How and When Does Engaging Customers in Environmental Sustainability Pay Off? The Role of Business Strategy

Abstract

This study explores the influence of consumer engagement for sustainability purposes on customer satisfaction and firm performance. Our study utilized unique actual data on the study variables to test these relationships in the context of S&P 500 firms. We collected data from 405 firms from 2013 to 2022. The analysis revealed that customer engagement is positively related to firm performance and customer satisfaction. The OLS approach demonstrated that a one-unit increase in CE resulted in an 8.1% improvement in company value and a 4.7% improvement in customer satisfaction. It also revealed that the relationship between customer engagement and firm performance is stronger when the company integrates climate change into their strategies. These findings offer meaningful implications for theory and practice in the context of sustainability.

1. Introduction

According to the Intergovernmental Panel on Climate Change [1], climate change poses a significant risk to around 3.3–3.6 billion people and a large number of animals. Implementing measures to mitigate global warming, such as reducing industrial greenhouse gas (GHG) emissions, would significantly decrease the projected societal and economic losses and concerns associated with climate change in both the ecosystem and the human system [1]. The majority of greenhouse gas (GHG) emissions from corporations usually occur outside of the companies themselves, as a result of the activities carried out by suppliers within the companies’ supply chains [2]. For instance, the food industry’s upstream supply chain accounts for 75–90% of its carbon footprint [2], whereas approximately 90% of Walmart’s greenhouse gas emissions and other sustainable impacts take place within its expanded supply chains [3]. In order to achieve their carbon neutrality objectives, companies must take into consideration the emissions generated by Scope 3 sources, which include both upstream and downstream activities in the supply chains [4]. Prior research indicated that reducing the high carbon intensity in Chinese supply networks had a substantial impact on reducing the carbon footprints of customer enterprises in the United States and Europe [5]. In addition, the measurement of Scope 3 emissions allows for the identification of climate change-related hazards within supply chains and aids corporations in developing plans to mitigate these risks [6].

The ethical considerations and reasons that drive enterprises to implement carbon management and involve supply chain participants in pursuing sustainability are the foundation of their emission reduction strategies [7]. Encouraging the supply chain to reveal emissions can be driven by a company’s principles or ethics, or by the intention to manage and oversee suppliers or consumers for the advantage of the main company. This can be achieved by collaboration, coercion, or instrumental motives [7,8]. The moral motive, which is defined by a firm’s deontological duty and moral obligation to behave ethically, is the primary component that drives the promotion of sustainability in supply chain management. When collaboration is combined with monitoring emissions, it can result in much greater outcomes in tackling climate change compared to merely focusing on a firm’s self-interest. Furthermore, organisations may possess a motivation to build and uphold favourable partnerships in order to acquire approval and adhere to the expectations of stakeholders [7]. The adoption of carbon management by a firm is strongly tied to its business strategies, operations, and the business settings in which supply chain involvement occurs. These reasons can be categorised as ethical, relational, or strategic.

Companies endeavour to involve stakeholders in order to attain environmental sustainability [9] and diminish emissions along the entire value chain. The organisation actively interacts with stakeholders and fosters relationships, builds a sustainable value chain, improves trustworthiness, transparency, integrity, and accountability in the company–stakeholder relationship, and strives for operational efficiency and long-term mutual benefits. Prior studies on marketing and environmental sustainability argue that suppliers and customers are the main stakeholders and highlight the significance of actively engaging them to achieve sustainability [10]. Customer engagement for sustainability reasons entails actively incorporating customers into the sustainable practices and strategies of a company. For instance, Air Liquide collaborates with its clients to jointly create new and inventive methods to decrease emissions, while Philips actively involves customers in the responsible recycling of garbage.

This study contributes to the literature in different ways. First, this research is the first to explore the impact of engaging consumers for environmental sustainability on customer satisfaction and firm performance. Second, our paper explores the moderating role of business strategy on the link between consumer engagement and firm performance, demonstrating that this relationship is stronger when companies integrate climate change in their strategies. Third, prior to taking action, a company must initially determine its objectives in relation to sustainability, both in the short and long term. If a company has a short-term focus, it may not see any economic advantages in interacting with customers, which is a crucial concern for the company. Nevertheless, even a company that focuses on short-term goals could still gain advantages by involving customers in the implementation of climate change initiatives. Customer interaction can yield economic benefits, particularly for firms with a long-term orientation. Simultaneously, the report suggests that companies should actively include customers since this can generate enduring value across various aspects. Finally, this research employs three regression techniques to compute the coefficients of the previously discussed models. In order to handle the problem of repeating observations of the same company across time and to consider the possibility of heteroskedasticity, we employ ordinary least squares (OLS) regression with cluster-robust standard errors. Furthermore, we employ a fixed-effect (FE) methodology to account for any time-invariant characteristics associated with certain organisations that could potentially bias the findings. To mitigate any potential problems related to endogeneity, we employ a fixed-effect two-stage least-squares (2SLS) regression model with cluster-robust standard errors, instrumental variables (IV), and fixed effects (FEs).

