilities sectors. Thus, utilities and non-cyclical consumer
goods and services companies showed a bidirectional link
between SSCP and FP during the sample period. However,
the precedence link between SSCP and financial companies’
profitability disappeared during the bear market, when their
profitability was strongly harmed by toxic assets such as
sovereign debt of questionable liquidity and negative return,
collateralized debt obligations and subprime mortgages. On
the contrary, SSCP caused the FP-PR of basic materials,
Table III Granger causality tests of SSCP and FP
SSCP does not Granger cause FP dimension FP dimension does
not Granger cause SSCP
Pre-crisis period Crisis period Pre-crisis period Crisis period
FP (dimensions) F-value Significance F-value Significance F-
value Significance F-value Significance
FP-MA (margins) (94.41) 0.000 (243.05) 0.000 (123.22) 0.000

(101.11) 0.000
FP-PR (profitability) (3.04) 0.170 (8.41) 0.000 (2.64) 0.032
(2.25) 0.061
FP-RE (revenue) (67.21) 0.000 (33.65) 0.000 (91.21) 0.000
(77.21) 0.000
Notes: This table shows the p-values of the Granger causality
tests between SSCP and firms’ FP for the full sample and for
both the pre-crisis and of
financial crisis periods. Parameters are shown in bold and
italics when the null of no causation can or cannot be rejected.
Parameters inside parenthe-
ses refer to the F-values of the Granger causality tests
Volume 19 · Number 3 · 2014 · 332–350
339
Ta
b
le
IV
G
ra
ng

er
ca
us
al
ity
te
st
s
of
SS
C
P
an
d
FP
by
ge
og
ra
ph
ic
al
ar
ea

A
fr
ic
a
A
si
a
Eu
ro
p
e
A
m
er
ic
a
O
ce
an
ia
FP
d
im
en

si
o
ns
Pr
e-
cr
is
is
p
er
io
d
C
ri
si
s
p
er
io
d
Pr
e-
cr
is

is
p
er
io
d
C
ri
si
s
p
er
io
d
Pr
e-
cr
is
is
p
er
io
d
C
ri

si
s
p
er
io
d
Pr
e-
cr
is
is
p
er
io
d
C
ri
si
s
p
er
io
d
Pr

e-
cr
is
is
p
er
io
d
C
ri
si
s
p
er
io
d
SS
C
P
do
es
no
t
G

ra
ng
er
ca
us
e
FP
di
m
en
si
on
FP
-M
A
(M
ar
g
in
s)
0.
71
2
0.

89
9
0.
00
0
0.
00
0
0.
00
0
0.
55
1
0.
00
0
0.
00
0
0.
00
0
0.

00
0
FP
-P
R
(P
ro
fi
ta
b
ili
ty
)
0.
51
2
0.
39
1
0.
06
1
0.
00

0
0.
00
0
0.
82
1
0.
00
0
0.
00
0
0.
56
9
0.
04
2
FP
-R
E
(R
ev

en
ue
)
0.
65
4
0.
70
1
0.
00
0
0.
00
0
0.
00
0
0.
44
9
0.
00
0

0.
00
0
0.
00
0
0.
00
0
FP
di
m
en
si
on
do
es
no
t
G
ra
ng
er
ca

us
e
SS
C
P
FP
-M
A
(M
ar
g
in
s)
0.
89
2
0.
76
1
0.
00
0
0.
00

0
0.
00
0
0.
74
3
0.
00
0
0.
00
0
0.
00
0
0.
00
0
FP
-P
R
(P
ro

fi
ta
b
ili
ty
)
0.
31
0
0.
53
4
0.
00
3
0.
00
9
0.
00
0
0.
79
9

0.
00
0
0.
00
0
0.
06
9
0.
22
1
FP
-R
E
(R
ev
en
ue
)
0.
82
1
0.

83
2
0.
00
0
0.
00
0
0.
00
0
0.
50
1
0.
00
0
0.
00
0
0.
00
3
0.

00
0
N
o
te
s:
Th
is
ta
bl
e
sh
ow
s
th
e
p-
va
lu
es
of
th
e
G

ra
ng
er
ca
us
al
ity
te
st
s
be
tw
ee
n
SS
C
P
an
d
fir
m
s’
FP
w

he
n
th
e
fu
ll
sa
m
pl
e
is
di
vi
de
d
by
ge
og
ra
ph
ic
al
ar
ea

,
bo
th
be
fo
re
an
d
du
rin
g
th
e
fin
an
ci
al
cr
is
is
.
Pa
-
ra

m
et
er
s
ar
e
sh
ow
n
in
bo
ld
an
d
ita
lic
s
w
he
n
th
e
nu
ll

of
no
ca
us
at
io
n
ca
n
or
ca
nn
ot
be
re
je
ct
ed
Volume 19 · Number 3 · 2014 · 332–350

340
healthcare and non-cyclical companies during the financial
crisis. These considerations suggest that the economic sector
in which companies operate can modify the relationship
between SSCP and FP, supporting H3.
5. Conclusions
Sustainability performance measurement is one of the key
issues comprising the broad concept of CSR. The possibility
of measuring the companies’ social and environmental
performance brings up the opportunity to analyze the
instrumentality of CSR. Considering the usefulness, in
financial terms, of CSR activities in SCM, may promote the
implementation of sustainability practices in companies’
supply chains. Sustainability performance measurement
literature provides conflicting views about the relationship
between SSCP and companies’ FP. One view is that the best
financial performers have slack resources available to invest in
improving their SSCP. An opposite view is that companies
that increase their SSCP through their commitment to
environmental concerns, consequently, improve their FP.
This view holds that addressing environmental issues as part
of corporate strategy can create new opportunities for
competition, as well as new ways to add value to core business
programs, improving long-term FP. This paper investigated
empirical evidence about the possibly bidirectional
relationship patterns between SSCP and FP. Multivariate
measures of SSCP and FP supplied Granger causality tests of
these constructs with a large, diverse sample of 3,900 firms
over eight years (2004-2011).
One of the most important findings is the support for a
significant, bidirectional causation between SSCP and

companies’ margins and revenue. This remained true for
companies’ profitability and SSCP during bull markets but
not during the financial crisis. These findings show that
managers mostly serve shareholders’ interests during bear
markets, prioritizing financial and economic issues over
environmental concerns. Furthermore, this research reveals
that the relationship between SSCP and FP is not static but
changes with macroeconomic conditions. It also varies with
geography. Regions showed bidirectional relationships except
in Africa and in Europe specifically during the financial crisis.
These exceptions need further analysis.
Another relevant finding of this paper is that for all other
companies analyzed, SSCP acts as a driver with a significant
impact on FP. Furthermore, this relationship is even more
significant when FP is measured through margins. Because
operational costs are a key factor in margins, this research
emphasizes that SSCP lets companies reduce costs
(specifically related to environmental expenditures) by
developing new technologies that mitigate their activities’
environmental impact. This is particularly relevant because
increasing SSCP benefits companies in other ways:
● improved efficiency;
● higher product quality;
● a lead on competitors and legislation;
● access to new markets;
● increased employee motivation and satisfaction;
● improved public relations;
Table V Granger causality tests of SSCP and FP by economic
sector
FP-MA (Margins) FP-PR (Profitability) FP-RE (Revenue)
Pre-crisis
period

