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Jisun Kim, Hyun-Soo Woo, Rachel Balven and Glenn Hoetker
Decades of research offer mixed results regarding the relationship between green product strategies and corporate financial performance. On the one hand, many scholars put…
Decades of research offer mixed results regarding the relationship between green product strategies and corporate financial performance. On the one hand, many scholars put forward green product strategies as a source of competitive advantage and in turn enhance financial performance. On the other hand, some studies suggest the opposite – that green product strategies may encounter managerial difficulties or are too costly, consequently leading to meager, if any, financial gain. This study explores cross-country contextual differences as a contingency to resolve this inconsistency. Thus, the research question is, “Do stakeholders of a country affect the link between green product strategies and financial performance?”
Using a meta-analytic approach, the authors examine three country-level contingencies related to stakeholders: the impact of regulatory (stringency of environmental regulators), economic (consumer economic wealth) and political conditions (democratic vs. authoritarian governments) of a country in which the effects of a green product strategy on financial performance may vary.
Consistent with our predictions, the meta-analysis of 26 studies published over a 20-year period reveals that green products positively relate to financial performance in countries with lax environmental regulation, low consumer economic status and authoritarian regimes.
The authors applied both (natural) resource-based and resource dependence theories by focusing on the interactions between firms' internal resources/capabilities and the external resources that firms can access. By doing so, the study adds to our understanding of stakeholders as resource providers to enhance financial benefits of green product strategies and provide insight into key boundary conditions of the link.