A Greener Company Makes for Happier Employees More so than Does a More Valuable One: A Regression Analysis of Employee Satisfaction, Perceived Environmental Performance and Firm Financial Value
15 Pages Posted: 14 Dec 2009 Last revised: 18 May 2013
Date Written: December 10, 2009
This paper tests two hypotheses. The first hypothesis is that employee satisfaction is positively impacted when a company is perceived as performing well environmentally. The second hypothesis is that employee satisfaction is positively impacted by firm financial performance. To test these hypotheses, the relationships between perceived environmental performance, financial performance and employee satisfaction were tested using regression analysis. The results indicate a significant positive relationship between employee satisfaction and level of perceived environmental performance. This study does not find a significant relationship between employee satisfaction and firm financial value.
The practical implication for managers is that investments in environmental performance and related communications are important for reasons beyond those that are more commonly discussed, such as external stakeholder relations. This study suggests that environmental performance and related communications should be an integral part of human resources management strategies to recruit, motivate and retain the best talent.
For scholars, this study suggests future directions for research in, for example, determining the causal mechanisms between actual environmental performance, perceptions of relative environmental performance and employee satisfaction.
Keywords: employee satisfaction, environmental performance, firm financial performance, Tobin's Q
JEL Classification: G3, M14, M50, M54
Suggested Citation: Suggested Citation