Araştırma Makalesi
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Role of Strategic Interactions in Corporate Sustainability Decisions: An Empirical Investigation

Yıl 2017, Cilt: 6 Sayı: 1, 17 - 46, 01.01.2017

Öz

There is a large amount of empirical literature on the relationship between corporate sustainability and corporate financial performance. However, the literature considers company-specific aspects affecting the link but omits the influence of the competition. A firm’s gains from its sustainability efforts, however, depend on whether its industry competitors also perform sustainable actions—whether similar in type or different. Thus, we consider the sustainability decision making of companies to be of a strategic nature and show that strategic motives, typically ignored in the literature, can be an important factor in the process. We estimate an Instrumental Variable (IV) Probit model using inclusion in the MSCI KLD 400 Social Index and draw on financial information from the Wharton Research Data Services COMPUSTAT dataset
in order to identify the effect of competition. We find that the effect of competition on the likelihood of entry into the sustainability market is negative, but this is only true if the endogeneity is correctly taken into account. Probit estimates present an upward bias, which means that results from raw models can be misleading in designing policies on sustainability. Overall evidence suggests a central role for strategic motives in management’s sustainability decisions.

Kaynakça

  • Athey, S., J. Levin, and E. Seira, (2008), "Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions," Working Paper, Stanford University.
  • Bajari, P., A. Hortacsu, (2003), "The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from e-Bay Auctions," RAND Journal of Economics, 34 (2), pp. 329-355.
  • Bajari, P., H. Hong, J. Krainer, D. Nekipelov, (2010), “Estimating Static Models of Strategic Interactions,” Journal of Business & Economic Statistics, Vol. 28:4, pp. 469-482.
  • Battini, D., A. Persona, F. Sgarbossa, (2014), “A Sustainable EOQ Model: Theoretical Formulation and Applications,” International Journal of Production Economics, Vol. 149, pp. 145-153.
  • Berry, S. T., (1992), "Estimation of a Model of Entry in the Airline Industry," Econometrica, Vol. 60, pp. 889-917.
  • Berry, S. and P. Reiss, (2007), “Empirical Models of Entry and Market Structure,” Handbook of Industrial Organization, Vol. 3, Chapter 29, pp. 1845-1886.
  • Berry, S. T. and J. Waldfogel, (1999), “Social Inefficiency in Radio Broadcasting,” Rand Journal of Economics, Vol. 30:3, pp. 397-420.
  • Birkinshaw, J., J. Ridderstrale, (1999), “Fighting the Corporate Immune System: A Process Study of Subsidiary Initiatives in Multinational Corporations,” International Business Review, Vol. 8, pp. 149-180.
  • Björn, P. and Q. Vuong, (1984), "Simultaneous Equations Models for Dummy Endogenous Variables: A Game Theoretic Formulation with Application to Labor Force Participation,” Californian Institute of Technology.
  • Bresnahan, T. F. and P. C. Reiss, (1991a), “Empirical Models of Discrete Games,” Journal of Econometrics, Vol. 48:1-2, pp. 57-81.
  • Bresnahan, T. F. and P. C. Reiss, (1991b), “Entry and Competition in Concentrated Markets,” Journal of Political Economy, Vol. 99:5, pp. 977-1009.
  • Carroll, R. J., D. M. Primo, and B. K. Richter, (2016), “Using Item Response Theory to Improve Measurement in Strategic Management Research: An Application to Corporate Social Responsibility,” Strategic Management Journal, Vol. 37, pp. 66-85.
