Week 4 Discussion Sustainability Solutions

Topic: Based on the articles you have read for Week 4, please discuss how the size of the firm and its financial performance may play a role in its implementation of sustainable practices. 

Please refer to concepts from the readings (articles provided for Week 4  – under Modules – Week 4) to support your points.

Cornell Hospitality Quarterly
XX(X) 1 –12
© The Author(s) 2013
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DOI: 10.1177/1938965513505700
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Article

Although the triple bottom line (i.e., profits, people, and
planet) has become a common framework for discussions
of hospitality firms’ success, the fact remains that the key
factor in a firm’s stance toward socially responsible actions
is the profit portion of the triple bottom line, that is, eco-
nomics. While firms are encouraged to invest resources in
socially responsible initiatives by customers and other
stakeholders, there is limited empirical evidence that such
investments indeed lead to profitability or enhance firm
value (Orlitzky, Schmidt, and Rynes 2003). Despite what
appears to be a tenuous link between a firm’s environmental
performance and its financial performance, numerous firms
are investing in initiatives that involve recycling, pollution
prevention, and reduction of waste. The firms then commu-
nicate their initiatives to stakeholders, including investors,
customers, media, and regulatory authorities on the expec-
tation that this will encourage brand loyalty, build reputa-
tion, and proactively prevent onerous regulation (Bird et al.
2007; Miles, Covin, and Heeley 2000).

Studies of the interaction of economic conditions and
social and environmental programs have indicated that
firms often cut back on corporate social responsibility
(CSR)1 programs when economic conditions are unfavor-
able. Lee, Singal, and Kim (2013) found this to be true of
hospitality firms that, for instance, curtail their nonopera-
tional CSR initiatives (e.g., environment and community

programs), although they continue to invest in operations-
related programs, such as product quality and employee
relations. However, I have seen little research that explains
the connection between an individual firm’s financial per-
formance and its investment in sustainable initiatives
(Myung, McClaren, and Li 2012). This gap is important to
fill because firms often face difficult conditions that may
tempt them to focus on short-term tactics while cutting
down on long-term sustainability initiatives, which may
eventually result in loss of customer and employee loyalty,
and reputation, thus eroding sustained competitive advan-
tage. Therefore, in this article, I seek to answer the follow-
ing question: Does firm financial performance affect
investment in sustainability initiatives? To address this mat-
ter, I compare the level of environmental investments made
by firms in the hospitality industry with that of firms in
other industries. More critically, I test the impact of envi-
ronmental investment on firm financial performance to

505700 CQXXXX10.1177/1938965513505700Cornell Hospitality QuarterlySingal
research-article2013

1Virginia Polytechnic Institute and State University, Blacksburg, USA

Corresponding Author:
Manisha Singal, Pamplin College of Business, Virginia Polytechnic Institute
and State University, 362 Wallace Hall, Blacksburg, VA 24061-0489,
USA.
Email: msingal@vt.edu

The Link between Firm Financial
Performance and Investment in
Sustainability Initiatives

Manisha Singal

1

Abstract
While sustainability initiatives by firms are increasingly encouraged by customers, investors, and the government, the
economics of sustainable decisions remains in question. The study described in this paper examines the link between
sustainability and economic performance for the hospitality industry, as compared with other businesses. Using data
spanning 1991 through 2011 from MSCI’s Environmental, Social, and Governance (ESG) Indices and credit ratings from
Standard and Poor’s representing 16,325 firm-years, the analysis finds that hospitality firms on average invest more in
environmental programs than do businesses in other industries; that hospitality firms have significantly fewer environmental
concerns; that strong financial performance leads to increased investments; and that going green, in turn, pays off in future
periods, creating a virtuous cycle. One implication is that hospitality firms should go forward confidently in establishing
their sustainability programs, as it appears that customers support the effort financially.

Keywords
environmental concerns, corporate finance, hospitality and tourism industry, competitive strategy, strategy formulation
and strategy implementation.

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2 Cornell Hospitality Quarterly XX(X)

evaluate whether socially responsible behavior toward the
environment pays off financially.

To summarize the findings, based on a data set of 16,325
firm-years covering the period from 1991 through 2011,
I find that hospitality and tourism firms score higher on
environmental performance than their nonhospitality and
tourism peers, and that investment in environmental mea-
sures varies directly with financial performance. Most
important, I find that superior environmental performance
improves future financial performance in this sample, sup-
porting the value of greening initiatives.

This paper contributes to the literature in three ways.
First, it compares investments made by firms in the hospi-
tality industry with those of other firms, thus adding to the
sustainability literature both in the services sector generally
and the hospitality sector specifically (Singal 2012).
Second, the study applies a hitherto unexamined variable,
financial performance as measured by credit ratings, in
explaining differential investment in sustainability initia-
tives, whereas most studies have examined managerial
motives and personal proclivities as explanations of corpo-
rate greening programs (Ayuso 2006; Tzschentke, Kirk,
and Lynch 2008). Finally, this study establishes a critical
link between CSR and financial performance by demon-
strating that investment in environment management
(which consists of several measures) affects firm financial
performance—a link that has previously shown mixed
results.

Theory Development

Hospitality and Tourism Industry and Investment
in Environmental Initiatives

The involvement of stakeholders is particularly crucial to
the success of hospitality and tourism industry sustainabil-
ity initiatives for at least two reasons. First, the hospitality
sector has a substantial environmental footprint, and it also
sees opportunities for reducing this footprint through sus-
tainability programs, which are encouraged by industry
associations such as the American Hotel and Lodging
Association’s Green Resource Center, the National
Restaurant Association’s Conserve initiative, and the
Global Sustainable Tourism Council. Moreover, reducing
environmental impact gives firms a competitive advantage,
given customers’ demands for sustainability. Research has
established the willingness of some consumers to pay more
to stay at green hotels or eat at green restaurants. Choi et al.
(2009), for instance, reported that consumers in Greece and
the United States were willing to pay higher prices to
patronize hotels with environmentally friendly policies and
some hotels have tested higher prices for green initiatives
(Choi and Parsa 2007). In other studies, green hotels with
sustainable practices attracted positive word-of-mouth

intentions, higher willingness to pay, and greater return
intentions (Kang et al. 2012; Millar and Baloglu 2011).
Similar results were found by Hu, Parsa, and Self (2010),
Schubert et al. (2010), and Namkung and Jang (2013) for
green restaurants. In a survey by the National Restaurant
Association, it was found that 60 percent of consumers
would prefer to patronize a green restaurant, and 51 percent
would pay a median of 10 percent more at a restaurant that
adopts green practices.

While sustainability initiatives may seem more neces-
sary in industries where pollution is actually visible, like oil
refining, mining, or chemical manufacturing, hospitality
operations often involve the support of a wide spectrum of
physical components and reliance on natural resources
(Sloan, Legrand, and Chen 2013). Sloan, Legrand, and
Chen (2013) stated, for instance, that the U.S. Environmental
Protection Agency calculates that a one-night stay in a hotel
room generates an average of 29.53 kg of CO

2
. Moreover, a

survey of twenty-eight InterContinental Hotel properties in
2007 led to an extrapolated estimate that, at 59 kg per night,
the average hotel room’s carbon footprint is roughly equal
to that of the average U.S. home.

Since the hospitality and tourism industry requires close
contact with customers who experience the service, the
industry’s firms should be more responsive to demands of
multiple stakeholders like shareholders, regulators, domestic
and international travelers, and corporate clients. As services
in hospitality are coproduced and concurrently consumed,
and quality of service is perceived based on the spillover
effect of corporate reputation and investment in customer
salient issues, I posit that hospitality firms will invest more in
sustainability initiatives than nonhospitality firms. Thus,

Hypothesis 1: Firms in the hospitality sector will invest
more in sustainability initiatives than firms in the non-
hospitality sectors.

Financial Performance and Investment in
Sustainable Initiatives

Among the motives for organizational investment in sus-
tainable initiatives are reputation, customer and employee
loyalty, and self-regulation (Hart 1995; Turban and
Greening 1997). However, the forces governing the timing
of such investments are not clear. Macroeconomic condi-
tions clearly have an effect (Lee, Singal and Kang 2013),
and a firm’s stable financial condition and organizational
slack can also have a positive correlation with sustainability
investments (Bowen 2002; Tuzzolino and Armanndi 1981).
Financial performance, resource levels, and managerial
interpretations of munificence have led to increased invest-
ment in environmental initiatives (McGuire, Sundgren, and
Schneeweis 1988; Seifert, Morris, and Bartkus 2004;
Sharma 2000).

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Singal 3

Within the hospitality industry, organizational perfor-
mance, which contributes to slack resources and stable
financial condition, is also likely to influence firm invest-
ment in environmental initiatives. Green initiatives require
upfront investment that firms with good financial perfor-
mance are more likely to consider adopting than firms in
financial distress. Garay and Font (2012), for instance,
found that for firms in the hospitality and tourism industry,
financial slack is an important determinant of investment in
CSR. Therefore, I expect that hospitality firms with higher
financial performance will likely invest more in sustainabil-
ity programs.

Consumer attitudes are also a driver of the hospitality
and tourism industry’s environmental investment. In a
Deloitte survey of more than 1,000 business travelers
(Weissenberg, Redington, and Kutyla 2008), 95 percent of
respondents thought that lodging companies should be
undertaking green initiatives. Similarly, the 2012 Canadian
Travel Intentions Survey found that 42 percent of business
travelers surveyed said that practices like recycling and
energy efficiency matter to them when choosing where to
stay, a figure that had increased by 5 percentage points from
the prior year.

Thus, I expect that given a similar level of financial per-
formance, firms in the hospitality and tourism sector will
invest more in sustainability measures than their nonhospi-
tality peers, as summarized in the following hypotheses:

Hypothesis 2a: Financial performance will affect invest-
ment in sustainability initiatives in all firms.
Hypothesis 2b: Higher financial performance will lead to
higher investment in sustainability initiatives in the hos-
pitality sector.
Hypothesis 2c: Controlled for financial performance, firms
in the hospitality sector will invest more in sustainability
initiatives than firms in the nonhospitality sector.

Impact of Environmental Sustainability Initiatives
on Financial Performance

Scholars in both strategic management and hospitality lit-
erature have examined the impact of environmental initia-
tives on firm performance and financial performance, but
the results are mixed. For example, using a broad sample of
firms, Berman et al. (1999) did not find any significant
effect of environmental factors on firm performance,
although they did find a positive correlation between
employee and product safety factors with firm performance.
Also relying on a cross-industry sample of firms, Bird et al.
(2007) found that there is a conflict between environmental
strengths and stock price performance though the market
seems to value firms that meet minimal environmental stan-
dards. Similarly, a meta-analysis of corporate social respon-
sibility and corporate social performance conducted by

Orlitzky, Schmidt, and Rynes (2003) found that environ-
mental responsibility pays off only weakly in firm perfor-
mance, and Hillman and Keim (2001) reported that
stakeholder management led to improved shareholder
value, while social issue participation was negatively asso-
ciated with shareholder value.

In contrast, other studies have found a positive link
between environmental performance and economic perfor-
mance, with industry growth moderating the relationship
(Russo and Fouts 1997); havesuggested that the market
rewards ecoefficiency, although environmental information
is incorporated with a drift, and valuation increases over
time (Guenster et al. 2011); and have concluded that pollu-
tion prevention, rather than pollution treatment, helps per-
formance (King and Lenox 2002). An intriguing
meta-analysis of the moderators that define the corporate
environment–financial performance relationship found that
smaller firms benefit more than larger firms, U.S.-based
firms benefit more than international firms, and that market
measures of performance react most to environmental
investments (Dixon-Fowler et al. 2013).

