Candle under a bushel: communicating environmental performance to improve firm performance

Abstract

PurposeThis study answers the question: “does the communication of environmental performance transmit positive overall firm performance?” The authors examine the influence of a company's environmental performance (EP) on its overall firm performance (FP) and the mediating role of integrated marketing communication (IMC) on the EP-FP relationship.Design/methodology/approachA survey of firms from the extractive, manufacturing and hospitality sectors of an emerging economy was used in testing our hypothesized relationships. Partial least square structural equation modelling (PLS-SEM) was used in analysing the data from 194 firms.FindingsThe study found that EP negatively and significantly influences FP directly. However, the introduction of IMC into the direct relationship changes this effect. IMC was, therefore, found to have a partial and complementary mediation effect on the relationship between EP and FP.Practical implicationsThe negative influence of EP on FP found explains the reluctance of companies towards environmental protection. However, if companies can utilize their communication capacity well enough in creating the necessary awareness among their stakeholder audiences, a positive relationship is created between EP and FP.Originality/valueThe benefits of EP to companies and how companies can turn their EP into gains were not clearly established in the literature. The current study has explained one of the boundary conditions that convert EP, which appears to be a cost to the firm, into a positive influence on FP. This study has, therefore, established the mechanism through which EP affects FP.