Our research articles this week searches out the reasons for or against being green and socially responsible.

Link between renewable energy utilisation and firm financial performance 
Contemporary research highlights multiple societal and environmental benefits in addition to potential economic advantages associated with renewable energy (RE) utilisation.

As federal and state incentives for investments in RE technologies become more prevalent, RE sources represent increasingly viable alternatives to established fossil fuel energy. RE utilisation is recognised as a key component of “green” product innovation that helps firms reduce the environmental impact of production processes and diminish their ecological footprints and energy consumption. Yet, despite consistent evidence that corporate sustainability initiatives are favourably associated with firm performance, the limited research that examines associations between RE initiatives and firm performance yields mixed results and an explicit link has yet to be established.

Drawing on the natural resource-based view of the firm, we examine the association between RE utilisation and firm financial performance over time. Annual ROI, Tobin’s Q, and operating margin for large U.S. firms identified as exceptional users of RE in the EPA’s Fortune 500 Top Green Power Partners list are compared with their respective industry medians over a 7-year period (2007–2013) and post hoc bootstrapping and sensitivity analyses are performed to further validate the study findings.

Our research advances current knowledge about the influence of RE utilisation by demonstrating that top RE user firms consistently generated superior financial performance compared to their industry competitors. As such, the study findings lend credence to the existence of a business case that complements the societal and environmental benefits of RE utilisation.

Hyunju Shin, Alexander E. Ellinger, Helenka Hopkins Nolan, Tyler D. DeCoster and Forrest Lane. 2018. An Assessment of the Association Between Renewable Energy Utilization and Firm Financial Performance. 
Journal of Business Ethics, 151(4), 1121–1138.


Ethical climates in organisations reviewed 
Since seminal meta-analytical work in 2006 we have witnessed burgeoning research on ethical climates. This article offers a comprehensive review of literature examining the antecedents and outcomes of ethical climates over the last decade, as well as moderators of the relationship between ethical climates and other variables.

Based on the review, an agenda for future research is also presented. In addition to highlighting the potential for incorporating alternative theoretical perspectives such as situational strength theory, trait-activation theory, social information processing theory, and institutional theory to better our understanding of ethical climates, this article highlights the need for future research to incorporate a dynamic perspective to study ethical climates, examine the curvilinear effects of ethical climates on work outcomes, extend the study of ethical climates to different levels of the organisation, and examine the effects of culture on ethical climates.

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Alexander Newman, Heather Round, Sukanto Bhattacharya, Achinto Roy. 2017. Ethical Climates in Organizations: A Review and Research Agenda.
Business Ethics Quarterly, 27(4), 475-512.


Interplay between private and public regulations: ISO 14001 in Chinese
Extant studies on private regulation have not reached a sufficient understanding about the interplay between private and public regulations, due to underdeveloped theoretical framework and the lack of large-sample empirical investigations. Leveraging ISO 14001 adoption among Chinese firms as the research context, the current research draws on the institutional theory to examine how firm’s adoption of ISO 14001 standard, as a specific form of private regulation, affects the incidence of public environmental inspections.

To test our arguments, we conduct two empirical studies. Study 1 uses the first-hand data of a corporate social responsibility survey on Chinese manufacturing firms, whereas Study 2 deploys the second-hand longitudinal archival data of the government environmental inspections on Chinese listed firms.

Both of the two studies reveal consistent findings that ISO 14001 adoption decreases the incidence of government environmental inspections, and that the effect of ISO 14001 adoption becomes stronger in state-owned enterprises and firms with top management team’s political ties.

Our findings are suggestive of a complementary relationship between private and public regulations, in a sense that private regulations can compensate for the weaknesses of public regulations by offering faster, more flexible and cost-efficient means of enforcement, which allows the public authorities to economise on the deployment of public resources to monitor the rest non-compliant firms.

Wenlong He, Wei Yang and Seong-jin Choi. 2018. The Interplay Between Private and Public Regulations: Evidence from ISO 14001 Adoption Among Chinese Firms. 
Journal of Business Ethics, 152(2), 477–497.


Environmental and social disclosures and firm risk
We examine the link between a firm’s environmental (E) and social (S) disclosures and measures of its risk including total, systematic, and idiosyncratic risk. While we do not find any link between a firm’s E and S disclosures and its systematic risk, we find a negative and significant association between these disclosures and a firm’s total and idiosyncratic risk.

These are novel findings and are consistent with the predictions of the stakeholder theory and the resource-based view of the firm suggesting that firms which make extensive and objective E and S disclosures promote corporate transparency that can help them build a positive reputation and trust with their stakeholders. This in turn can help mitigate the firms’ idiosyncratic/operational risk.

These findings are important for all corporate stakeholders including managers, employees, and suppliers who have a significant economic interest in the survival and success of the firm.

Mohammed Benlemlih, Amama Shaukat, Yan Qiu & Grzegorz Trojanowski. 2018. Environmental and Social Disclosures and Firm Risk.
Journal of Business Ethics, 152(3), 613–626.


Green consumption practices among young environmentalists 
We examined the subjective experiences of young environmentalists who engage in green consumption practices from the theoretical lens of Warde’s (J Consum Cult 5(2):131–153, 2005) practice theory. Data were gathered through 21 photo-elicited, in-depth interviews with young environmentalists.

Based on our findings, we postulated a theoretical framework to understand green consumption practices among our informants as a process with three interrelated phases: green credibility seeking, green procurement and prosumption, and green whispers. This inductive investigation revealed various symbolic meanings of green consumption (e.g. happiness and empowerment) that are instrumental in effectively engaging in green consumption practice and are widely shared among our informants.

Our investigation extends the existing literature on green consumption with an alternative theoretical perspective and provides managers with insights into the motivations and practices of green consumers.

Chamila Perera, Pat Auger & Jill Klein. 2018. Green Consumption Practices Among Young Environmentalists: A Practice Theory Perspective.
Journal of Business Ethics, 152(3), 843–864.


Permanency of CSR activities and firm value 
This paper investigates whether the pattern of firms’ corporate social responsibility (CSR) activities affects firm value. If firms do permanently CSR activities for strategic purposes, firms’ value is more likely to increase.

Using firms known to do CSR in Korea, we examine the valuation effect by adopting an earnings response coefficient (ERC) model and document firms with permanent CSR activities, which show higher ERCs than other firms regardless of the level of CSR activities.

This result partly explains the inconsistency among the results of previous studies by showing the differential implication for firm value depending on the CSR activity pattern. Also, the results of our paper imply that investors need to consider the pattern of firms’ CSR activities in their economic decision making.

Kwang Hwa Jeong, Seok Woo Jeong, Woo Jae Lee and Seong Ho Bae. 2018. Permanency of CSR Activities and Firm Value.
Journal of Business Ethics, 152(1), 207–223.