Crisis
period
Pre-crisis
period
Crisis
period
Pre-crisis
period
Crisis
period
SSCP does not Granger cause FP dimension
Basic materials 0.000 0.000 0.251 0.011 0.000 0.000
Cyclical consumer goods and services 0.000 0.000 0.899 0.445
0.000 0.000
Energy 0.000 0.000 0.201 0.119 0.021 0.000
Financial 0.000 0.000 0.041 0.404 0.000 0.000
Healthcare 0.023 0.000 0.788 0.011 0.000 0.000
Industrials 0.000 0.000 0.506 0.401 0.000 0.000
Non-cyclical consumer goods and services 0.000 0.000 0.002
0.019 0.000 0.000
Technology 0.000 0.000 0.149 0.772 0.000 0.000
Telecommunications services 0.059 0.000 0.455 0.401 0.059
0.000
Utilities 0.010 0.000 0.034 0.018 0.001 0.000
FP dimension does not Granger cause SSCP
Basic materials 0.000 0.000 0.432 0.591 0.000 0.000
Cyclical consumer goods and services 0.000 0.000 0.531 0.602
0.000 0.000
Energy 0.000 0.000 0.589 0.291 0.000 0.000
Financial 0.000 0.000 0.201 0.243 0.000 0.000

Healthcare 0.000 0.005 0.021 0.242 0.000 0.002
Industrials 0.000 0.000 0.897 0.145 0.000 0.225
Non-cyclical consumer goods and services 0.000 0.000 0.019
0.004 0.000 0.012
Technology 0.000 0.000 0.001 0.306 0.000 0.000
Telecommunications services 0.000 0.005 0.632 0.159 0.000
0.011
Utilities 0.012 0.000 0.029 0.023 0.011 0.009
Notes: This table shows the p-values of the Granger causality
tests of SSCP and firms’ FP when the full sample is divided by
the economic sector be-
fore and during the financial crisis. Parameters are shown in
bold and italics when the null of no causation can or cannot be
rejected
Volume 19 · Number 3 · 2014 · 332–350
341
● financial aid; and
● better organizational reputation.
In addition, the link between SSCP and FP varies among
cyclical and non-cyclical companies.
The following three are among the main limitations of this
research:

1 We used a huge sample of companies and years of data
that generated statistical robustness; yet, to refine the link
between SSCP and FP, one must analyze the quality of
SSCP management with respect to the range of
possibilities for improving SSCP efficiently (Schaltegger
and Synnestvedt, 2002).
2 We used environmental indicators to measure SSCP, but
characterized this unobservable factor by explicit
integration of environmental or social objectives which
extend the economic dimension to the triple bottom line
(Seuring and Müller, 2008), thus comprising social issues
such as occupational health and safety and child labor.
3 Granger causality tests in this research only capture a
correlation between the current value of one variable and
the past values of others (Scholtens, 2008).
Thus, it does not mean that changes in one variable cause
changes in another variable (Brooks, 2002). Granger causality
focuses on lead – lag relationships, which do not necessarily
correspond with standard causation (Scholtens, 2008).
This research provides, from a sustainability performance
measurement approach, a global overview about the
interaction between SSCP and FP, but only preliminary
evidence. Much remains to be learned about this relationship.
Future research seems promising and should more deeply
explore the causality by testing the relationship in the
following three ways:
1 through a country perspective, addressing a nation’s
economic development, environmental regulations,
governmental interventions and other institutional
aspects;

2 through different market structures, addressing different
market rules and long-term sources of financing; and
3 through different industries, showing their levels of
exposure to environmental and other issues.
Future research in the field should also extend this research to
obtain the equations’ coefficients, implementing models such
as those proposed by Arellano and Bond (1991), allowing
better understanding of the very complex phenomenon this
research analyzes. Finally, further research can measure the
social dimension of SSCP to gain new and interesting insights
about its interaction with the companies’ economic success.
Notes
1 The literature provides various definitions and terms
for SSCM, including sustainable supply network
management, supply chain environmental management,
green purchasing, sustainable purchasing, environmental
purchasing, green logistics, sustainable supply chain and
green supply chain management (Sarkis et al., 2011).
2 See Sharfman (1996) for an assessment of the
construction of this KLD database.
References
Abbott, W.F. and Monsen, R.J. (1979), “On the
measurement of corporate social responsibility:
self-reported disclosures and a method of measuring
corporate social involvement”, Academy of Management
Journal, Vol. 22 No. 3, pp. 501-515.
Allouche, J. and Laroche, P. (2005), “A meta-analytical

investigation of the relationship between corporate social
and financial performance”, Revue de Gestion des Resources
Humaines, Vol. 57, pp. 18-41.
Alvarez Gil, M.J., Burgos Jimenez, J. and
Céspedes Lorente, J.J. (2001), “An analysis of
environmental management, organizational context and
performance of Spanish hotels”, Omega, Vol. 29 No. 6,
pp. 457-471.
Andersen, M. and Skjoett-Larsen, T. (2009), “Corporate
social responsibility in global supply chains”, Supply Chain
Management: An International Journal, Vol. 14 No. 2,
pp. 75-86.
Anderson, J.C. and Frankle, A.W. (1980), “Voluntary social
reporting: an iso-beta portfolio analysis”, The Accounting
Review, Vol. 45 No. 3, pp. 468-479.
Arellano, M. and Bond, S. (1991), “Some tests of
specification for panel data: Monte Carlo evidence and an
application to employment equations”, The Review of
Economic Studies Limited, Vol. 58 No. 2, pp. 277-297.
Arevalo, J.A. and Aravind, D. (2010), “The impact of the
crisis on corporate responsibility: the case of UN global
compact participants in the USA”, Corporate Governance,
Vol. 10 No. 4, 406-420.
Ashby, A., Leat, M. and Smith, M.H. (2012), “Making
connections: a review of supply chain management and
sustainability literature”, Supply Chain Management: An
International Journal, Vol. 17 No. 5, pp. 497-516.
Aupperle, K.E. (1991), “The use of forced-choice survey
procedures in assessing corporate social orientation”, in

