Impact of Corporate Sustainability Performance on Financial Performance of South African Industries Via Brand Value and Competitiveness

Emmanuel Obinali OBIOHA

doi:10.38142/ijesss.v5i2.1011

Authors

Emmanuel Obinali OBIOHA Tshwane University of Technology Pretoria, South Africa

DOI:

https://doi.org/10.38142/ijesss.v5i2.1011

Keywords:

Brand Value/Reputation, Competitiveness, Corporate Sustainability Performance, Financial Performance

Abstract

Sustainability managers and stakeholders unanimously recognise that a single, systematic and integrated model for measuring corporate sustainability performance significantly enhances firms’ competitive advantage, profit and performance. Nevertheless, serious concerns exist in literature on the non-existence of a single, systematic and integrated model for measuring the impact of corporate sustainability performance (i.e. environmental, social, and economic) on the financial performance of South African industries via brand value/reputation and competitiveness. Thus, the objective is to develop this model by collecting qualitative and quantitative data through a census of 70 out of 74 companies of Johannesburg Stock Exchange, active in Socially Responsible Investment Index. Factor analysis was used for data reduction, Chi-square tested for association between categorical variables, and Cronbach alpha for internal consistency and reliability of instruments. Findings revealed positive impacts between environmental, social and economic aspects of corporate sustainability performance, brand value/reputation, competitiveness and financial performance. Results also showed that the elements/factors of corporate social performance like ethical behaviour, genuine community initiatives and human rights can translate to brand value/reputation. Likewise, elements/factors of brand value/reputation like competitive edge, comparative advantage, innovation, reputation, employees’ loyalty and non-market effect can translate to competitiveness and financial performance. By implication, the model can be useful to potential managers in South Africa or world for making easy and prompt decisions on past, pending and future environmental, social and economic sustainability. Hence, the research contributes to development science a single, systematic and integrated evaluation model adaptable to companies, businesses and governments/municipalities for achieving performance targets.

Downloads

Download data is not yet available.

References

Ahmad, S., Wong, K. Y. & Rajoo, S. (2019). Sustainability indicators for manufacturing sectors: a literature survey and maturity analysis from the triple-bottom line perspective. J Manuf Technol Manag 30(2):312–334

Amaral, A. R., Rodrigues, E., Gaspar, A. R. & Gomes, A. (2020). A review of empirical data of sustainability initiatives in university campus operations. Journal of Cleaner Production, 250, 119558

Ali, Alshehhi, I., Haitham, Nobanee, I. & Nilesh, Khare, (2018). The Impact of Sustainability Practices on Corporate Financial Performance: Literature Trends and Future Research Potential, pp. 1-25

Arinze, Christian, Nwoba, Nathaniel, Boso, Matthew, J. & Robson, (2020). Corporate sustainability strategies in institutional adversity: Antecedent, outcome, and contingency effects, Business Strategy and the Environment, 10.1002/bse. 2654, 30, 2, pp. 787-807

Arushanyan, Y., Ekener, E. & Moberg, A. (2017). Sustainability assessment framework for scenarios—SAFS. Environ Impact Assess Rev 63: 23–34

Avlonas, N. & Nassos, G. P. (2020). Practical Sustainability Strategies. How to gain a Competitive Advantage. John Wiley & Sons: Hoboken, NJ, USA, pp. 32-42

Barnett, M. L. (2019). The business case for corporate social responsibility: A critique and an indirect path forward. Business & Society, 58(1), pp. 167-190

Beckmann, M. & Schaltegger, S. (2020). Responsible Management Learning and Education and the Need for Interdisciplinarity and Transdisciplinary. In Laasch, O., Moosmayer, D.C., & Parkes, C. (Eds.): The Sage Handbook of Responsible Management Learning and Education, Sage. Forthcoming

Breuer, A., Janetschek, H. & Malerba, D. (2019). Translating sustainable development goal (SDG) Interdependencies into policy advice: Sustainability. Bonn, Germany: MDPI German Development Institute (DIE). [Crossref], [Google Scholar]

Christopher, S. & Collins, C. M. (2018). The central role of theory in Qualitative research. Qualitative method

Dalir, Mohsen, Dudange, Sarah, Afshar & Parvin, (2017). Investigating the effect of green mix marketing on organizational performance and attracting green customers. Quarterly Journal of Management and Accounting Studies. Volume 3. Number 2

