Revisiting the relationship between environmental and financial performance: The moderating role of ambidexterity in logistics

Research has shown the need for business organizations to be ambidextrous, which means they should possess the ability to simultaneously exploit existing competencies and explore novel opportunities for improved organizational performance. Past evidence suggests that corporate environmental and financial performance may benefit from well-organized logistics operations. Meanwhile, the causality between the performances has been continuously debated, and the role of ambidexterity in the relationship is largely unexplored. We argue that ambidexterity in logistics operations enhances the link between environmental and financial performance. Using longitudinal data from Finnish manufacturing and trading firms, we applied regression analysis to test a theory driven moderation model. Our findings indicate that ambidexterity in logistics operations affects the strength of the virtuous cycle between environmental and financial performance. Notably, the stronger the explorative orientation in logistics in a firm, the more enhanced the link between their environmental and financial performances. Overall, firms may find it challenging for their available resources to be employed for environmental and financial sustainability unless they are ambidextrous. Financial resources and environmental investments are necessary conditions but not sufficient for performance improvements in themselves; they need to be coupled with a desire to seek new, innovative solutions rather than just exploit existing practices. Combining exploitative and explorative orientations in logistics helps businesses meet divergent stakeholder expectations and translate their resources into performance. To this end, logistics operations should be organized to support organizational performance through an active search for new solutions as well as investments to develop both existing and new logistics practices.