The Economic Impacts of Voluntary Environmental Performance of Firms: A Critical Review

41 Pages Posted: 9 Jun 2009

See all articles by Esther Blanco

Esther Blanco

affiliation not provided to SSRN

Javier Rey-Maquieira

University of the Balearic Islands

Javier Lozano

University of the Balearic Islands

Abstract

New trends in studies on the governance of natural assets include substantial consideration of the role of voluntary initiatives. A traditional economic view states that there is a trade-off between being green and being competitive. According to that view, no voluntary environmental action is expected to occur. To undertake an in-depth analysis of the scope for voluntary action, this paper reviews empirical literature that analyzes the relationship between manufacturing firms’ environmental initiatives or performance and economic results. This review moves beyond the general test of the ‘pay to be green’ hypothesis, preferring instead to systematize empirical results in more specific research questions. Empirical findings of the reviewed literature generally support that there is no penalty for being green. In addition, the typology of firms, the methods utilized for implementing environmental initiatives, the intensity of abatement efforts and stockholders’ valuation of green firms have all been shown to have a sizeable influence on the actual economic results of environmental action or management. Consequently, the findings of this paper challenge the traditional strategic theory that predicts widespread free-riding; it holds major implications for environmental policy-making and environmental business decisions.

Suggested Citation

Blanco, Esther and Rey-Maquieira, Javier and Lozano, Javier, The Economic Impacts of Voluntary Environmental Performance of Firms: A Critical Review. Journal of Economic Surveys, Vol. 23, Issue 3, pp. 462-502, July 2009, Available at SSRN: https://ssrn.com/abstract=1416371 or http://dx.doi.org/10.1111/j.1467-6419.2008.00569.x

Esther Blanco (Contact Author)

affiliation not provided to SSRN

No Address Available

Javier Rey-Maquieira

University of the Balearic Islands ( email )

Ctra. de Valldemossa km 7,5
Palma, Baleares
Spain

Javier Lozano

University of the Balearic Islands

Crtra. Valldemossa, km 7.5
Ed. Ramon Llull
Palma de Mallorca, Illles Balears 07122
Spain

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