Going for gold by going green? - A study about the relation between energy and material saving activities and the financial performance of organizations.

Abstract

This study researches the relation between energy and material saving activities and business performance. The theory of Hart and Dowell (2011) regarding pollution prevention strategies forms the theoretical background for this study. Literature does not agree upon the nature of the relation between sustainable activities and business performance, some studies outline a neutral relation, whether other studies state that a negative relation is present. This study aims to address this inconsistency by researching the influence of energy and material saving activities on the revenue outcomes and production costs of manufacturing firms in the Netherlands. Additionally, this study aims to understand how the moderating effects of organisational capabilities and searching for sustainable practices influence the relation between energy and material saving activities and revenue/production cost changes. The regression analysis and several post-hoc analyses show that autonomously investing in energy and material saving activities does not result in revenue growth or reductions in production costs. The possession of organisational capabilities does not have an influence on this relation. However, a search for energy and material saving activities that is motivated by laws and regulations results in production cost savings or revenue growth. Prerequisites for this relation are that regulatory forces highly motivate companies to search, are effective enough to overcome organisational inertia, and customers should be aware of the sustainable activities of companies. Contrary, voluntary searching for energy and material saving activities results in production cost increasements in situations with high searching costs.