Journal of the Academy of Marketing Science

, Volume 41, Issue 2, pp 151–170 | Cite as

“Greening” the marketing mix: do firms do it and does it pay off?

  • Constantinos N. Leonidou
  • Constantine S. Katsikeas
  • Neil A. Morgan
Original Empirical Research

Abstract

Growing concern about the sustainability of the natural environment is rapidly transforming the competitive landscape and forcing companies to explore the costs and benefits of “greening” their marketing mix. We develop and test a theoretical model that predicts (1) the role of green marketing programs in influencing firm performance, (2) the impact of slack resources and top management risk aversion on the deployment of such programs, and (3) the conditioning effects that underpin these relationships. Our analyses show that green marketing programs are being implemented by firms, and we find evidence of significant performance payoffs. Specifically the results indicate that green product and distribution programs positively affect firms’ product-market performance, while green pricing and promotion practices are directly positively related to firms’ return on assets. In addition, industry-level environmental reputation moderates the links between green marketing program components and firms’ product-market and financial performance. Finally, we find that slack resources and top management risk aversion are independently conducive to the adoption of green marketing programs—but operate as substitutes for each other.

Keywords

Green marketing Firm performance Stakeholder theory Slack resources Industry reputation Risk aversion Competitive intensity 

References

  1. Anderson, J. C., & Gerbing, D. W. (1988). Structural equation modeling in practice: a review and recommended two-step approach. Psychological Bulletin, 103, 411–423.CrossRefGoogle Scholar
  2. Audia, P. G., Locke, E. A., & Smith, K. G. (2000). The paradox of success: an archival and a laboratory study of strategic persistence following radical environmental change. The Academy of Management Journal, 43, 837–853.CrossRefGoogle Scholar
  3. Auh, S., & Menguc, B. (2005). Balancing exploration and exploitation: the moderating role of competitive intensity. Journal of Business Research, 58, 1652–1661.CrossRefGoogle Scholar
  4. Bahadir, S. C., Bharadwaj, S. G., & Srivastava, R. K. (2008). Financial value of brands in mergers and acquisitions: Is value in the eye of the beholder? Journal of Marketing, 72, 49–64Google Scholar
  5. Baker, W. E., & Sinkula, J. M. (2005). Environmental marketing strategy and firm performance: effects on new product performance and market share. Journal of the Academy of Marketing Science, 33, 461–475.CrossRefGoogle Scholar
  6. Banerjee, S. B. (2001). Managerial perceptions of corporate environmentalism: interpretations from industry and strategic implications for organizations. Journal of Management Studies, 38, 489–513.CrossRefGoogle Scholar
  7. Banerjee, S. B. (2002). Corporate environmentalism: the construct and its measurement. Journal of Business Research, 55, 177–191.CrossRefGoogle Scholar
  8. Banerjee, S. B., Gulas, C. S., & Iyer, E. S. (1995). Shades of green: a multidimensional analysis of environmental advertising. Journal of Advertising, 24, 21–31.Google Scholar
  9. Banerjee, S. B., Iyer, E. S., & Kashyap, R. K. (2003). Corporate environmentalism: antecedents and influence of industry type. The Journal of Marketing, 67, 106–122.CrossRefGoogle Scholar
  10. Bansal, P. (2003). From issues to actions: the importance of individual concerns and organizational values in responding to natural environmental issues. Organization Science, 14, 510–527.CrossRefGoogle Scholar
  11. Baumann, H., Boons, F., & Bragd, A. (2002). Mapping the green product development field: engineering, policy and business perspectives. Journal of Cleaner Production, 10, 409–425.CrossRefGoogle Scholar
  12. Becker-Olsen, K. L., Taylor, C. R., Hill, R. P., & Yalcinkaya, G. (2011). A cross-cultural examination of corporate social responsibility marketing communications in Mexico and the United States: strategies for global brands. Journal of International Marketing, 19, 30–44.CrossRefGoogle Scholar
