2018
Working Paper
HBS Working Paper Series

Corporate Sustainability: A Strategy?

By: Ioannis Ioannou and George Serafeim

Format:Print
| Language:English
| Pages:45

Abstract

We explore the conditions under which firms maintain their competitive advantage through sustainability-based differentiation when faced with imitation pressures by industry peers. We document growing intraindustry convergence on sustainability actions over time for almost all industries in our sample and show that interindustry heterogeneity in the rates of intraindustry convergence is associated with (a) the importance of environmental and social issues relative to governance issues, and (b) the tone and volume of feedback received from stakeholders. Further, we find that actions characterized by low regulatory uncertainty are more likely to be imitated whereas those characterized by high novelty are less likely to be imitated. We then distinguish between common (i.e., imitated) and unique sustainability actions and evidence that the adoption of unique actions is significantly and positively associated with multiple measures of performance, whereas the adoption of common actions is not. Overall, we explore the role of sustainability as a long-term strategy under conditions of strong imitative forces, contributing to both the sustainability and the imitation literatures.

Keywords

Sustainability; Corporate Performance; Industry Analysis; CSR; ESG; ESG (Environmental, Social, Governance) Performance; Environment; Social Responsibility; Strategy And Execution; Corporate Social Responsibility and Impact; Environmental Sustainability; Strategy; Performance; Corporate Strategy

Citation

Ioannou, Ioannis, and George Serafeim. "Corporate Sustainability: A Strategy?" Harvard Business School Working Paper, No. 19-065, January 2019. (Revised April 2021.)