2. Literature Review

Engagement is a multifaceted concept that encompasses both a dynamic process and a static state. Prior research used the term firm-initiated engagement to refer to the specific techniques that organisations use to enhance interactivities in non-transactional behaviours [11]. During the procedures, a company assumes a proactive role in establishing a connection with the other party. Engagement fosters communication among the parties involved, resulting in both tangible and intangible advantages for the company [12]. The tangible merits of business performance have been extensively investigated in numerous research studies.

While the existing body of literature primarily focuses on consumer interaction and its outcomes, it is crucial to acknowledge the significance of other stakeholders, such as suppliers, in ensuring the efficient and profitable operation of an organization. Stakeholders’ involvement is becoming increasingly important in marketing because one of the responsibilities of marketing is to establish and sustain good communications with both internal and external stakeholders [13]. Stakeholders’ engagement refers to the involvement of groups or persons who have a direct impact on or are impacted by the initiatives of an organisation [13]. Prior research defines it as the actions taken by an organisation to involve its different stakeholders actively, responsibly, and effectively [14].

Sustainability is a multifaceted notion that managers find difficult to navigate when it comes to incorporating it into company practices and implementing strategic measures. Although there is scant exploration connecting consumer involvement to sustainability, previous studies have independently examined the factors that lead to stakeholder engagement and the outcomes of such engagement in relation to environmental sustainability. In order to attain corporate sustainability in a comprehensive manner, a company must responsibly and resiliently involve and interact with various stakeholders. These stakeholders, due to their distinct institutional origins, behaviours, and functions, can have varying impacts on the attainment of organisational sustainability goals [15]. A previous study indicated that including stakeholders in environmental innovation resulted in enhanced environmental and financial performance, as well as bolstering the company’s competitive edge, reputation, legitimacy, and employee commitment [16]. Consumers are crucial stakeholders and involving them in sustainability efforts can enhance the company’s capacity and potential to generate value across several dimensions—for the company, its stakeholders, and individuals [17].

Consumer engagement refers to a dynamic and interactive process that fosters profound and significant links and exchanges between a firm and its consumers [18]. There are only a small number of existing research studies that have investigated consumer participation in relation to sustainability [19]. These studies have mostly used consumer behavioural perspectives to analyse consumers’ desire to participate in sustainability initiatives [20]. A previous study revealed that passengers contribute to the creation of environmental value by voluntarily offsetting carbon emissions in the aviation industry [21]. Similarly, previous exploration revealed that online service sellers’ involvement in corporate social responsibility initiatives improves consumers’ behaviours and attitudes [13]. Prior examination highlighted the importance of social qualities and platforms in the pursuit and evaluation of consumer engagement [11]. Prior examination found that suppliers who adopt advanced environmental practices can boost their revenues when their consumers also prioritise environmental management [22]. Therefore, suppliers will not reap any benefits from investing in environmental practices unless their customers also engage in such measures. The suppliers will only obtain gains if their consumers truly appreciate and value their efforts. A previous study revealed that suppliers have the ability to effectively engage their clients and enhance their dependence on the firm by utilising instrumental motives and international environmental policies [8]. Therefore, it is crucial for suppliers to interact with consumers in carbon management, as it can enhance their business.

To be considered a preferred client by a supplier, buyers must actively engage with the supplier and have a clear awareness of the provider’s expectations [23]. In the context of carbon management, when consumers and suppliers have shared objectives for reducing emissions and collaborating on addressing climate change, they enhance consumers’ dedication to their links with suppliers [7]. Specifically, consumers’ willingness to openly communicate their objectives and experiences for improving performance outcomes in carbon management is crucial for fostering supply chain engagement.

3. Conceptual Framework and Hypotheses Development

We utilise the principles of control theory to establish the connections between our primary independent and dependent constructs. The control perspective posits that due to potential divergent aims between employees and organisations, it is necessary for an organisation to use various control mechanisms in order to assure adherence [24]. A significant obstacle in sustainability engagement is the company’s capacity to effectively disseminate sustainability objectives throughout the organisation, as environmental sustainability activities may not have a direct correlation with profitability [25]. It is crucial to ensure that personnel are in line with sustainability objectives, as they have the potential to hinder the firm’s sustainability efforts [26]. Therefore, organisations necessitate formal control systems, such as written rules and processes, to guarantee that employees comprehend their responsibilities in attaining environmental sustainability. The involvement of employees with different stakeholders is crucial in attaining environmental sustainability, despite the fact that their roles in sustainability may encompass numerous aspects [27]. While marketing studies have not extensively explored the topic of engagement for environmental sustainability, there is evidence supporting the important role of employees in attaining consumer engagement [11,19]. Figure 1 shows the conceptual framework of our investigation. It indicates the impact of engaging consumers for environmental sustainability on both firm performance and customer satisfaction. It also explores the moderating role of business strategy in these relationships.

