'Doing Well by Doing Good:' Examining the Relationship between Environmental Performance and Profitability for Managers in Shareholder-oriented Organizations

This dissertation examined recent research dating from the year 2000 onward to determine if there was a relationship between environmental performance and profitability that supported managers' decisions for implementing environmental performance initiatives in shareholder-oriented organizations. Environmental performance was examined using the two mechanisms of third party institutional ratings and organizational self-reporting, as well as by assessing the factors influencing managers' decisions to implement environmental performance. Third party institutional ratings included ratings from investment firms, socially-responsible indices, and government agencies. Self-reporting transparency was a mechanism wherein organizations published reports discussing environmental strategies and expenditures. Profitability was represented by market and accounting measures. Stakeholder theory, resource-based theory, and efficient market theory were applied to understand theoretical underpinnings of examined studies to ensure cohesion of conceptual frameworks and research approaches. These theories were brought together under agency theory, as this theory served as the basis for the social responsibility debate, identifying managers as those responsible for achieving cohesion among shareholders and stakeholders interests. Upon drawing conclusions, the focus shifted to explain if environmental performance was a managerial practice in conflict with agency-fiduciary goals. Accordingly, this dissertation argued that managers' decisions to implement environmental performance initiatives were not in conflict with agency-fiduciary responsibilities. The overall results showed that ceteris paribus, firms with superior environmental performance experienced improved economic performance. Management implications were provided to guide managers in devising environmental performance initiatives that balanced the needs of shareholders and stakeholders.