Economic and Environmental Performance of the Firm: Synergy or Trade-Off?

Over the last decades, corporations are increasingly expected to fulfill the written and unwritten laws of doing business in a sustainable way. They are implicitly expected to perform well on the so-called triple bottom line; People, Planet and Profit. However, both in academia and in practice, there is no consensus on the feasibility of doing good (for society and environment) and doing well (economically) simultaneously. The traditional view is that there is an unavoidable trade-off between the social & environmental performance of an organization and its profitability. The other school of thought has challenged this view and claimed that doing good and doing well simultaneously, i.e., breaking the trade-off and creating a synergy, is not only desired but actually feasible. In this paper, the validity of both views (trade-off and synergy) is tested within the context of green sourcing, using a multi-objective approach to a variant of the well- known Economic Order Quantity (EOQ) model. It is demonstrated that both views are not contradictory but valid under different conditions and strategic focus. As such this paper helps to reach a better understanding of the factors and conditions that drive trade-offs and synergy behavior of the triple bottom line measures within the chosen problem setting.