  13. Belz, F.-M., & Peattie, K. (2009). Sustainability marketing: A global perspective. West Sussex: Wiley.Google Scholar
  14. Bhattacharya, C. B., & Sen, S. (2003). Consumer-company identification: a framework for understanding consumers’ relationships with companies. The Journal of Marketing, 67, 76–88.CrossRefGoogle Scholar
  15. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of corporate social responsibility. The Academy of Management Review, 32, 946–967.CrossRefGoogle Scholar
  16. Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: a review of concepts, research and practice. International Journal of Management Reviews, 12, 85–105.CrossRefGoogle Scholar
  17. Chabowski, B. R., Mena, J. A., & Gonzalez-Padron, T. L. (2011). The structure of sustainability research in marketing, 1958–2008: a basis for future research opportunities. Journal of the Academy of Marketing Science, 39, 55–70.CrossRefGoogle Scholar
  18. Christmann, P. (2004). Multinational companies and the natural environment: determinants of global environmental policy standardization. The Academy of Management Journal, 47, 747–760.CrossRefGoogle Scholar
  19. Cole, M. A., Elliott, R. J. R., & Shimamoto, K. (2005). Industrial characteristics, environmental regulations and air pollution: an analysis of UK manufacturing. Journal of Environmental Economics and Management, 50, 121–143.CrossRefGoogle Scholar
  20. Crittenden, V. L., Crittenden, W. F., Ferrell, L. K., Ferrell, O. C., & Pinney, C. C. (2011). Market-oriented sustainability: a conceptual framework and propositions. Journal of the Academy of Marketing Science, 39, 71–174.CrossRefGoogle Scholar
  21. Cronin, J. J., Jr., Smith, J. S., Gleim, M. R., Ramirez, E., & Martinez, J. D. (2011). Green marketing strategies: an examination of stakeholders and the opportunities they present. Journal of the Academy of Marketing Science, 39, 158–174.CrossRefGoogle Scholar
  22. Dahlstrom, R. (2011). Green marketing management. International Edition, Australia: South-Western/Cengage Learning.Google Scholar
  23. Danjelico, R. M., & Pujari, D. (2010). Mainstreaming green product innovation: why and how companies integrate environmental sustainability. Journal of Business Ethics, 95, 471–486.CrossRefGoogle Scholar
  24. DEFRA. (2008). Final report environmental protection expenditure by industry: 2006 UK Survey. London: Department of Environment, Food and Rural Affairs.Google Scholar
  25. Drumwright, M. E. (1994). Socially responsible organizational buying: environmental concern as a noneconomic buying criterion. The Journal of Marketing, 58, 1–19.CrossRefGoogle Scholar
  26. E.On (2011). E.ON ÖkoStrom. https://www.eon.de/de/eonde/pk/produkteUndPreise/Strom/E.ON_OekoStrom/index.htm. Accessed 12 July 2012.
  27. Egri, C. P., & Herman, S. (2000). Leadership in the North American environmental sector: values, leadership styles, and contexts of environmental leaders and their organizations. The Academy of Management Journal, 43, 571–604.CrossRefGoogle Scholar
  28. Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21 st century business. Oxford: Capstone Publishing.Google Scholar
  29. Esty, D. C., & Winston, A. S. (2009). Green to gold. Hoboken: Wiley.Google Scholar
  30. Etzion, D. (2007). Research on organizations and the natural environment, 1992– present: a review. Journal of Management, 33, 637–664.CrossRefGoogle Scholar
  31. Fraj-Andrés, E., Martinez-Salinas, E., & Matute-Vallejo, J. (2009). A multidimensional approach to the influence of environmental marketing and orientation on the firm’s organisational performance. Journal of Business Ethics, 88, 263–286.CrossRefGoogle Scholar
  32. Fuller, D. A. (1999). Sustainable marketing: Managerial-ecological issues. Thousand Oaks: Sage Publications.Google Scholar
  33. George, G. (2005). Slack resources and the performance of privately held firms. The Academy of Management Journal, 48, 661–678.CrossRefGoogle Scholar
  34. Godfrey, P. C., Merrill, C. B., & Hansen, J. M. (2009). The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis. Strategic Management Journal, 30, 425–445.CrossRefGoogle Scholar
  35. Godfrey, R. (1998). Ethical purchasing: Developing the supply chain beyond the environment. In T. Russel (Ed.), Greener purchasing: Opportunities and innovations (pp. 244–251). Sheffield: Greenleaf Publishing.Google Scholar
