Green Revenue Generation and Sales Contribution: Are Consumers Willing to Bear the Cost of Sustainability?

Enayet Karim; Mahmoud Elmarzouky; Doaa Shohaieb

doi:10.1002/bse.70146

journal article Open Access Aug 25, 2025

Green Revenue Generation and Sales Contribution: Are Consumers Willing to Bear the Cost of Sustainability?

Enayet Karim

Mahmoud Elmarzouky

Doaa Shohaieb

Business Strategy and the Environment Vol. 34 No. 8 pp. 10977-10996 · Wiley

View at Publisher Save 10.1002/bse.70146

Abstract

ABSTRACT
This study examines the strategic implications of environmental activities on firm performance, specifically focusing on contribution per dollar sale and operational cost efficiency within US companies. Using a comprehensive dataset of 17,735 firm‐year observations from 2008 to 2023, we find that firms engaging in green revenue generation do not pass the associated costs on to consumers through higher prices, leading to a reduction in contribution per dollar sale. However, these firms enhance their operational cost efficiency to offset this impact and maintain profitability, underscoring the operational efficiencies gained from sustainability initiatives. To address potential endogeneity, we employ two‐stage least squares and difference‐in‐differences approaches. Our results indicate that the relationship between green revenue generation, cost efficiency and profitability remains robust regardless of regulatory pressures, indicating that sustainability efforts are embedded within broader strategic and operational practices. We also find that firms adjust marketing expenditures to absorb costs, illustrating a purposeful alignment of sustainability goals with competitive positioning. This study contributes to the strategic management literature by highlighting the role of environmental activities in shaping firm performance and operational strategy. We offer valuable insights for businesses, policymakers and standard setters seeking to balance sustainability with financial performance.

Topics

No keywords indexed for this article. Browse by subject →

References

88

[1]

10.5465/amp.2008.35590353

[2]

Balakrishnan K. "Product Market Competition and Financial Accounting Misreporting" Journal of Accounting and Economics (2011)

[3]

Firm Resources and Sustained Competitive Advantage

Jay Barney

Journal of Management 10.1177/014920639101700108

[4]

10.1016/j.frl.2022.103550

[5]

Business Strategy, Financial Reporting Irregularities, and Audit Effort

Kathleen A. Bentley, Thomas C. Omer, Nathan Y. Sharp

Contemporary Accounting Research 10.1111/j.1911-3846.2012.01174.x

[6]

Berns M. "The Business of Sustainability: What it Means to Managers Now" MIT Sloan Management Review (2009)

[7]

Corporate Motives for Social Initiative: Legitimacy, Sustainability, or the Bottom Line?

Peggy Simcic Brønn, Deborah Vidaver-Cohen

Journal of Business Ethics 10.1007/s10551-008-9795-z

[8]

10.1016/j.frl.2022.102828

[9]

Cahaya Y. F. "Contributions to Customer Satisfaction From Product Quality, Promotion and Price" Journal of Economics, Finance and Management Studies (2023)

[10]

California Air Resources Board (2022)

[11]

10.1016/j.jenvman.2023.118829

[12]

10.2308/accr.2005.80.1.85

[13]

10.1002/bse.3226

[14]

10.1111/1540-6229.12368

[15]

10.1108/17465680610669825

[16]

Green Product Innovation: Where we are and Where we are Going

Rosa Maria Dangelico

Business Strategy and the Environment 10.1002/bse.1886

[17]

10.1111/j.1540-6261.2006.00884.x

[18]

10.2307/259223

[19]

10.1016/j.ejor.2005.05.013

[20]

10.1002/smj.2603

[21]

10.1109/tem.2013.2246792

[22]

10.1007/s10551-019-04177-w

[23]

Does green innovation affect the financial performance of Multilatinas? The moderating role of ISO 14001 and R&D investment

Eduardo Duque‐Grisales, Javier Aguilera‐Caracuel, Jaime Guerrero‐Villegas et al.

Business Strategy and the Environment 10.1002/bse.2572

[24]

10.1002/bse.3353

[25]

10.1111/jwas.12706

[26]

10.51594/ijmer.v6i4.985

[27]

10.1029/2010jd015146

[28]

FASB (2023)

[29]

10.5465/amj.2011.0744

[30]

10.1257/pol.1.2.72

[31]

10.1177/01492063211006450

[32]

Green Revenues Data Model Methodology.2024. Available at:https://www.lseg.com/content/dam/ftse‐russell/en_us/documents/policy‐documents/ftse‐green‐revenues‐classification‐system.pdf.

[33]

10.1016/j.bar.2021.101037

[34]

10.9774/gleaf.3062.2001.su.00006

[35]

A Natural-Resource-Based View of the Firm

Stuart L. Hart

The Academy of Management Review 10.2307/258963

[36]

10.1108/03090561111151790

[37]

10.1016/j.tre.2018.03.013

[38]

10.1016/j.ecolecon.2010.04.004

[39]

10.1111/jpim.12008

[40]

Ittner C. D. "The Choice of Performance Measures in Annual Bonus Contracts" Accounting Review (1997)

[41]

An empirical investigation of environmental performance and the market value of the firm

Brian W. Jacobs, Vinod R. Singhal, Ravi Subramanian

Journal of Operations Management 10.1016/j.jom.2010.01.001

[42]

10.1111/j.1911-3846.2011.01093.x

[43]

10.1007/s10551-014-2276-7

[44]

Johansson G. (2001)

[45]

10.1016/j.jenvman.2021.112581

[46]

Klausmann J. (2024)

[47]

Kruse T. M.Mohnen P. F.Pope andM.Sato.2020. “Green Revenues Profitability and Market Valuation: Evidence From a Global Firm Level Dataset.” Working Paper Grantham Research Institute on Climate Change and the Environment; Centre for Climate Change Economics and Policy; London School of Economics and Political Science.https://www.lse.ac.uk/granthaminstitute/wp‐content/uploads/2020/01/working‐paper‐331‐Kruse‐et‐al.pdf.

[48]

10.1007/s12063-023-00411-x

[49]

10.35808/ersj/3436

[50]

10.70767/jmbe.v1i2.230

Showing 50 of 88 references

Metrics

11

Citations

88

References

Details

Published: Aug 25, 2025
Vol/Issue: 34(8)
Pages: 10977-10996
License: View

Authors

E

Enayet Karim

Queen's Business School Queen's University Belfast Belfast Northern Ireland UK

M

Mahmoud Elmarzouky

St Andrews Business School University of St Andrews St Andrews UK

D

Doaa Shohaieb

Aston Business School Aston University Birmingham UK; Faculty of Business Menoufia University Menoufia Egypt

Cite This Article

Enayet Karim, Mahmoud Elmarzouky, Doaa Shohaieb (2025). Green Revenue Generation and Sales Contribution: Are Consumers Willing to Bear the Cost of Sustainability?. Business Strategy and the Environment, 34(8), 10977-10996. https://doi.org/10.1002/bse.70146

Green Revenue Generation and Sales Contribution: Are Consumers Willing to Bear the Cost of Sustainability?

You May Also Like