Post, J.E. (Ed.), Research in Corporate Social Performance and
Policy, Vol. 12, JAI Press, Greenwich, CT, pp. 269-279.
Aupperle, K.E., Carroll, A.B. and Hatfield, J.D. (1985), “An
empirical examination of the relationship between corporate
social responsibility and profitability”, Academy of
Management Journal, Vol. 28 No. 2, pp. 446-463.
Barnett, M.L. (2007), “Stakeholder influence capacity and
the variability of financial returns to corporate social
responsibility”, Academy of Management Review, Vol. 32
No. 3, pp. 794-816.
Barnett, M.L. and Salomon, R.M. (2012), “Does it pay to be
really good? Addressing the shape of the relationship
between social and financial performance”, Strategic
Berger, I.E., Cunningham, P. and Drumwright, M.E. (2007),
“Mainstreaming corporate social responsibility: developing
markets for virtue”, California Management Review, Vol. 49
No. 4, pp. 132-157.
Berman, S.L., Wicks, A.C., Kotha, S. and Jones, T.M.
(1999), “Does stakeholder orientation matter? The
relationship between stakeholder management models and
firm financial performance”, Academy of Management
Journal, Vol. 42 No. 5, pp. 488-506.
Volume 19 · Number 3 · 2014 · 332–350

342
Bird, R., Casavecchia, L. and Reggiani, F. (2006), “Corporate
social responsibility and corporate performance: where to
begin?” Working paper, University of Technology, Sydney
& Bocconi University, Milan.
Bock, R.D. and Lieberman, M. (1970), “Fitting a response
model for n dichotomously scored items”, Psychometrika,
Vol. 35 No. 2, pp. 179-197.
Bowen, F.E., Cousins, P.D., Lamming, R.C. and Faruk, A.C.
(2001), “Horses for courses: explaining the gap between the
theory and practice of green supply”, Greener Management
International, Vol. 35, pp. 41-60.
Bowman, E.H. and Haire, M. (1975), “A strategic posture
toward corporate social responsibility”, California
Management Review, Vol. 18 No. 2, pp. 49-58.
Brammer, S. and Millington, A. (2008), “Does it pay to be
different? An analysis of the relationship between corporate
social and financial performance”, Strategic Management
Journal, Vol. 29 No. 12, pp. 1325-1343.
Branzei, O., Vertinsky, I., Takahashi, T. and Zhang, W.
(2001), “Corporate environmentalism across cultures: a
comparative field study of Chinese and Japanese
executives”, Cross Cultural Management, Vol. 1 No. 3,
pp. 287-312.
Brooks, C. (2002), Introductory Econometrics for Finance,
Cambridge University Press, Cambridge.

Burritt, R. and Schaltegger, S. (2010), “Sustainability
accounting and reporting: fad or trend?” Accounting,
Auditing and Accountability Journal, Vol. 23 No. 7,
pp. 829-846.
Campbell, J.L. (2006), “Institutional analysis and the paradox
of corporate social responsibility”, American Behavioral
Scientist, Vol. 49 No. 7, pp. 925-938.
Carroll, A.B. (1979), “A three-dimensional conceptual model
of corporate social performance”, Academy of Management
Review, Vol. 4 No. 4, pp. 497-505.
Carroll, A.B. and Shabana, K.M. (2010), “The business case
for corporate social responsibility: a review of concepts,
research and practice”, International Journal of Management
Reviews, Vol. 12 No. 1, pp. 85-105.
Carter, C.R. and Easton, P.L. (2011), “Sustainable supply
chain management: evolution and future directions”,
International Journal of Physical Distribution and Logistics
Management, Vol. 41 No. 1, pp. 46-62.
Carter, C.R. and Ellram, L.M. (1998), “Reverse logistics: a
review of the literature and framework for future
investigation”, Journal of Business Logistics, Vol. 19 No. 1,
pp. 85-102.
Carter, C.R., Auskalnis, R. and Ketchum, C. (1999),
“Purchasing from minority business enterprises: a
cross-industry comparison of best practices”, Journal of
Supply Chain Management, Vol. 35 No. 1, pp. 28-32.
Carter, C.R., Kale, R. and Grimm, C.M. (2000),
“Environmental purchasing and firm performance: an

empirical investigation”, Transportation Research Part E:
Logistics and Transportation Review, Vol. 36 No. 3,
pp. 219-228.
Chatterji, A.K., Levine, D.I. and Toffel, M.W. (2007), “Do
corporate social responsibility ratings predict corporate
social performance?”, Working paper, Corporate Social
Responsibility Initiative, Harvard University, Cambridge,
MA.
Cheng, B.S. and Lai, T.W. (1997), “An investigation of
co-integration and causality between energy consumption
and economic activity in Taiwan”, Energy Economics,
Vol. 19, pp. 435-444.
Cho, C.H. (2009), “Legitimation strategies used in response
to environmental disaster: a French case study of total SA’s
Erika and AZF incidents”, European Accounting Review,
Vol. 18 No. 1, pp. 33-62.
Cho, C.H. and Patten, D.M. (2007), “The role of
environmental disclosure as a tools of legitimacy: a research
note”, Accounting, Organizations and Society, Vol. 32 Nos.
7/8, pp. 639-647.
Christmann, P. (2000), “Effect of ‘best practices’ of
environmental management on cost advantage: the role of
complementary assets”, Academy of Management Journal,
Vol. 43 No. 4, pp. 663-680.
Christopher, M. (2005), “Logistics and supply chain
management. Strategies for reducing cost and improving
service”, 3rd ed, Financial Times. Pitman Publishing,
London.

Clarkson, M.E. (1991), “Defining, evaluating, and managing
corporate social performance: the stakeholder management
model”, James P.E. (Ed), Research in Corporate Social
Performance and Policy, Vol. 12, Greenwich, CT, JAI Press,
pp. 331-358.
Clarkson, M.E. (1995), “A stakeholder framework for
analyzing and evaluating corporate social performance”,
Academy of Management Review, Vol. 20 No. 1, pp. 92-117.
Cornell, B. and Shapiro, A.C. (1987), “Corporate
stakeholders and corporate finance”, Financial Management,
Vol. 16 No. 1, pp. 5-14.
Courtney, M.G. (2013), “Determining the number of factors
to retain in EFA: using the SPSS R-menu v2.0 to make
more judicious estimations”, Practical Assessment, Research
and Evaluation, Vol. 18 No. 8, pp. 1-14.
Dechant, K., Altman, B., Downing, R.M. and Keeney, T.
(1994), “Environmental leadership: from compliance to
competitive advantage”, Academy of Management Executive,
Vol. 8 No. 3, pp. 7-28.
Denison, D.R. and Mishra, A.K. (1995), “Toward a theory of
organizational culture and effectiveness”, Organization
Science, Vol. 6 No. 2, pp. 204-223.
Deshpande, R., Farley, J.U. and Webster, F.E. Jr. (1993),
“Corporate culture, customer orientation, and
innovativeness in Japanese firms: a quadrad analysis”,
Journal of Marketing, Vo. 57 No. 1, pp. 23-37.
Dickey, D. and Fuller, W. (1979), “Estimation for
autoregressive time series with a unit root”, Journal of the
American Statistical Association, Vol. 74, pp. 427-431.