  • Cassimon, D., P. Engelen, and L. Van Liedekerke, (2016), “When Do Firms Invest in Corporate Social Responsibility? A Real Option Framework,” Journal of Business Ethics, Vol. 137, pp. 15-29.
  • Conrad, K., (2005) “Price Competition and Product Differentiation When Consumers Care for the Environment,” Environmental & Resource Economics, Vol. 31, pp. 1-19.
  • Cheng, B., I. Ioannou, and G. Sefafeim, (2014), “Corporate Social Responsibility and Access to Finance,” Strategic Management Journal, Vol. 35, pp. 1-23.
  • Christensen, Clayton M., (1997), The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business School Press, Boston, Massachusetts, USA.
  • Draganska, M., S. Misra, V. Aguirregabiria, P. Bajari, L. Einav, P. Ellickson, D. Horsky, S. Narayanan, Y. Orhun, P. Reiss, K. Seim, V. Singh, R. Thomadsen, and T. Zhu, (2008), “Discrete Choice Models of Firms’ Strategic Decisions,” Marketing Letters, Vol. 19, pp. 399-416.
  • Eccles, R. G., I. Ioannou, and G. Serafeim, (2014), “The Impact of Corporate Sustainability on Organizational Processes and Performance,” Management Science, Vol. 60:11, pp. 2835-2857.
  • Ellickson, P. B. and S. Misra, (2008), “Supermarket Pricing Strategies,” Marketing Strategies, Vol. 27:5, pp. 811-828.
  • Flammer, C., (2015), “Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach,” Management Science, Published online in Articles in Advance 19 Feb 2015.
  • Gaimon, C., (1989), “Dynamic Game Results of the Acquisition of New Technology,” Operations Research, Vol. 37:3, pp. 410-425.
  • Galbreth, M. and B. Ghosh, (2013), “Competition and Sustainability: the Impact of Consumer Awareness,” Decision Sciences, Vol. 44:1, pp. 127-159.
  • Garcia-Castro, R., M. A. Ariño, M. A. Canela, (2010), “Does Social Performance Really Lead to Financial Performance? Accounting for Endogeneity,” Journal of Business Ethics, Vol. 92, pp. 107-126.
  • Golicic, S. and C. D. Smith, (2013), “A Meta-Analysis of Environmentally Sustainable Supply Chain Management Practices and Firm Performance,” Journal of Supply Chain Management, Vol. 49:2, pp. 78-95.
  • Hitchcock, D. E., M. L. Willard, (2009), The Business Guide to Sustainability: Practical Strategies and Tools for Organizations. 2nd ed. London: Routledge.
  • Hotz, J. and R. Miller, (1993), “Conditional Choice Probabilities and the Estimation of Dynamic Models,” Review of Economic Studies, Vol. 60, pp. 497-529.
  • Imbens, G. W., J. D. Angrist, (1994), “Identification and Estimation of Local Average Treatment Effects,” Econometrica, 62 (2), pp. 467-475.
  • Keane, M. and K. Wolpin, (1997), "The Career Decisions of Young Men," Journal of Political Economy, Vol. 105, pp. 473-522.
  • Lee, D., (2012), “Turning Waste into Byproduct,” Manufacturing & Service Operations Management, Vol. 14:1, pp. 115-127.
  • Lu, W., K. W. Chau, H. Wang, and W. Pan, (2014), “A Decade's Debate on the Nexus between Corporate Social and Corporate Financial Performance: A Critical Review of Empirical Studies, 2002-2011,” Journal of Cleaner Production, Vol.79, pp. 195-206.
  • Mangala, S., J. Madaan, F. T. S. Chan, (2013), “Analysis of Flexible Decision Strategies for Sustainability-focused Green Product Recovery System,” International Journal of Production Research, Vol. 51: 11, pp. 3428-3442.
  • Margolis, J. D., H. A. Elfenbein, and J. P. Walsh, (2009), “Does it Pay to be Good...And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance,” http://ssrn.com/abstract=1866371.
  • Matisoff, D., (2015), “Sources of Specification Errors in the Assessment of Voluntary Environmental Programs: Understanding Program Impacts,” Policy Sciences, Vol. 48, pp.109-126.
