A Ten Country-Company Study of Sustainability and Product-Market Performance: Influences of Doing Good, Warm Glow, and Price Fairness

Abstract

Countries, companies, and customers are becoming increasingly concerned with sustainability. However, it is unclear how much increased cost, if any, companies are willing to tolerate for sustainability efforts at the rate of potentially lower profits. Plus, what are the customers’ sensitivities to the prices of products/services that are developed within the realm of sustainability initiatives (e.g., how much more can the products/services cost and still be viable)? Additionally, with 193 countries of the United Nations ratifying the Sustainable Development Goals, we know that countries are focused on sustainability, but can companies achieve positive sustainability effects on performance above what countries are doing? Consequently, what are the macro-micro dynamics in play for sustainability efforts? In a 10-country study involving 4,051 companies, we examine these macro-micro (country-company) dynamics, company costs, customer costs, and price sensitivities on the effects of sustainability on companies’ performance. The results indicate that positive effects on companies’ performance can be achieved (1) from the companies’ sustainability efforts in all 10 countries studied, (2) even if the costs and/or prices increased by 27 to 72 percent (depending on the dynamic and scenario), and (3) by companies implementing sustainability efforts that are 5 to 30 percent above the efforts of the country. Increased sustainability effects can also be gained from lowering customer and company costs, but no such effects were found when lowering product prices. © The Author(s) 2018.