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Journal of Business Economics

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15.10.2022 | Original Paper

What to say and what to do: the disparity of the communication and investment in sustainability targets, given customer expectations

verfasst von: Hans Ulrich Buhl, Valerie Graf-Drasch, Christian Wiethe

Erschienen in: Journal of Business Economics | Ausgabe 3/2023

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Abstract

Companies have many opportunities to engage in sustainable development. However, since transformations toward sustainability represent strategic shifts, such transformations should be undertaken with care. Companies might begin by translating particular sustainability targets into economically relevant advantages. Yet, appropriate decision support regarding how much to invest and which goals to communicate to customers is missing. Against this backdrop, we develop a formal mathematical decision model that helps companies simultaneously determine optimal levels of sustainability investment and public communication. Optimal sustainability solutions will balance customer expectations with a company’s financial investments. The feasibility and added value of our model are evaluated via prototypical instantiations at a German beverage company. Applicability and extensions of the model are discussed.

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Journal of Business Economics

From January 2013, the Zeitschrift für Betriebswirtschaft (ZfB) is published in English under the title Journal of Business Economics (JBE). The Journal of Business Economics (JBE) aims at encouraging theoretical and applied research in the field of business economics and business administration, promoting the exchange of ideas between science and practice.

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Note that not each investment will lead to a reduction in the underlying sustainability indicator. For instance, if the company exclusively uses highly efficient equipment, most investments in alternative equipment would increase consumption. However, we argue that \(F\) would be sufficiently small such that the errors should not significantly distort the overall results.

The definition of the variables as “negative” values (consumption) leads to the function exhibiting a negative slope (and positive intercept) instead of a positive slope as shown in Fig. 1. We nonetheless refrain from reformulating the variables, due to the formula’s simplicity and because a reformulation of the variables entails unnecessary complexity.

Since the GBC has several production sites with varying sustainability performance, the technical feasibility \(F\) for each sustainability indicator is estimated by the best-practice value over all production sites.

The extreme losses are due to the must-be attribute and are practically impossible, as customers cannot punish bad company sustainability behavior beyond a certain threshold of total churn.

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Titel: What to say and what to do: the disparity of the communication and investment in sustainability targets, given customer expectations
verfasst von: Hans Ulrich Buhl
Valerie Graf-Drasch
Christian Wiethe
Publikationsdatum: 15.10.2022
Verlag: Springer Berlin Heidelberg
Erschienen in: Journal of Business Economics / Ausgabe 3/2023
Print ISSN: 0044-2372
Elektronische ISSN: 1861-8928
DOI: https://doi.org/10.1007/s11573-022-01115-7

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