Environmental Responsibility and Firm Performance: Evidence from Nigeria
The objective of this paper is to establish a possible relationship between sustainable business practice and firm performance. Using a field survey methodology, a sample of sixty manufacturing companies in Nigeria was studied. The firms were categorised into two groups, environmentally 'responsible' and 'irresponsible' firms. An investigation was undertaken into the possible relationship between firm performance and three selected indicators of sustainable business practice: employee health and safety (EHS), waste management (WM), and community development (CD), common within the 30 'responsible' firms. Findings from empirical results reveal that the sustainable practices of the 'responsible' firms are significantly related with firm performance. In addition, sustainable practices are inversely related with fines and penalties. The paper concludes that, within the Nigerian setting at least, sustainability affects corporate performance and sustainability may be a possible tool for corporate conflict resolution as evidenced in the reduction of fines, penalties and compensations. The paper therefore recommends research into the relationship between sustainability and conflict management.
[1] J, Elkington, Cannibals with forks; The Triple Bottom line of 21st
Century Business, London. Capstone, 1997.
[2] S. L. Hart, beyond greening strategies: strategies for sustainable world.
Harvard Business Review, Vol.75, no.1, p 67. 1997.
[3] T. O-Riordan, Environmentalism, London. Pion Books, 1997.
[4] D. Pepper, The Roots of Environmentalism, London. Rutledge, 1986.
[5] A. Dobson, Green Political Thought. London. Harper Collins. 1990.
[6] M. J. Epstein, Measuring Corporate Environmental Performance: Best
Practices for Costing and Managing Effective Environmental Strategy.
New Jersey. IMA/McGraw Hill. 1995.
[7] S. Shaltegger, K. Muller, & H. Hindrichsen, Corporate Environmental
Accounting; Chichester. Wiley. 1996.
[8] UN, Report of the World Commission on Environment and
Development, General Assembly Resolution, 42/187. 1987.
[9] WHO. World Summit Outcome Document, World Health Organisation
15th September.2005.
[10] H. Clause, & R. Pall, (2008) Experience and Novice Investors: Does
Environmental Information influence investment Allocation Decisions.
European Accounting Review.[online], available at:
http://www.informaworld.com/10.1080/09638180802016627 (accessed
28 May 2008).
[11] H. Lars, & N. Henrik, "The Value Relevance of Environmental
Performance-- European Accounting Review, vol. 14, no.1, p.14. 2005.
[12] M. Moskowitz, "Choosing socially responsible stocks". Business and
Society Review. Vol.1, pp. 71-75. 1972.
[13] G. Balabanis, H. C. Philips, & J. Lyall, "Corporate Social
Responsibility and economic performance in the top British companies:
are they linked? " European Business Review Vol. 98, pp.25-44. 1998.
[14] M. Tsoutsoura," Corporate social responsibility financial performance."
Center for Responsibility Business. Working paper series, paper 7.
Retrieved: 22 August 2007 from: http//repositories.cdlib.org/crb/wps/7.
2004).
[15] D. B. Turban, & D.W. Greening, "Corporate social performance and
organizational attractiveness to prospective employees". Academy of
Management Journal. Vol. 40, no. 3, pp.658-672. 1997.
[16] K. Aupperle, A. Carroll, & J. Hatfield, "An Empirical Examination
Between Corporate Social Responsibility and Profitability". Academy
of Management Journal. 28 no.2, pp. 446 -463. 1985.
[17] P. L. Cochran, & R. A. Wood," Corporate social responsibility and
financial performance". Academy of Management Journal. Vol.27,no.1,
42-56. 1984.
[18] L. Lankoski, "Determinants of environmental profit: an analysis of the
firm level relationship between environmental performance and
economic performance". Doctoral Dissertation. Department of Industrial
Engineering and Management, Helsinki University of Technology,
Helsinki. 2000.
[19] A. C. Mackinlay, "Events studied in economics and finance". Journal of
Economic Literature. Vol. 35 (March), pp.13-39. 1997.
[20] A. J. Hillman, & G. D. Keim, "Shareholder value, stakeholder
management, and social issues: what-s the bottom line?" Strategic
Management Journal. Vol.22, no.2, pp.125-239. 2001.
[21] A. McWilliams, & D. Siegel, "Corporate social responsibility and
financial performance: correlation or misspecification?" Strategic
Management Journal. Vol.215, pp.603-609. 2000.
[22] S. H. Teoh, l.Welch, & C.P. Wazzan." The effect of socially activist
investment policies on the financial markets: evidence from the South
African boycott". Journal of Business. Vol.72 no.1, pp.35-89. 1999.
[23] L. Burke, & J. M. Logsdon. "How social responsibility pays off ," Long
Range Planning. Vol.29, pp.495-502. 1996.
[24] T. Cannon, Corporate Social Responsibility: A Textbook on Business
Ethics, Governance, Environment: Roles and Responsibilities, London.
Pitman. 1994.
[25] M. E. Porter, & C. Linde, "Toward a new conception of the
environment-competitiveness relationship," Journal of Economic
Perspective. Vol.9, no. 4, pp.97-118. 1995.
[1] J, Elkington, Cannibals with forks; The Triple Bottom line of 21st
Century Business, London. Capstone, 1997.
