Tourism firms’ environmental rankings and financial performance: a multidimensional scaling approach

Abstract

The relationship between firms' environmental initiatives and financial performance continues to generate considerable interest. Despite the progress made in the study of this relationship, there is a paucity of research addressing tourism sector firms’ simultaneous environmental and financial performance. This research sheds light on the link between tourism-related firms’ environmental and financial performance. Results indicate that firms that performed well financially ranked higher on environmental initiatives. This suggests that firms’ financial performance may influence environmental performance since firms with good financial performance are better able to allocate more resources to support environmental initiatives. However, since investments in environmental initiatives require financial and manpower resources, firms should only invest in such initiatives if resources are not diverted from core functions, since such actions could affect overall firm viability. Results also indicated that firms that have adopted green initiatives can be classified into four clearly defined categories: progressive firms, which includes firms that simultaneously excel on green initiatives and financial performance; repressive firms or those that perform poorly on both; aggressive firms or those that perform admirably financially but poorly on environmental initiatives; and green firms or firms that perform admirably on green initiatives but poorly financially.