3.1. Engaging Consumers for Environmental Sustainability and Firm Performance

A previous study defined consumer engagement (CE) as the several sorts of value that service organisations gain via CE behaviours [28]. Consumer engagement in sustainability activities, like actively contributing to greenhouse gas emission reductions and climate change plans, is mostly associated with customer influencer value, although it is not exclusively restricted to it. This phenomenon can be characterised as consumers exerting influence on both existing consumers and potential customers. A previous study described the influential consumer engagement (CE) behaviour as the act of consumers giving resources such as expertise, experience, and time to influence the views, preferences, or knowledge of other actors towards the focus firm [29]. However, consumer engagement (CE) in greenhouse gas (GHG) emissions and climate change initiatives extends beyond the act of persuading and converting potential consumers into actual consumers. It also involves encouraging existing consumers to raise their spending with the company, fostering a collective service experience, and assisting other consumers in utilising the company’s services. The generation of value derived from carbon emissions and climate change policies also extends to the collaborative creation of value for society. Therefore, the reduction in greenhouse gas (GHG) emissions and the development of policies to address climate change are strongly connected to the mobilisation of consumer engagement (CE) behaviour [29]. This conduct involves consumers giving resources to encourage other stakeholders to take action in support of the company.

A pivotal company is strategically located between its suppliers and customers [30], allowing it to have a comprehensive and balanced view of carbon management from both ends. Carbon management is motivated by ethical considerations and a sincere commitment to environmental preservation [7]. Carbon management in corporate strategy can be influenced by a motivation that is rooted in values and morals [9]. This motivation is based on environmental awareness that aligns with firm values and top management strategies [19]. Companies have moral motives when they exert significant influence on public policies connected to climate change since they perceive these actions as morally correct [4]. Nevertheless, corporations operating in industries with high greenhouse gas (GHG) emissions are actively seeking ways to offset their environmental impact. One such approach is implementing carbon management practices throughout their supply chain. This is employed to prevent negative publicity or other adverse outcomes, which can be seen as a strategic motive [31]. Recent research has discovered that instrumental motives also have an impact on consumer engagement [8]. Companies may have relational incentives to employ carbon management in order to align with stakeholder norms, such as meeting customer expectations or addressing requests from environmental activists [7,15]. The influence of environmental rules on corporations’ carbon management is an external force, indicating a relational purpose [7,23]. Previous studies have indicated that customer engagement in environmental sustainability has a notable influence on the success of companies. Therefore, we propose the subsequent hypothesis:

H1: 

Engaging customers for environmental sustainability is positively related to firm performance.

3.2. Engaging Consumers for Environmental Sustainability and Consumer Satisfaction

Consumer satisfaction is considered a crucial concept that has a substantial impact on marketing activity [7,10]. Consumer satisfaction refers to the emotional state that consumers experience when evaluating a service provided by a company and their subsequent response to it [11,26]. Similarly, it is seen as an assessment of how well a company’s services or goods meet or surpass the expectations of consumers [31]. Therefore, it is contended that satisfaction is primarily influenced by the overall quality of consumers’ experiences and their communication with the service provider [6,11]. The existing literature indicates that consumer satisfaction can impact several outcomes in customer relationships, such as customers’ inclination to make purchases, the reputation of the company, and consumer loyalty [14,23,29].

A prior study established a conducive atmosphere within the company, which in turn enhances the generation of more efficient evaluations concerning the service encounter [9]. Previous examination has consistently found a direct correlation between corporate social responsibility initiatives and consumer satisfaction [26]. This relationship has been supported by several studies conducted [13,22,28]. The potential factors contributing to this favourable correlation between CSR and customer satisfaction are as follows: Consumers of a company might be potential or actual stakeholders who are not only interested in the economic value of their purchases but also in the entire reputation and social performance of the company [6,19]. Furthermore, research has shown that consumers are significantly more inclined to experience satisfaction when they engage with a company that has a higher level of social responsibility [26,30]. Furthermore, proponents claim that a company’s strong corporate social responsibility track record creates a positive image that enhances customers’ evaluation of the company and their attitudes towards it [11,16,21]. Therefore, our study proposes the following hypothesis:

H2: 

Engaging customers in environmental sustainability has a positive impact on consumer satisfaction.

