Financing Capabilities and Sustainability Strategy of Global Corporations: Implications for Sustainability-Corporate Performance Relationship

26 Pages Posted: 24 Jun 2011 Last revised: 2 Jun 2014

See all articles by Radiah Othman

Radiah Othman

Massey University

Rashid Ameer

IPU New Zealand Tertairy Institute

Date Written: May 12, 2011

Abstract

This paper aims to answer an important question, that being: is the sustainability-corporate performance relationship contingent upon the access to and use of financial capabilities? This paper uses a sample of Top 100 Sustainable global corporations. We derived a distinction between product-led and process-led sustainability approaches of the global corporations. Our empirical findings show that financing choice matter for sustainable development, and that the sustainability-corporate performance relationship is contingent upon the use of financial resources. Our work brings to forefront the importance of using a categorization of sustainable strategy using R&D and capital expenditures data. Furthermore, it also suggests a classification of companies (conservative vs. aggressive) based on the financing surplus (deficit) to highlight their impact on the corporate performance. For corporations considering the setting strategies for sustainable development, our findings emphasize the importance of financial capabilities and internal factors in creating an environment that sends a clear message of change. Organizations must evaluate their own progress on the path to sustainability in terms of the protection of the environment and the advancement of those communities in which they operate.

Keywords: financing capability, environment, performance, strategy, sustainability

Suggested Citation

Othman, Radiah and Ameer, Rashid, Financing Capabilities and Sustainability Strategy of Global Corporations: Implications for Sustainability-Corporate Performance Relationship (May 12, 2011). Available at SSRN: https://ssrn.com/abstract=1839008 or http://dx.doi.org/10.2139/ssrn.1839008

Radiah Othman

Massey University ( email )

School of Accountancy
Palmerston North
New Zealand

Rashid Ameer (Contact Author)

IPU New Zealand Tertairy Institute ( email )

57 Aokautere Drive
Fitzherbert
Palmerston north
New Zealand

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