Michael Lenox

Does It Really Pay to Be Green? An Empirical Study of Firm Environmental and Financial Performance: An Empirical Study of Firm Environmental and Financial Performance

Summary Previous empirical work suggests that firms with high environmental performance tend to be profitable, but questions persist about the nature of the relationship. Does stronger environmental performance really lead to better financial performance, or is the observed relationship the outcome of some other underlying firm attribute? Does it pay to have cleanrunning facilities or to have facilities in relatively clean industries? To explore these questions, we analyze 652 U.S. manufacturing firms over the time period 1987–1996. Although we find evidence of an association between lower pollution and higher financial valuation, we find that a firms fixed characteristics and strategic position might cause this association. Our findings suggest that “When does it pay to be green?” may be a more important question than “Does it pay to be green?”

WHEN DO FIRMS UNDERTAKE R&D BY INVESTING IN NEW VENTURES?

This paper explores the conditions under which firms are likely to pursue equity investment in new ventures as a way to source innovative ideas. We find that both industry-level and firm-level factors drive firms to invest more in new ventures. These results have important implications for the organization of R&D.

Secondary Stakeholder Actions and the Selection of Firm Targets

In this paper, we advance the stakeholder theory literature by developing and testing a set of hypotheses concerning which firms are likely to be targeted by secondary stakeholder groups. To test these hypotheses, we draw upon a unique dataset of stakeholder actions within the United States concerning environmental issues over the period 1988 to 2003. We find evidence for two clusters of stakeholder groups, each using different tactics and targeting different populations of firms. In general, we find firms that are more consumer-oriented, financially sound, and heavier polluters are more likely to be targets of environmentally-oriented stakeholder actions.

Through the Mud or in the Boardroom: Examining Activist Types and their Strategies in Targeting Firms for Social Change

We examine the variety of activist groups and their tactics in demanding firms’ social change. While extant work does not usually distinguish among activist types or their variety of tactics, we show that different activists (e.g., social movement organizations versus religious groups and activist investors) rely on dissimilar tactics (e.g., boycotts and protests versus lawsuits and proxy votes). Further, we show how protests and boycotts drag companies “through the mud” with media attention, whereas lawsuits and proxy votes receive relatively little media attention yet may foster investor risk perceptions. This research presents a multifaceted view of activists and their tactics and suggests that this approach in examining activists and their tactics can extend what we know about how and why firms are targeted.Managerial summary: The purpose of this study was to examine how different types of activist groups behave differently when targeting firms for social change. We find that traditional activist groups rely on boycotts and protests, whereas religious groups and activist investors rely more on lawsuits and proxy votes. Additionally, we find that protests and boycotts are associated with greater media attention, whereas lawsuits and proxy votes are associated with investor perceptions of risk.

Towards a unified model of innovation and technological change

ABSTRACT Innovation and technological change have been at the center of our society for most of the past 50 years. During that time, academics have tried with varying success to study the processes that drive growth in innovation and technology. This paper provides a historical perspective on the trajectory of research on innovation and technological change. Based on our review, we offer three positions that run counter to the status-quo. First, that a model of innovation should explain the dynamics of market competition rather than to simply define the source of economic rents. Second, that the manner in which we should study innovation and technological change is much more behavioral in nature. Third, we need to unpack the organization to make progress in understanding innovation. With this in mind, we develop a taxonomy of the relevant literature in strategy, economics, product development, and technology management. We then propose some principles for modeling innovation and technological change in a manner that brings together these fields of study.

CSR Needs CPR: Corporate Sustainability and Politics:

Corporate sustainability has gone mainstream, and many companies have taken meaningful steps to improve their own environmental performance. But while corporate political actions such as lobbying can have a greater impact on environmental quality, they are ignored in most current sustainability metrics. It is time for these metrics to be expanded to critically assess firms based on the sustainability impacts of their public policy positions. To enable such assessments, firms must become as transparent about their corporate political responsibility (CPR) as their corporate social responsibility (CSR). For their part, rating systems must demand such information from firms and include evaluations of corporate political activity in their assessments of corporate environmental responsibility.