Donaldson, T. and Preston, L.E. (1995), “The stakeholder
theory of the corporation: concepts, evidence, and
implications”, Academy of Management Review, Vol. 20
No. 1, pp. 65-91.
Eisenhardt, K.M. (1989), “Building theories from case study
research”, Academy of Management Review, Vol. 14 No. 4,
pp. 532-550.
Elsayed, K. and Paton, D. (2005), “The impact of
environmental performance on firm performance: static and
Volume 19 · Number 3 · 2014 · 332–350
343
dynamic panel data evidence”, Structural Change and
Economic Dynamics, Vol. 16 No. 3, pp. 395-412.
Epstein, M.J. and Roy, M.J. (2003), “Improving sustainability
performance: specifying, implementing and measuring key
principles”, Journal of General Management, Vol. 29 No. 1,
pp. 15-31.
Fawcett, S.E., Magnan, G.M. and McCarter, M.W. (2008),
“Benefits, barriers, and bridges to effective supply chain
management”, Supply Chain Management: An International

Journal, Vol. 13 No. 1, pp. 35-48.
Figge, F. and Hahn, T. (2001), “Sustainable value added –
measuring corporate contribution to sustainability”,
Business Strategy and the Environment Conference Proceedings
(ERP Environment, Shipley), Shipley, pp. 83-92.
Figge, F., Hahn, T., Schaltegger, S. and Wagner, M. (2002),
“The sustainability balanced scorecard – linking
sustainability management to business strategy”, Business
Strategy and the Environment, Vol. 11 No. 5, pp. 269-284.
Fombrun, C. and Shanley, M. (1990), “What’s in a name?
Reputation building and corporate strategy”, Academy of
Freedman, M. and Jaggi, B. (2005), “Global warming,
commitment to the Kyoto Protocol, and accounting
disclosures made by the largest public firms from polluting
industries”, The International Journal of Accounting, Vol. 40
No. 3, pp. 215-232.
Freedman, M. and Stagliano, A.J. (1991), “Differences in
social-cost disclosures: a market test of investor reactions”,
Accounting, Auditing and Accountability Journal, Vol. 4
No. 1, pp. 68-83.
Freeman, R.E. (1984), Strategic Management: A Stakeholder
Perspective, Prentice Hall, Englewood Cliffs, NJ.
Freeman, R.E. and Evan, W.F. (1990), “Corporate
governance: a stakeholder interpretation”, Journal of
Behavioral Economics, Vol. 19 No. 4, pp. 337-359.
Freeman, R.E., Harrison, J.S., Wicks, A.C., Parmar, B.L. and
De Colle, S. (2010), Stakeholder Theory: The State of the Art,

Cambridge University Press, Cambridge.
Gallego, I., García-Sánchez, I. and Da Silva Vieira, C. (2013),
“Climate change and financial performance in times of
crisis”, Business Strategy and the Environment, Published
online in Wiley Online Library, available at: http://
onlinelibrary.wiley.com/doi/10.1002/bse.1786/abstract, doi:
10.1002/bse.1786
Gimenez, C. and Tachizawa, E.M. (2012), “Extending
sustainability to suppliers: a systematic literature review”,
Supply Chain Management: An International Journal, Vol. 17
No. 5, pp. 531-543.
Gjølberg, M. (2009), “Measuring the immeasurable?
Constructing an index of CSR practices and CSR
performance in 20 countries”, Scandinavian Journal of
Graves, S.B. and Waddock, S.A. (2000), “Beyond built to last
stakeholder relations in “built-to-last’ companies”, Business
and Society Review, Vol. 105 No. 4, pp. 393-418.
Gray, R., Kouhy, R. and Lavers, S. (1995), “Corporate social
and environmental reporting: a review of the literature and
longitudinal study of UK disclosure”, Accounting, Auditing
and Accountability Journal, Vol. 8 No. 2, pp. 47-77.
Greening, D.W. and Turban, D.B. (2000), “Corporate social
performance as a competitive advantage in attracting a
quality workforce”, Business and Society, Vol. 39 No. 3,
pp. 254-280.
Griffin, J.J. and Mahon, J.F. (1997), “The corporate social
performance and corporate financial performance debate”,
Business and Society, Vol. 36 No. 1, pp. 5-31.

Hahn, T. and Figge, F. (2001), “Beyond the bounded
instrumentality in current corporate sustainability research:
toward an inclusive notion of profitability”, Journal of
Business Ethics, Vol. 104 No. 3, pp. 325-345.
Hall, J. (2003), Environmental Supply Chain Innovation,
Greening of the Supply Chain, Greenleaf.
Han, J.K., Kim, N. and Srivastava, R.K. (1998), “Market
orientation and organizational performance: is innovation a
missing link?”, Journal of Marketing, Vol. 62 No. 4,
pp. 30-45.
Handfield, R.B., Walton, S.V., Seegers, L.K. and
Melnyk, S.A. (1997), “Green value chain practices in the
furniture industry”, Journal of Operations Management,
Vol. 15 No. 3, pp. 293-315.
Harrison, J.S. and St. John, C.H. (1994), Strategic
Management of Organizations and Stakeholders, West, St.
Paul, MN.
Hart, S. (1995), “A natural-resource-based view of the firm”,
Academy of Management Review, Vol. 20 No. 4,
pp. 986-1014.
Hill, C. and Jones, T. (1992), “Stakeholder-agency theory”,
Journal of Management Studies, Vol. 29 No. 2, pp. 131-154.
Husted, B.W. and De Jesus Salazar, J. (2006), “Taking
Friedman seriously: maximizing profits and social
performance”, Journal of Management Studies, Vol. 43
No. 1, pp. 75-91.
Jones, T. (1995), “Instrumental stakeholder theory: a

synthesis of ethics and economics”, Academy of Management
Review, Vol. 20 No. 2, pp. 404-437.
Kapstein, E.B. (2001), “The corporate ethics crusade”,
Foreign Affairs, Vol. 80 No. 5, pp. 105-119.
Karagozoglu, N. and Lindell, M. (2000), “Environmental
management: testing the win-win model”, Journal of
Environmental Planning and Management, Vol. 43 No. 6,
pp. 817-830.
Karaibrahimoglu, Y.Z. (2010), “Corporate social
responsibility in times of financial crisis”, African Journal of
Business Management, Vol. 4 No. 4, pp. 382-389.
Keating, B., Quazi, A., Kriz, A. and Coltman, T. (2008), “In
pursuit of a sustainable supply chain: insights from Westpac
Banking Corporation”, Supply Chain Management: An
Klassen, R.D. and Whybark, D.C. (1999), “The impact of
environmental technologies on manufacturing
performance”, Academy of Management Journal, Vol. 42
No. 6, pp. 599-615.
Klein, J. and Dawar, N. (2003), “Corporate social
responsibility and consumers’ attributions and brand
evaluations in a product-harm crisis”, International Journal
of Research in Marketing, Vol. 21 No. 3, pp. 203-217.
Knol, D.L. and Berger, M.P.F. (1991), “Empirical
comparison between factor analysis and multidimensional