  • McFadden, D. L., (1984), “Econometric Analysis of Qualitative Response Models,” In Z. Griliches and M. D. Intriligator (eds.) Handbook of Econometrics, Vol. II, pp. 1395-1447. Amsterdam: Elsevier.
  • McKelvey, R. and T. Palfrey, (1995), “Quantal Response Equilibria for Normal Form Games,” Games and Economic Behavior, Vol. 10:1, pp. 6-38.
  • Mendoza, A. J., R. T. Clemen, (2013), “Outsourcing Sustainability: A Game Theoretic Modeling Approach,” Environment Systems and Decisions, Vol. 33, pp. 224-236.
  • Molina, J. F., A. E. Claver, D. López, G. J. J. Tarí, (2009), "Green Management and Financial Performance: A Literature Review," Management Decisions, Vol. 47:7, pp. 1080-1100.
  • Moraga-González, J. L. and N. Padrón-Fumero, (2002), "The Adverse Effects of Environmental Policy in Green Markets," Environmental and Resource Economics, Vol. 22:3, pp. 419-447.
  • Orhun, A.Y., (2013) “Spatial Differentiation in the Supermarket Industry: The Role of Common Information,” Quantitative Marketing and Economics, Vol. 11:1, pp. 3-37.
  • Ryan, P. and C. Tucker, (2012), “Heterogeneity and the Dynamics of Technology Adoption,” Quantitative Marketing & Economics, Vol. 10, pp. 63-109.
  • Salzmann O., A. Ionescu-Somers, and U. Steger, (2005), “The Business Case for Corporate Sustainability: Literature Review and Research Options,” European Management Journal, No. 23, pp. 27-36.
  • Schoenherr, T., (2012), “The Role of Environmental Management in Sustainable Business Development: A Multi-country Investigation,” International Journal of Production Economics, Vol. 140:1, pp. 116-128.
  • Seim, K., (2006), “An Empirical Model of Firm Entry with Endogenous Product-type Choices,” RAND Journal of Economics, Vol. 37:3, pp. 619-642.
  • Soytas, M. A., M. Denizel, D. Usar, (2015), “Corporate Sustainability: Empirical Evidence of Causality on Financial Performance,” 18th Informs Applied Probability Society Conference, July 5-8, 2015, Istanbul, TURKEY.
  • Soytas, M. A., D. Usar, M. Denizel, (2017), “Estimation of the Static Corporate Sustainability Interactions Model,” Working Paper.
  • Soytas, M. A., M. Denizel, D. Usar, I. Ersoy, (2017), “Corporate Sustainability Investments and the Financial Performance Relationship in Turkey,” Journal of Management and Economics Research, 15 (2), pp. 140-162.
  • Stern, S. and B. Heidemann, (1999), "Strategic Play Among Family Members When Making Long-Term Care Decisions," Journal of Economic Behavior and Organization, Vol. 40, pp. 29-57.
  • Surroca, J., J. A. Tribo, S. Waddock, (2010), “Corporate Responsibility and Financial Performance: The Role of Intangible Resources,” Strategic Management Journal, Vol. 3, pp. 463-490.
  • Tetrault Sirsly, C. and K. Lamertz, (2008), “When Does a Corporate Social Responsibility Initiative Provide a First-Mover Advantage?” Business & Society, Vol. 47: 3, pp. 343-369.
  • Unruh, G., (2010), “Can You Compete on Sustainability?” Harvard Business Review, https://hbr.org/2010/03/can-you-compete-on-sustainability.
  • Unruh, G., D. Kiron, N. Kruschwitz, M. Reeves, H. Rubel, and A. M. zum Felde, (2016), “Investing For a Sustainable Future,” MIT Sloan Management Review, May 11.
  • Yadav, P. L., S. H. Han, H. Kim, (2017), “Sustaining Competitive Advantage Through Corporate Environmental Performance,” Business Strategy and The Environment” Vol. 26, pp. 345-357.
  • Zhu, T. and V. Singh, (2009), “Spatial Competition and Endogenous Location Choices: An Application to Discount Retailing,” Quantitative Marketing and Economics Vol. 7:1, pp. 1-35.

