The relationship between culture, sustainable use of resources, and financial performance : an institutional and natural-resource-based perspective

Engelke, Deon H. (author), Pearse, Noel J. (author), Correa, Fabio M. (author), Skae, Frederick O. (author)

Modelling a dataset of 5230 globally listed firms through two statistical approaches reflecting the primary principles of Natural-Resource-Based Theory and Institutional Theory, respectively, this study provides evidence that sustainability initiatives developed by firms are being rewarded in the form of improved Corporate Financial Performance (CFP). Culture has a significant influence on both firm sustainability performance, captured in ESG ratings, and CFP and also interacts with other variables, including industry sector and socio-economic development of a firm’s markets. This study is unique in hypothesising and statistically proving that sustainability is a mechanism that activates the potential of culture to produce CFP. Natural-Resource-Based Theory (NRBT) and Institutional Theory (DiMaggio & Powell, 1983) provide complementary explanations for the relationship between the culture of a firm and its CFP being mediated by sustainability, effectively determining firms’ approach to the use of their resources in a sustainable or unsustainable way. Certain relationships between culture, sustainability performance, and CFP, however, are better explained by Institutional Theory than NRBT.

• Language: English
• Keywords: national culture, sustainability, ESG, resource-Based theory, natural-Resource-Based theory, institutional theory
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2024
• Number of pages: Str. 61-80
• Numbering: Vol. 26, iss. 2, article no. 1
• PID: 20.500.12556/RUL-164750
• UDC: 502.131.1
• ISSN on article: 2335-4216
• DOI: 10.15458/2335-4216.1335
• COBISS.SI-ID: 200327939
• Publication date in RUL: 08.11.2024

Record is a part of a journal

• Title: Economic and business review
• Publisher: Ekonomska fakulteta
• ISSN: 2335-4216
• COBISS.SI-ID: 268649216

Licences

• License: CC BY-NC-ND 4.0, Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International
• Link: http://creativecommons.org/licenses/by-nc-nd/4.0/
• Description: The most restrictive Creative Commons license. This only allows people to download and share the work for no commercial gain and for no other purposes.

Secondary language

• Language: Slovenian
• Keywords: podjetje, finance, trajnostni razvoj