Hospitality industry results are likewise varied. Studies
of Spain’s hotels have shown a positive link between
socioenvironmental responsibility and firm performance
(Rodriguez and Cruz 2007) and between revenue genera-
tion and environmental certification (Segarra-Oña et al.
2012). While studying the commitment to levels of quality
jointly with environment management, Tari et al. (2010)
found that both initiatives influenced hotel performance.
However, Claver-Cortes et al. (2007) did not find a link
between environmental proactivity and organizational per-
formance. Similarly, Park and Lee (2009) and Lee and
Park (2009) reported that financial rewards for social
responsibility benefitted U.S. hotels, while casinos and res-
taurants did not experience a clear benefit.

Although some scholars have attributed the mixed findings
in the hospitality sector to the use of diverse measures (Zhang,
Joglekar, and Verma 2012), a literature review of thirty-two
quantitative studies on the link between environmental perfor-
mance and financial performance (Molina-Azorín et al. 2009)
and the meta-analysis by Dixon-Fowler et al. (2013) con-
cluded that studies reporting a positive link dominate.

For these reasons, I propose the following:

Hypothesis 3: There will be a positive link between
investment in environmental initiatives and financial
performance, especially in the hospitality sector.

Method

Sample and Sources of Data

Data come from three primary sources. The first data set,
MSCI’s Environmental, Social, and Governance (ESG)

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4 Cornell Hospitality Quarterly XX(X)

Indices (also known as the KLD database), is an annual
data set originated in 1991 with ESG performance infor-
mation, which is used to evaluate investment in environ-
mental corporate social responsibility.2 The ESG database
has been extensively used and validated for studying cor-
porate social performance (Agle, Mitchell and Sonnenfeld
1999; Hillman and Keim 2001; Mattingly and Berman
2006; Waddock and Graves 1997). The other two data sets
are standard in the finance and accounting literatures: his-
torical and current credit ratings of firms from Standard
and Poor’s (S&P) Compustat and stock returns and market
capitalization from Center for Research in Security Prices
(CRSP) at the University of Chicago.

The intersection of ESG data and S&P credit ratings data
generates a total sample of 16,325 firm-years of which 624
firm-years relate to the hospitality and tourism sector. To
identify hospitality and tourism firms, we match the firms
in the ESG ratings sample with a sample of hospitality and
tourism firms that traded on any U.S. exchange between
1980 and 2011.3 In the regression analysis, hospitality and
tourism firms are identified with a hospitality and tourism
dummy set to 1.

Variables and Methods

Environmental CSR variables are constructed from 1991
through 2011 using two types of indicators: strength indica-
tors such as pollution prevention, recycling, and waste man-
agement systems, and concerns indicators such as gaps in
regulatory compliance, severity of controversies related to
land use, and biodiversity. Each ESG indicator is a binary
variable, which is set to 1 if the firm meets the criteria for
that indicator, and 0 otherwise. Hence, higher scores on
strength environmental indicators imply stronger environ-
mental performance, whereas greater scores on concern
indicators denote poorer performance. Following estab-
lished practice, I sum each category of indicators to arrive
at composite assessment of strengths (EnvStr) and concerns
(EnvCon; Bartkus and Glassman 2008; Berrone, Surroca,
and Tribó 2007; Hillman and Keim 2001; Ruf, Muralidhar,
and Paul 1998). Such composites have been successfully
used in other studies (Bird et al. 2007; Dyer and Whetten
2006). In addition, I compute an overall environmental CSR
composite (EnvAll) as the ratio of the two composites:

EnvAll =

( )

( )

1

1

+
+
EnvStr

EnvCon
.4

Financial performance is measured by historical long-
term issuer ratings assigned to a firm by S&P.5 Flow vari-
ables such as stock returns, return on assets, sales growth,
and return on equity suffer from their transitory nature in
measuring the impact of CSR on financial performance
unless there is a significant change in CSR during the period
under observation (Gregory and Whittaker 2013). If firms
consistently have high CSR, for instance, flow variables
would show no change, and it would be difficult to relate

CSR to financial performance. Most stock variables (mea-
sured at a point in time) depend greatly on accounting num-
bers such as Tobin’s Q, which is subject to accounting
policy choices, or must be benchmarked to an accounting
number such as market-to-book value instead of just market
capitalization. I therefore chose credit rating as it is a better
measure of firm performance than other measures. Kisgen
(2006, 1038-39) states, for instance: “Credit ratings may
provide information on the quality of a firm beyond other
publicly available information. Rating agencies may receive
significant company information that is not public . . . and
thereby provide more reliable measures of a firm’s credit-
worthiness.” The relationship between equity performance
measures and credit ratings is evidenced by the reaction of
stock prices to rating changes, which Hand, Holthausen,
and Leftwich (1992) and Holthausen and Leftwich (1986)
found to directly affect both bond and stock prices. Credit
ratings are also easily comparable across different firms and
provide direct information about financial slack available
for discretionary investments.

The sample’s S&P rating ranges from AAA, which I
give a numerical value of 25, to D, which I assign a value of
1. Following standard industry practice, ratings are further
partitioned into investment grade (InvGrade), which has a
dummy value of 1 for ratings at or above BBB− and nonin-
vestment grade, based on ratings at or below BB+.

Control and other variables. With credit rating as the measure
of a firm’s financial condition, this analysis does not need
variables controlling for leverage, risk, and other factors
intended to measure the financial condition of a firm. In
addition, since the primary analysis is concerned with firms
in the hospitality and tourism industry, industry-specific
control variables are redundant. In the end, the two most
relevant control variables are size of the firm, which may
affect credit rating and investment in environmental initia-
tives, and stock performance, a flow measure of firm per-
formance. Consequently, size and stock performance are
included in regressions as control variables. Size is mea-
sured using the log of market capitalization (LogSize) at the
end of the previous year following Graves and Waddock
(1999),6 and performance is measured by stock return.

In addition, to isolate the effect of financial performance
on environmental initiatives in the hospitality industry, I
use an interaction term Hospitality and tourism firm dummy
with the investment grade dummy. Using unbalanced panel
data from the sources described earlier, I conducted t tests
and multivariate regression analysis to evaluate the three
hypotheses proposed here.

Results

The summary statistics and correlation matrix reported in
Exhibit 1 are generally consistent with the hypotheses. The
high positive correlation between environmental CSR and

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Singal 5

Exhibit 1:
Summary Statistics and Correlations.

Variable N M Median SD 1 2 3 4 5 6 7 8

Hospitality and tourism dummy (1) 16,325 0.04 0.00 0.19 1.00**
EnvAll (2) 16,325 1.07 1.00 0.63 0.04** 1.00**
EnvStr (3) 16,325 0.33 0.00 0.75 −0.02 0.69** 1.00**
EnvCon (4) 16,325 0.45 0.00 0.91 −0.08** −0.40** 0.26** 1.00**
LogSize (5) 16,089 8.12 8.04 1.46 −0.05** 0.10** 0.28** 0.25** 1.00**
StockReturn (6) 16,058 0.16 0.11 0.63 0.01 −0.02* −0.03* −0.01* −0.18** 1.00**
InvGrade (7) 16,171 0.66 1.00 0.47 −0.12** 0.05** 0.15** 0.13** 0.52** −0.06** 1.00**
Rating (8) 16,171 15.75 16.00 3.53 −0.13** 0.06** 0.16** 0.13** 0.64** −0.06** 0.81** 1.00**

Note: N is reported in firm-years; size is the log of market capitalization in millions of dollars.
*p < .05. **p < .01.

credit ratings shows that CSR is likely to be more prevalent
in firms that have higher financial performance. The corre-
lations also show that the hospitality and tourism firms in
this sample are smaller and have lower credit ratings and
lower investment grades than the firms in other industries.
In spite of their smaller size, I observe from Column 1 in the
exhibit that hospitality and tourism firms are positively cor-
related with the overall environmental CSR, EnvAll. This
finding is in accordance with Hypothesis 1 and suggests
that hospitality and tourism firms have higher investment in
the environment than firms in other industries. Hospitality
and tourism firms have slightly lower strengths (EnvStr)
than other firms but significantly lower environmental con-
cerns (EnvCon) than the other firms.

Hospitality and tourism firms’ comparative effective-
ness at environmental CSR is underscored by the data in
Exhibit 2, which contains results related to Hypotheses 1
and 2.7 Again consistent with Hypothesis 1, Panel A1
shows that EnvAll is larger for hospitality and tourism
firms than for the other firms by a statistically significant
0.126. Despite the fact that hospitality and tourism firms
have fewer strengths and fewer concerns, the magnitude of
the difference in concerns (EnvCon) is much greater at
−0.393 than the magnitude of difference in strengths
(EnvStr) at −0.077.

Consistent with Hypothesis 2a, investment grade firms
have a better record of environmental CSR than noninvest-
ment grade firms (Panel A2), such that the overall environ-
mental score, EnvAll, is higher by a statistically significant
0.067 for investment grade firms. The results become
clearer in Panels A3 and A4, where firms are evaluated by
financial performance. In both cases, consistent with
Hypothesis 2b, we find that investment grade firms gener-
ally have a better record of overall environmental CSR than
noninvestment grade firms, both for hospitality and tourism
firms and nonhospitality and tourism firms. For hospitality
and tourism firms, investment grade companies outperform
noninvestment grade firms by a statistically significant
0.214, while in other industries the outperformance of
investment grade firms is a statistically significant 0.069.

Both strengths and concerns are higher for investment grade
firms, although the difference in strengths is relatively
much higher than for concerns.

The relatively higher environmental effort of the hospi-
tality and tourism industry is summarized in Panel A5,
which compares firms with similar financial performance.
In that regard, EnvAll is significantly greater for investment
grade hospitality and tourism firms than for comparable
firms in other industries (0.236), and the same is true for
noninvestment grade firms, in which hospitality and tour-
ism firms are also relatively higher (0.091). While there is
no statistically significant difference in strengths in either
sets of firms, I find that hospitality and tourism firms have
significantly fewer concerns than comparable firms in other
industries. For investment grade firms, the difference is
−0.412, and for noninvestment grade firms, the difference is
−0.274. Thus, the results for overall CSR and environmen-
tal concerns are consistent with Hypothesis 2c because,
controlled for financial performance, hospitality and tour-
ism firms have significantly superior environmental CSR
performance than nonhospitality and tourism firms. An
analysis of variance inflation factors (VIFs) for Panel B of
Exhibit 2, and Exhibit 3 indicated no instances of multicol-
linearity. In addition, statistical significance is based on
heteroskedasticity-consistent standard errors.8

The models presented here further support the hypothe-
ses and tabular material. The first set of three models, 1 to
3, relate to Hypothesis 1 and Panel A1 (see Exhibit 2).
Model 1 reveals that hospitality and tourism firms have a
statistically significantly greater EnvAll score (0.127) when
compared with other firms, primarily because hospitality
and tourism firms have far fewer concerns than other firms
(−0.404 in Model 3) and the hospitality and tourism firms
have marginally fewer strengths (−0.082 in Model 2).
Consistent with Hypothesis 1, the results show that hospi-
tality and tourism firms have significantly greater invest-
ment in environmental initiatives than do firms in other
industries.

Models 4 to 6, corresponding to Hypothesis 2a and
Panel A2, examine the relationship between environmental

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6 Cornell Hospitality Quarterly XX(X)

Exhibit 2:
Environmental CSR and Financial Performance.