3.3. The Role of Business Strategy

Firms that possess ample financial resources and possess excellent management qualities are more inclined to adopt proactive environmental measures [7], which have the potential to enhance companies’ financial performance [14,22,27]. By being the first firm to enter a market and establish a sustainable strategy, a company can increase its market share and improve its reputation, which in turn can impact its profitability [11,26,30]. Previous exploration indicated that firms that actively pursue business opportunities in carbon management, rather than only focusing on risk management, tend to achieve greater performance [13,23].

Business plans serve to synchronise and harmonise the operations of different departments within the organisation, and supply chain management is designed to be in accordance with these strategies [6]. Previous exploration outlined many methods for integrating climate change into business plans and supply chain management [29]. Initially, organisations have the ability to reduce expenses by utilising energy-efficient technologies and discerning and executing energy-efficient initiatives with consumers. Additionally, businesses have the potential to enhance their earnings by enhancing public relations and fostering consumers’ inclination to purchase sustainable and energy-efficient products. Firms can enhance supply chain effectiveness by minimising the involvement of intermediaries and brokers and establishing direct communication with lower-tier suppliers regarding environmental concerns [6,17]. Ultimately, engaging in horizontal alliances with other multinational purchasers can serve as a powerful incentive for suppliers to actively work towards reducing their emissions. By incorporating carbon management into the business strategies of influential buyers, suppliers are put under pressure to maintain their consumer base. On the other hand, involving consumers in carbon management usually relies on the consumer’s dedication to their relationship with the supplier [7,21,29]. Thus, this study puts forward the subsequent hypothesis:

H3: 

Business strategy moderates the link between engaging customers for environmental sustainability and firm performance.

4. Method

4.1. Sampling and Data Collection

This study utilises five sources for data collection to test the proposed model: “CDP (Carbon Disclosure Project), Refinitiv Eikon, Customer Satisfaction Index, Compustat, and Bloomberg”. The “CDP” database is a prominent repository of climate-related data [32] and has garnered considerable interest in climate and emissions research [33,34]. Over 13,000 companies, which account for more than 64% of the total global market capitalization, took part in a range of “CDP” surveys in 2021. “Refinitiv Eikon”, formerly known as “Thompson Reuters Eikon”, is a highly comprehensive “ESG” database that is widely utilised in academic research [35]. We enhance our data sources, namely the “CDP database and Refinitiv Eikon”, by including the “Bloomberg database”. This enables us to access a wide range of control factors for financial outcomes. This research focuses on S&P 500 companies. The sample of S&P 500 companies is chosen because it provides comprehensive information across factors and years. These companies are legally required to disclose specific data, ensuring consistency in disclosure due to policies. Furthermore, the accuracy of the information available in databases is verified. We obtain the data of S&P 500 firms from “Bloomberg and Refinitiv”. We then compare these data with the “S&P 500” companies included in the CDP database. This process resulted in a total of 405 organisations between the years 2013 and 2022. The initial sample is taken from the “S&P 500” firm sample due to its thorough information coverage across variables and years. These companies have a legal obligation to disclose specified information, which guarantees uniformity in reporting as a result of established policies. Furthermore, the validity of the information stored in databases is confirmed. The report suggests that the framework can be used by any organisation that has the required variables.

4.2. Measures Conceptualization

4.2.1. Independent Variables

Customer engagement for sustainability, also known as CE, refers to the process of actively involving customers in sustainable practices and initiatives. Customer engagement is a binary variable that is assigned a value of 1 if the company involves customers in its efforts related to reducing greenhouse gas (GHG) emissions and implementing climate change strategies specifically for scope 3 emissions at time t. Otherwise, it is assigned a value of 0. The data are obtained from companies’ replies to the CDP climate change information request, which also indicates if the company has involved customers in its sustainability programmes [10]. This information is a component of a broader inquiry that CDP presents to companies regarding their involvement in addressing greenhouse gas emissions and climate change. The inquiry aims to gather information about the many aspects of the value chain that the focus company is involved in. We assign a value of 1 to customer engagement when the firm explicitly includes engaging customers as one of the criteria, and a value of 0 otherwise.