  36. Goldschmidt, B. (2011). Water works. Progressive Grocer Online, http://www.progressivegrocer.com/print/article/water-works/2271/. Accessed 12 July 2012.
  37. González-Benito, J., & González-Benito, O. (2005). Environmental proactivity and business performance: an empirical analysis. Omega, 33, 1–15.CrossRefGoogle Scholar
  38. Graves, S. B., & Waddock, S. A. (1994). Institutional owners and corporate social performance. The Academy of Management Journal, 37, 1035–1046.CrossRefGoogle Scholar
  39. Greve, H. R. (1998). Performance, aspirations, and risky organizational change. Administrative Science Quarterly, 44, 58–86.CrossRefGoogle Scholar
  40. Gunther, M. (2006). Retailers clean up their paper trails. Fortune. http://money.cnn.com/2006/12/13/magazines/fortune/pluggedin_gunthercatalogs.fortune/index.htm. Accessed 12 July 2012.
  41. Henriques, I., & Sadorsky, P. (1999). The relationship between environmental commitment and managerial perceptions of stakeholder importance. The Academy of Management Journal, 42, 87–99.CrossRefGoogle Scholar
  42. Hoffman, A. J. (1999). Institutional evolution and change: environmentalism and the U.S. chemical industry. The Academy of Management Journal, 42, 351–371.CrossRefGoogle Scholar
  43. Hult, G. T. M. (2011). Market-focused sustainability: market orientation plus! Journal of the Academy of Marketing Science, 39, 1–6.CrossRefGoogle Scholar
  44. Hult, G. T. M., Mena, J. A., Ferrell, O. C., & Ferrell, L. (2011). Stakeholder marketing: a definition and conceptual model. Academy of Marketing Science Review, 1, 44–65.Google Scholar
  45. Hultman, M., Katsikeas, C. S., & Robson, M. J. (2011). Export promotion strategy and performance: the role of international experience. Journal of International Marketing, 19, 17–39.Google Scholar
  46. Hunt, C. B., & Auster, E. R. (1990). Proactive environmental management: avoiding the toxic trap. MIT Sloan Management Review, 31, 7–18.Google Scholar
  47. Jap, S. D., & Anderson, E. (2003). Safeguarding interorganizational performance and continuity under ex post opportunism. Management Science, 49, 1684–1701.CrossRefGoogle Scholar
  48. Jawahar, I., & McLaughlin, G. (2001). Toward a descriptive stakeholder theory: an organizational life cycle approach. The Academy of Management Review, 26, 397–414.Google Scholar
  49. Jaworski, B. J., & Kohli, A. K. (1993). Market orientation: antecedents and consequences. The Journal of Marketing, 57, 53–70.CrossRefGoogle Scholar
  50. Jennings, D. P., & Zandbergen, P. A. (1995). Ecologically sustainable organizations: an institutional approach. The Academy of Management Review, 20, 1015–1052.Google Scholar
  51. Judge, W. Q., Jr., & Douglas, T. J. (1998). Performance implications of incorporating natural environmental issues into the planning process: an empirical assessment. Journal of Management Studies, 35, 241–262.CrossRefGoogle Scholar
  52. Kalyanaram, G., & Winer, R. S. (1995). Empirical generalizations from reference price research. Marketing Science, 14, 161–169.CrossRefGoogle Scholar
  53. Klassen, R. D., & Whybark, D. C. (1999). The impact of environmental technologies on manufacturing performance. The Academy of Management Journal, 42, 599–615.CrossRefGoogle Scholar
  54. Kotler, P. (2011). Reinventing marketing to manage the environmental imperative. The Journal of Marketing, 75, 132–135.CrossRefGoogle Scholar
  55. Lant, T. K., Milliken, F. J., & Batra, B. (1992). The role of managerial learning and interpretation in strategic persistence and reorientation: an empirical exploration. Strategic Management Journal, 13, 585–608.CrossRefGoogle Scholar
  56. Leonidou, C. N., & Leonidou, L. C. (2011). Research into environmental marketing/management: a bibliographic analysis. European Journal of Marketing, 45, 68–103.CrossRefGoogle Scholar
  57. Luchs, M. G., Naylor, R. W., Irwin, J. R., & Raghunathan, R. (2010). The sustainability liability: potential negative effects of ethicality on product preference. The Journal of Marketing, 74, 18–31.CrossRefGoogle Scholar
  58. Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction, and market value. The Journal of Marketing, 70, 1–18.CrossRefGoogle Scholar
