The effect of construction sustainability system interactions on financial performance: a sociotechnical perspective

Abstract

Purpose

Construction sustainability (CS) is a strategic reaction to the sustainability expectations of the construction industry's external stakeholders. The extant literature has viewed the environmental, social and economic dimensions of CS as having independent effects on financial performance. Due to the influence of common stakeholders, however, interactions in these dimensions will be present in their effect on financial performance. Accordingly, this study identifies the mechanisms of the interactions between the three CS dimensions and how they jointly affect financial performance.

Design/methodology/approach

Content analysis of GRI reports of 60 large construction organisations, followed by a hierarchical regression analysis was used to identify the interactions between environmental, social and economic CS in their effect on financial performance.

Findings

Economic CS was found to indirectly, and not directly, affect financial performance, the effect being mediated by both environmental and social CS. Environmental CS was found to have a strong negative effect on financial performance, whilst social CS was found to have a strongly significant positive effect on financial performance.

Practical implications

The motivation for engaging in CS is that investment in economic CS will have a positive effect on both environmental and social CS outcomes, which, in turn can have a combined effect on financial performance.

Originality/value

This is one of the first studies investigating the effect of interactions between the environmental, social and economic CS dimensions on the financial performance of construction organisations. It is also one of the first studies that applies a sociotechnical framework to this relationship.

Citation

Orr, S. and Jadhav, A. (2023), "The effect of construction sustainability system interactions on financial performance: a sociotechnical perspective", Engineering, Construction and Architectural Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/ECAM-12-2021-1134