Ethics and corporate social responsibilities are the integral parts of the business, which contribute to the business success. According to Tenuta (2010), corporate social responsibility has the clear impact on the activities and decisions for developing the sustainable position. It is to be indicated that the ethical field is often involved with the systematic, recommended concepts, and defending method of right and wrong behaviour. The article, Sustainability Practices and Corporate Financial Performance: A Study Based on the Top Global Corporations provides the broader perspectives based on sustainability and ethical business practices. The thesis developed in this study determines that the companies that are maintaining the sustainable and ethical practices have higher financial performance than the companies, which are not maintaining the sustainable practices (Ameer & Othman, 2012). The essay would describe the formulation of the sustainable practices to increase the financial performance of the firm. The study has used the quantitative and qualitative method to collect the necessary information from 100 sustainable global companies. The further study would review the methods used in this article and would identify the use of the ethical and sustainable business practices.
The sustainability practice can lead an organisation towards success. According to Wagner (2011), sustainability is concerned with the organisational functionalities that create the significant impacts on the societies, ecosystems, and the future environments. Each of the business organisations develops a clear and concise focus towards a particular vision to improve their position in a competitive scenario. While operating in an environment, it is essential for an organisation to understand the environmental and societal need. The corporate companies need to keep the focus on the structured strategic planning that can develop a sustainable position for a longer time (Patten, 2012). This long-term focus demands for more inclusive set of responsibilities that would drive the organisation in achieving the competitive position. The study is widely focusing on the centralized thesis statement, which depicts that the companies maintaining the sustainable practices are more likely to achieve higher level of financial profit in compare with the companies that do not maintain such practices (Ameer and Othman, 2012). The study is developed by using both the quantitative and qualitative data collection process. The target population for the study is 100 sustainable global companies in the year of 2008. This population was chosen among 3000 firms from the developed countries and the emerging markets.
The study introduces the significance of the sustainable approach of the firm that helps in strengthening the competitive position. The publication of the Brudtland Report represents an observable outcome. It depicts that the development of the sustainable approach helps in meeting the needs of the current environment without compromising the future abilities of fulfilling the needs. Gray (2010) defined sustainability at the broadest level by stating that it is a system approach, which holds the higher level of difficulties in conceptualizing more clearly. The counter argument present on such basis acknowledges the diverse nature of the sustainable development. The assumptions are made upon the difficulty level of maintaining the sustainable approaches are strictly argued. However, the study develops the understanding regarding the impact of the environmental protection activities that can ensure the long term sustainability of the firm. Henri and Journeault (2010) opined that there is no specific mechanical law that links the environmental performance with the performance in the economic field. The corporate business marketers need to identify the set of responsibilities and restrictions. Along with all these restrictions, it is even essential for these business marketers to understand the threats, incentives, and opportunities. Such rethinking process would result in a new and innovative environmental profile.
Corporate social responsibilities are adopted by the firms to maintain the right social actions and benefit the social structure. It suggests the long term sustainability of the firm in a competitive market. The article depicts that the government has imposed the regulations to promote the rightful actions for the societal benefits. Moreover, these regulations are imposed to eliminate the negative externalities and diminishing the unethical practices that affect the society. However, Saeidi et al., (2015) argued that the development of the industrialization affects the environment mostly. It is assumed the continuous innovations in the industrial businesses are emitting the waste that affects the environment, which is against the environmental rules. The statement is thus quite contradictory in such context. It is even stated that the higher impact on the environment can lead a firm towards competitive disadvantage. The firm can be burdened with higher environmental costs relative to other industries.
The hypothetical analysis of the study examines the keen connection between the corporate performance and sustainability. The multidimensional construct based study focuses on the environmental, economic, and social indicators. The sample of 55 firms from the Dow Jones Sustainability Index for the time within 1998-2004 was selected for this quantitative and qualitative study. After rescreening 100 sustainable as well as the non-sustainable firms, the study conducted the research to understand whether the firms are able to achieve the competitive advantage by maintaining the sustainable approach or not. The research study develops a set of hypotheses that defines the context, the first hypothesis highlights the revenue growth is higher in the companies that maintain the sustainable responsibilities during the period of 2006-2010. The second hypothesis suggests that the Return on Assets (ROA) is higher in the companies that maintain the sustainable approach than the companies that control these practices. The third hypothesis defines that the profit before tax (PBT) is higher in the globally sustainable company than the control companies during the period of 2006-2010 (Ameer and Othman, 2012). The fourth hypothesis formulated in this research study indicates the cash flows derived from the operational activities are also higher in the sustainable companies than the control companies during the same period. The conducted study therefore clearly defines that the companies need to undertake the sustainable approach and maintain the ethical business practices to ensure the growth in the financial aspects.
The quantitative and qualitative methods used in conducting this research among four major segments, such as community, diversity, ethical standards, and environment. The findings obtained from the study indicate that these four segments are the major components for identifying commitments of the company to develop the sustainable approach in their operating locations. The country based clusters are identified in defining each of these segments. After recognizing the result, it has been observed that the definition of the sustainability is presented differently by judging the diverse perceive values. Wagner (2011) stated that the environmental sustainability can cause the worse scenario for a firm since it involves the higher capital investment. On the other hand, Eccles, Ioannou and Serafeim (2014) argued that social responsibilities are responsible for the growth identified in the financial aspects. However, opposing such statement, Henri and Journeault (2010) exclaimed that social responsibilities may constrain the maximization of firm’s value and leading towards the worse financial conditions. The control companies prepare the entire structure with appropriate investment on the different segments that could decrease the cost of the social responsibilities and could be invested in other business segments. However, the statistical analysis clearly develops the hypotheses that are indicating the firms, which maintain the sustainable approaches are more financially benefitted than the firms that are not maintaining these approaches.
It can thus be inferred that the companies maintaining the sustainable practices are more likely to achieve higher level of financial profit in compare with the companies that do not maintain such practices. The firms need to be much attentive towards the sustainable development while structuring the business functionalities for achieving the competitive advantage (Saeidi et al., 2015). It is notable that the government has imposed the regulations to promote the rightful actions for the societal benefits. Moreover, these regulations are imposed to eliminate the negative externalities. In order to prevent the external threats, the companies require maintaining these regulations to develop the sustainable position in the competitive market (Henri and Journeault, 2010). Therefore, it can be indicated that these four segments are the major components for identifying commitments of the company to develop the sustainable approach in their operating locations.
The study defines the significance of maintaining the sustainable and ethical approaches for achieving competitive advantage and strengthening the position in the competitive market. The quantitative and qualitative research methods are used in this study to ensure which of the firms are more financially benefitted by developing these practices. The survey result indicates that the companies maintaining the sustainable practices are more likely to achieve higher level of financial profit in compare with the companies that do not maintain such practices. However, it is also noticed that the assumptions are made upon the difficulty level of maintaining the sustainable approaches are strictly argued. Despite the arguments presented against the definition of the sustainable approach, it has been observed that the establishment of the secured sustainability parameter helps the firm to ensure growth in the financial condition in this global competitive market.
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