41
a Economic Performance
The basic goal of business is profit maximization. This neoclassical theory strives to satisfy fiduciary stakeholders, primarily falls into shareholders, creditors,
and other parties that have contractual ties. Fauzi et al. 2010 assert that “higher financial performance leads to the increase in wealth of these stakeholders”.
Furthermore, financial performance can be measured by employing three alternative approaches, such as market-based measure, accounting-based measure,
and perceptual-based measure Fauzi et al., 2010. Firstly, in market-based approach, “the market value of a company is derived from the stock price, all of which is used to
measure CFP” Fauzi et al., 2010. This notion concerns heavily on shareholders’ interests.
Secondly, the accounting-based approach is derived from “a company’s competitive effectiveness and a competitive internal efficiency as well as optimal
utilization of assets, for some certain measures” Fauzi et al., 2010. Financial tools such as net income, return on assets ROA, and return on equity ROE are the basic
proponents of this approach. Thirdly, in perceptual method, some personal judgments for financial performance will be exercised by respondents using some instruments,
such as ROA, ROE, and the financial position relative to other companies. Furthermore, Sebhatu adds market share, sales turnover, and sales as complementary
for financial performance.
B. Previous Research
In terms of green marketing strategies, Vaccaro 2009 conducted study that integrates business-to-business green marketing and innovation theory to the extent
42
that both frameworks can serve as a useful scientific insight to gain competitive advantage. The aims of the study is to investigate how innovation theory can be
utilized to design more effective B2B green marketing strategies so that can meet the triple bottom line of economic, social, and ecological sustainability. The researcher
initially elaborates corporate social responsibility theories relevant to green marketing. By then, he employs diffusion of innovation theory to address the gap in
the literature on instrumental CSR theories. Furthermore, he explains reactive and proactive green marketing strategies that can be examined in B2B and their
relationship to the levels of innovation, as well as corresponding diffusion of innovation theory and its relationship to B2B research. He later develops five
propositions and a new conceptual model towards B2B green marketing innovation strategies and competitive advantage. Last but not least, he presents an analysis on the
relationship of diffusion of innovation characteristics to B2B green marketing strategies and the benefits resulted linked with competitive advantage for B2B
organizations. A study conducted by Mathur and Mathur 2000 discussed wealth effects of
green marketing strategies. Specifically, the researchers analyzed the effects of stock price reactions towards corporate announcements of green marketing activities -green
products, recycling, green promotions, and appointment of environmental policy managers. The results for the sample of 73 firms show that the market value for the
average firm in the sample declines by 3.14 during the period from 10 days prior to 10 days after the news is announced. Announcements related to green products,
recycling efforts, and appointments of environmental policy managers result in insignificant stock price reactions. Nevertheless, announcements for green
promotional efforts produce significantly negative stock price reactions.
43
Gottsman and Kessler 1998 in Murphy, 2002: 3 conducted research that analyze the environmental performers return against the Standard and Poor SP
500. It explicitly classifies the SP 500 firms based on four revenue-normalized environmental performance measures Investor Responsibility Research Center data,
such as emissions efficiency, compliance, spill frequency, and waste generation rates. The companies were weighed in each category and further compared to the median
scorer in their industry. It denotes that those who score above the median score were categorized as good performers, while those who score below were indicated as poor
performers. Furthermore, the researchers construct three portfolios of good performers based on the score, of which the highest performers pertain to top
portfolio, while three opposed portfolios were made up of poor environmental performers. The research that was conducted from 1992 to 1997 revealed that the
portfolio of top environmental performers recorded the highest total return, while the worst performers portfolio experienced the lowest return.
However Indonesian scholar as well as foreign researchers, Fauzi et al. 2010 develops a proposition by exhibiting triple bottom line TBL as a sustainable
corporate performance SCP. They insist SCP should account financial, social, and environmental measurements. They propose TBL as SCP to be derived from the
interface between them. They eloquently suggest that the content of each of TBL elements may vary across context and over time. Subsequently, they argue TBL as
SCP should be interpreted as a relative dynamic and iterative concept. Likewise, TBL as SCP requires that the complexity and variability between financial, social, and
environmental measurement elements are synchronized. Finally, the contribution of TBL as SCP stresses the connection between current business and social orientation
on the one hand, and the forthcoming planet orientation on the other.
44
C. Logical Framework Figure 2.1
Logical Framework
Sampling Process
Dependent Variable Independent Variable
Economic Sustainability Stock Price
Green Marketing Strategies Product Strategy, Production
Strategy, DistributionMarket Strategy, and Promotion
Strategy
Calculate based on operational variable
definition Calculate based on
operational variable definition
Regression Model Y =
αί + βί
1
PROD + βί
2
PRDT + βί
3
DIST + βί
4
PROM + ℮ί
Regression model test Hypothesis test
Analysis Conclusion
45
Figure 2.2 Hypothesis Model
Based on literature review discussed above and by considering some propositions developed by some scholars in green marketing strategies, and economic
sustainability aspects, therefore this study aims to investigate the influence of green marketing strategies towards economic sustainability, by employing product,
production, distributionmarket, and promotion strategies as independent variable, while stock price constitutes dependent variable.
D. Hypotheses Development
Based on literature review discussed above, thus there are some hypotheses to be tested, as follow:
Green marketing has been rarely used as a strategy to achieve a corporate objective. There is also scant research discussing the connection between green
marketing strategy and economic sustainability. However, green marketing strategy
Product Strategy Vaccaro, 2009: 322
Production Strategy Vaccaro, 2009: 322
Distributionmarket Strategy
Vaccaro, 2009: 324 Promotion Strategy
Vaccaro, 2009: 324 Stock Price
Fauzi et al., 2010: 1347
