When does it pay to be good? Moderators and mediators in the corporate sustainability-corporate financial performance relationship: A critical review

We draw on the emerging literature on the micro-foundation of capability development to investigate the effects of the relative importance of corporate sustainability in a firm's organizational cognitive frame on the development of distinct organizational capabilities. Based on survey data from 124 Danish manufacturing firms and seven interviews, we find that the relative importance of corporate sustainability in a firm's organizational cognitive frame positively encourages the development of three organizational capabilities, namely, stakeholder integration, market sensing, and organizational learning. However, contrary to our expectation and reasoning, we find that the development of the strategic planning capability is negatively affected. Our findings provide novel empirical evidence and contribute to an improved understanding of the effect of a firm's organizational cognitive frame on the development of organizational capabilities.

In this essay, we argue that by taking a systems lens, sustainability researchers can better understand the implications of COVID‐19 on business and society and prevent future pandemics. A systems lens asks management researchers to move from a firm‐level perspective to one that also considers the broader socioecological context. We argue that for business to prevent future pandemics and assure future prosperity, business must recognize the limits to growth, alternative temporalities that do not pit the short against the long term, the nestedness of local phenomena in global systems, and leverage points that can reduce entrenched systems of social inequalities.

Strategy scholars are increasingly attempting to tackle complex global social and environmental issues (i.e. wicked problems); yet, many strategy scholars approach these wicked problems in the same way they approach business problems—by building causal models that seek to optimize some form of organizational success. Strategy scholars seek to reduce complexity, focusing on the significant variables that explain the salient outcomes. This approach to wicked problems, ironically, divorces firms from the very social-ecological context that makes the problem “wicked.” In this essay, we argue that strategy research into wicked problems can benefit from systems thinking, which deviates radically from the reductionist approach to analysis taken by many strategy scholars. We review some of the basic tenets of systems thinking and describe their differences from reductionist thinking. Furthermore, we ask strategy scholars to widen their theoretical lens by (1) investigating co-evolutionary dynamics rather than focusing primarily on static models, (2) advancing processual insights rather than favoring causal identification, and (3) recognizing tipping points and transformative change rather than assuming linear monotonic changes.

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