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ENVIRONMENTAL CONSCIOUSNESS, REPUTATION AND VOLUNTARY ENVIRONMENTAL INVESTMENT
Author(s) -
LIU CHIAYING,
WU CHIHSIN
Publication year - 2009
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/j.1467-8454.2009.00366.x
Subject(s) - reputation , turnover , investment (military) , consciousness , environmental consciousness , business , economics , psychology , political science , management , neuroscience , politics , law
This note attempts to explore the driving force behind firms' voluntary environmental investment and to provide an alternative viewpoint to the traditional notion of environmental investment. We show that, if consumers are environmentally conscious, then firms' environmental investment will enhance their environmentally‐based reputation and effectively stimulate consumer demand for the product. Thus, some firms will voluntarily engage in environmental investment. In addition, it is also found that when consumers become more environmentally conscious, in the steady state a high level of environmental investment may be associated with higher output. This result potentially provides an explanation as to why environmental quality may increase with output.