Corporate Sustainability: A Strategy?

We explore the conditions under which firms maintain their competitive advantage through sustainability-based differentiation when faced with imitation pressures by industry peers. Specifically, we document growing intraindustry convergence on sustainability actions over time for almost all industries in our sample, suggesting that they rapidly diffuse via imitation. We also find 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. We subsequently distinguish between common (i.e., imitated) and unique sustainability actions and evidence that the adoption of unique sustainability actions is significantly and positively associated with multiple measures of corporate performance, whereas the adoption of common sustainability actions is not. Our results provide insights into the role of sustainability as a long-term strategy under conditions of strong imitative forces, thus contributing to both the sustainability and the imitation literatures. We discuss implications for future research and practice.