Role of Strategic Interactions in Corporate Sustainability Decisions: An Empirical Investigation

Yıl 2017, Cilt: 6 Sayı: 1, 17 - 46, 01.01.2017

Öz

There is a large amount of empirical literature on the relationship between corporate sustainability and corporate financial performance. However, the literature considers company-specific aspects affecting the link but omits the influence of the competition. A firm’s gains from its sustainability efforts, however, depend on whether its industry competitors also perform sustainable actions—whether similar in type or different. Thus, we consider the sustainability decision making of companies to be of a strategic nature and show that strategic motives, typically ignored in the literature, can be an important factor in the process. We estimate an Instrumental Variable (IV) Probit model using inclusion in the MSCI KLD 400 Social Index and draw on financial information from the Wharton Research Data Services COMPUSTAT dataset
in order to identify the effect of competition. We find that the effect of competition on the likelihood of entry into the sustainability market is negative, but this is only true if the endogeneity is correctly taken into account. Probit estimates present an upward bias, which means that results from raw models can be misleading in designing policies on sustainability. Overall evidence suggests a central role for strategic motives in management’s sustainability decisions.

Kaynakça

  • Athey, S., J. Levin, and E. Seira, (2008), "Comparing Open and Sealed Bid Auctions: Theory and Evidence from Timber Auctions," Working Paper, Stanford University.
  • Bajari, P., A. Hortacsu, (2003), "The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from e-Bay Auctions," RAND Journal of Economics, 34 (2), pp. 329-355.
  • Bajari, P., H. Hong, J. Krainer, D. Nekipelov, (2010), “Estimating Static Models of Strategic Interactions,” Journal of Business & Economic Statistics, Vol. 28:4, pp. 469-482.
  • Battini, D., A. Persona, F. Sgarbossa, (2014), “A Sustainable EOQ Model: Theoretical Formulation and Applications,” International Journal of Production Economics, Vol. 149, pp. 145-153.
  • Berry, S. T., (1992), "Estimation of a Model of Entry in the Airline Industry," Econometrica, Vol. 60, pp. 889-917.
  • Berry, S. and P. Reiss, (2007), “Empirical Models of Entry and Market Structure,” Handbook of Industrial Organization, Vol. 3, Chapter 29, pp. 1845-1886.
  • Berry, S. T. and J. Waldfogel, (1999), “Social Inefficiency in Radio Broadcasting,” Rand Journal of Economics, Vol. 30:3, pp. 397-420.
  • Birkinshaw, J., J. Ridderstrale, (1999), “Fighting the Corporate Immune System: A Process Study of Subsidiary Initiatives in Multinational Corporations,” International Business Review, Vol. 8, pp. 149-180.
  • Björn, P. and Q. Vuong, (1984), "Simultaneous Equations Models for Dummy Endogenous Variables: A Game Theoretic Formulation with Application to Labor Force Participation,” Californian Institute of Technology.
  • Bresnahan, T. F. and P. C. Reiss, (1991a), “Empirical Models of Discrete Games,” Journal of Econometrics, Vol. 48:1-2, pp. 57-81.
  • Bresnahan, T. F. and P. C. Reiss, (1991b), “Entry and Competition in Concentrated Markets,” Journal of Political Economy, Vol. 99:5, pp. 977-1009.
  • Carroll, R. J., D. M. Primo, and B. K. Richter, (2016), “Using Item Response Theory to Improve Measurement in Strategic Management Research: An Application to Corporate Social Responsibility,” Strategic Management Journal, Vol. 37, pp. 66-85.
  • Cassimon, D., P. Engelen, and L. Van Liedekerke, (2016), “When Do Firms Invest in Corporate Social Responsibility? A Real Option Framework,” Journal of Business Ethics, Vol. 137, pp. 15-29.
