Green Business Strategy and its effect on Financial Performance: The mediating role of Corporate Social Responsibility

Abstract

Organizations are increasingly integrating environmental concerns in their strategic plans. This research analyzes how green business strategy (GBS) and corporate social responsibility (CSR) impact financial performance (FP). In addition, we analyze the mediating role of CSR in the relationship between GBS and FP. The empirical application uses structural equation modeling on a sample of 300 manufacturing firms from Mexico. The results show positive and significant relationships between GBS, CSR and FP, while the significantly positive mediating role of CSR was also verified. Thus, the environmental objectives set by the GBS contribute to the FP of Mexican manufacturing firms. CSR also collaborates to this end but only partially by mediating the relationship between GBS and FP. The findings support the importance of incorporating environmental concerns in businesses' strategic planning in order to ensure not only economic but also social benefits through GBS and CSR activities.