4.2.2. Dependent Variables

Firm performance was evaluated using the Tobin Q ratio. This research used Tobin’s q as a metric for assessing firm performance, in line with prior studies conducted by Lee and Grewal in 2004, as well as Srinivasan in 2006. Tobin’s q is a prospective indicator derived from stock market prices, which indicates the future performance and long-term profitability of a company [36]. In addition, Tobin’s q is adjusted for briskness, is not influenced by industry, and serves as a reliable predictor of shareholder value [37]. This study uses the methodology developed by prior research to compute Tobin’s q [38].

$$\mathrm{q}=\frac{\mathrm{M}\mathrm{V}\mathrm{E}+\mathrm{P}\mathrm{S}+\mathrm{D}\mathrm{E}\mathrm{B}\mathrm{T}}{\mathrm{T}\mathrm{A}}$$

(1)

where MVE represents the closing price of shares at the end of the financial year multiplied by the number of common shares outstanding. PS represents the liquidation value of the outstanding preferred stock. DEBT is calculated by subtracting current assets from current liabilities, adding the book value of inventories, and adding long-term debt. TA represents the book value of total assets. Customer satisfaction was measured using the American Customer Satisfaction Index (ACSI) [39,40].

4.2.3. Moderator and Control Variables

Our study utilised business strategy as a moderator variable. The variable “business strategy” is assigned a value of 1 when climate change is included in the company’s overall business strategy, and a value of 0 otherwise. Based on prior research [10,41], our study also used several control variables (i.e., firm size and financial performance).

Table 1. Variables operationalization.

Variables	Description	Data Source
Engaging customers for environmental sustainability	“Indicates whether the company engages its customers on greenhouse gas emissions (GHGs) and climate change strategy for scope 3 emissions, If engaged, then 1; 0 otherwise”.	“Carbon Disclosure Project (CDP)”
Firm performance (Tobin Q)	“Q = (MVE + PS + DEBT)/TA, where MVE is the product of share price and common stock shares outstanding, PS is the liquidating value of outstanding preferred stocks, DEBT is the value of the firm’s short-term liabilities net of its short-term assets, plus the book value of the firm’s long-term debt, and TA is the total assets of the firm”.	“Compustat ExecuComp; Bloomberg”
Customer satisfaction	“Firm’s customer satisfaction (ACSI) score in year t”	“Compustat ExecuComp”
Firm size	“Firm Size Natural logarithm of the number of employees”	“Compustat ExecuComp; Bloomberg”
“Total assets”	“Natural logarithm of total assets”	“Compustat ExecuComp; Bloomberg”
“Industry”	“GICS Industry Group Code of the corresponding firm”	“Refnitiv Eikon”

shows the study variables and their operationalisation.

5. Model Specifications and Estimators

Consistent with previous research [42], our study employed the “Cobb-Douglas production function model” to evaluate the influence of customer engagement in environmental sustainability on the performance of both firms and consumers. We incorporated additional factors, such as labour and capital, to accurately measure the inputs of the company. In order to address variations among industries, we incorporated both the year and industry as factors. In our investigation, we employed the following equations to evaluate hypotheses H1 and H2.

Log (Tobin Q) = β0 + β1log (labor) + β2log (capital) + β3CE + Controls + ε

(2)

Log (SAT) = β0 + β1log (labor) + β2log (capital) + β3SAT + Controls + ε

(3)

We tested the moderating roles of business strategy (BST) using the following equation:

Log (Tobin Q) = β0 + β1log (labor) + β2log (capital) + β3CE + β4BST+ β6CE × BST+ Controls + ε

(4)

This research employs three regression techniques to compute the coefficients of the aforementioned models. To address the issue of repeating observations of the same company across time and to account for potential heteroskedasticity, we utilise ordinary least-squares (OLS) regression with cluster-robust standard errors. In order to address the potential distortion of findings caused by time-invariant features associated with certain organisations, we utilise a “fixed-effect (FE) method with cluster-robust standard errors”. This method helps to mitigate the issue of omitted factor bias for the variables in question. In order to address any potential issues connected to endogeneity, we employ a fixed-effect two-stage least-squares (2SLS) regression model with cluster-robust standard errors, instrumental variables (IV), and fixed effects (FEs).

6. Results

Table 2. Correlations among research constructs.

Variables	1	2	3	4	5	6	7
(1) CE	1.000
(2) Tobin Q	0.294 ***	1.000
(3) SAT	0.182 ***	0.378 ***	1.000
(4) Strategy	0.0219 **	0.105 **	0.117 **	1.000
(5) labor	0.066	0.089	0.029 *	0.078	1.000
(6) Capital	0.078	0.092	0.083	0.061	0.090	1.000
(7) Firm size	0.019 **	0.031 **	0.095	0.079	0.086	0.074	1.000
Mean	0.820	1.780	0.792	0.620	1.290	1.025	10.034
SD	0.533	0.683	0.438	0.439	0.738	0.302	1.892

* p < 0.1; ** p < 0.05; *** p < 0.01.

presents descriptive statistics and the relationship between the factors in our study.

Table 3. Firm value estimates.

