When Premium Product Strategy Meets Sustainability: Environmental–Economic Trade‐Offs in Japanese Manufacturing

Abstract

ABSTRACT Corporate sustainability has become a central concern for business stakeholders, yet little is known about how premium product strategies shape firms' sustainability orientations and performance. Drawing on stakeholder theory, this study examines whether pursuing premium products is associated with firms' adoption of environmental and economic sustainability orientations and how these orientations, in turn, relate to corporate performance. Using survey data from 128 directors and managers responsible for overseas operations in manufacturing firms listed on the Tokyo Stock Exchange, analyzed with structural equation modelling, we find that a premium product strategy is positively associated with both environmental and economic sustainability orientations. However, their performance implications differ: economic sustainability is positively related to firm performance, whereas environmental sustainability shows a significant negative association. These results suggest that, among Japanese manufacturing exporters, premium product strategies simultaneously foster sustainability ambitions and expose firms to short‐term trade‐offs between environmental and economic outcomes.