[2] S. L. Hart, beyond greening strategies: strategies for sustainable world.
Harvard Business Review, Vol.75, no.1, p 67. 1997.
[3] T. O-Riordan, Environmentalism, London. Pion Books, 1997.
[4] D. Pepper, The Roots of Environmentalism, London. Rutledge, 1986.
[5] A. Dobson, Green Political Thought. London. Harper Collins. 1990.
[6] M. J. Epstein, Measuring Corporate Environmental Performance: Best
Practices for Costing and Managing Effective Environmental Strategy.
New Jersey. IMA/McGraw Hill. 1995.
[7] S. Shaltegger, K. Muller, & H. Hindrichsen, Corporate Environmental
Accounting; Chichester. Wiley. 1996.
[8] UN, Report of the World Commission on Environment and
Development, General Assembly Resolution, 42/187. 1987.
[9] WHO. World Summit Outcome Document, World Health Organisation
15th September.2005.
[10] H. Clause, & R. Pall, (2008) Experience and Novice Investors: Does
Environmental Information influence investment Allocation Decisions.
European Accounting Review.[online], available at:
http://www.informaworld.com/10.1080/09638180802016627 (accessed
28 May 2008).
[11] H. Lars, & N. Henrik, "The Value Relevance of Environmental
Performance-- European Accounting Review, vol. 14, no.1, p.14. 2005.
[12] M. Moskowitz, "Choosing socially responsible stocks". Business and
Society Review. Vol.1, pp. 71-75. 1972.
[13] G. Balabanis, H. C. Philips, & J. Lyall, "Corporate Social
Responsibility and economic performance in the top British companies:
are they linked? " European Business Review Vol. 98, pp.25-44. 1998.
[14] M. Tsoutsoura," Corporate social responsibility financial performance."
Center for Responsibility Business. Working paper series, paper 7.
Retrieved: 22 August 2007 from: http//repositories.cdlib.org/crb/wps/7.
2004).
[15] D. B. Turban, & D.W. Greening, "Corporate social performance and
organizational attractiveness to prospective employees". Academy of
Management Journal. Vol. 40, no. 3, pp.658-672. 1997.
[16] K. Aupperle, A. Carroll, & J. Hatfield, "An Empirical Examination
Between Corporate Social Responsibility and Profitability". Academy
of Management Journal. 28 no.2, pp. 446 -463. 1985.
[17] P. L. Cochran, & R. A. Wood," Corporate social responsibility and
financial performance". Academy of Management Journal. Vol.27,no.1,
42-56. 1984.
[18] L. Lankoski, "Determinants of environmental profit: an analysis of the
firm level relationship between environmental performance and
economic performance". Doctoral Dissertation. Department of Industrial
Engineering and Management, Helsinki University of Technology,
Helsinki. 2000.
[19] A. C. Mackinlay, "Events studied in economics and finance". Journal of
Economic Literature. Vol. 35 (March), pp.13-39. 1997.
[20] A. J. Hillman, & G. D. Keim, "Shareholder value, stakeholder
management, and social issues: what-s the bottom line?" Strategic
Management Journal. Vol.22, no.2, pp.125-239. 2001.
[21] A. McWilliams, & D. Siegel, "Corporate social responsibility and
financial performance: correlation or misspecification?" Strategic
Management Journal. Vol.215, pp.603-609. 2000.
[22] S. H. Teoh, l.Welch, & C.P. Wazzan." The effect of socially activist
investment policies on the financial markets: evidence from the South
African boycott". Journal of Business. Vol.72 no.1, pp.35-89. 1999.
[23] L. Burke, & J. M. Logsdon. "How social responsibility pays off ," Long
Range Planning. Vol.29, pp.495-502. 1996.
[24] T. Cannon, Corporate Social Responsibility: A Textbook on Business
Ethics, Governance, Environment: Roles and Responsibilities, London.
Pitman. 1994.
[25] M. E. Porter, & C. Linde, "Toward a new conception of the
environment-competitiveness relationship," Journal of Economic
Perspective. Vol.9, no. 4, pp.97-118. 1995.
@article{"International Journal of Business, Human and Social Sciences:61837", author = "Collins C. Ngwakwe", title = "Environmental Responsibility and Firm Performance: Evidence from Nigeria", abstract = "The objective of this paper is to establish a possible relationship between sustainable business practice and firm performance. Using a field survey methodology, a sample of sixty manufacturing companies in Nigeria was studied. The firms were categorised into two groups, environmentally 'responsible' and 'irresponsible' firms. An investigation was undertaken into the possible relationship between firm performance and three selected indicators of sustainable business practice: employee health and safety (EHS), waste management (WM), and community development (CD), common within the 30 'responsible' firms. Findings from empirical results reveal that the sustainable practices of the 'responsible' firms are significantly related with firm performance. In addition, sustainable practices are inversely related with fines and penalties. The paper concludes that, within the Nigerian setting at least, sustainability affects corporate performance and sustainability may be a possible tool for corporate conflict resolution as evidenced in the reduction of fines, penalties and compensations. The paper therefore recommends research into the relationship between sustainability and conflict management.
", keywords = "Environmental responsibility, environmental investment, social responsibility, sustainable business, social ethics, environmental ethics.", volume = "2", number = "10", pages = "1152-8", }
