Sustainability and Firm Performance: A Review and Analysis Using Algorithmic Pathways in the Throughput Model

Abstract

This paper reviews the prior research on the relationship between sustainability and a firm’s performance and proposes algorithmic pathways in the throughput model that could be used to improve the research findings for such research. Results of our literature search were mixed. Some studies reported a positive relationship between a firm’s sustainability efforts and profitability while others found a negative to no relationship. Studies found reasons for implementing sustainability even though it is a loss-bearing activity; other studies found reasons for not practising sustainability. Reasons for not practising sustainability ranged from absence of external pressure; not viewing the sustainability report as a business obligation; deeming it too expensive for small firms; to a lack of resources. Our evaluation of the prior research also found that the prior studies excluded an important class of assets—non-financial intangible assets—in their evaluation of the relationship between sustainability efforts and profitability. The contribution of this study is that the throughput model along with its six dominant algorithms depicts the significance of triple bottom line concepts of economic, social, and environmental variables influencing performance.