Panel A: Indicators of Environmental CSR

Panel A1 All Hospitality and Tourism Firms All Nonhospitality and Tourism Firms Difference

EnvAll 1.196 1.070 0.126**
EnvStr 0.260 0.337 −0.077**
EnvCon 0.074 0.467 −0.393**

Panel A2 All Firms, Investment Grade All Firms,

Noninvestment Grade Difference

EnvAll 1.097 1.030 0.067**
EnvStr 0.413 0.181 0.231**
EnvCon 0.537 0.291 0.245**

Panel A3
Hospitality and Tourism,

Investment Grade
Hospitality and Tourism,
Noninvestment Grade Difference

EnvAll 1.328 1.114 0.214**
EnvStr 0.437 0.150 0.287**
EnvCon 0.134 0.036 0.098**

Panel A4
Nonhospitality and Tourism,

Investment Grade
Nonhospitality and Tourism,

Noninvestment Grade Difference

EnvAll 1.092 1.023 0.069**
EnvStr 0.412 0.184 0.228**
EnvCon 0.546 0.311 0.235**

Panel A5 Difference between Hospitality and Tourism and Nonhospitality and Tourism Firms, by Financial Performance

EnvAll 0.236** 0.091**
EnvStr 0.025 −0.033
EnvCon −0.412** −0.274**

Panel B: Regression Results For Environmental CSR in Hospitality and Tourism Firms and Nonhospitality and Tourism Firms

Dependent Variable

EnvAll EnvStr EnvCon

Independent Variables Model 1 Model 2 Model 3

Intercept 1.073** 0.338 0.464**
Hospitality and tourism dummy 0.127** −0.082** −0.404**
Stock return −0.007 0.013† 0.035**
LogSizea 0.041** 0.151** 0.159**
N 15,907 15,907 15,907
Adjusted R2 (%) 0.8 6.2 5.4

Independent Variables

Dependent Variable

EnvAll (All Firms) EnvStr (All Firms) EnvCon (All

Firms)

Model 4 Model 5 Model 6

Intercept 1.032** 0.179** 0.283**
InvGrade 0.067** 0.233** 0.247**
Stock return −0.004 0.023** 0.045**
LogSizea 0.042** 0.151** 0.160**
N 15,907 15,907 15,907
Adjusted R2 (%) 0.9 8.3 6.3

Dependent Variable

EnvAll (Hospitality and Tourism

Firms)
EnvStr (Hospitality and Tourism

Firms)
EnvCon (Hospitality and Tourism

Firms)

Independent Variables Model 7 Model 8 Model 9

Intercept 1.115** 0.153** 0.038**
InvGrade 0.195** 0.258** 0.087**
Stock return 0.024 0.028 0.006
LogSizea 0.100** 0.152** 0.057**
N 606 606 606
Adjusted R2 (%) 7.0 12.0 7.4

(continued)

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Singal 7

Exhibit 2: (continued)

Dependent Variable

EnvAll (InvGrade) EnvStr (InvGrade) EnvCon (InvGrade)

Independent variables Model 10 Model 11 Model 12

Intercept 1.026** 0.181** 0.302**
Hospitality and tourism dummy 0.094** −0.027 −0.271**
Hospitality and tourism ×
InvGrade or Rating

0.137** 0.027 −0.170**

InvGrade or Rating 0.069** 0.231** 0.238**
Stock return −0.004 0.023** 0.046**
LogSizea 0.041** 0.151** 0.161**
N 15,907 15,907 15,907
Adjusted R2 (%) 1.2 8.2 6.8

Independent variables

Dependent Variable

EnvAll (Rating) EnvStr (Rating) EnvCon (Rating)

Model 13 Model 14 Model 15

Intercept 0.904** −0.206** −0.044
Hospitality and tourism dummy −0.241* −0.127 −0.004
Hospitality and tourism ×
InvGrade or Rating

0.029** 0.007 −0.027**

InvGrade or Rating 0.011** 0.034** 0.032**
Stock return −0.004 0.026** 0.050**
LogSizea 0.042** 0.163** 0.183**
N 15,907 15,907 15,907
Adjusted R2 (%) 1.2 8.3 7.1

Note. Statistical significance for Panel B is based on heteroskedasticity consistent standard errors. CSR = corporate social responsibility.
aSince size is correlated with investment grade, this variable represents the residual from a regression of logsize on InvGrade.
*p < .05. **p < .01.

CSR and financial performance. Here I apply the invest-
ment grade dummy (InvGrade) to distinguish firms with
high levels of financial performance from firms with low
levels of financial performance. Model 4 shows that invest-
ment grade firms (i.e., financially strong firms) invest more
in overall environmental CSR than weaker firms (0.067).
The coefficients in all three models (4-6) are close to the
differences reported in Panel A2, and consistent with
Hypothesis 2a.

Turning to hospitality and tourism firms only, Models 7
to 9 correspond to Hypothesis 2b and Panel A3 and evaluate
the effect of financial performance on environmental CSR.
Once again, financial strength seems to drive environmen-
tal investment, as the coefficient on InvGrade in Model 7 is
significantly positive at 0.195. Models 8 and 9 also show
that the positive impact of financial performance on
strengths is much larger than the effect on concerns.
These results support Hypothesis 2b, which predicts that

Exhibit 3:
Effect of Environmental CSR on Financial Performance.

Dependent Variable

Rating Rating Rating Rating Rating Rating Rating

Independent Variables Controls Only Model 16 Model 17 Model 18 Model 19 Model 20 Model 21

Intercept 3.142** 3.000** 3.150** 3.028** 3.034** 3.162** 3.031**
Hospitality and tourism dummy −1.840** −1.822** −1.874** −2.420** −1.936** −1.900**
Hospitality and tourism × LagEnvCSR (EnvAll) (EnvStr) (EnvCon) (EnvAll) 0.485** (EnvStr) 0.405* (EnvCon) 0.228
LagEnvCSR 0.130** 0.027 −0.149** 0.116** 0.017 −0.150**
Stock return 0.300** 0.333** 0.332** 0.340** 0.333** 0.333** 0.340**
LogSize 1.552** 1.553** 1.551** 1.576** 1.551** 1.550** 1.576**
N 15,907 14,146 14,146 14,146 14,146 14,146 14,146
Adjusted R2 (%) 40.7 42.5 42.4 42.6 42.5 42.4 42.6

Note: Statistical significance is based on heteroskedasticity-consistent standard errors. CSR = corporate social responsibility.
*p < .05. **p < .01.

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8 Cornell Hospitality Quarterly XX(X)

investment grade hospitality and tourism firms will invest
more in environmental CSR than their financially weaker
cousins.

I control for financial performance in Models 10 to 12
as I compare hospitality and tourism firms with those in
other industries. This is accomplished with an interaction
term between InvGrade and Hospitality and tourism
dummy. Controlled for financial performance (InvGrade)
and consistent with Hypothesis 2c, hospitality and tourism
firms have better overall performance in environmental
CSR than the other firms (0.137). Again, hospitality and
tourism firms have significantly fewer concerns than non-
hospitality and tourism firms (−0.170), although there is no
significant difference in strengths. I used the Rating vari-
able in Models 13 to 159 to evaluate the effect of financial
performance at a finer level than InvGrade in Models 10 to
12, with similar results.

A critical aspect of my analysis is Hypothesis 3, the
effect of environmental corporate citizenship on a compa-
ny’s financial outcome, shown in Exhibit 3. First, I note that
the negative coefficients on the independent variable
Hospitality and tourism dummy show that, on average, hos-
pitality and tourism firms have a rating that is two steps
below the rating of other firms. The coefficient on LagEnvAll
in Model 16 shows that the current period’s financial
strength (Rating) is significantly affected by the prior peri-
od’s environmental investment, EnvAll (0.130). Although
the rating is not affected by the strengths composite, as evi-
denced by an insignificant coefficient on LagEnvStr (Model
17), the rating is significantly affected by the concerns com-
posite, LagEnvCon (Model 18). The negative coefficient
(−0.149) suggests that fewer concerns would result in a
higher credit rating.

I further contrast the effect of environmental invest-
ments on future performance for hospitality and tourism
firms compared with firms in other industries using an
interaction term between the hospitality and tourism
dummy and lagged environmental CSR, as shown in
Models 19 to 21. Comparing the effect of prior environ-
mental CSR on hospitality and tourism firms with its effect
on other firms, the coefficient of 0.485 on Hospitality and
tourism × LagEnvAll in Model 19 shows that the effect of
LagEnvAll is greater on hospitality and tourism firms.
Credit rating is also affected by the prior period’s strengths
composite (0.405), though not significantly by the prior
period’s concerns composite (0.228). However, the main
effect on credit rating continues to arise from the overall
environmental CSR (LagEnvAll) and the concerns com-
posite, LagEnvCon. Overall, the results in Exhibit 3 are
consistent with Hypothesis 3 and suggest that environmen-
tal CSR has a real impact on credit ratings of a firm, and
that the effect is greater for hospitality and tourism firms
than for firms in other industries.

Discussion

This analysis of 16,325 firm-years showed support for the
three hypotheses that express the idea that hospitality and
tourism firms are more environmentally committed than
firms in other industries. I found that hospitality and tour-
ism firms significantly outperformed other firms when ESG
measures of overall environmental CSR are used. I also
found that hospitality and tourism firms have marginally
fewer environmental strengths (such as beneficial products
and services, pollution prevention, clean energy, and recy-
cling) than firms in other industries. On the other hand, hos-
pitality and tourism firms have far fewer concerns (such as
emissions of toxic chemicals, noncarbon emissions, and
controversies related to noncompliance with regulations or
climate change allegations) than the other firms. It appears
then that hospitality and tourism firms are perhaps more
proactive in mitigating concerns in their approach to green-
ing, and are just beginning to become proactive in taking
initiatives. This is interesting to note because research has
found that proactive measures, such as process innovation,
and collaboration with suppliers and stakeholders including
employee training, result in the development of valuable
organization capabilities such as stakeholder integration,
higher order learning, and continuous innovation (Dixon-
Fowler et al. 2013; Sharma and Vredenburg 1998). These
are all important outcomes for the hospitality industry.
While measures to mitigate environmental concerns are
also important, especially for maintaining organizational
image and reputation, it may become important for hospi-
tality and tourism firms to move further along the proactive
stage by adopting the initiatives mentioned before.

With regard to performance, the analysis showed that
financially well performing firms, irrespective of sector,
scored higher on environmental programs. Beyond that,
hospitality and tourism firms invested significantly more in
the environment than did equivalent firms in other indus-
tries. Again as mentioned earlier this increased investment
came in the form of reduced concerns. Finally, I found that
a firm’s credit rating is positively related to the prior peri-
od’s investment in environmental CSR, and negatively
related to the prior period’s environmental concerns. Thus,
investment in the environment and mitigation of concerns
in one period had a positive impact on the next period’s
credit rating. This effect of environmental corporate respon-
sibility on credit rating was much greater for hospitality and
tourism firms than for firms in other industries, highlighting
the importance of a progressive stance on environmental
programs among hospitality and tourism firms. This bodes
well for companies like Starwood, for example, who have
recognized the importance of sustainability and built their
“Element” hotels that have a brand-wide commitment to
pursue U.S. Green Building Council’s Leadership in Energy

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Singal 9

& Environmental Design (LEED) certification in addition
to their reduce, reuse, and recycle initiatives. Moreover, it
bodes well for the entire set of firms in the hospitality and
tourism sector that offer natural ventilation, enhanced day
lighting, and sustainable site locations encouraged by
World Energy Engineering Congress.

