Exploring the Direction on the Environmental and Business Performance Relationship at the Firm Level. Lessons from a Literature Review

Logo: Institute for Security and Development Policy (ISDP)
Commentaries and Op-eds November, 2016, Sustainability
The interest of scientists and companies in understanding the business implications of environmental investment is timely; however, a dilemma remains at the firm level: is the environment a “strategic competitive factor”, as in the “Porter point of view”, or is it a “luxury good”, as in the “Wagner point of view”? Our research contributes to this debate through a review of the papers published in scientific journals between 2000 and 2015 that discussed the direction of the relationship between the environmental and business performances of enterprises. The objectives of the research are: (a) to verify if there is an agreement in the scientific literature of the last 15 years about the “Porter–Wagner dilemma” when focusing at the firm level; (b) to underline the prevalent cause and effect directions of the relationship between environmental and business performance; and (c) to investigate the reasons for any disagreements in this topic among the scientists. The results show that the main agreement regards the positive bi-directional relationship, as a virtuous cyclic approach with mutual effects between business and environmental performance; nevertheless, more complex hypotheses emerge, such as nonlinear and/or conditional relationship, that need to be further explored. On the other hand, the Porter–Wagner dilemma remains, and the main reason for the non-agreement among scientists can be due to the several non-homogeneous variables considered in the analyses. Thereafter, as lesson for scientists, the priority is to share univocal methods to measure firms’ environmental and business performances.