Make green, live clean! Linking adaptive capability and environmental behavior with financial performance through corporate sustainability performance

Abstract

Lying on the dynamic capabilities perspective, organizational citizenship behavior for the environment and literature on green environmental management and performance as theoretical underpinnings, this study examines how adaptive capability and environmental behavior affect corporate sustainability performance and financial performance. To this aim, it relies on the use of the partial least squares-structural equation modeling (PLS-SEM) approach to analyze the data collected from 311 ISO 14001 certified firms in Saudi Arabia. The empirical analysis of the data reveals that, as it was hypothesized, both adaptive capability and environmental behavior have a positive and significant effect on corporate sustainability performance as well as on financial performance. In addition, the results demonstrate that corporate sustainability performance partially mediates the links between the two antecedent (exogenous) constructs and the endogenous construct (financial performance). This study may provide useful implications for cleaner production scholars and practitioners, that may enable them to better grasp the importance of training their employees in competencies such as adaptation and change detection and management, as well as to develop a pro-environmental behavior.