“Triple Bottom Line” as “Sustainable Corporate Performance”: A Proposition for the Future

Abstract: Based upon a review of corporate performance, corporate financial performance and corporate social performance, we propose that the concept of “triple bottom line” (TBL) as “sustainable corporate performance” (SCP) should consist of three measurement elements, namely: (i) financial, (ii) social and (iii) environmental. TBL as SCP is proposed to be derived from the interface between them. We also propose that the content of each of these measurement elements may vary across contexts and over time. Furthermore, TBL as SCR should be interpreted to be a relative concept that is dynamic and iterative. Continuous monitoring needs to be performed, adapting the content of the measurement elements to changes that evolve across contexts and over time in the marketplace and society. TBL as SCP may be seen as a function of time and context.


The outcome of management processes, from strategic planning to implementation of the plan, underpins the measurement of corporate performance. Thus, corporate performance refers to the end result of management processes in relation to corporate goals. Daft defined corporate performance as the organization’s ability to attain its goals by using resources in an efficient and effective manner.

There are different perspectives on the measurement of corporate performance in strategic management literature. For example, Ventrakaman and Ramanujam divide corporate performance into operational and financial performances. Operational performance includes:

(i)                  market share,

(ii)                product quality, and

(iii)               marketing effectiveness.

Financial performance is broken down into two subcategories:

(i)                  market-based performance (e.g., stock price, dividend payout and earnings per share) and

(ii)                accounting-based performance (e.g., return on assets and return on equity).

The concept of corporate performance in accounting literatures refers normally to financial aspects such as profit, return on assets (ROA) and economic value added (EVA), using the nick name of ―the bottom line. Kaplan and Norton coined the extended measurement of corporate performance as balanced scorecard, where the core idea is to balance the domination of financial and non-financial aspects in corporate performance. Kaplan and Norton’s extended corporate performance is in line with the measurement of corporate performance by Ventakraman and Ramanujam.

Simons defines corporate performance using an approach of market mechanism by which the company actively interacts with the financial, factor and customer product markets. In the financial market, the corporate performance strives to satisfy shareholders and creditors in the form of financial indicators. In the factor market, such as suppliers and other production owners, the corporate ability to pay in time and in agreed amount are important in evaluating corporate performance. Finally, from the perspective of customer product market, corporate performance will be evaluated by parties in the market based on the ability of the corporation to deliver value to customers with affordable price which is the net effect, in turn, will be indicated in the corporate revenue.

Overall, Simons’ view of corporate performance parallels the ―input-output‖ view of a company, suggesting that the existence of a company is due to mere contributions by stockholders/investors, suppliers, employees, customers, with the hope of return for each party through market mechanism. One difference between Simons and Donaldson et al. is that in Simons’ work, supplier and labour are the same market (factor market), while Donaldson et al. refer to these two parties as separated to picture the flow of input and output.

Different aspects of corporate performance have been important in strategic management and accounting research. Research has examined the construct of performance (both in corporate and managerial perspectives) and relating to other constructs such as:

(i)                strategy,

(ii)               business environment,

(iii)             control system and

(iv)             organization structure.

Furthermore, contemporary research continues to be developed by focusing on the predictors of corporate performance as done by Langfield-Smith, with the findings that factors affecting corporate performance are matching the business environment, the strategy, the internal structure, and the control system. Previous studies often define corporate performance by focusing on the financial aspects. Not only does the corporate performance imbalance the financial aspect and non-financial aspect, but the performance also does not accommodate other parties outside the market system. Therefore, the concept of corporate performance needs to be extended to consider the aspects of people (social) and planet (environment) as important parts of a company’s performance. This paper focuses on an extended corporate performance labelled as ―triple bottom line as ―sustainable corporate performance‖ (SCP) including three interlinked measurement elements, namely:

(i)                financial,

(ii)                social, and

(iii)               environmental.

For this purpose, this paper reviews ―corporate financial performance and ―corporate social performance‖ leading to ―triple bottom line as ―sustainable corporate performance‖ ending with a proposition for the future.

Read the full article here in PDF format.

Citation: Fauzi, H.;Svensson, G.;  Rahman, A.A. “Triple Bottom Line” as “Sustainable Corporate Performance”: A Proposition for the Future. Sustainability 2010, 2, 1345-1360.

One Response to ““Triple Bottom Line” as “Sustainable Corporate Performance”: A Proposition for the Future”
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  1. […] This post was mentioned on Twitter by Brigitte Goddemeyer, Professor Paul. Professor Paul said: Sustainable corporate performance – interesting viewpoint. http://bit.ly/aOHTyC #CSR #Sustainability #Economics […]

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