Volume 19 · Number 3 · 2014 · 332–350
344
http://onlinelibrary.wiley.com/doi/10.1002/bse.1786/abstract
http://onlinelibrary.wiley.com/doi/10.1002/bse.1786/abstract
item response models”, Multivariate Behavioral Research,
Vol. 26 No. 3, pp. 457-477.
Kotter, J.P. and Heskett, J.L. (1992), Corporate Culture and
Performance, Free Press, New York, NY.
Kurucz, E., Colbert, B. and Wheeler, D. (2008), “The
business case for corporate social responsibility”, in
Crane, A., McWilliams, A., Matten, D., Moon, J. and
Siegel, D. (Eds), The Oxford Handbook of Corporate Social
Responsibility, Oxford University Press, Oxford, pp. 83-112.
Lockett, A., Moon, J. and Visser, W. (2006), “Corporate
social responsibility in management research: focus, nature,
salience and sources of influence”, Journal of Management
Studies, Vol. 43 No. 1, pp. 115-135.
McGuire, J.B., Sundgren, A. and Schneeweis, T. (1988),
“Corporate social responsibility and firm financial
performance”, Academy of Management Journal, Vol. 31
No. 4, pp. 854-872.
McGuire, J.B., Schneeweis, T. and Branch, B. (1990),
“Perceptions of firm quality: a cause or result of firm
performance”, Journal of Management, Vol. 16 No. 1,

pp. 167-180.
McWilliams, A. and Siegel, D. (1998), “How fund managers
can contribute to academic research on corporate social
responsibility”, in Bruce, B. (Ed.), The Investment Research
Guide to Socially Responsible Investing, Investment Research
Forums, NewYork, NY, pp. 83-103.
McWilliams, A., Siegel, D.S. and Wright, P.M. (2006),
“Corporate social responsibility: strategic implications”,
Journal of Management Studies, Vol. 43 No. 1, pp. 1-18.
Maignan, I. and Ferrel, O.C. (2000), “Measuring corporate
citizenship in two countries: the case of United States and
France”, Journal of Business Ethics, Vol. 23 No. 3,
pp. 283-297.
Margolis, J.D. and Walsh, J.P. (2001), People and Profits?: The
Search for a Link Between a Company’s Social and Financial
Performance, Lawrence Erlbaum Associates, Inc, Mahawah,
NJ.
Margolis, J.D. and Walsh, J.P. (2003), “Misery loves
companies: rethinking social initiatives by business”,
Administrative Science Quarterly, Vol. 48 No. 2, pp. 268-305.
Margolis, J.D., Elfenbein, H.A. and Walsh, J.P. (2007),
“Does it pay to be good? A meta-analysis and redirection of
research on the relationship between corporate social and
financial performance”, available at: SSRN:
http://ssrn.com/abstract�1866371.
Min, H. and Galle, W.P. (1997), “Green purchasing
strategies: trends and implications”, International Journal of
Purchasing and Materials Management, Vol. 33 No. 2,
pp. 10-17.

Miras, M.M., Carrasco, A. and Escobar, B. (2013), “Are
socially responsible behaviors paid off equally? a
cross-cultural analysis”, Corporate Social Responsibility and
Environmental Management, Published online in Wiley
Online Library, available at: http://onlinelibrary.wiley.com/
doi/10.1002/csr.1344/abstract.
Mitchell, R.K., Agle, B.R. and Wood, D.J. (1997), “Toward
a theory of stakeholders identification and salience: defining
the principle of who and what really counts”, Academy of
Moneva, J.M. and Ortas, E. (2010), “Corporate
environmental and financial performance: a multivariate
approach”, Industrial Management and Data Systems,
Vol. 110 No. 2, 193-210.
Moskowitz, M. (1972), “Choosing socially responsible
stocks”, Business and Society Review, Vol. 1, pp. 71-75.
Njoroge, J. (2009), “Effects of the global financial crisis on
corporate social responsibility in multinational companies
in Kenya”, covalence intern analyst papers, available at:
www.covalence.ch/docs/Kenya-Crisis.pdf (accessed on 02
December, 2013).
Nunnally, J.C. (1978), Psychometric Theory, McGraw-Hill,
New York, NY.
Orlitzky, M., Schmidt, F. and Rynes, S. (2003), “Corporate
social and financial performance: a meta-analysis”,
Organization Studies, Vol. 24 No. 3, pp. 403-441.
Owens, B.D. (1972), “The purchasing manager’s impact on
the environment”, Journal of Purchasing, Vol. 8 No. 1,

pp. 58-62.
Parket, I.R. and Eilbirt, G. (1975), “Social responsibility: the
underlying factors”, Business Horizons, Vol. 18 No. 4,
pp. 5-10.
Patten, D.M. (1992), “Intra-industry environmental
disclosures in response to the Alaskan oil spill: a note on
legitimacy theory”, Accounting, Organizations and Society,
Vol. 17 No. 5, pp. 471-475.
Patten, D.M. and Crampton, W. (2004), “Legitimacy and the
internet: an examination of corporate web page
environmental disclosures”, Advances in Environmental
Accounting and Management, Vol. 2, pp. 31-57.
Peloza, J. (2005), “Corporate social responsibility as
reputation insurance”, paper presented at the 2nd Annual
Corporate Social Performance Conference, Haas School of
Business, University of California, Berkeley.
Peloza, J. (2006), “Using corporate social responsibility as
insurance for financial performance”, California
Peterson, R. and Kim, Y. (2013), “On the relationship
between coefficient alpha and composite reliability”, Journal
of Applied Psychology, Vol. 98 No. 1, pp. 194-198.
Pivato, S., Misani, N. and Tencati, A. (2008), “The impact of
corporate social responsibility on consumer trust: the case
of organic food” Business Ethics: A European Review, Vol. 17
No. 1, pp. 3-12.
Porter, M.E. and Van der Linde, C. (1995), “Toward a new
conception of the environment-competitiveness relationship”,