	Dependent Variable: Tobin Q
	OLS (1)	FE (2)	2SLS/IV with FE (3)	2SLS/IV with FE (4)	2SLS/IV with FE (5)	2SLS/IV with FE (6)
Log (Capital) Log (Labor) CE CE × Strategy	0.079 (0.072) 0.092 (0.120) 0.081 ** (0.001)	0.084 (0.062) 0.139 * (0.027) 0.081 ** (0.001)	0.046 (0.059) 0.106 * (0.031) 0.064 ** (0.002)	0.054 (0.072) 0.085 (0.092) 0.064 ** (0.002) 0.041 * (0.025)	0.054 (0.039) 0.085 (0.092) 0.064 ** (0.002)	0.054 (0.039) 0.085 (0.092) 0.064 ** (0.002) 0.043 * (0.026)
Industry dummies Year dummies	Yes Yes	Yes Yes	Yes Yes	Yes Yes	Yes Yes	Yes Yes
Observations R2 Adjusted R2	4050 0.739 0.735	4050 0.721 0.703	4050 0.721 0.703	4050 0.721 0.703	4050 0.721 0.703	4050 0.721 0.703

* p < 0.1; ** p < 0.05. Notes: Robust standard errors are clustered on firms as shown in parentheses a firm’s industry for a given year as instrumental variables.

and

Table 4. Customer satisfaction.

	Dependent Variable: Customer Satisfaction
	OLS (1)	FE (2)	2SLS/IV with FE (3)	2SLS/IV with FE (4)	2SLS/IV with FE (5)	2SLS/IV with FE (6)
Log (Capital) Log (Labor) SAT	0.094 (0.071) 0.060 (0.059) 0.047 ** (0.024)	0.094 (0.071) 0.060 (0.059) 0.047 ** (0.024)	0.094 (0.071) 0.060 (0.059) 0.047 ** (0.024)	0.094 (0.071) 0.060 (0.059) 0.047 ** (0.024)	0.094 (0.071) 0.060 (0.059) 0.047 ** (0.024)	0.094 (0.071) 0.060 (0.059) 0.047 ** (0.024)
Industry dummies Year dummies	Yes Yes	Yes Yes	Yes Yes	Yes Yes	Yes Yes	Yes Yes
Observations R2 Adjusted R2	4050 0.619 0.594	4050 0.619 0.594	4050 0.619 0.594	4050 0.619 0.594	4050 0.619 0.594	4050 0.619 0.594

** p < 0.05. Notes: Robust standard errors are clustered on firms as shown in parentheses.

present the primary findings about the influence of CE on the performance of both firms and customers. Table 3 displays the findings on the impact of CE on the performance of the company. To assess the influence of corporate entrepreneurship (CE) on business performance (H1), we utilise three distinct methodologies. The findings from three estimators demonstrated a favourable impact of CE on Tobin Q. The OLS approach demonstrated that a one-unit increase in CE resulted in an 8.1% improvement in company value. Furthermore, both the “Fixed-Effect (FE)” model and the “Two-Stage Least Squares/Instrumental Variables (2SLS/IV) with Fixed Effects (FEs)” model demonstrated a positive impact of CE on company value. Therefore, H1 is confirmed. Table 4 displays the outcomes of the impact of CE on consumer satisfaction. The investigation revealed that CE has a substantial and favourable influence on consumer satisfaction. “OLS” analysis showed that a one-unit increase in CE is associated with a 4.7-unit increase in customer satisfaction. Therefore, H2 is confirmed. Moreover, Table 3 revealed that the impact of CE on firm value is stronger if the company integrated climate change into their strategy. Therefore, H3 is supported.

The mean variance inflation factor (VIF) of the factors is 1.894, indicating the absence of multicollinearity. After eliminating the control variables that were significantly linked, we re-evaluated the data and found that they still aligned in terms of direction, magnitude, and level of significance.

Post Hoc Analysis

Our research utilised a variety of accounting-based measures and market-based measure indicators to strengthen the reliability of our findings. In our investigation, we employed the accounting-based performance metric called return on assets (ROA). This measure is calculated by dividing the profit by the total assets. In a more precise manner, we calculated the return on assets (ROA) adjusted for the industry by deducting the average ROA of the industry from the ROA of each individual firm [43]. Furthermore, we selected return on capital employed (ROCE) since it is in line with the theoretical framework of return on assets (ROA), making it suitable for a thorough study of the results. Furthermore, we utilised the return on equity (ROE) metric due to its ability to provide a precise depiction of the profits acquired by investors. This metric is usually recognised as the most accurate indicator of a company’s overall performance [44]. Furthermore, we opted to apply the return on sales (ROS) metric as it is a widely used accounting-based success assessment in the field of marketing studies [43]. The hypothesised effects observed in the core model for return on assets (ROA), return on capital Employed (ROCE), return on equity (ROE), and return on sales (ROS) remain robust and dependable. In general, our findings remain largely consistent when examining several indicators of company performance, which further strengthens the empirical evidence that supports our conclusions.

