Creating social and environmental value through integrated thinking: International evidence

Abstract

Integrated thinking (IT) is a managerial mindset increasingly discussed in the context of value creation. Through the lens of systems theory, this study examines how the degree to which IT is embedded in a firm's strategy and day-to-day business processes is associated with the firm's social and environmental value creation. Using a broad international dataset, we find strong evidence that our measure of IT is positively related to a firm's sustainability performance (SP), which we use to operationalize social and environmental value creation (or erosion). Our results also reveal that the increase in a firm's SP might come at the cost of a short-term decrease in financial performance (FP). We find no indication, however, that IT induces a trade-off between SP and long-term FP. Integrated thinking appears to stipulate long-term financial value creation instead. We further explore moderating factors within the organizational and institutional context of our sample firms and highlight implications for society, corporate practice, and policymaking.