Conclusion

Contributions and Implications

Although the hospitality literature is rich in studies related
to the environment, few studies have empirically examined
the relationship between firms’ environmental initiatives
and financial performance. Myung, McCaren, and Li (2012,
1296) recommended such research: “First, the most impor-
tant issue in this field is perhaps evaluation of green prac-
tices and economic or financial performance of the firm.” I
examine this important issue in this study and contribute to
the literature in several ways. Foremost, I find that firms in
the hospitality and tourism sector score higher than those in
other industries on overall environment ratings, thereby
supporting the contention that environmental reputation
matters to hospitality firms in their quest to attract all cus-
tomers and especially those with green inclinations. Second,
I extend the argument that organizational slack in the form
of financial performance supports social responsibility ini-
tiatives to the hospitality and tourism sector. In short, I find
that “doing well” paves the way for “doing good” in all
firms including the hospitality and tourism industry. Even
within the subset of hospitality and tourism firms, firms
with higher financial performance measured by higher
credit ratings have higher scores on environmental perfor-
mance. By confirming that financial performance is an
important determinant of social performance, future
research would do well to include this variable as a key
determinant while evaluating and comparing the CSR per-
formance of firms. Third, I also find that going green in turn
results in doing well in all firms, but relatively more in hos-
pitality and tourism firms, once again supporting the theory
that reputation enhances performance, or, in this case, that a
firm’s credit ratings are affected by its investment in the
environment. Thus, this study does not support the negative
view that environmental practices foment poor performance
by drawing resources and management away from a busi-
ness’s core areas (Hull and Rothenburg 2008).

A novel feature of this study is the use of two data sets
that have been little used for the hospitality industry. The
first database is ESG MSCI, which in contrast, has been
used extensively for quantitative analysis of firm policies
and corporate social performance in broad samples in other
industries (Agle Mitchell, and Sonnenfeld 1999; Hillman
and Keim 2001; Mattingly and Berman 2006; Waddock and

Graves 1997). A strength of the ESG is its long time series
of data (1991-2011) on a variety of different environmental
factors for a wide array of firms. The second database, the
S&P ratings database, has heretofore not been used for
evaluating financial performance and CSR in the hospitality
and tourism industry. As I argued at the outset, credit rat-
ings are a better measure of financial performance than
many other measures that are based on historical data, fail
to account for anticipated changes in the economic environ-
ment, and cannot include private information available to
the rating agencies. I call on researchers to consider using
the ESG and S&P ratings databases for studies in the future.

Another contribution of this study is that I analyze cor-
porate social responsibility at the corporate level, rather
than a business unit or property level. While analysis at the
property level has management value, it becomes difficult
to generalize local level findings to the whole firm, whereas
corporate level assessment of the firms’ environmental pol-
icy is useful in strategic decision making and analysis.

The main implication and the most important result of
this article is that investment in environmental CSR mat-
ters, and is in fact part of a virtuous cycle with the firm’s
financial performance. The study also underlines the impor-
tance of firms’ mitigating concerns that arise from environ-
mental abuse. Results of this study suggest that both an
increase in environmental strengths and a decrease in con-
cerns are associated with an improvement in a firm’s finan-
cial performance. Finally, for strategic reasons, managers
should continue to invest in environmental initiatives even
in times of low financial performance. Although this analy-
sis finds that firms reduce their focus on the environment
when they are passing through difficult financial times,
investment in the environment seems almost more impor-
tant in lean times because of its impact on future perfor-
mance and on the positive externalities on the firm’s
reputation and customer perceptions. This is in line with
scholars who propose an integrative logic rather than an
instrumental logic for the symbiotic relationship between
corporate social, environmental, and financial performance.
Gao and Bansal (2013) state, for instance, that the three are
not only causally related but also simultaneously related,
and urge practitioners to acknowledge the concurrent deter-
mination of system-wide elements that allow firms to gen-
erate creative solutions in developing environmental
proactive behaviors.

Limitations and Future Research

The limitations of this article can serve as avenues for future
research. Since I examined only publicly traded firms, these
results may not apply to small, privately owned firms.
Moreover, I did not conduct subsector analysis within the
hospitality and tourism sector, so future research may

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10 Cornell Hospitality Quarterly XX(X)

conduct a subsample analysis to gauge whether there are
differences in relative performance responses to environ-
mental programs in different sectors (e.g., hotels, casinos,
gaming, tourist attractions, and restaurants). Finally, since
this study relied only on the ESG database for environmen-
tal indicators, it is desirable for future studies to compare
the results of this study with research based on alternative
data sources for validation.

Acknowledgments

The author thanks Professor Vijay Singal, Department of
Finance, Virginia Tech, for help and guidance with the Data and
Methodology sections of this article.

Declaration of Conflicting Interests

The author declared no potential conflicts of interest with respect
to the research, authorship, and/or publication of this article.

Funding

The author received no financial support for the research, author-
ship, and/or publication of this article.

Notes

1. While definitions of CSR vary, we use the definition given by
the Commission of European Communities (2001), a concept
whereby companies integrate social and environmental con-
cerns in their business operations and in their interaction with
their stakeholders on a voluntary basis.

2. http://www.msci.com/products/indices/esg/.
3. The sample is constructed from many sources including

CRSP, Security and Exchange Commision’s EDGAR data-
base, Hoover’s online, Business and Company Gale database,
and Yahoo! Profiles using sector codes from North American
Industry Classification System (NAICS), Standard Industry
Classification (SIC), and Global Industry Classification
Standard (GICS) and name searches.

4. Similar EnvAll scores can result for a firm with high EnvStr and
high EnvCon, as for a firm with low EnvStr and low EnvCon,
though the two firms are inherently different. To avoid any
confusion, I report results for EnvAll along with separate
results for EnvStr and EnvCon throughout the article.

5. A credit rating, which is issued for a firm, is different from a
bond rating, which is issued for individual bonds. Instead of
using individual bond ratings, we use credit issuer rating, an
overall measure of financial performance of a company.

6. There is no change in our conclusions if we use log of sales to
proxy for size instead of log of market value.

7. The reported t statistics recognize unequal sample sizes and
variances.

8. To remove the effect of any omitted time-constant variable in
the regressions, I examine the results with a firm fixed effects
regression. There is no change in any of the reported coeffi-
cients or their significance.

9. The coefficient of 0.029 on the interaction term in Model 13
should be read with the average value of Rating, which is 15.75
from Exhibit 1.

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Author Biography

Manisha Singal conducts research in the areas of strategic manage-
ment, entrepreneurship, and firm ownership. She examines the ante-
cedents to corporate financial performance and corporate social
performance in the context of the hospitality and tourism industry.

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lable at ScienceDirect

Journal of Cleaner Production xxx (2014) 1e10

Contents lists avai

Journal of Cleaner Production

journal homepage: www.elsevier .com/locate/ jc lepro

Sustainability motivations and practices in small tourism enterprises
in European protected areas

Xavier Font a, Lluís Garay b,*, Steve Jones a

a Leeds Metropolitan University, Leeds LS6 3QW, United Kingdom
bUniversitat Oberta de Catalunya, Av. Tibidabo, 39, 08035 Barcelona, Spain

a r t i c l e i n f o

Article history:
Received 28 February 2013
Received in revised form
23 January 2014
Accepted 24 January 2014
Available online xxx

Keywords:
Business case
Legitimization
Social capital
Altruism
Lifestyle
Corporate social responsibility

* Corresponding author.
E-mail addresses: X.Font@leedsmet.ac.uk (X

luisgaraysbd@hotmail.com (L. Garay), s.r.jones@leedsm

0959-6526/$ e see front matter � 2014 Elsevier Ltd.
http://dx.doi.org/10.1016/j.jclepro.2014.01.071

Please cite this article in press as: Font, X., e
areas, Journal of Cleaner Production (2014),

a b s t r a c t

A survey of around 900 tourism enterprises in 57 European protected areas shows that small firms are
more involved in taking responsibility for being sustainable than previously expected, including eco-
savings related operational practices but also reporting a wide range of social and economic re-
sponsibility actions. Two-step cluster analysis was used to group the firms in three groups based on their
motivations to be sustainable. Business driven firms implement primarily eco-savings activities and are
commercially oriented. Legitimization driven firms respond to perceived stakeholder pressure and report
a broad spectrum of activities. Lifestyle and value driven firms report the greatest number of environ-
mental, social and economic activities. No profile has a higher business performance than average. The
study has implications for policy programmes promoting sustainability behaviour change based pri-
marily on a business case argument.

� 2014 Elsevier Ltd. All rights reserved.

1. Introduction

This study analyses the pro-sustainability behaviour of tourism
small and medium enterprises (SME) through different profiles of
motivation against the implementation of sustainable measures and
generic business variables. Pro-sustainability behaviour refers to
voluntarily applying practices to reconcile environmental preserva-
tion, social equity, and economic demands. These vary according to
the type of firm, ranging from well-rehearsed water and energy
saving measures, to purposefully purchasing locally or ethically
produced products, providing labour conditions above the legal re-
quirements, or promoting cultural and heritage preservation.

The motivations for pro-sustainability behaviour vary, yet the
existing literature has been primarily written to justify a business
case for large enterprises engaging in Corporate Social Re-
sponsibility (CSR). The issue is that SMEs are not “little big enter-
prises” that should adopt scaled-down versions of the techniques
and requirements of bigger enterprises to engage in sustainability
through traditional and standard CSR activities (Jenkins, 2006;
Morsing and Perrini, 2009). In comparison with large enterprises,
SMEs are both challenged and motivated by CSR in different ways
and also engagewith it differently (Morsing and Perrini, 2009). One

. Font), lgaray@uoc.edu,
et.ac.uk (S. Jones).

All rights reserved.

t al., Sustainability motivatio
http://dx.doi.org/10.1016/j.jc

could therefore speak of the difference between explicit CSR, a
systematic process with higher managerial skills often associated
with larger enterprises, and implicit CSR in SMEs embedded
through habits and the very nature of the product or service, rather
than formalised plans (Matten and Moon, 2008).

In different contexts and sectors, it has been argued that SMEs
owners/managers have a good grasp of sustainability concepts
without knowing the theory (Fassin et al., 2011). SMEs are in gen-
eral, managed by their owners, mainly oriented towards solving
day-to-day problems, establishing more informal relations and
communications with their stakeholders, and largely dependent on
internal market dynamics determined by larger enterprises
(Murillo and Lozano, 2006; Russo and Tencati, 2009). Decision-
making is often an extension of the owner-manager’s personality
and characteristics, often shaping the SMEs’ culture and enacting
values and habits in ways other than shaped by profit (Fassin et al.,
2011). SME owners have the advantage of being able to react
quickly to address sustainability issues, and the disadvantage of
lacking information both on market requirements and opportu-
nities for change (Condon, 2004). In this sense, SMEs will be less
organised to explain or be accountable for their sustainability, but
that does not mean they are disengaged.

The reasons for engaging in sustainability are usually presented
in the general literature using three frames that are often looked at
independently. Cost reduction competitiveness has been the most

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mailto:s.r.jones@leedsmet.ac.uk

www.sciencedirect.com/science/journal/09596526

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X. Font et al. / Journal of Cleaner Production xxx (2014) 1e102

referenced frame (Carroll and Shabana, 2010; Revell and Blackburn,
2007; Salzmann et al., 2005). It explains enterprises taking sus-
tainability actions that accrue a direct operational and internal
benefit and is related with the traditional resource-based inter-
pretation of the enterprise suggesting that enterprises will under-
take sustainability actions that can provide a competitive
advantage, based on cost reduction, differentiation or other eco-
nomic elements. It has a direct association with literature trying to
justify the introduction of responsibility in terms of its relationship
with financial performance and it has been especially useful to
analyse great enterprises’ behaviour.

Going beyond purely economic reasons, a second frame (Brønn
and Vidaver-Cohen, 2009; Fuller and Tian, 2006; Garay and Font,
2012; Spence et al., 2003) that has been usually used to understand
pro-sustainability motivations can be called societal legitimization,
and presents enterprises taking sustainability actions visible or
expected by others. In the traditional business case, analysing big
enterprises this has been interpreted through stakeholders’ theory
but for SMEs, this has been interpreted from social capital literature.