Dara, G., Schniederjans, Mehrnaz & Khalajhedayati, (2020). Competitive sustainability and stakeholder engagement: Exploring awareness, motivation, and capability, Business Strategy and the Environment, 10.1002/bse.2655, 30, 2, pp. 808-824

Doluca, H., Holzner, B. & Wagner, M. (2018). Environmental innovation and corporate sustainability: A 15-year comparison based on survey data. In J. Horbach, & C. Reif (Eds.), new developments in eco-innovation research (Vol. 14), pp. 193– 217. Cham: Springer International Publishing (Sustainability and Innovation)

Doluca, H., Wagner, M. & Block, J. (2018). Sustainability and environmental behaviour in family firms: A longitudinal analysis of environment-related activities, innovation and performance. Business Strategy and the Environment, 27(1), pp. 152– 172

Donoher, W. J. (2017). The Multinational and the Legitimation of Sustainable Development. Transnational Corporations – Vol. 24, No. 3, pp. 49-60. http://DOI:10.18356/5DBAD6D9-EN. Accessed 14 Apr 2023

Eccles, R. G., Ioannou, I. & Serafeim, G. (2020). The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and Performance. Journal of Finance Economics, in Press, pp. 114

Epstein, M. J. (2018). Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. London: Routledge

Epstein, M. J. & Roy, M. S. (2001). Sustainability in action. Identifying and measuring the key performance drivers. Long Range Planning, vol.34 No. 5, pp. 585-604. {CrossRef} {Infotrieve}

Erin, O. A., Bamigboye, O. A. & Oyewo, B. (2022). Sustainable development goals (SDG) reporting: an analysis of disclosure. Journal of Accounting in Emerging Economies. 12 (2) http://:DOI.10.1108/JAEE .-02-2020-0037. Accessed 30 Jan 2023

Ernst, Young, (2015). Sustainability Reports. Our journey towards sustainability. South Africa.

Ford, Inc, (2011). Ford Motor Company. Available at: http://www.csrglobe.com/login/companies/ford_motor_company . html. Accessed 21 Feb 2023

Fraering, M. & Minor, M. S. (2013). “Beyond loyalty: customer satisfaction, loyalty and fortitude”. Journal of Services Marketing, 27(4), pp. 334-344

Gartenberg, C. M., Prat, A. & Serafeim, G. (2018). Corporate purpose and financial performance. Organization Science, forthcoming

George, L?z?roiu, Lumini?a, Ionescu, Mihai, Andronie, Irina & Dijm?rescu, (2020). Sustainability Management and Performance in the Urban Corporate Economy: A Systematic Literature Review, Sustainability, 10.3390/su12187705, 12, 18, pp. 7705

Gitman, L. J. (2019). Principles of managerial finance. 4th Impression, Pearson Education South Africa (Pty) Ltd, Forest Drive, Pinelands, Cape Town, South Africa, pp. 380-389

Global, Environmental, Management, Initiative, (GEMI) (2016). Exploring Pathways to a Sustainable Enterprise. Sustainable Development Planner. Washington, pp. 1-60

Goyal, P., Rahman, Z. & Kazmi, A. A. (2013). "Corporate sustainability performance and firm performance research: Literature review and future research agenda”. Management Decision, 51(2), pp. 361-379

GRI, (2015). Sustainability Reporting Guidelines. Empowering Sustainable Decisions. Five Year Focus, pp. 5-55. Available at: http://www.sustainabilityreportingguidelines.org. Accessed: 15 Dec 2022

Hahn, T., Figge, F., Pinkse, J. & Preuss, L. (2018). A paradox perspective on corporate sustainability: Descriptive, instrumental, and normative aspects. Journal of Business Ethics, 148(2), pp. 235-248

Hartzmark, S. M. & Sussman, A. B. (2018). Do Investors Value Sustainability? A Natural Experiment Examining Ranking and Fund Flows

Hörisch, J., Wulfsberg, I. & Schaltegger, S. (2019). The influence of feedback and awareness of consequences on the development of corporate sustainability action over time. The influence of feedback and awareness of consequences on the development of corporate sustainability action over time

Interbrand, (2009). Methodology for measuring best global brands. Available at: http://www.interbrand.com. Accessed 11 Jan 2023

International Federation of Accountants, (IFAC) (2015). International Guidance Document. Management Accounting Concepts. New York, pp. 1-84