  • Conrad, K., (2005) “Price Competition and Product Differentiation When Consumers Care for the Environment,” Environmental & Resource Economics, Vol. 31, pp. 1-19.
  • Cheng, B., I. Ioannou, and G. Sefafeim, (2014), “Corporate Social Responsibility and Access to Finance,” Strategic Management Journal, Vol. 35, pp. 1-23.
  • Christensen, Clayton M., (1997), The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business School Press, Boston, Massachusetts, USA.
  • Draganska, M., S. Misra, V. Aguirregabiria, P. Bajari, L. Einav, P. Ellickson, D. Horsky, S. Narayanan, Y. Orhun, P. Reiss, K. Seim, V. Singh, R. Thomadsen, and T. Zhu, (2008), “Discrete Choice Models of Firms’ Strategic Decisions,” Marketing Letters, Vol. 19, pp. 399-416.
  • Eccles, R. G., I. Ioannou, and G. Serafeim, (2014), “The Impact of Corporate Sustainability on Organizational Processes and Performance,” Management Science, Vol. 60:11, pp. 2835-2857.
  • Ellickson, P. B. and S. Misra, (2008), “Supermarket Pricing Strategies,” Marketing Strategies, Vol. 27:5, pp. 811-828.
  • Flammer, C., (2015), “Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach,” Management Science, Published online in Articles in Advance 19 Feb 2015.
  • Gaimon, C., (1989), “Dynamic Game Results of the Acquisition of New Technology,” Operations Research, Vol. 37:3, pp. 410-425.
  • Galbreth, M. and B. Ghosh, (2013), “Competition and Sustainability: the Impact of Consumer Awareness,” Decision Sciences, Vol. 44:1, pp. 127-159.
  • Garcia-Castro, R., M. A. Ariño, M. A. Canela, (2010), “Does Social Performance Really Lead to Financial Performance? Accounting for Endogeneity,” Journal of Business Ethics, Vol. 92, pp. 107-126.
  • Golicic, S. and C. D. Smith, (2013), “A Meta-Analysis of Environmentally Sustainable Supply Chain Management Practices and Firm Performance,” Journal of Supply Chain Management, Vol. 49:2, pp. 78-95.
  • Hitchcock, D. E., M. L. Willard, (2009), The Business Guide to Sustainability: Practical Strategies and Tools for Organizations. 2nd ed. London: Routledge.
  • Hotz, J. and R. Miller, (1993), “Conditional Choice Probabilities and the Estimation of Dynamic Models,” Review of Economic Studies, Vol. 60, pp. 497-529.
  • Imbens, G. W., J. D. Angrist, (1994), “Identification and Estimation of Local Average Treatment Effects,” Econometrica, 62 (2), pp. 467-475.
  • Keane, M. and K. Wolpin, (1997), "The Career Decisions of Young Men," Journal of Political Economy, Vol. 105, pp. 473-522.
  • Lee, D., (2012), “Turning Waste into Byproduct,” Manufacturing & Service Operations Management, Vol. 14:1, pp. 115-127.
  • Lu, W., K. W. Chau, H. Wang, and W. Pan, (2014), “A Decade's Debate on the Nexus between Corporate Social and Corporate Financial Performance: A Critical Review of Empirical Studies, 2002-2011,” Journal of Cleaner Production, Vol.79, pp. 195-206.
  • Mangala, S., J. Madaan, F. T. S. Chan, (2013), “Analysis of Flexible Decision Strategies for Sustainability-focused Green Product Recovery System,” International Journal of Production Research, Vol. 51: 11, pp. 3428-3442.
  • Margolis, J. D., H. A. Elfenbein, and J. P. Walsh, (2009), “Does it Pay to be Good...And Does it Matter? A Meta-Analysis of the Relationship between Corporate Social and Financial Performance,” http://ssrn.com/abstract=1866371.
  • Matisoff, D., (2015), “Sources of Specification Errors in the Assessment of Voluntary Environmental Programs: Understanding Program Impacts,” Policy Sciences, Vol. 48, pp.109-126.
  • McFadden, D. L., (1984), “Econometric Analysis of Qualitative Response Models,” In Z. Griliches and M. D. Intriligator (eds.) Handbook of Econometrics, Vol. II, pp. 1395-1447. Amsterdam: Elsevier.