Finally, and considering the particular nature of SMEs owner-
ship and management, literature highlights another frame beyond
(but still including) the expectation of economic gain and associ-
ated with the values and lifestyle of their owners. This third frame
(Ateljevic and Doorne, 2000; Carlsen et al., 2008; Shaw and
Williams, 2004), that we have called lifestyle-value drivers differs
from these first two frames in explaining pro-sustainability
behaviour because of personal choices and habit and sometimes
is presented in conflict with an exclusive pursuit of economic gain.

Despite the prevalence of SMEs in tourism industry, there is
scarce evidence about the reasons for and barriers to these enter-
prises being sustainable, the measures implemented, and the
impact of these measures. As can be seen in the background section
there are some references related to tourism SMEs analysing CSR
motivations and management dynamics from a qualitative
perspective but there are few references analysing tourism SMEs
quantitative data related with CSR motivations, practices, and their
impact on other business’ variables. The authors’ main motivation
in this regard is to know what the main reasons are for SMEs to act
more sustainably, and how they compare with those of larger
tourism enterprises for whom competitive elements have tradi-
tionally dominated the literature. Given the general characterisa-
tion of SMEs, the authors think that it is important to consider
factors related to the owners’ values and habits (Thapa and Best,
2013). Finally, this study seeks to find out if these reasons to be
sustainable could generate distinct profiles in terms of the imple-
mentation of sustainability actions and/or other business variables.

The structure of the paper is as follows. First, the background
outlines sustainability drivers. Next, we explain our study methods,
including the research design, responses and data analysis, and
then we present results, including the sample characteristics, sus-
tainability practices, and reasons for acting sustainably. These re-
sults are then contextualised in the discussion where we argue the
case for three complementary explanatory models to understand
small enterprises’ pro-sustainability reasons. We finish the paper
with some conclusions, limitations, and future recommendations.

2. Background

2.1. Cost reduction competitiveness

The traditional resource-based view of enterprise suggests that
enterprises will undertake sustainability actions that can provide a
competitive advantage, because competitors cannot (or will not)
quickly imitate them (Hart, 1995). Although individual sustainability
actions cannot be classed as valuable, rare, imperfectly imitable, and

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

not substitutable (Barney, 1991). Sustainability overall, however, can
be explained this way because most enterprises competing in the
same market do not see it as a strategic opportunity for competi-
tiveness (Bonilla-Priego et al., 2011). It is possible for successful en-
terprises to be copied by othermore commercial enterprises in away
that would suggest the resource-based view of the enterprise applies
to sustainable tourism (Ateljevic and Doorne, 2000).

There clearly are “best practice” sustainable SME case studies;
beyond these, we find low eco-literacy and inward-looking moti-
vations (Tilley, 2000) fuelled by the belief that, for them, sustain-
ability is expensive and complex (Dodds and Holmes, 2011; Revell
and Blackburn, 2007; Vernon et al., 2003; Zschiegner, 2011). These
beliefs and motivations result in shallow eco-friendly behaviour,
where sustainability actions are takenwithout really disturbing the
status quo of current practices. Sustainability is not seen as part of
the enterprise’s raison d’être, and the only environmentally related
actions taken are those that lead to easily gained financial bottom
line improvements (Revell et al., 2010; Tilley, 2000). From this point
of view, cost is therefore a barrier as much as a driver for sustain-
ability change in SMEs (Tzschentke et al., 2004; Zschiegner, 2011),
and these enterprises rely especially on green taxes, incentives or
subsidies to change behaviour (Bonilla-Priego et al., 2011).

Much of the literature relating to the search for competitiveness
suggests that this is originated by the belief in the existence of a
relationship between CSR and corporate financial performance
(Carroll and Shabana, 2010). However, the same literature is
inconclusive on this relationship; finding positive, neutral and
negative associations (Griffin and Mahon, 1997; Margolis and
Walsh, 2001). This has also been criticised for an excessive bias
considering CSR only as a business case (Lee, 2008). The literature
also suggests that in this relationship there is an optimal level of
CSR activity that supports enterprise performance, and acting
beyond that current level can only be explained by reasons that are
not purely commercial (Salzmann et al., 2005).

For the tourism sector, different studies on large enterprises and
hotel chains, major transport enterprises or casinos have suggested
that environmental performance unequivocally means improved
economic performance (Inoue and Lee, 2011; Kang et al., 2010;
Rodriguez and del Mar Armas Cruz, 2007). With regard to the
search for competitiveness, few studies have considered the
distinctive features of SMEs other than to mention weaknesses,
such as lack of capital, management structures, planning, decision
making and particularly information control, financial instability
and risk exposure (Ateljevic and Doorne, 2000; Dewhurst and
Thomas, 2003). Early studies identified the introduction of basic
environmental practices for eco-savings (Kirk, 1995; Knowles et al.,
1999), and more recently, tax incentives or subsidies (Bonilla-
Priego et al., 2011). While useful, this first frame leaves much cur-
rent sustainability behaviour unexplained.

2.2. Societal legitimization

An alternative approach is to explain engagement in sustain-
ability as a search for societal legitimization in the eyes of stake-
holders. While stakeholder theory has been primarily developed
from the study of large enterprises, the concept is still valid for
small enterprises yet the methods and reasons for societal legiti-
mization will differ. SMEs do not use the term ‘Corporate Social
Responsibility’, nor do they design standardised operating pro-
cedures as a way of creating a corporate personality with a set of
shared values. SMEs are naturally driven by the owner’s values and
in this sense the theory of social capital can better explain how
SMEs engage in CSR (Perrini, 2006). Social capital resides in the
value of the individual or organisation’s network. It is defined as
“the nature of power and meaning that exists as structures and

ns and practices in small tourism enterprises in European protected
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X. Font et al. / Journal of Cleaner Production xxx (2014) 1e10 3

mechanisms guiding everyday social practice” (Fuller and Tian,
2006). This includes intangible assets that compose the guiding
principles of the long-term performance of SMEs: reputation, trust,
legitimacy and consensus (Russo and Tencati, 2009). This is often
influenced through behaving responsibly towards partners, cus-
tomers, and society in general.

Sustainability is related in this context with responsibility and is
defined by the owner’s values. These might include being reliable,
paying on time or collaborating with competitors. As such, industry
associations or destination-wide efforts to introduce sustainability
values may encourage SMEs to realise the salience of sustainability
activities as part of this social capital (Fassin et al., 2011). SME
sustainability champions are more likely to explain their reasons
for engagement for moral and ethical arguments together with
pride and the sense of ‘doing the right thing’. This can be linked to
the development of social capital, with most benefits being un-
quantifiable and most enterprises not wanting to look at sustain-
ability in economic terms, even when such benefits were also
realised (Jenkins, 2006; Tzschentke et al., 2004, 2008).

Social capital also helps explain some of the responses tomarket
demand for sustainability. This is part of gaining an enhanced im-
age as a reliable, trustworthy enterprise that provides quality
products where sustainability information has an impact on pur-
chasing behaviour (Hellund, 2011; Miller et al., 2010). The
communication of ethical actions or awards gained helps create
symbolic capital that can create competitive advantage through
protecting reputation. This is despite SMEs generally feeling un-
comfortable with “boasting”; something seen as a “big business”
thing to do (Ateljevic and Doorne, 2000; Jenkins, 2006). Typically,
communications (rather than marketing) are used to promote the
CSR agenda, as opposed to the aim of gaining some commercial
advantage from their own CSR actions.

The relationship between sustainability and enterprise success
through societal legitimization is also complex. On one hand, the
emphasis continues to be in explaining the potential competitive
advantage of applying normative theories of social capital to SMEs
(Fuller and Tian, 2006) somehow to disprove the theory that
business ethics are a “luxury good” (Spence et al., 2003). On the
other hand, as here, sustainability is explained through the rela-
tionship between business and society, as the expectation of being
socially responsible increases with the increased perception of
success of the enterprise, not just business size (Matten and Crane,
2005). This suggests that more financially successful enterprises
will implement CSR actions to legitimize their status. Furthermore,
proximity to customers and other stakeholders (usually the result
of being a small enterprise) determines an enterprise’s perception
of having to behave ethically (Fuller and Tian, 2006).

2.3. Lifestyle-value drivers

The last explanatory frame suggests that much of the pro-
sustainability behaviour observed is best explained through life-
style choices and habits informed by values rather than conscious
actions. The concept of lifestyle entrepreneurship has been put
forward when speaking about sustainability in tourism SMEs
(Lordkipanidze et al., 2005; Shaw and Williams, 2004). This is un-
derstood as maintaining a certain quality of life sustained by in-
come generating opportunities conditioned by lifestyle and value
choices. Their multiple goals can be explained as “utility max-
imisation” (as opposed to profit maximisation) based on a trade-off
between income/growth and quality of life goals (Dewhurst and
Horobin, 1998). ‘Success’ for these owner/managers is grounded
in their own circumstances (Carlsen et al., 2008) which at times
(but not always) means managing an enterprise based on

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

sustainability values (Ateljevic and Doorne, 2000). This latter group
would form the basis of a lifestyle-value driven cluster.

Whilst non-altruistic lifestyle enterprises and altruistic yet
commercially driven enterprises can be found, there is some merit
in trying to explain the interface between both. Lifestyle, values,
and world-views are the centre of the decisional factors for going
green in tourism SMEs (Sampaio et al., 2012; Tzschentke et al.,
2008). This is not a decision taken at a single point in time, as
could be in larger enterprises, but can be seen as a journey,
reflecting a series of personal choices. While there is intent behind
these lifestyle choices, what makes themmore effective is the large
element of habit and routine (as opposed to a conscious managerial
structure) that makes them part of the DNA of the enterprise
(Dahlstrand and Biel, 1997).

Protected areas in particular attract entrepreneurs who seek
lifestyles based on “alternative values” to those of profit max-
imisation. The literature reports examples of entrepreneurs
rejecting economic growth for lifestyle values, be it sustainability
(Ateljevic and Doorne, 2000) or family and community (Getz and
Carlsen, 2005). The designation of these landscapes as protected
areas often means these values include sustainability. Sampaio
et al. (2012) suggest that some CSR practices related to ‘experi-
encing nature’were not perceived as providing any economic gains
or competitive advantage but they contributed to the non-
economic goals pursued for ‘lifestyle’ reasons. They found owners
engaging in sustainability practices without economic gains yet
choosing to neglect cost-saving opportunities, because of their way
of viewing and valuing the world. The case in point here is not that
owners purposefully engage with activities that do not challenge
their lifestyles, but that they naturally behave in a sustainable
manner through their lifestyle choices (Matten and Moon, 2008).

There are different reasons to expect lower profits from this
group. There is evidence of SMEs underestimating the skills
necessary to run a tourism enterprise and so influencing the
practices they could implement (Zschiegner, 2011). This, in turn,
lends itself to implementing those actions that best fit their values
and current lifestyle and that they feel most comfortable with
(Sampaio et al., 2012). Personal ethics are a key determinant of their
lifestyle behaviour. This is equally important to providing a quality
service and often more important than profit maximisation
(Ateljevic and Doorne, 2000; Shaw and Williams, 2004). Interest-
ingly this often leads to higher customer satisfaction and loyalty. In
any event, a small segment of lifestyle altruists will be true sus-
tainable entrepreneurs that stand out for both their sustainability
and business skills. This approach helps to look beyond the di-
chotomy that it is a case of either profit or lifestyle.

