Environmental proactivity and firm performance: a fuzzy-set analysis

The purpose of this paper is to explore causal complexity in the relationship between environmental proactivity and firm performance. Using data collected from 27 Australian firms and controlling for the organizational life cycle, type of industry and external contingencies, the study empirically examines environmental proactivity in high-performing firms from polluting industries.

The data were analyzed using fuzzy-set qualitative comparative analysis.

In general, the results of the analysis imply that environmental proactivity is not always associated with high firm performance, and that environmental proactivity is not as important as the other causal conditions for high-performing firms in highly polluting industries.

The study addresses the relationship between environmental and firm performance more holistically by including a number of the firm’s external and internal factors identified as important in past research. Second, it offers a new perspective on the relationship with its systematic comparative analysis of complex cases. Next, it identifies different combinations of conditions (paths) leading to a high firm performance and, finally, the core complementary model allows an exploration of which factors are essential and which are less important or even irrelevant to high-performing firms.

Based on the findings, firms from highly polluting industries can determine in which circumstances, if any, the adoption of environmental proactivity will result in a positive firm performance.

The study is valuable because it contains a rich set of measures of the firm’s external and internal environment, thus allowing a more holistic examination of the relationship between environmental proactivity and firm performance.