A sand cone model of sustainability performance: an empirical analysis

AbstractThe purpose of this paper is to shed light on the relationship between environmental, social and financial performance. In particular, based on the literature, we hypothesise the existence of a 'sand cone' model of sustainability that implies cumulative and sequential effects among the three performance dimensions. The hypothesis is tested using the fixed effects model on a longitudinal dataset of secondary data covering the period 2010–2019. The dataset includes 661 companies operating in the manufacturing industry and located in Europe, North America and Asia. The findings show that environmental, social and financial performance do not conflict but cumulate. The sequence of performance improvements that outlines a 'sand cone' starts with environmental sustainability and ends with financial performance, while social performance fully mediates the relationship between the two. Any other sequence is not confirmed by the data. These results are however valid only in Western countries (i.e. Europe and North America). Based on these findings, this research informs managers that the three pillars of sustainability have a cumulative effect, but only if a specific implementation sequence is followed. However, managers should be aware that these cumulative effects need some time to show up.KEYWORDS: Sustainabilityenvironmental performancesocial performancefinancial performancesand cone modelsecondary data Disclosure statementNo potential conflict of interest was reported by the author(s).Data availability statementThe data that support the findings of this study are available on the website of Thomson Reuters Eikon at https://eikon.thomsonreuters.com/index.html. Restrictions apply to the availability of these data, which were used under license for this study.Additional informationNotes on contributorsMargherita MolinaroMargherita Molinaro is assistant professor in Management Engineering at the Free University of Bozen-Bolzano, Italy. She graduated in Management Engineering and holds PhD in Industrial and Information Engineering from the University of Udine, Italy. Her research interests include the areas of Industry 4.0, supply chain management and sustainability. On these topics, she published in various journals, including International Journal of Production Economics, International Journal of Production Research, Journal of Business Logistics and Journal of Purchasing and Supply Management.Guido OrzesGuido Orzes is associate professor in Management Engineering at the Free University of Bozen, Italy. He obtained a doctorate in industrial sciences and information engineering from the University of Udine, Italy. His research focuses on international sourcing and manufacturing, Industry 4.0 implementation, and sustainability. On these topics, he has published more than 100 scientific works in leading operations management and international business journals, including Journal of Supply Chain Management, International Journal of Operations and Production Management (IJOPM), International Journal of Production Economics, International Journal of Production Research, Business & Society and Journal of Purchasing and Supply Management (JPSM). He is also Past President of the European Division of the Decision Science Institute (EDSI) and Associate Editor of IJOPM and JPSM.Marco SartorMarco Sartor is associate professor of Quality Management at the University of Udine, Italy. His studies concern international sourcing and manufacturing, supply chain management, and quality management. He has published more than 50 scientific works in several leading journals, including International Journal of Production Economics and Production Planning and Control. Together with Guido Nassimbeni he is the coauthor of Sourcing in China (Palgrave Macmillan, 2006) and Sourcing in India (Palgrave Macmillan, 2008). He co-edited with Guido Orzes Quality Management: Tools, Methods and Standards (Emerald Publishing, 2019). He is Vice President of the Decision Science Institute (DSI) and he was President of the European Division of the Decision Science Institute (EDSI) in 2028–2019.Guido NassimbeniGuido Nassimbeni is a full professor in Management Engineering at the University of Udine, Italy. MS in Management Engineering and PhD in Science of Industrial Innovation. His research has been funded by various national and international institutions, including the Ministry of University and Scientific and Technological Research, the National Research Council and the European Union. His research interests are related to new production models and advanced buyer-supplier interactions, supply chain network management, international manufacturing and sourcing. On these topics, he has published on a number of leading journals, including Journal of Operations Management, Journal of Supply Chain Management, Research Policy, International Journal of Production Research, OMEGA, International Journal of Operations and Production Management.