Research On The Strategic Value Of Corporate Environmental Responsibility

Based on natural resource basic theory,stakeholder theory,strategic corporate social responsibility theory,and expectation violation theory,this research investigates the internal mechanism of the realization of strategic value of corporate environmental responsibility(CER)and the contingencies by integrating the benefits and costs perspectives.The findings will help improve the understanding of the strategic value of corporate environmental responsibility and provide support for corporations to carry out environmental responsibility practice and innovation.First,this study examines potential applicants' intention to apply and its antecedents(e.g.,perceived negative publicity)after the exposure of an environmental scandal by simultaneously including CSR and CPQ images as moderators.432 college students from three universities in Nanjing,China are asked for their intention to apply for a job in a well-known vehicle manufacturer after the exposure of its environmental scandal in 2015.The study finds that intention to apply for a job is indirectly affected by a company's CSR and CPQ images via the mediation of organizational attractiveness.In addition,the influence of perceived negative publicity on organizational attractiveness is moderated by a company's CSR and CPQ images.To be specific,the effect of negative publicity is significantly reduced when CPQ image is high but increases when CSR image is high.Second,the natural resource-based view suggests a relationship between corporate environmental responsibility(CER)and corporate financial performance(CFP)because the intangible assets accrued by the firm constitute competitive advantages.However,the role of corporate reputation as a valuable intangible asset in the CER-CFP link has yet to be examined.We fill this gap by examining the effect of a firm's reputation in terms of prominence and favorability in interactively mediating the CER-CFP link.Based on a sample of 10,995 firm-year observations in China,we find that CER enhances a firm's promnence and its favorability,through which CER indirectly improves CFP.Additionally,the results of moderated mediation analysis indicate that the indirect effect of CER on CFP via improving prominence(favorability)is more positive and significant in high levels of favorability(prominence)than in low levels.Third,there is always a problem in determining the strategic value of corporate environmental responsibility:Is there any advantage or disadvantage to corporate financial performance in fulfilling environmental responsibility?From a strategic point of view,the strategic value of a decision is reflected in the benefits of the decision exceeding the cost of the decision.On the basis of this view,this research uses benefit-cost analysis to solve the strategic value issues that have long plagued the field of corporate social responsibility.Some studies have concluded that CER nurtures good stakeholder relationships and facilitates acquisition of critical resources controlled by those stakeholders,thereby suggesting a positive CER-CFP link.By contrast,other researchers have taken a negative stance by suggesting that commitment to improve CER diverts limited resources from value-creating activities and damages competitive advantage.This study reconciles the longstanding debate about the CER-CFP link by integrating and extending existing perspectives.We suggest that the CER-CFP link can be captured by an inverse U-shape.Uncertainty,as an important attribute of the external environment,has a significant impact on the value realization of corporate strategy.This article discusses the moderating role of environmental uncertainty—dynamism,munificence and complexity on the relationship between corporate environmental responsibility and corporate financial performance.We use the annual panel data set of 8364 companies from 1455 industrial companies,which provides strong support for the hypotheses.The results indicate that the inverse U-shape is steeper and of a lower plateau in higher levels of environmental uncertainty characterized by high dynamism,low munificence,and high complexity.This means that environmental uncertainty strengthens the positive relationship between environmental responsibility and financial performance before the turning point.In contrast,environmental uncertainty after the turning point strengthened the negative correlation between environmental responsibility and financial performance.This finding confirms that environmental uncertainty is a double-edged sword in moderating the relationship between environmental responsibility and financial performance.There are several implications of this research.First of all,previous studies have rarely used corporate environmental responsibility image and corporate product quality image as contingency factors to study human resources issues,and have not paid attention to the different roles of these two dimensions of corporate image when companies experience scandals.Although previous studies have proved that corporate capabilities and ethical image can bring considerable benefits to enterprises,the conclusions of this article show that under certain circumstances,corporate environmental responsibility image may also become a burden for enterprises.This also proves that the company's hypocritical behavior will have an adverse effect on the company.Secondly,the relationship between corporate environmental responsibility and corporate financial performance has long been controversial.By exploring the internal mechanism of the causal relationship between the two,it can provide a practical path basis for establishing the strategic value of corporate environmental responsibility.This paper verifies the mediating role of corporate reputation and reputation in the relationship between corporate environmental responsibility and corporate financial performance,and enriches the theory of strategic corporate social responsibility.The interaction between the evaluative and non-evaluative dimensions of corporate reputation also provides new ideas for research on corporate reputation.Finally,this paper empirically demonstrates that there is an inverted U-shaped relationship between corporate environmental responsibility and financial performance,and examines the three dimensions of environmental uncertainty—dynamism,munificence and complexity in moderating the relationship between corporate environmental responsibility and corporate financial performance.The findings have reconciled the long-standing debate in CER-CFP link and clarified the application boundary of the strategic corporate social responsibility theory.This article uses a variety of research designs,alternative variable measurements,and multiple statistical methods(including OLS linear regression,two-way fixed effects model,dynamic panel model,structural equation model)to provide robust tests.