International Organization for Standardization, (ISO) (2015). 14064-1: Greenhouse gases – Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals. S. 2191. America’s Climate Security Act of 2015. 110th Congress. Pp. 1-67. Available at: http://www.iso.org. Accessed: 24 Feb 2023

Jarvis, P. (2013). Research Method knowledge Base. Pp. 1-16

Jha, M. K. & Rangarajan, K. (2020). The approach of Indian corporates towards sustainable development: An exploration using sustainable development goals based model. Sustainable Development, https://doi.org/10.1002/sd.2053. Accessed 31 Jan 2023

Jové-Llopis, E. & Segarra-Blasco, A. (2018). Eco-innovation strategies: A panel data analysis of Spanish manufacturing firms. Business Strategy and the Environment, 27(8), pp. 1209– 1220

JSE, SRI, (2019). Ground Rules for Management of the JSE SRI Index Constituents. One Exchange Square Gwen Lane, Sandown, Sandton, 2146, South Africa, pp. 1-20

Kanwal, M., Khanam, F., Nasreen, S. & Hameed, S. (2013). Impact of corporate social responsibility on the firm’s financial performance. IOSR Journal of Business and Management (IOSR-JBM), 14(5): 67-74

Kazemikhasragh, A., Cicchiello, A. F. & Pietronudo, M. C. (2021). Factors influencing the adoption of SDGs reporting by large African and Asian companies International Journal of Technology Management & Sustainable Development. https://doi.org/10.1386/tmsd_00034. Accessed 24 Apr 2023

Khan, M., Serafeim, G. & Yoon, A. (2016). Corporate sustainability: First evidence on materiality. The Accounting Review, 91(6), pp. 1697-1724

KPMG, (2020). Survey of integrated sustainability report in South Africa. An investigative study of the companies listed on the JSE Securities Exchange All Share Index. Stellenbosch, pp. 1-33

Landroguez, S. M., Castro, C. B. & Cepeda-Carrion, G. (2013). Developing an integrated vision of customer value. Journal of Services Marketing, 27(3), pp. 234-244

Landrum, N. (2018). Stages of corporate sustainability: Integrating the strong sustainability worldview, Organization & Environment, 31 (4), pp. 287-313

Marney, J. & Tarbert, H. (2018). Corporate finance for business. Oxford: Oxford University Press, pp. 245-280

Marx, J., De Swardt, C., Smith, M. B. & Erasmus, P. (2019). Financial management in Southern Africa. 3rd edition. Cape Town, South Africa: Pearson Education, pp. 445-485

Meurs, P. & Quid, A. B. (2018). Sustainability—The SDG’s from a critical perspective; network of Universities from the Capitals of Europe (UNICA). Brussels, Belgium. [Google Scholar]

Naami, Abdullah, Majid, Ahang, Ali & Mirtaheri, (2017). Assessment of Factors Influencing Consumer Behavior in Iran's Airline Industry Using AHP Technique. SINDHOLOGICAL STUDIES, ISSN: 1032-6759 (2): 113-123

Papagiannakis, G. & Lioukas, S. (2017). Corporate environmental management: Individual-level drivers and the moderating role of charismatic leadership. European Management Review, 38, pp. 932

Pepsico, (2011). Pepsi Values & Philosophy. Available at: http://www.pepsico.com/Company/PepsiCo-Values. and Philosophy. Html. Accessed 12 Jan 2023

Porter, M. & Kramer, M. (2011). Creating shared value. Harvard Business Review, 89. Pp. 62-77

Ramos, T. B. & Caeiro, S. (2010). Meta?performance evaluation of sustainability indicators. Ecological Indicators, 10. Pp. 157?166

Roberts, S. (2018). South Africa’s economy is badly skewed to the big guys: how it can be changed. The Conversation. Available: https://theconversation.com/south-africas-economy-is-badly-skewed-to-the-big-guys-how-it-can-bechanged-92365. 13 Mar 2023

Rosati, F. & Faria, L. (2019). “Addressing the SDG in sustainability reports: the relationship between institutional factors”, Journal of Cleaner Production, Vol. 215, pp. 1312-1326

Safari, M. K., Mehdi, S. M. & Eram, A. (2013). Investigating the critical success factors of corporate social responsibility implementation: Evidence from the Iranian banking sector. Corporate Governance, 13(2): 184-197

Schaltegger, S. & Burritt, R. (2018). Business cases and corporate engagement with sustainability: differentiating ethical motivations. Journal of Business Ethics, 147(2), pp. 241-259