7. Discussion and Conclusions

7.1. Key Findings

This paper seeks to explore the influence of engaging consumers for environmental sustainability on customer satisfaction and business performance. Our model was developed based on previous studies in the context of sustainability [9,10,23,31,41]. Different techniques were utilised to test the study hypotheses. Our analysis revealed that CE is positively related to customer satisfaction and firm performance. It also revealed that the impact of CE on firm performance is stronger when the company integrates climate change into their strategies.

Consumer engagement for sustainability purposes has become an important concept in recent years and is receiving more attention from professionals and scholars. This is because it has the potential to influence customer behaviour and is seen as an effective way to improve customer experiences and satisfaction, thus developing and maintaining a competitive advantage [10,31,45,46]. Practitioners also emphasise the challenges of involving clients in sustainability initiatives. The supply chain sustainability study produced by the MIT Centre suggests that customer participation in sustainability poses a challenge due to consumer disinterest, requiring enterprises to invest significant effort to foster engagement [10]

The findings indicated that a company’s capability to involve its consumers in sustainability initiatives has a positive influence on firm performance. These results are consistent with prior exploration that found a significant and positive effect of engaging consumers for environmental sustainability on firm performance [6,10,41]. Previous studies also found that the ability of a company to involve its consumers in sustainable initiatives plays a significant role in improving its performance [10,21,25]. The analysis also revealed that this relationship is stronger when a company integrates climate change into its strategy. These findings are in line with previous exploration that found that the ability of organisations to include climate change in their strategies is key to enhancing their performance [10,19,31]. Our study also found a significant positive link between the ability of the organisation to engage its consumers in sustainable initiatives and customer satisfaction. In recent decades, scholars have achieved substantial progress in the advancement of conventional cellular materials such as honeycombs and lattices [10]. Moreover, architected metamaterials possess exceptional characteristics as a result of their meticulously engineered microstructures, rather than just relying on the quality of their constituent materials [37,38,39,40]. This finding is consistent with previous examinations that found a significant impact of consumer engagement in sustainability purposes and consumer satisfaction [10,41]. Hence, this study provides the following valuable implications to the existing body of knowledge and practical applications.

7.2. Theoretical Implications

Consumer participation in carbon management is essential for effectively addressing climate change. Our research suggests that firms motivated by moral considerations are more likely to engage their suppliers and consumers in carbon management, as opposed to companies without moral motivations. Companies that include climate change in their business strategy are more likely to engage their suppliers and consumers in carbon management, in contrast to those that do not. The results of our multinomial logistic regression offer substantiation for this assertion in all three categories: suppliers exclusively, consumers exclusively, and both suppliers and consumers. The results align with prior research [3,47]. Companies that actively shape public policy on climate change are more likely to involve their supply chain in carbon management [48].

A previous study discovered that proactive corporations have the ability to shape public policy in order to establish environmental regulations [49]. Our findings also indicate that these companies are actively involved in influencing the carbon practices of their supply chains. This study enhances the context of sustainable supply chains by demonstrating that the moral reasons of a focal organisation have a greater influence on supplier engagement compared to consumer engagement [41,42]. This contribution is derived from the findings of ordinal logistic regression studies pertaining to H1 and 2. Integrating climate change into a corporate plan has a greater influence on suppliers than on customers. Consistent with the findings of a prior study [16], the incorporation of carbon management into the business strategy of influential buyers increases the demand for suppliers to decrease greenhouse gas (GHG) emissions. This finding is in line with prior examinations that revealed that enterprises are strategically leveraging exploratory green innovation to capitalise on sustainable development prospects. This approach enables them to develop groundbreaking technologies and generate value in the environmental and social sectors [50,51,52].

A study conducted by prior research found that moral and relational reasons have a greater impact on carbon management in the supply chain compared to instrumental predictors [7]. Our findings provide support for this claim as we discovered that the level of greenhouse gas (GHG) intensity at the industry level was a significant predictor in determining supply chain participation. However, we also found that company strategies played a much bigger role in determining supply chain engagement. Our findings demonstrate that GHG intensity has a positive impact on customer engagement, which aligns with the findings of a recent study that highlighted the influence of instrumental reasons on customer engagement. Customer engagement in the disclosure method has a consequential effect on reducing the overall impact of emissions in supply chains [8,27,53,54]. This effect extends beyond mere supplier engagement [31,34].

