A Meta-Analysis of Country Context Effects on the Link Between Green Products and Firm Performance

Abstract

Green products refer to products that use less polluting materials, emit less pollution during usage, and are more recyclable upon disposal. Although green product strategy has gained attention from both scholars and business practitioners as a source of competitive advantage and environmental sustainability in recent years, empirical evidence for the relationship between green products and financial performance remains inconsistent. Drawing on the Natural Resource Based View (NRBV) and Resource Based View (RBV), we explore crucial contextual contingencies that can help resolve this inconsistency. In particular, we examine three country-level contingencies: i.e., the impact of regulatory, economic and political conditions of a country in which rarity and imitability of green product resources and capabilities may vary. Our meta-analysis of 18 studies published over 40-year period reveals the importance of considering country-level differences for the green products-financial performance link. Our results indicate that green products positively relate to financial performance only in countries with lax environmental regulation (vs. stringent environmental regulation), developing economy (vs. developed economy), and authoritarian regime (vs. democracy).