  59. Maignan, I., & Ferrell, O. C. (2004). Corporate social responsibility and marketing: an integrative framework. Journal of the Academy of Marketing Science, 32, 3–19.CrossRefGoogle Scholar
  60. Martin, D., & Schouten, J. (2012). Sustainable marketing. Upper Saddle River: Prentice Hall/Pearson.Google Scholar
  61. Mathur, L. K., & Mathur, I. (2000). An analysis of the wealth effects of green marketing strategies. Journal of Business Research, 50, 193–200.CrossRefGoogle Scholar
  62. Matthews, R. (2011). HP’s Sustainable innovation serves the planet and profits. Green Conduct, http://www.greenconduct.com/news/2011/04/20/hps-sustainable-innovation-serves-the-planet-and-profits/. Accessed 12 July 2012.
  63. McGuire, J. B., Sundgren, A., & Schneeweis, T. (1988). Corporate social responsibility and firm financial performance. The Academy of Management Journal, 31, 854–872.CrossRefGoogle Scholar
  64. Menguc, B., & Ozanne, L. K. (2005). Challenges of the ‘green imperative’: a natural resource-based approach to the environmental orientation – business performance relationship. Journal of Business Research, 58, 430–438.CrossRefGoogle Scholar
  65. Menguc, B., Auh, S., & Ozanne, L. (2010). The interactive effect of internal and external factors on a proactive environmental strategy and its influence on a firm’s performance. Journal of Business Ethics, 94, 279–298.CrossRefGoogle Scholar
  66. Menon, A., & Menon, A. (1997). Enviropreneurial marketing strategy: the emergence of corporate environmentalism as market strategy. The Journal of Marketing, 61, 51–67.CrossRefGoogle Scholar
  67. Menon, A., Menon, A., Chowdhury, J., & Jankovich, J. (1999). Evolving paradigm for environmental sensitivity in marketing programs: a synthesis of theory and practice. Journal of Marketing Theory & Practice, 7, 1–15.Google Scholar
  68. Miles, M. P., & Covin, J. G. (2000). Environmental marketing: a source of reputational, competitive, and financial advantage. Journal of Business Ethics, 23, 299–311.CrossRefGoogle Scholar
  69. Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. The Academy of Management Review, 22, 853–886.Google Scholar
  70. Neville, B. A., & Menguc, B. (2006). Stakeholder multiplicity: toward an understanding of the interactions between stakeholders. Journal of Business Ethics, 66, 377–391.CrossRefGoogle Scholar
  71. Nidumolu, R., Prahalad, C. K., & Rangaswami, M. R. (2009). Why sustainability is now the key driver of innovation. Harvard Business Review, 78, 56–64.Google Scholar
  72. Nohria, N., & Gulati, R. (1996). Is slack good or bad for innovation? The Academy of Management Journal, 39, 1245–1264.CrossRefGoogle Scholar
  73. Öberseder, M., Schlegelmilch, B. B., & Gruber, V. (2011). Why don’t consumers are about CSR?: a qualitative study exploring the role of CSR in consumption decisions. Journal of Business Ethics, 104, 449–460.CrossRefGoogle Scholar
  74. Ottman, J. A. (2011). The new rules of green marketing: Strategies, tools, and inspiration for sustainable branding. San Francisco: Greenleaf publishing.Google Scholar
  75. Ottman, J. A., Stafford, E. R., & Hartman, C. L. (2006). Avoiding green marketing myopia: ways to improve consumer appeal for environmentally preferable products. Environment, 48, 22–36.CrossRefGoogle Scholar
  76. Peng, Y.-S., & Lin, S.-S. (2008). Local responsiveness pressure, subsidiary resources, green management adoption and subsidiary’s performance: evidence from Taiwanese manufacturers. Journal of Business Ethics, 79, 199–212.CrossRefGoogle Scholar
  77. Ping, R. A., Jr. (1995). A parsimonious estimating technique for interaction and quadratic latent variables. Journal of Marketing Research, 32, 336–347.CrossRefGoogle Scholar
  78. Podsakoff, P. M., MacKenzie, S. B., Jeong-Yeon, L., & Podsakoff, N. P. (2003). Common method biases in behavioral research: a critical review of the literature and recommended remedies. The Journal of Applied Psychology, 88, 879–903.CrossRefGoogle Scholar
  79. Polonsky, M. J., & Rosenberger, P. J., III. (2001). Re-evaluating green marketing: a strategic approach. Business Horizons, 44, 21–30.CrossRefGoogle Scholar
  80. Pujari, D. (2006). Eco-innovation and new product development: understanding the influences on market performance. Technovation, 26, 76–85.CrossRefGoogle Scholar