3. Study methods

3.1. Research design

The empirical research was conducted with European protected
area members of the network EUROPARC (Europarc, 2012). First, a
questionnaire was developed to analyse the relationship between
sustainability practices, reasons for implementing them, business
performance, and characteristics. It was piloted in 2010 in Cata-
lonia, Spain, where a population of 3838 accommodation enter-
prises was approached reaching 394 responses (12% response rate)
after two reminders (Garay and Font, 2012). Lessons learned from
the pilot included randomising the order of some possible answers,
adding new questions related to the establishment’s main business,
and differentiating between full-time and part-time employees.
The results gave us the confidence to improve and extend the study
across Europe, including additional types of business but keeping
being based in protected areas as a common factor. An improved

ns and practices in small tourism enterprises in European protected
lepro.2014.01.071

Table 2
CSR practices.

Respondents %

Environmental
Use environmentally friendly products 651 75.3
Encourage customers to be environmentally friendly
in your property

586 67.8

Energy and water saving activities 562 65.0
Waste recycling 544 63.0
Encourage customers be environmentally friendly in
nature

543 62.8

Renewable energy sources (solar, wind, biomass.) 379 43.9
Choose environmentally friendly suppliers 376 43.5

Social
Support local community development and heritage
conservation

551 69.8

Promote gender equality in your employment practices 366 46.4
Actively encourage respect for the culture and language
of the area

342 43.3

Facilities are adapted for disabled people 321 40.7
Collaborate with social and charity projects 281 35.6
Encourage customers to contribute to social and charity
initiatives

273 34.6

Seek to balance work and family life for your staff 271 34.3
Choose suppliers that demonstrate their social
responsibility

239 30.3

Encourage people of all abilities to apply for jobs 178 22.6
Economic
Encourage customers to consume/use local products 660 78.9
Choose local staff wherever possible 460 55.0
Encourage customers to contribute to charitable
activities

371 44.3

Staff salaries are above industry average 355 42.4
Choose suppliers that contribute to local development 346 41.3

Source: own elaboration

X. Font et al. / Journal of Cleaner Production xxx (2014) 1e104

version of the pilot questionnaire was developed in 2011 during a
workshop with eight protected area representatives from across
Europe.

The 2011 questionnaire first asked SMEs owners/managers
questions about themselves: gender, age (less than 40, 41 to 60, 61
and over), qualifications (from primary to university postgraduate),
and role (owner, manager, supervisor). The next section asked
about their business characteristics: name, address, postcode, years
since business creation (5 and under, 6 to 10, 11 to 20, over 20),
affiliation to some brand or chain, whether they are a family en-
terprises, business type (hotel, self-catering holiday apartment,
villa, cottage or flat, guesthouse or bed and breakfast, mountain
hut, excursions organiser, campsite, restaurant, activity provider,
other), category (in stars), number of employees (5 or less, 6 to 10,
11 to 20, over 20), capacity (people per day), average occupancy (as
a percentage), average expenditure (euros), business performance
(current financial health and change in the last two years), and
customer data such as average length of stay and mode of travel
(with an organised trip, with the family, as a couple, with friends,
alone).

Respondents were then asked to state which environmental,
social, and economic measures they undertake (see Table 2),
whether they perceived that their customers value these efforts
and how that information is gathered, how sustainability is
communicated to customers (in the parks, on internet, in leaflets, in
welcome brochures, through documentation in bedrooms and
public areas, telling them during their stay, they can see it for
themselves, others) and the impact that sustainability has on their
business. Finally, they were prompted to state the three top reasons
to act sustainably among a group of thirteen possibilities extracted
from and related with the three pro-sustainability frames
mentioned in the literature (see Table 3), the barriers to imple-
menting sustainability measures (lack of time, lack of money, lack
of motivation, don’t know what to do, the customers haven’t asked
for it, nobody will value it), and the kind of tasks they preferred to
work with (that require learning something new, that they think
they can succeed at, that they can get a subsidy or grant for) Table 1.

Staff from 102 EUROPARC protected areas opted to distribute the
survey in their destinations in summer 2011. The protected areas
had the survey translated, and our team created separate mirror
URL portals for every single park using their logo and park name to
increase ownership and improve response rates. The survey team
sent instructions to staff in each park on how to explain the benefits
of participating in the survey, which they would distribute as a URL

Table 1
Sample characteristics.

About the respondents
Businesses managed by their owners 78%
Female respondents 50%
Owners-managers aged 41e60 64%
Owners-managers with secondary/university education 44/35%
About the businesses
Family businesses 78%
Operating less than ten years ago 49%
5 or fewer full time employees 80%
Poor/average/good financial health 14/61/24%
Financial situation has improved/stayed the same/worsened

in the 2 last years
24/41/35%

About their customers
Customers’ average length of stay 2e3/4e7 days 46/40%
Daily spend per customer in high/low season 50/38 euros
Customers travelling with the family/couple/friends 45/29/13%
Customers choosing the business by competitive prices/

quality/location
44/82/76%

How customers to find the business: recommendations/
internet search/repeat clients

77/75/65%

Source: own elaboration

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

link in an email amongst tourism enterprises in and around their
park. All enterprises (and not simply those known for their sus-
tainability efforts) were encouraged to participate, although park
staff recognised it was easier to get commitment from more active
enterprises.

The sampling methods varied; parks that saw a benefit in
gathering this data printed the survey and distributed it in meet-
ings, while others did little more than forwarding an email to a
mailing list. During the collection of responses, parks received an
updated list every two weeks of their enterprises that had
responded, as an encouragement to engage further enterprises. As
an incentive, parks knew that after project closure they would be
sent a comparative summary of their own park results against the
national and European averages, so they could use this for internal
benchmarking of their park-level efforts to promote sustainability.

Table 3
Reasons for being sustainable in tourism SMEs.

Respondents %

To protect the environment 744 87.0
It’s a personal, lifestyle choice 421 49.2
To improve our society 401 46.9
For cost savings 249 29.1
For marketing and image benefits 162 18.9
In response to customer demand 82 9.6
To meet legal requirements 69 8.1
To gain new information, advice and networks 59 6.9
To improve business management data 51 6.0
Because it was easy to implement 47 5.5
To obtain subsidies or grants 38 4.4
To meet the requirements of our chain/group 26 3.0
To meet the requirements of a tour operator 5 0.6

Source: Own elaboration

ns and practices in small tourism enterprises in European protected
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X. Font et al. / Journal of Cleaner Production xxx (2014) 1e10 5

3.2. Responses

A total of 910 responses were received. As many parks wanting
to participate had done their own translation, a higher participation
rate was assumed than finally achieved. In practice, 59 parks
participated and 70% of all responses were facilitated by 17 parks.
Interviews with the park staff reveal that invitations to participate
were not always sent to all enterprises in the region. Often they
were sent only to those that have a working relationship with the
park, for example by participating in their sustainability forums.
Most parks did not have data on the population of tourism enter-
prises nor methods to contact them. This means that no compari-
sons were possible to assess response rates, sampling errors or
confidence levels. In addition, we expected an inevitable self-
selection bias from the value-action gap typical in online and
ethical surveys (Bonsall, 2009; Ramus and Steger, 2000) and social
desirability issues in certain questions (i.e. financial performance).

Having said this, three measures were used to ensure validity.
First, non-response bias was assessed by comparing early re-
spondents with late respondents (Armstrong and Overton, 1977).
The dataset was divided into thirds according to the order of the
surveys completed. Pearson’s Chi Square tests and Student’s t tests
between the first and last thirds indicated no statistically signifi-
cant differences in the mean responses for all the variables
measured. Therefore, non-response bias is presumed not to be a
problem in this dataset.

Second, because it was not feasible to ask for more than one
respondent in each of the SMEs, we checked for common method
variance (Podsakoff and Organ, 1986) using Harman’s single factor
test. Twenty factors were extracted, with the first factor accounting
only for 7% of the total variance. As such, the observed relationships
among constructs were not mainly accounted for by the systematic
variance associated with themeasurement technique. It is common
that by increasing the number of survey items, more factors are
found, and this does not invalidate the results (Podsakoff et al.,
2003). It should be added that if the purpose of the factor anal-
ysis is descriptive it could be problematic to use dichotomous
variables, but it is valid to use it for checking relational tendencies
(how variables tend to cluster) (Kim and Mueller, 1994), as in the
case of this Harman’s test.

Finally, on-site interviews with enterprises were used to test the
consistency between the narratives describing business practices
and social responsibility (Fuller and Tian, 2006; Randall and
Fernandes, 1991). This demonstrated some aspirational responses
but a general consistency between the survey and business
practices.

3.3. Data analysis

Frequencies and cross-tabulations of significant relationships
mapped the data, before using Cluster Analysis to group re-
spondents based on the motivations to introduce sustainability
measures. We searched for significant statistical differences among
possible clusters in CSR motivations, testing relationships with CSR
measures and business characteristics.

Clustering is a powerful tool when used in combination with
other methods to test sophisticated theoretical models (Ketchen
and Shook, 1996; Punj and Stewart, 1983). We use the original
sample (without ordering variables, as it produces slightly different
results) to test clusters based on all CSR motivations and then
compare the clusters against other variables to better define the
profiles of SMEs. TwoStep cluster analysis was the best option
(Bacher et al., 2004) to search for clusters from dichotomous vari-
ables (with binary yes/no responses). TwoStep cluster analysis
solves some of the problems of the widely used clustering

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

algorithms, k-means clustering and agglomerative hierarchical
techniques (Bacher, 2000) and uses the hierarchical clustering
method in the second step to assess multiple cluster solutions,
giving the possibility of automatically determine the optimal
number of clusters for the input data.

As our objective was to identify patterns related to the different
pro-sustainability profiles previously established in published
literature, we began our analysis introducing all the survey’s pro-
sustainability reasons and testing the resulting models. Early tests
resulted in models with limited validity but they were very useful
to know which variables might be less able to generate clusters
(predictors with less importance). The model with the best
explanatory capacity and statistical fit gave us three different
clusters based on three pro-sustainability motivations: “to protect
the environment”, “it’s for personal, lifestyle motivations” and “for
cost savings”, that were among the four most commonly reported
reasons (only excluding “to protect society”). The statistical fit was
excellent (0.7 in the silhouette measure of cohesion and separation)
(Kaufman and Rousseeuw, 1990), the cluster sizes were optimal
(the size of the smallest cluster was 27.1% of the sample and the
largest was 37.5%), and all the predictors had enough relative
importance in conforming the clusters. Table 4 shows how each
cluster can be effectively related with previous literature findings.

A group of 302 enterprises all of which were responding to the
lifestyle and environment protection reason but not interested in
cost savings formed the first cluster, that we called “Lifestyle”. It is
interesting to add that they constitute 72% of all lifestyle responses,
41% of environment responses, and a half of the sample’s enter-
prises not interested in cost savings.

A second cluster, that we called “Business”, was formed by 321
enterprises most of which were especially interested in costs (77%
of them) and also in environment but not in lifestyle. Considering
the whole sample, in this cluster we found all the enterprises
responding to the cost savings reason (249) and also all those that
were not interested in environment (111 out of 321 in this cluster).

Finally, in a third group, that we called “Legitimization”, 232
enterprises who were not interested in costs and lifestyle but
focused on environment protection in a general sense and a range
of legitimization motivations. A crosstab analysis shows relation-
ships with other pro-sustainability reasons. These were especially
related in this third group, whose companies were relatively more
motivated by variables related with image or stakeholder legiti-
mization such as “for marketing and image”, “to gain new infor-
mation, advice and networks”, “to meet legal requirements”, “to
meet the requirements of our chain/group” or “in response to
customer demand”.

We then searched for differences between clusters using cross-
tabulations and chi-square statistics for qualitative and categorical
variables, andmeans analysis with an analysis of variance “ANOVA”
statistic for quantitative variables, which are presented in the re-
sults section.