Schaltegger, S., Hörisch, J. & Loorbach, D. (2020). Corporate and entrepreneurial contributions to sustainability transitions, Business Strategy and the Environment, 10.1002/bse.2454, 29, 3, pp. 1617-1618

Schaltegger, S., Hörisch, J. & Freeman, E. (2019). Business cases for sustainability. A stakeholder theory perspective, Organization & Environment, 32(3), pp. 191–212

Schaltegger, S. & Wagner, M. (2006). Managing and Measuring the Business Case for Sustainability: Capturing the Relationship between Sustainability Performance, Business Competitiveness and Economic Performance. Greenleaf Publishing, pp. 1-27

Schlager, T., Bodderas, M., Maas, P. & Luccachelin, J. (2011). The influence of the employer brand on employee attitudes relevant for service branding: An empirical investigation. Journal of Services Marketing, 25 (7): 497-508

Schniederjans, D. & Khalajhedayati, M. (2020). Competitive sustainability and stakeholder engagement: Exploring awareness, motivation, and capability, Business Strategy and the Environment, 10.1002/bse.2655, 30, 2, pp 808-824

Shahzalal, M. D. & Hassan, A. (2019). Communicating sustainability: Using community media to influence rural people’s intention to adopt sustainable behaviour. Sustainability, 11(3), pp 812

Spahn, A. (2018). “The first generation to end poverty and the last to save the planet?”—Western individualism, human rights and the value of nature in the ethics of global sustainable development. Sustainability, 10, 1853. https//doi:10.3390/su10061853[Crossref], Google Scholar Accessed 15 Mar 2023

Stankovi?, L., Novi?evi?, B. & ?uki?, S. (2013). Designing corporate sustainability performance measurement systems. Economic and Organization, 9(4), pp 417-427

Sustainability, (2001). Buried Treasure. Uncovering the Business Case for Corporate Sustainability. London, United Kingdom, pp 1-58. Available at: http://www.sustainability.com./buried treasure. Accessed 6 Feb 2023

Székely, F. & Knirsch, M. (2005). Responsible leadership and corporate social responsibility. Metrics for Sustainable Performance, 23, pp 628-647

Unilever, (2011). Values and Standards. Available at: www.unilever.com/sustainability/Introduction/values/ Accessed Apr 2023

United Nations Industrial Development Organisation, (UNIDO) (2020). Annual Report. Vienna International Centre, P.O. Box 300, 1400 Vienna, Australia, pp 1-20. United Nationals United Development Organisation

United Nations General Assembly, (2015). Transforming our world: The 2030 Agenda for Sustainable Development.21October2015. http://www.un.org/ga/search/view_doc.asp?symbol=A/RES/70/1&Lang=E Accessed19 Jan 2023)(12) (PDF) Sustainable Development Goals (SDGs), and their implementation: A national global framework for health, development and equity needs a systems approach at every level. Available from: https://www.researchgate.net/publication/320685121_Sustainable_Development_Goals_SDGs_and_their_implementation_A_national_global_framework_for_health_development_and_equity_needs_a_systems_approach_at_every_level

Veleva, V. & Ellenbecker, M. (2001). A proposal for measuring business sustainability. Greener Management International, 31:101-120

Vu, Minh, Ngo, (2020). Measuring Customer Satisfaction: A Literature Review. Proceedings of the 7th International Scientific Conference Finance and Performance of Firms in Science, Education and Practice.

Wagner, M. (2015). The link of environmental and economic performance: Drivers and limitations of sustainability integration, Journal of Business Research, 68, pp 1306–1317. http://doi: 10.1016/j.jbusres. Accessed Jan 2023

Wanamaker, C. (2018). The Environmental, Economic, and Social Components of Sustainability: The Three Spheres of Sustainability: Adapted from the U.S. Army Corps of Engineers https://soapboxie.com/social-issues/The-Environmental-Economic-and-Social-Components-of-Sustainability. [Google Scholar] Accessed May 2023

World Business Council for Sustainable Development, (WBCSD) (2015). Reporting Matters. Redefining Performance and Disclosure Report. Maison De La Paix Chemin Eugène-Rigot, 2 Case Postale 246 CH-1211 Geneva 21, Switzerland, 1-45. Available at: http://www.wbcsd.org. Accessed 20 Apr 2023.

World Bank, (2020). World Development Indicators. Online resource:

https://data.worldbank.org/. Accessed 2 Feb 2023