In our study, we included firm size as a control factor because previous studies [48,49] have suggested that large organisations are more inclined to involve their supply chains in carbon management compared to small enterprises. Consistent with the findings of prior studies [9,10,41], our research demonstrates that major corporations actively include their consumers in carbon management. The outcome is predictable as larger corporations own greater financial and other assets. Numerous studies have demonstrated a positive correlation between company size and both sustainability initiatives and overall success [10,41]. We proposed that organisations exhibiting strong performance are more inclined to include supply chain partners in carbon management, as opposed to firms with weak performance. The positive financial condition of a company has been identified as a crucial variable in sustainable supply chain research, as demonstrated by earlier studies [41,50,55]. Nevertheless, our findings reveal that there was no correlation between strong financial performance and the level of interaction with either suppliers or customers.

7.3. Managerial Implications

Firms driven by ethical considerations to decrease emissions should implement efficient and viable carbon management strategies that foster collaboration within supply chains. By taking collaborative activities, companies can attain superior long-term outcomes. By actively involving suppliers and consumers in carbon management, firms can decrease their susceptibility to climate-related risks and enhance their ability to withstand and adjust to challenges in supply chains. This is particularly crucial in the current business landscape, which is characterised by several crises. Companies operating in industries with high greenhouse gas (GHG) emissions should understand the need to engage with both suppliers and customers. In order to encourage suppliers to be more open and honest in sharing information about carbon and climate change, it is advisable for a greater number of consumers to demand that suppliers offer such information. Suppliers are more likely to be willing to provide these data when multiple consumers demand it, especially if they use these data as a factor in their purchasing decisions.

In addition, purchasers who work with moral goals can utilise their relational talents and collaborations to decrease opportunistic behaviour among individuals in supply chains and enhance participation in transparency. This, in turn, will ultimately result in improved outcomes in carbon management. Regardless of whether the consumer’s eagerness to engage suppliers in carbon management is instrumental or moral, suppliers will likewise receive advantages. By actively committing to and participating in the reduction in emissions, suppliers can position themselves as possible long-term partners. This can play a crucial role in the selection of suppliers and provide a competitive edge to supplier enterprises. By acknowledging the firm’s role as a central entity in a supply chain, it becomes easier to monitor carbon emissions and facilitate the disclosure of information in both the supply chains that come before and after the company.

This exploration provides solutions to the issues that firms frequently face in developing effective strategies for engaging consumers and suppliers. Initially, a company must provide incentives to its employees and board members in order to encourage them to actively participate to engage with consumers. The article suggests that corporations should offer non-monetary advantages to workers to enhance morale while providing monetary incentives to board users to encourage involvement with customers and suppliers. Furthermore, a corporation can modify the methods based on its desire to attain customer and supplier participation. While board monitoring alone may have some benefits for customer involvement, a company must rely on incentives to ensure supplier participation. Furthermore, it is important for a company to recognise that relying solely on formal processes may not be enough to effectively utilise interventions such as incentives and board oversight. A company should avoid excessive bureaucracy, as it might weaken the impact of actions. Furthermore, it is crucial to acknowledge that the existence of a Chief Marketing Officer (CMO) can enhance the impact of board supervision on consumer engagement. If a Chief Marketing Officer (CMO) takes on multiple responsibilities, they might develop a vital culture of sustainability inside the company by depending on board supervision for consumer involvement. Ultimately, a company must initially choose short- and long-term objectives linked to sustainability. If a company has a short-term focus, it may not derive economic advantages from interacting with suppliers and customers, which is a crucial concern for the company. Nevertheless, even a company that focuses on short-term goals could still gain advantages by including customers and suppliers in the implementation of climate change initiatives and the adoption of corporate social responsibility methods. The long-term orientation of a corporation can lead to economic gains through customer engagement and supplier involvement. Simultaneously, the study advises enterprises to actively include customers and suppliers since this might yield enduring value across various aspects.

8. Limitations and Directions for Future Studies

Although this work examines a relevant and current subject, it has several significant constraints. Our study examined the effects of involving consumers in environmental sustainability efforts on both the performance of firms and the happiness of consumers. However, it is important to consider that there may be additional factors that can influence customer participation. Subsequent investigations should adopt a grounded theory methodology to ascertain and determine these factors. Furthermore, our attention was directed towards the immediate connections between CE and performance results. Subsequent studies could investigate the indirect connections between these variables. Furthermore, our study specifically focused on examining the impact of corporate entrepreneurship (CE) on both company performance and consumer satisfaction. Additional analysis could investigate the primary limitations of CE. Ultimately, we focused only on S&P 500 companies since we have access to their data. Expanding our research to include small and medium enterprises, in addition to the S&P 500, could offer further valuable perspectives. In addition, including companies from emerging economies would enhance our comprehension of the factors that contribute to consumer engagement even more.