4. Study results

4.1. Sample characteristics

Responses portray a profile of family enterprises with fewer
than five staff, not affiliated to a brand, run bymiddle-aged owners,
equally male and female, and with average education. Most en-
terprises were classed as micro or small enterprises, with fewer
than five stars andwere relatively recently established. The types of
enterprises vary, the most typical being apartments/self-catering
accommodation, followed by hotels, guesthouses, restaurants, ac-
tivity providers and campsites. This profile (Table 1) does not vary
fundamentally from previous studies (Getz and Carlsen, 2000).

ns and practices in small tourism enterprises in European protected
lepro.2014.01.071

Table 4
Sustainability motivation clusters and main predictors.

n For cost savings It’s a personal, lifestyle choice To protect the environment

Yes No Yes No Yes No

Lifestyle 302 0 0.0% 302 49.8% 302 71.7% 0 0.0% 302 40.6% 0 0.0%
Business 321 249 100% 72 11.9% 119 28.3% 202 46.5% 210 28.2% 111 100%
Legitimization 232 0 0.0% 232 38.3% 0 0.0% 232 53.5% 232 31.2% 0 0.0%

855 249 100% 606 100% 421 100% 434 100% 744 100% 111 100%

Number and percentage of clusters’ enterprises responding each motivation.
Source: own elaboration.

X. Font et al. / Journal of Cleaner Production xxx (2014) 1e106

A large proportion of respondents say their establishment’s
financial health is about average, but also a quarter of them said it is
good. Over the past two years, three quarters of the sample said
that their financial situation has not changed or has improved, but
the number of establishments where it has worsened is also
considerable. A large number of these enterprises have average
occupancy and the difference of the daily expenditure per customer
between high and low season is typical. Low occupancy is, in part,
due to weekend bookings that leave weekdays unoccupied, with
four to seven day bookings also being important. Families and
couples represent the typical party compositions. Respondents
claim that quality and location are the key reasons why their clients
choose them, and not price (multiple choices allowed). Recom-
mendations from past clients and the information on the enter-
prise’s website are believed to be very important, but not social
media, and even less advertising, and they rely heavily on repeat
clients.

4.2. Sustainability practices

These enterprises report a high number of sustainability prac-
tices, as seen in Table 2. The environmental variables show a high
percentage of companies claiming to use environmentally friendly
products, encouraging customers to be to be environmentally
friendly in both the property and in nature or introducing eco-
savings and waste recycling. Notable social practices include
claims of supporting local community development and heritage
conservation, promoting gender equality, encouraging respect for
culture and language, or even introducing adapted facilities for
disabled people. Finally, these SMEs report economic practices such
as encouraging customers to consume local products or choosing
local staff wherever possible.

There is a positive relationship between the environmental,
social, and economic measures and the enterprises’ financial situ-
ation evolution in the last two years. There are also different indi-
vidual positive relationships (with measures such as energy and
water savings, waste recycling, collaborating with social and char-
ity projects, encouraging people of all abilities to apply for jobs,
choosing local staff, encouraging customers to participate in social
projects, and to consume local products and choose suppliers that
contribute to local development). There are also positive individual
relationships between different measures and the enterprises’
current financial situation. For example, enterprises with good
financial health (69.2%) were more likely (sig .03) to implement
energy and water savings than those with average (66.3%) or poor
health (55.4%). Similar differences were found for waste recycling
or choosing local staff. It was found however, that sustainability
does not contribute to improved results in the ratio of low season to
high season prices, or affect customers’ average length of stay, so
improvements can only result from higher occupancy rates.

It is worth noting that there is no significant difference in the
total number of sustainability actions taken by age of the respon-
dent. However, analysing different cross-tabs between the age

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

variable and the CSR practices we found that older respondents
report the introduction of actions that lead to greater income or
savings (in particular environmental savings), while younger re-
spondents are more likely to claim socio-economic actions, such as
staff salaries above the industry average and promoting gender
equality. For example, 65.3% of respondents are introducing eco-
savings, against 77.3% of 61 and overs (sig .00). For staff salaries,
42.3% of respondents claim to pay salaries above industry average,
while 57.4% respondents younger than 40 years old claim to do so
(sig .00). Finally, 55.1% (vs 46% average) of the younger respondents
claim to promote gender equality. However, 46% of older re-
spondents encourage customers to contribute to social and charity
projects, against a 35% average.

Better-qualified respondents undertake more sustainability ac-
tions. Belonging to a brand or chain is positively (and significantly)
related to undertaking different sustainability practices. Non-
family owned SMEs report being more active; only recycling is
more typical in family enterprises (66.8% against an average 63.2%,
sig .00). Size impacts on either the number of actions or the
awareness of undertaking them, as larger enterprises report
implementing more actions than smaller ones. The star category is
also a relevant variable, with four or five star properties reporting
the greatest number of actions. As expected, enterprises holding
sustainability certificates also undertake more sustainability
practices.

The reported barriers are primarily lack of money (70%), time
(45%), not knowing what to do (12%), customers not asking for it
(8%), lack of motivation (6%), and believing that nobody will value
it (3%). Respondents overwhelmingly prefer to work with tasks
they believe they can succeed at before they start (64%), followed
by tasks where they need to learn something new or require
innovation (56%), and finally tasks for which subsidies are avail-
able (40%).

4.3. Profiling reasons for acting sustainably

Respondents were asked to select their three main reasons for
acting sustainably. Protection of the environment (87%) and im-
provements in society (47%) speak of altruistic reasons, whereas
lifestyle (49%) reasons speak of personal choices made by the
owner/manager that reflect their values. “Business case” reasons
play a lower but not insignificant role, as cost savings (29%), image
and marketing benefits (19%), customer demand (10%), and
meeting legal requirements (8%). Reasons can be seen in Table 3.

As commented in section 3.3, TwoStep cluster analysis provided
three respondent profiles out of the reasons for undertaking sus-
tainability actions. Table 4 shows the size of each cluster and their
distribution against the three reasons used as predictors to deter-
mine the model. Here we can see the number of enterprises in each
group answering yes or no to each of these reasons and the per-
centage within the valid responses of the total sample (855). We
already mentioned that this cluster result had a good explanatory
capacity because it included the three different profiles related

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X. Font et al. / Journal of Cleaner Production xxx (2014) 1e10 7

with the threemost referenced pro-sustainability frames presented
in literature and was statistically consistent.

The next step was then to know if these three motivation-based
clusters could show some differences in CSR implementation
(Table 5) and business characteristics, using cross tabulations. This
produced some interesting characteristics for each profile dis-
cussed in turn. The first cluster, with 302 respondents (35.3% of the
sample), has been labelled as “Lifestyle”. As commented in the
literature, this group is motivated by environment protection, so-
cietal improvement, and lifestyle but is not interested in costs,
marketing and legitimization reasons. Importantly, as shown in
Table 5, companies in this group implement more responsibility
measures, excelling in virtually all environmental and social mea-
sures. This is the cluster that introduces more actions that generate
income or savings, but also those that increase operating costs.

The Lifestyle cluster groups predominantly middle-aged fe-
males and has a higher proportion of university postgraduates,
owners, and family micro-enterprises. We have found also signifi-
cant statistical differences in the proportion of hotels (13% versus
the 21% of the sample) and restaurants (10% versus 14% of the
sample) being predominantly made up of self-catering accommo-
dation, guesthouses, activity provides and other businesses types. It
also has a higher proportion of 4 and 5 stars establishments. Re-
spondents state that their customers do not choose them for their
competitive prices (40% versus 45% of the sample), but for their
quality. Owners communicate responsibility actions by public
advertising and telling customers personally (in higher proportions
than the sample average). Finally, there are a higher proportion of
respondents in Spain, England, and Germany.

We labelled the second cluster “Business”, because companies
identify their CSR motivations on the traditional “business case”.
These are enterprises with economic pro-sustainability motiva-
tions, especially cost-savings but also obtaining subsidies or grants.
Most respondents (65%) are also motivated by environment pro-
tection, logically as they are located in protected areas but they are
not interested in social improvement, image, or legitimization.
Table 5 shows that this cluster stands significantly above the

Table 5
CSR practices-clusters and overall results.

c2

Environmental
Use environmentally friendly products 14.22
Encourage customers to be environmentally friendly in property 5.45
Energy and water saving activities 26.38
Waste recycling 9.06
Encourage customers be environmentally friendly in nature 21.35
Renewable energy sources (solar, wind, biomass.) 10.69
Choose environmentally friendly suppliers 22.57

Social
Support local community development and heritage conservation 11.36
Promote gender equality in your employment practices 0.08
Actively encourage respect for the culture and language of the area 0.29
Facilities are adapted for disabled people 7.20
Collaborate with social and charity projects 9.62
Encourage customers to contribute to social and charity initiatives 10.57
Seek to balance work and family life for your staff 9.74
Choose suppliers that demonstrate their social responsibility 13.14
Encourage people of all abilities to apply for jobs 1.39

Economic
Encourage customers to consume/use local products 2.61
Choose local staff wherever possible 1.39
Encourage customers to contribute to charitable activities 4.34
Staff salaries are above industry average 2.40
Choose suppliers that contribute to local development 7.81

Note: In Lifestyle, Business and Legitimization columns is the percentage of respondents
clusters. In all cases 0 cells (.0%) have expected count less than 5. c2 ¼ Chi-square value
Source: own elaboration.

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

sample’s mean in the implementation of two measures. One of
them is closely related with its cost-savings objective: the intro-
duction of renewable energy sources, but curiously the second
seems a more “lifestyle” measure: seek to balance work and family
life for their staff. The number of actions implemented by enter-
prises in this cluster is closer to the average.

This “Business” cluster is the largest sample’s group, with 321
companies and is composed equally by middle-aged men and
women. This is the group with a higher proportion of respondents
with secondary education and a large proportion of family enter-
prises (although similar to the previous group). It is also composed
mostly of guesthouses, bed and breakfasts, restaurants, and other
types of accommodation of similar category/star classification as
the whole sample. These enterprises are more likely to claim that
their customers choose their product as a result of offering
competitive prices. Overall, this is a group whose respondents
belong to different European nations, but disproportionately higher
from France and Latvia.

Finally, the third cluster, with 25.5% of the sample, has been
labelled as “Legitimization”. Enterprises in this group are motivated
by a range of legitimization or “image” motivations. These include:
environment protection (100%), improve society (55% vs a sample
average of 47%), marketing and image (34% vs 19%), to gain advice
and networks (10% vs 7%), to improve business management data
(10% vs 6%), to meet legal requirements (13% vs 8%), to meet the
requirements of the chain/group (7% vs 3%), and in response to
customer demand (13% vs 9%). Besides this stakeholder focus, they
are also distinct by not having lifestyle cost motivations. Table 5
shows that enterprises in this group implement fewer re-
sponsibility measures, standing out only for a greater propensity to
introduce facilities that are adapted for disabled people.

The “legitimization” cluster is the smallest with 232 enterprises.
We find a higher proportion of men and respondents under 40
years. Surprisingly it has both the greatest number of individuals
with only primary education and conversely university graduates.
In this cluster, we also find the most managers and supervisors but
fewer family enterprises, although owners remain the majority

p Lifestyle Business Legitimization

7 0.001 83 75 70
3 0.065 74 66 66
7 0.000 72 70 52
7 0.011 68 64 55
9 0.000 74 56 61
3 0.005 47 49 36
1 0.000 55 40 36

7 0.003 76 63 71
5 0.959 46 46 48
5 0.863 44 44 42
2 0.027 34 44 45
7 0.008 43 35 29
8 0.005 42 31 31
6 0.008 36 39 26
4 0.001 39 26 26
1 0.499 22 25 21

4 0.271 82 80 76
7 0.497 52 57 55
8 0.114 49 40 45
9 0.300 39 42 46
9 0.020 47 42 35

in a profile selecting that response. Bold cells show significant differences between
, p ¼ significance.

ns and practices in small tourism enterprises in European protected
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X. Font et al. / Journal of Cleaner Production xxx (2014) 1e108

(70% vs 78% sample average). Proportionally this group has more
hotels and 3 star establishments. They have average scores on
reasons for customers to choose them (price and quality primarily)
and in how they communicate responsibility implementation (we
would have expected this to be higher due to their legitimization
focus). Respondents are more likely to be from Spain and Italy, but
less likely from England and Germany.