  • McKelvey, R. and T. Palfrey, (1995), “Quantal Response Equilibria for Normal Form Games,” Games and Economic Behavior, Vol. 10:1, pp. 6-38.
  • Mendoza, A. J., R. T. Clemen, (2013), “Outsourcing Sustainability: A Game Theoretic Modeling Approach,” Environment Systems and Decisions, Vol. 33, pp. 224-236.
  • Molina, J. F., A. E. Claver, D. López, G. J. J. Tarí, (2009), "Green Management and Financial Performance: A Literature Review," Management Decisions, Vol. 47:7, pp. 1080-1100.
  • Moraga-González, J. L. and N. Padrón-Fumero, (2002), "The Adverse Effects of Environmental Policy in Green Markets," Environmental and Resource Economics, Vol. 22:3, pp. 419-447.
  • Orhun, A.Y., (2013) “Spatial Differentiation in the Supermarket Industry: The Role of Common Information,” Quantitative Marketing and Economics, Vol. 11:1, pp. 3-37.
  • Ryan, P. and C. Tucker, (2012), “Heterogeneity and the Dynamics of Technology Adoption,” Quantitative Marketing & Economics, Vol. 10, pp. 63-109.
  • Salzmann O., A. Ionescu-Somers, and U. Steger, (2005), “The Business Case for Corporate Sustainability: Literature Review and Research Options,” European Management Journal, No. 23, pp. 27-36.
  • Schoenherr, T., (2012), “The Role of Environmental Management in Sustainable Business Development: A Multi-country Investigation,” International Journal of Production Economics, Vol. 140:1, pp. 116-128.
  • Seim, K., (2006), “An Empirical Model of Firm Entry with Endogenous Product-type Choices,” RAND Journal of Economics, Vol. 37:3, pp. 619-642.
  • Soytas, M. A., M. Denizel, D. Usar, (2015), “Corporate Sustainability: Empirical Evidence of Causality on Financial Performance,” 18th Informs Applied Probability Society Conference, July 5-8, 2015, Istanbul, TURKEY.
  • Soytas, M. A., D. Usar, M. Denizel, (2017), “Estimation of the Static Corporate Sustainability Interactions Model,” Working Paper.
  • Soytas, M. A., M. Denizel, D. Usar, I. Ersoy, (2017), “Corporate Sustainability Investments and the Financial Performance Relationship in Turkey,” Journal of Management and Economics Research, 15 (2), pp. 140-162.
  • Stern, S. and B. Heidemann, (1999), "Strategic Play Among Family Members When Making Long-Term Care Decisions," Journal of Economic Behavior and Organization, Vol. 40, pp. 29-57.
  • Surroca, J., J. A. Tribo, S. Waddock, (2010), “Corporate Responsibility and Financial Performance: The Role of Intangible Resources,” Strategic Management Journal, Vol. 3, pp. 463-490.
  • Tetrault Sirsly, C. and K. Lamertz, (2008), “When Does a Corporate Social Responsibility Initiative Provide a First-Mover Advantage?” Business & Society, Vol. 47: 3, pp. 343-369.
  • Unruh, G., (2010), “Can You Compete on Sustainability?” Harvard Business Review, https://hbr.org/2010/03/can-you-compete-on-sustainability.
  • Unruh, G., D. Kiron, N. Kruschwitz, M. Reeves, H. Rubel, and A. M. zum Felde, (2016), “Investing For a Sustainable Future,” MIT Sloan Management Review, May 11.
  • Yadav, P. L., S. H. Han, H. Kim, (2017), “Sustaining Competitive Advantage Through Corporate Environmental Performance,” Business Strategy and The Environment” Vol. 26, pp. 345-357.
  • Zhu, T. and V. Singh, (2009), “Spatial Competition and Endogenous Location Choices: An Application to Discount Retailing,” Quantitative Marketing and Economics Vol. 7:1, pp. 1-35.
Toplam 53 adet kaynakça vardır.

Ayrıntılar

Birincil Dil İngilizce
Konular Ekonomi
Bölüm Araştırma Makaleleri
Yazarlar

Mehmet Ali Soytas

Damla Durak Uşar

Yayımlanma Tarihi 1 Ocak 2017
Yayımlandığı Sayı Yıl 2017 Cilt: 6 Sayı: 1

Kaynak Göster

APA Soytas, M. A., & Durak Uşar, D. (2017). Role of Strategic Interactions in Corporate Sustainability Decisions: An Empirical Investigation. Ekonomi-Tek, 6(1), 17-46.