Linking corporate environmental performance to financial performance of pakistani firms: The roles of technological capability and public awareness

Abstract

This research investigates the corporate environmental performance (CEP) literature toward its financial performance of the firm. CEP is defined as the exercise and practices of companies to choose sensible measures to save and develop environment-friendly green activities. The influence of CEP on the financial performance of the firm via technological capability was examined. Furthermore, public awareness was hypothesized to moderate the impact of CEP on technological capability indicating moderation mediation. When public awareness was high, the relationship between the CEP and technological capability should be stronger. Content analysis was used for data collection. The model was tested using a sample of 1491 observations from the manufacturing companies of Pakistan. The data were collected between the period 2008 and 2017 from the annual reports of the companies, State Bank of Pakistan, and Pakistan Stock exchange. A hierarchical regression analysis was used for data analysis. Using bootstrap analysis, we used model 8 in Stata to examine conditional direct and indirect effects. Results supported the indirect effect of CEP on financial performance through strengthening technological capability. Both direct and indirect effects were significant. Consistent with theoretical assumptions, the indirect effect becomes stronger with high public awareness and diminished with low public awareness. Both theoretical and practical contributions are discussed based on the outcomes.