Green Rivalry and Performance

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This study analyzes the competitive interactions between focal and rival firms in the domain of environmental management (EM) practices and the associated impacts on environmental performance and financial performance. Using competitive dynamics and institutional theory as a basis, the study contends that firm performance is impacted by behavior of both focal and rival firms, and perceptions of legitimacy. Our findings indicate that firms competing aggressively do benefit from their proactive approach, but significant dissimilarity of behavior from their rivals tends to negatively impact firm performance bringing issues of legitimacy to the forefront.

Subsequently, the study expands the work outlined above with a larger set of performance measures to look at the impact of rivalry on growth and long term shareholder value. Furthermore, this section also looks into the joint impact of environmental behavior and environmental performance on financial performance via a mediating model using various environmental performance measures. The findings indicate a partial mediation between EM behavior and financial performance from EM reputation and EM policy.

In the final part of the dissertation, the study presents exploratory work on two future research topics. The first topic expands the work from focal-rival dyads to include supplier networks as well. The second topic lays out a roadmap for future work in the area of credible EM signaling. This topic takes on issues surrounding greenwashing that has been reported in the popular media.

Given the visibility on sustainable activities across the entire spectrum, and the burden of green on firms, it is important to understand how firms are responding and if the returns justify their investments. This study contributes to this discourse by tying theory with behavior and adds additional clarity to firm behavior vis-à-vis green. From a methodological perspective, this study uses an original panel dataset using secondary data sources, which adds to the credibility of the results. The study has important managerial relevance at both the firm level and for policy making.