Journal of Economic Perspectives, Vol. 9, pp. 97-118.
Porter, M.E. and Kramer, M.R. (2002), “The competitive
advantage of corporate philanthropy”, Harvard Business
Review, Vol. 80 No. 12, pp. 56-68.
Preston, L.E. (1978), “Analyzing corporate social
performance: methods and results.” Journal of Contemporary
Business, Vol. 7, pp. 135-150.
Rao, P. and Holt, D. (2005), “Do green supply chains lead to
competitiveness and economic performance?” International
Journal of Operations and Production Management, Vol. 25
No. 9, pp. 898-916.
Revelle, W. (1979), “Hierarchical cluster-analysis and the
internal structure of tests”, Multivariate Behavioral Research,
Vol. 14 No. 1, pp. 57-74.
Volume 19 · Number 3 · 2014 · 332–350
345
http://www.ssrn.com/abstract=1866371
http://onlinelibrary.wiley.com/doi/10.1002/csr.1344/abstract
http://onlinelibrary.wiley.com/doi/10.1002/csr.1344/abstract
http://www.covalence.ch/docs/Kenya-Crisis.pdf
Ribstein, L.E. (2005), “Accountability and responsibility in

corporate governance”, Law and Economic Working paper
No. 34, University of Illinois College of Law, IL.
Ringov, D. and Zollo, M. (2007), “Corporate responsibility
from a social-institutional perspective: the impact of
national culture on corporate social performance”,
Corporate Governance, Vol. 7 No. 4, pp. 476-485.
Roman, R.M., Hayibor, S. and Agle, R.B. (1999), “The
relation between social and financial performance:
repainting a portrait”, Business and Society, Vol. 38 No. 1,
pp. 109-125.
Rowley, T. and Berman, S. (2000), “A brand new brand of
corporate social performance”, Business and Society, Vol. 39
No. 4, pp. 397-418.
Russo, M.V. and Fouts, P.A. (1997), “A resource-based
perspective on corporate environmental performance and
profitability”, The Academy of Management Journal, Vol. 40
No. 3, pp. 534-559.
Sarkis, J., Zhu, Q. and Lai, K.H. (2011), “An organizational
theoretic review of green supply chain management
literature”, International Journal of Production Economics,
Vol. 130 No. 1, pp. 1-15.
Schaltegger, S. and Synnestvedt, T. (2002), “The link
between ‘green’ and economic success: environmental
management as the crucial trigger between environmental
and economic performance”, Journal of Environmental
Schaltegger, S. and Wagner, M. (2006), “Integrative
management of sustainability performance, measurement
and reporting”, International Journal of Accounting, Auditing

and Performance Evaluation, Vol. 3 No. 1, pp. 1-19.
Schaltegger, S., Bennett, M. and Burritt, R. (2006),
Sustainability Accounting and Reporting, Springer, Dordrecht.
Scholtens, B. (2008), “A note on the interaction between
corporate social responsibility and financial performance”,
Ecological Economics, Vol. 68 No. 1, pp. 46-55.
Scholtens, B. and Kang, F.C. (2013), “Corporate social
responsibility and earnings management: evidence from
Asian economies”, Corporate Social Responsibility and
Environmental Management, Vol. 20 No. 2, pp. 95-112,
Published online in Wiley Online Library.
Schreck, P. (2011), “Reviewing the business case for
corporate social responsibility: new evidence and analysis”,
Journal of Business Ethics, Vol. 103 No. 2, pp. 167-188.
Seuring, S. (2012), “A review of modeling approaches for
sustainable supply chain management”, Decision Support
System, Vol. 54 No. 4, pp. 1513-1520.
Seuring, S. and Müller, M. (2008), “From a literature review
to a conceptual framework for sustainable supply chain
management”, Journal of Cleaner Production, Vol. 16 No. 15,
pp. 1699-1710.
Seuring, S., Sarkis, J., Müller, M. and Rao, P. (2008),
“Sustainability and supply chain management — an
introduction to the special issue”, Journal of Cleaner
Production, Vol. 16 No. 15, pp. 1545-1551.
Sharfman, M. (1996), “The construct validity of the Kinder,
Lydenberg & Domini social performance ratings data”,
Journal of Business Ethics, Vol. 15 No. 3, pp. 287-296.

Shrivastava, P. (1995a), “Environmental technologies and
competitive advantage”, Strategic Management Journal,
Vol. 16 No. 1, pp. 183-200.
Shrivastava, P. (1995b), “The role of corporations in
achieving ecological sustainability”, Academy of
Singh, R. (2013), “Standard & Poor’s environmental, social
and governance (esg) india index during and post global
financial crisis”, Global Journal of Management and Business
Studies, Vol. 3 No. 10, pp. 1205-1212.
Skjøtt-Larsen, T., Schary, P.B., Mikkola, J.H. and Kotzab, K.
(2007), Managing the Global Supply Chain, 3rd ed.,
Copenhagen Business School Press, Copenhagen.
Soana, M.G. (2011), “The relationship between corporate
social performance and corporate financial performance in
the banking sector”, Journal of Business Ethics, Vol. 104
No. 1, pp. 133-148.
Solomon, R.C. and Hanson, K. (1985), It’s Good Business,
Harper and Row Publisher, Atheneum, New York, NY.
Sroufe, R. (2003), A Framework for Strategic Environmental
Sourcing, Greening the Supply Chain, Greenleaf, Sheffield.
Sugita, M. and Takahashi, T. (2013), “Influence of corporate
culture on environmental management performance: an
empirical study of japanese firms”, Corporate Social
Responsibility and Environmental Management, Published
online in Wiley Online Library
Surroca, J., Tribo, J. and Waddock, S. (2010), “Corporate

responsibility and financial performance: the role of
intangible resources”, Strategic Management Journal, Vol. 31
No. 5, pp. 463-490.
Svensson, G. (2007), “Aspects of sustainable supply chain
management (SSCM): conceptual framework and
empirical example”, Supply Chain Management: An
Theotokas, I. and Giannarakis, G. (2011), “The effect of
financial crisis in corporate social responsibility
performance”, International Journal of Marketing Studies,
Vol. 3 No. 1, pp. 2-10.
Turban, D.B. and Greening, D.W. (1996), “Corporate social
performance and organizational attractiveness to
prospective employees”, Academy of Management Journal,
Vol. 40 No. 3, pp. 658-672.
Ullman, A.A. (1985), “Data in search of a theory: a critical
examination of the relationship among social performance,
social disclosure in Bangladesh”, Corporate Social
Responsibility and Environmental Management Review,
Vol. 10 No. 3, pp. 540-557.
Vachon, S. and Klassen, R.D. (2006), “Extending green
practices across the supply chain”, International Journal of
Operations and Production Management, Vol. 26 No. 7,
pp. 795-821.
Van Beurden, P. and Gössling, T. (2008), “The worth of
values — a literature review on the relation between
corporate social and financial performance”, Journal of
Business Ethics, Vol. 82 No. 2, pp. 407-424.
Van de Velde, E., Vermeir, W. and Corten, F. (2005),