It is worth mentioning there are no significant differences be-
tween the three groups for some variables. These include: age of
the establishment, membership of a brand or chain, number of
part-time employees, occupancy levels, differences between high
and low season prices, or market channels. This list also includes
variables such as how the enterprise values their financial situation
(now and over the last two years), how customers may value the
implementation of sustainability measures, how sustainability
measures are communicated to customers, being sustainability
certified, or the perceived barriers to implementing measures.
Table 5 also shows some sustainability practices without significant
differences between the three clusters. These are: encouraging
customers to be environmentally friendly in your property (a
practice likely to appeal to all profiles for different reasons),
encouraging respect for the culture and language of the area,
encouraging customers to contribute to social initiatives, work-
related social practices (including promoting gender equality and
encouraging people of all abilities to apply for jobs), and essentially
all economic practices (except for choosing suppliers that
contribute to local development, where the lifestyle cluster
highlights).

5. Discussion

This study confirms the literature in showing that tourism SMEs’
sustainability reasons and practices are not homogeneous. The
types of actions these enterprises engage in and the relationships
with their business characteristics have been identified in relation
to economic factors and with altruistic and personal motivations.
This provides a more complete picture of how and why small
tourism enterprises take responsibility for being sustainable. This is
the first survey of this size to measuremotivations to be sustainable
with three complementary profiles around the issues of expected
benefits, notions of wanting to give something back, and person-
ality or lifestyle choices (Dewhurst and Thomas, 2003; Spence et al.,
2003).

In our analysis, we find a group called “Lifestyle” and in this
study’s results, habit and lifestyle explain a large part of the sus-
tainability behaviour. Results show they report taking the most
sustainability activities and do it implicitly as part of their routine.
For this group, sustainability does not have a direct relationship
with financial performance, but is related to satisfaction with this
performance, corroborating the multiple goals seen in lifestyle
enterprises. The results are in line with the explanation from
Ateljevic and Doorne (2000), who described enterprises fitting in
this profile as the most confident in their quality, being averse to
sustainability communications and marketing in commercial
terms, and showing a general dislike to marketing. Individual bar-
riers to being part of this cluster include the relative importance of
sustainability values in the entrepreneur’s overall value system, as
well as generic practical barriers of access to resources, time,
knowledge, encouragement, facilities and so on (Blake, 1999).

The cost-reductionmotivation of achieving competitive prices is
explained by the resource-based theory of the enterprise; expect-
ing enterprises to be rational profit-seekers. The “business case”
often promoted by policy makers resonates with the 35% of the
respondents falling in this profile, that we called “Business” iden-
tified as “Unconvinced Minor Participants” (Dewhurst and Thomas,

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

2003) at the early stages of implementing actions for increased
business efficiency reasons (Salzmann et al., 2005). The perception
of part of the literature that environmental practices will not pro-
vide substantial savings that impact on the bottom-line (and so not
justify the effort required) (Vernon et al., 2003) cannot therefore be
justified in its entirety. It was expected that the size of investment
in the enterprise would determine how commercial the business
motivations are and the level of formality of their sustainability
activities.

Finally, the “Legitimization” cluster use sustainability actions to
influence stakeholder perceptions as away of gaining social capital.
This is an outward-oriented group, especially interested in
improving their image by complying with social norms. Our results
are consistent with the literature (Brønn and Vidaver-Cohen, 2009;
Van Staden and Hooks, 2007) finding that enterprises motivated by
legitimacy reasons undertake fewer and vaguer actions. The liter-
ature would expect that successful enterprises would perceive a
greater pressure for legitimization; for example older, more
established or financially successful enterprises (Fuller and Tian,
2006), while the primary data suggests that it is the larger enter-
prises that feel that pressure, but not necessarily belonging to a
brand or chain.

The data shows that enterprises undertaking more sustainabil-
ity actions were more likely to perceive financial improvements in
the last two years. Many sustainability measures were positively
correlated with both their perception of their financial perfor-
mance at present and changes in recent years. Although the sus-
tainable entrepreneur (Ateljevic and Doorne, 2000) does not
appear as a cluster in its own right, all three profiles share some of
their characteristics.

The findings show how tourism SMEs can have a commercial
motivation but define themselves in other ways (Thomas and
Thomas, 2006) which further accentuates the difficulty of devel-
oping clusters with financial performance as a critical variable.
Sustainability actions investigated have not shown a direct rela-
tionship with business performance variables. This paper does not
question that sustainable entrepreneurs exist, for they can be seen
winning industry awards, collecting sustainability certifications,
highlighted in the academic literature, and are used to set gov-
ernment policies. However, there may be issues profiling them by
their reasons for engaging in sustainability, whether they are suf-
ficiently different to other respondents, and how representative
they are of the total number of individuals engaging in sustain-
ability actions.

Finally, it is worth reiterating that ethics and sustainability
research is a value-laden topic. It is fully expected that some of
these pro-sustainability behaviours are the result of over-reporting
to create a positive impression, however it is item desirability that
will play a stronger influence in self-reporting socially desirable
behaviour (Randall and Fernandes, 1991). Perceived item desir-
ability causes social desirability bias in ethical research, and this
varies across cultures as what each culture values is different
(Randall et al., 1993). This analysis did not attempt to identify if
regional variations for responses were due to external factors (lack
of infrastructure), economic factors (extremely short term pay-
backs), or socio-cultural norms (resource-poor or highly populated
countries will be more environmentally conscious) (Kollmuss and
Agyeman, 2002). For this reason, little time was spent looking at
geographical differences.

6. Conclusions

This paper contributes to the understanding of the reasons,
practices, and impacts of sustainability management in tourism
SMEs. We have seen that the main motivations are related with

ns and practices in small tourism enterprises in European protected
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X. Font et al. / Journal of Cleaner Production xxx (2014) 1e10 9

economic and financial goals but especially with the owner’s life-
style and legitimization among society. The reasons differ in great
measure due to the importance that the owner’s values have in
tourism SMEs (as in other sectors). The study reports that SMEs can
improve their pro-sustainability behaviour with both fairly stan-
dard but also advanced and organisational CSR measures. Finally,
we have seen that most of these measures have a positive and
significant relationship with some economic performance-related
variables, such as the owner’s satisfaction with financial results
and expectations with financial evolution.

The literature on CSR that uses quantitative data primarily refers
to large enterprises, in tourism these are hotel chains and tour
operators. SME studies usually use qualitative data. Most studies
have examined one explanatory framework (e.g. cost, legitimiza-
tion, and lifestyle) at a time, only partly explaining a segment of the
industry. The contribution of this work is significant because it
surveys a large number of tourism SMEs to make a quantitative
analysis of their most reported pro-sustainability reasons (and not
only some of them) and links them to the implementation of CSR
practices.

Our results show that enterprises motivated by business moti-
vations undertake some operational internal actions that lead to
operational savings but are also introducing some advanced mea-
sures. Those motivated by legitimization undertake externally
different measures, highlighting facing actions, seeking marketing
and image benefits from being seen to respond to society’s de-
mands. It is those enterprises that are driven by lifestyle, values,
and habits that undertake most sustainability actions. The enter-
prises taking more sustainability actions are also more satisfied
with their economic performance even if they do not necessarily
perform better than average.

The data has implications for how we understand small service
sector enterprises. Previous studies have focused on using large
enterprises’ language with an emphasis on systems and policies,
but also focusing in eco-savings (Curkovic et al., 2000; López-
Gamero et al., 2009; Molina-Azorín et al., 2009; Pereira-Moliner
et al., 2012) in a quest to identify how corporate social re-
sponsibility improves business performance.

This study shows that broadening the number of sustainability
measures provides a much richer picture. It also shows that
assuming a profit maximisation view of the world is unhelpful to
understand small enterprises. Sustainability perfectly fits with
lifestyle, habits, and routines for most of SMEs and this is positively
correlated with improving performance. However, small enter-
prises are shy to communicate their sustainability messages and
make limited use of their sustainability actions to attract cus-
tomers. A more nuanced analysis of how small enterprises engage
with sustainability is therefore needed. The results also have im-
plications for policy makers, as a stubborn emphasis on “the busi-
ness case” for engaging enterprises to engage in sustainability may
be misplaced. Instead, having a more thorough understanding for
how the manifold reasons for acting relate to the actions under-
taken and the enterprise’s characteristics would provide a better
platform to encourage behaviour change. Instead of one size fits all
projects, policy makers can then segment the market of SMEs ac-
cording to their motivations and suggest different reasons for
engaging that match their values and preferred learning styles.

This study has a number of limitations. First, results are appli-
cable only to enterprises based on protected areas. Second, we rely
on self-reported answers primarily from owner/managers that
would benefit from a more detailed in-situ study beyond the few
interviews conducted to test validity. Qualitative studies are
required to both appreciate the gap between self-reported and
actual behaviour, and go deeper into the reasons for acting sus-
tainably. Third, we acknowledge that there may be no singular

Please cite this article in press as: Font, X., et al., Sustainability motivatio
areas, Journal of Cleaner Production (2014), http://dx.doi.org/10.1016/j.jc

model to explain pro-sustainability behaviour, and that our study
presents one plausible explanatory model (or indeed three com-
plementary ones). Both qualitative and longitudinal researches are
desirable as this study presents only a snapshot.

What is unknown is the life cycle of the sustainability-engaged
enterprise. In particular, whether the starting point is emphasising
eco-saving commercial reasons to the disengaged profit-driven
enterprises, and how this may eventually realise societal appreci-
ation for their efforts, and have the effect of slowly embedding
some aspects of sustainability into personal values and lifestyle
choices. The literature in adult and organisational learning would
be invaluable to understand the sustainability trajectory. Finally,
further research is necessary to add dimensions of perceived in-
ternal influences. In particular, reasons for being in business,
generic business skills, and external influences to determine pro-
sustainability attitudes and behaviour would have great explana-
tory power.

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Dr. Xavier Font is Reader in Tourism Management, Leeds Metropolitan University
(Leeds, LS6 3QW, United Kingdom ). His research and con-
sultancy interests include sustainability behaviour and marketing.

Dr Lluis Garay is Lecturer in Tourism Development, Universitat Oberta de Catalunya
(Avinguda Tibidabo, 39, 08035, Barcelona, Spain ). His research
interests include sustainability and tourism products development.

Mr Steve Jones is Principal Lecturer in Tourism Management, Leeds Metropolitan
University (Leeds, LS6 3QW, United Kingdom ). His
research and consultancy interests include sustainability behaviour and corporate
social responsibility.

ns and practices in small tourism enterprises in European protected
lepro.2014.01.071

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mailto:X.Font@leedsmet.ac.uk

mailto:lgaray@uoc.edu

mailto:s.r.jones@leedsmet.ac.uk

• Sustainability motivations and practices in small tourism enterprises in European protected areas

1 Introduction

2 Background

2.1 Cost reduction competitiveness

2.2 Societal legitimization

2.3 Lifestyle-value drivers

3 Study methods

3.1 Research design

3.2 Responses

3.3 Data analysis

4 Study results

4.1 Sample characteristics

4.2 Sustainability practices

4.3 Profiling reasons for acting sustainably

5 Discussion

6 Conclusions

References