 Penalty Zones in International Sustainability Standards: Where Improved Sustainability Doesn't PayNicole Darnall, Konstantinos Iatridis, Effie Kesidou and Annie Snelson‐Powell Journal of Management Studies, 2024, vol. 61, issue 6, 2373-2405 Abstract: Adopting an international sustainability standard (ISS) helps firms improve their sustainability performance. It also acts as a credible market ‘signal’ that legitimizes firms' latent sustainability practices while improving their market value. But how do these signals function when firms adopt multiple ISSs? We show that the relationships between firms' ISSs adoption and their market value and their sustainability performance appear positive. However, beyond a tipping point of 2 ISSs, firms' market gains decline, even though their sustainability performance continues to improve until a tipping point of 3 ISSs. Differing tipping points create a gap that we refer to as the ‘penalty zone’ – the place where market value declines, even though firms' actual sustainability performance continues to improve. The penalty zone arises because of imprecisions in market signals and serves as a significant barrier to firms wishing to further their sustainability agenda through additional ISS adoption. Date: 2024 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jomstd:v:61:y:2024:i:6:p:2373-2405 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Management Studies is currently edited by Timothy Clark, Steven W. Floyd and Mike Wright More articles in Journal of Management Studies from Wiley Blackwell |
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