“Finance and accounting: corporate social responsibility
and financial performance”, Corporate Governance, Vol. 5
No. 3, pp. 129-138.
Volume 19 · Number 3 · 2014 · 332–350
346
Waddock, S. and Graves, S. (1997), “The corporate social
performance – financial performance link”, Strategic
Wagner, M. (2009), “National culture, regulation and
country interaction of effects on the association of
environmental management systems with environmentally
beneficial innovation”, Business Strategy and the
Environment, Vol. 18 No. 2, pp. 122-136.
Wagner, M. and Blom, J. (2011), “The reciprocal and
non-linear relationship of sustainability and financial
performance”, Business Ethics: A European Review, Vol. 20
No. 4, pp. 418-432.
Wagner, M., Van Phu, N., Azomahou, T. and
Wehrmeyer, W. (2002), “The relationship between the
environmental and economic performance of firms: an
empirical analysis of the European paper industry”,
Corporate Social Responsibility and Environmental

Walley, N. and Whitehead, B. (1994), “It’s not easy being
green”, Harvard Business Review, Vol. 72 No. 3, pp. 46-52.
Walton, S.V., Handfield, R.B. and Melnyk, S.A. (1998), “The
green supply chain: integrating suppliers into environmental
management process”, International Journal of Purchasing
and Materials Management, Vol. 34 No. 2, pp. 2-11.
Wolfe, R. (1991), “The use of content analysis to assess
corporate social responsibility”, in James, E.P (Ed),
Research in Corporate Social Performance and Policy, Vol. 12,
JAI Press, Greenwich, CT pp. 281-307.
Wood, D.J. (1991), “Corporate social performance revisited”,
Academy of Management Review, Vol. 16 No. 4, pp. 691-718.
Wood, D.J. (2008), “Corporate responsibility and stakeholder
theory: challenging the neoclassical paradigm”, in Agle, B.R.,
Donaldson, T., Freeman, R.E., Jensen, M.C., Mitchell, R.
and Wood, D.J. (Eds), “Dialogue: towards a superior
stakeholder theory”, Business Ethics Quarterly, Vol. 8 No. 2,
pp. 153-190.
Wu, M.L. (2006), “Corporate social performance, corporate
financial performance and firm size: a meta-analysis”,
Journal of American Academy of Business, Vol. 8 No. 1,
pp. 163-171.
Yang, H.Y. (2000), “A note on the causal relationship
between energy and GDP in Taiwan”, Energy Economics,
Vol. 22, pp. 309-317.
Yelkikalan, N. and Köse, C. (2012), “The effects of the
financial crisis on corporate social responsibility”,

International Journal of Business and Social Science, Vol. 3
No. 3, pp. 292-300.
Yin, R. (2009), Case Study Research: Design and Methods,
Sage
Publications, London.
Zhu, Q. and Cote, R.P. (2004), “Integrating green supply
chain management into an embryonic eco-industrial
development: a case study of the Guitang Group”, Journal
of Cleaner Production, Vol. 12 Nos 8/10, pp. 1025-1035.
Zhu, Q. and Sarkis, J. (2007), “The moderating effects of
institutional pressures on emergent green supply chain
practices and performance”, International Journal of
Production Research, Vol. 45 No. 18, pp. 4333-4355.
Appendix
Table AI SSCP construct key indicators (KI)
Factor Indicator Description Loading Construct information
SSCP SSCP KI 1 Does the company have a policy to lessen the
environmental
impact of its supply chain?
0.823�� Number of eigenvalues above one: 1
SSCP KI 2 Does the company use environmental criteria (e.g.,
ISO 14000,
energy consumption) in the selection process for its suppliers
or sourcing partners?
0.889�� Variance explained: 87.15 per cent

SSCP KI 3 Does the company report or end a partnership with a
sourcing
partner if environmental criteria are not met?
0.799�� Kaiser–Meyer–Olkin test: 0.859
SSCP KI 4 Does the company survey its suppliers’
environmental
performance?
0.845�� Barlett’s sphericity test:
SSCP KI 5 Does the company describe, claim to have or
mention
processes to include its supply chain in its efforts to lessen its
overall environmental impact?
0.865�� 2 � 325.834�� (28 df)
SSCP KI 6 Does the company claim to use key performance
indicators or
a balanced scorecard to monitor the environmental impact of
its supply chain?
0.891�� Cronbach’s alpha � 0.901
SSCP KI 7 Has the company set targets or objectives to be
achieved for
the environmental impact of its supply chain?
0.834�� Revelle’s beta � 0.873
SSCP KI 8 Is the company making progress toward or achieving
its
objectives for the environmental impact of its supply chain?

0.871�� Composite Reliability � 0.904
Note: *** Significant at 1%
Volume 19 · Number 3 · 2014 · 332–350
347
Table AII SSCP construct factor information
Initial eigenvalues Extraction sums of squared loadings
Total
Variance
(per cent)
Cumulative variance
(per cent) Total
Variance
(per cent)
Cumulative variance
(per cent)
1 4.052 87.15 87.15 4.052 87.15 87.15
2 0.790 4.00 91.15
3 0.710 3.23 94.38

4 0.650 2.10 96.48
5 0.550 1.30 97.78
6 0.470 0.80 98.58
7 0.401 0.75 99.33
8 0.377 0.67 100.00
Table AIII FP construct’s key indicators (KI)
Factor Indicator Description Loading Construct information
FP-MA FP KI 1 Percentage change of operating income in the
past three years 0.801�� Number of eigenvalues above one: 1
Variance explained: 92.77 per cent
Kaiser–Meyer–Olkin test: 0.904
Barlett’s sphericity test:
�2 � 343.001�� (21 df)
Cronbach’s alpha � 0.924
Revelle’s beta � 0.889
Composite reliability � 0.926
FP KI 2 Net income growth (three-year annual growth)
0.934��
FP KI 3 Operating profit margin 0.971��
FP KI 4 Net margin 0.911��
FP KI 5 Return on assets (ROA) 0.952��
FP KI 6 Sales in USD per employee 0.949��
FP KI 7 Total salaries and benefit expenses (staff costs) divided
by net
sales or revenue
0.812��

