Sustainability . Sustainability is a notion that proposes that socially responsible firms will somehow financially outperform other less responsible firms in the long run. This might result from customer loyalty, better employee morale, or public policy favoring ethical conduct. Empirical results testing this hypothesis are mixed, neither suggesting that more responsible firms, on the average, have a clear financial advantage nor a large burden. Thus, a useful approach may be to determine (1) specific circumstances under which a firm may actually find the more responsible approach to be more profitable, (2) under which circumstances responsible behavior can be pursued without an overall significant downside, and (3) the ethical responsibilities that a firm faces when a more responsible approach may be more costly.
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