  81. Roberts, P. W., & Dowling, G. R. (2002). Corporate reputation and sustained superior financial performance. Strategic Management Journal, 23, 1077–1093.CrossRefGoogle Scholar
  82. Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. The Academy of Management Journal, 40, 534–559.CrossRefGoogle Scholar
  83. Salam, M. A. (2009). Corporate social responsibility in purchasing and supply chain. Journal of Business Ethics, 85, 355–370.CrossRefGoogle Scholar
  84. Schaefer, A. (2007). Contrasting institutional and performance accounts of environmental management systems: three case studies in the UK water & sewerage industry. Journal of Management Studies, 44, 506–535.CrossRefGoogle Scholar
  85. Sharma, S. (2000). Managerial interpretations and organizational context as predictors of corporate choice of environmental strategy. The Academy of Management Journal, 43, 681–697.CrossRefGoogle Scholar
  86. Shrivastava, P. (1995). Environmental technologies and competitive advantage. Strategic Management Journal, 16, 183–200.CrossRefGoogle Scholar
  87. Spencer, J. (2007). Big firms to press suppliers on climate. Wall Street Journal, http://online.wsj.com/public/article/SB119186622895152448.html. Accessed 12 July 2012.
  88. Surroca, J., Tribo, J. A., & Waddock, S. (2010). Corporate responsibility and financial performance: the role of intangible resources. Strategic Management Journal, 31, 463–490.Google Scholar
  89. The Observer (2003). Let’s hear it for the boycott. The Observer, http://www.guardian.co.uk/business/2003/mar/02/globalisation.news. Accessed 12 July 2012
  90. Turker, D. (2009). Measuring corporate social responsibility: a scale development study. Journal of Business Ethics, 85, 411–427.CrossRefGoogle Scholar
  91. Van Doorn, J., & Verhoef, P. C. (2011). Willingness to pay for organic products: differences between virtue and vice foods. International Journal of Research in Marketing, 28, 167–180.CrossRefGoogle Scholar
  92. Varadarajan, R. P., & Menon, A. (1988). Cause-related marketing: a coalignment of marketing strategy and corporate philanthropy. The Journal of Marketing, 52, 58–74.CrossRefGoogle Scholar
  93. Vlachos, P. A., Tsamakos, A., Vrechopoulos, A. P., & Avramidis, P. K. (2009). Corporate social responsibility: attributions, loyalty, and the mediating role of trust. Journal of the Academy of Marketing Science, 37, 170–180.CrossRefGoogle Scholar
  94. Vorhies, D. W., & Morgan, N. A. (2005). Benchmarking marketing capabilities for sustainable competitive advantage. The Journal of Marketing, 69, 80–94.CrossRefGoogle Scholar
  95. Voss, G. B., Sirdeshmukh, D., & Voss, Z. G. (2008). The effects of slack resources and environmental threat on product exploration and exploitation. The Academy of Management Journal, 51, 147–164.CrossRefGoogle Scholar
  96. Waddock, S. A., & Graves, S. B. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 18, 303–319.CrossRefGoogle Scholar
  97. Wagner, T., Lutz, R. J., & Weitz, B. A. (2009). Corporate hypocrisy: overcoming the threat of inconsistent corporate social responsibility perceptions. The Journal of Marketing, 73, 77–91.CrossRefGoogle Scholar
  98. Walls, J. L., Berrone, P., & Phan, P. H. (2012). Corporate governance and environmental performance: Is there really a link? Strategic Management Journal, advanced online publication.Google Scholar
  99. Wood, D. J. (1991). Corporate social performance revisited. The Academy of Management Review, 16, 691–718.Google Scholar
  100. World Commission on Environment and Development. (1987). Our common future. Oxford: Oxford University Press.Google Scholar
  101. Zhu, Q., & Sarkis, J. (2004). Relationships between operational practices and performance among early adopters of green supply chain management practices in Chinese manufacturing enterprises. Journal of Operations Management, 22, 265–289.CrossRefGoogle Scholar

Copyright information

© Academy of Marketing Science 2012

Authors and Affiliations

  • Constantinos N. Leonidou
    • 1
  • Constantine S. Katsikeas
    • 1
  • Neil A. Morgan
    • 2
  1. 1.Leeds University Business SchoolUniversity of LeedsLeedsUK
  2. 2.Kelley School of BusinessIndiana UniversityBloomingtonUSA

Personalised recommendations