FP�PR FP KI 8 Return on equity (ROE) 0.923�� Number of
eigenvalues above one: 1
�2 � 395.845�� (28 df)
FP KI 9 Return on invested capital (ROIC) 0.917��
FP KI 10 Operating cash flow (or unlevered free cash flow
[UFCF]) growth
(three-year annual growth)
0.895��
FP KI 11 Current ratio (total current assets/total current
liabilities) 0.873��
FP KI 12 Net debt to equity 0.894��
FP KI 13 Long-term debt to equity 0.900��
FP KI 14 Retained earnings divided by equity 0.912��
FP KI 15 Dividend payout ratio 0.888��
FP�RE FP KI 16 Net sales or revenue growth (three year
annual growth) 0.941�� Number of eigenvalues above one: 1
�2 � 300.834�� (15 df)

FP KI 17 Net sales or revenue in USD 0.937��
FP KI 18 Research and development costs divided by net sales
or revenue 0.931��
FP KI 19 Total US patents owned in the current year divided by
net sales
or revenue in USD
0.891��
FP KI 20 Variability of quarterly sales over the past three years
0.915��
FP KI 21 Total value of the company’s brands in USD
0.924��
Note: *** Significant at 1%
Volume 19 · Number 3 · 2014 · 332–350
348
Table AIV FP construct’s factor information

Initial eigenvalues Extraction sums of squared loadings
Total
Variance
(per cent)
Cumulative variance
(per cent) Total
Variance
(per cent)
Cumulative variance
(per cent)
FP-MA
1 3.405 92.77 92.77 3.405 92.77 92.77
2 0.832 2.45 95.22
3 0.783 1.99 97.21
4 0.642 1.01 98.23
5 0.500 0.90 99.12
6 0.432 0.79 99.91
7 0.406 0.09 100
FP-PR
1 6.075 91.54 91.54 6.075 91.54 91.54
2 0.603 3.770 95.31
3 0.522 2.033 97.34
4 0.301 0.904 98.25
5 0.204 0.521 98.77
6 0.150 0.476 99.24
7 0.094 0.401 99.65
8 0.051 0.355 100
FP�RE
1 3.753 83.21 83.21 3.753 83.21 83.21
2 0.779 5.888 89.10

3 0.745 4.824 93.92
4 0.303 3.009 96.93
5 0.256 2.155 99.09
6 0.164 0.914 100.00
Table AV Companies in the sample classified by country
Country
Number of
companies Percentage Country
Number of
companies Percentage Country
Number of
companies Percentage
Abu Dhabi 1 0.03 Hungary 4 0.10 Philippines 11 0.28
Australia 298 7.64 India 59 1.51 Poland 21 0.54
Austria 20 0.51 Indonesia 23 0.59 Portugal 12 0.31
Belgium 27 0.69 Ireland 16 0.41 Qatar 2 0.05
Brazil 68 1.74 Israel 14 0.36 Russia 34 0.87
Canada 297 7.62 Italy 51 1.31 Saudi Arabia 6 0.15
Channel Islands 1 0.03 Japan 424 10.87 Singapore 52 1.33
Chile 18 0.46 Jordan 1 0.03 South Africa 50 1.28
China 73 1.87 Kazakhstan 1 0.03 South Korea 90 2.31
Colombia 4 0.10 Kuwait 4 0.10 Spain 49 1.26
Cyprus 1 0.03 Luxembourg 6 0.15 Sri Lanka 1 0.03
Czech Republic 4 0.10 Malaysia 40 1.03 Sweden 50 1.28
Denmark 25 0.64 Mexico 21 0.54 Switzerland 65 1.67
Dubai 1 0.03 Morocco 2 0.05 Taiwan 96 2.46
Egypt 4 0.10 The Netherlands 34 0.87 Thailand 21 0.54
Finland 27 0.69 New Zealand 11 0.28 Turkey 20 0.51
France 94 2.41 Nigeria 1 0.03 UK 333 8.54
Germany 82 2.10 Norway 23 0.59 US 1,054 27.03
Greece 22 0.56 Oman 1 0.03 Zimbabwe 1 0.03

Hong Kong 128 3.28 Peru 1 0.03 Total 3,900 100
Notes: This table shows the companies analyzed in the
empirical work and classified by country
Volume 19 · Number 3 · 2014 · 332–350
349
About the authors
Eduardo Ortas is an Assistant Professor of Finance at the
Faculty of Business Administration of the University of
Zaragoza. He holds a PhD in Accounting and Finance from
the University of Zaragoza. He has participated in many
national and international research projects related with
sustainability, corporate social responsibility and ethical
investment. His research focuses on corporate social,
environmental and financial performance, sustainable supply
chain management, socially responsible investment and other
topics related with corporate sustainability. His publications
include textbooks and research papers in relevant
international journals. Eduardo Ortas is the corresponding
author and can be contacted at: [email protected]
José M. Moneva is a Professor of Accounting and Finance at
the Faculty of Business Administration of the University of
Zaragoza. He has directed and participated in different national
and international research projects related with sustainability,

corporate social responsibility and ethical investment. His
research focuses on corporate social, environmental and
financial
performance; sustainable supply chain management; socially
responsible investment; and other topics related with corporate
sustainability. His publications include textbooks and research
papers in relevant international journals (www.catedrabsh-uz.es/
pdf/CVen-jmmoneva.pdf).
Igor Álvarez is an Assistant Professor of Accounting at the
Faculty of Business Administration of the University of
Basque Country. He holds a PhD in Accounting and Finance
from University of Basque Country. He has participated in
many national and international research projects related with
sustainability, corporate social responsibility and social and
environmental disclosure. His research focuses on corporate
social, environmental and financial performance; sustainable
supply chain management; social and environmental
disclosure; and other topics related with corporate
sustainability. His publications include textbooks and research
papers in international journals.
To purchase reprints of this article please e-mail:
[email protected]
Or visit our web site for further details:
www.emeraldinsight.com/reprints
Table AVI Companies in the sample classified by economic
sector
Economic sector
Number of
companies Percentage
Basic materials 481 12.33
Cyclical consumer goods and services 592 15.18

Energy 347 8.90
Financial 791 20.28
Healthcare 222 5.69
Industrials 609 15.62
Non-cyclical consumer goods and services 263 6.74
Technology 285 7.31
Telecommunications services 123 3.15
Utilities 187 4.79
Total 3,900 100
Notes: This table shows the companies analyzed in the
empirical work
and classified by economic sector as indicated by the Global
Standard
Classification Standard (GICS)
Figure A1 Sustainable supply chain performance and financial
performance constructs’ scree plots
0
1
2
3
4
5
6
7
1 2 3 4 5 6 7 8

Sustainable supply chain and companyperformanceA global .docx

Sustainable supply chain and companyperformanceA global .docx

Recommended

Recommended

More Related Content

Similar to Sustainable supply chain and companyperformanceA global .docx

Similar to Sustainable supply chain and companyperformanceA global .docx (20)

More from deanmtaylor1545

More from deanmtaylor1545 (20)

Recently uploaded

Recently uploaded (20)

Sustainable supply chain and companyperformanceA global .docx