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  • Subject Name : Literature Review

Literature Review


Research objective
Hypothesis of the research
Current sustainability in the hospitality industry
McDonalds CSR activities
McDonalds environmental issues
Critically assess the steps to be taken for future sustainable development
Corporate sustainability and financial risk exposure


A well-recognized systematic approach is applied to identify the impact of business activities of the hospitality industry in the environment, its importance in the society and present issues faced by the companies in sustainable development. The relevant articles and literature are used to identify the major issues and challenges faced by companies in sustainable development. This literature review also consists of the example of McDonalds which is famous for the corporate social (CSR) activities. The future aspects of sustainable development are critically discussed in this research. This research comprises the database from the Wiley Online library, business insiders, Emerald and so on. All the necessary journals and books are referred to collect the most authentic and valid information for this research. Furthermore, this research covered the gaps for further research and those aspects of the study that have not been covered yet.

Research objective

The main objectives of this research are as follows
To identify the impact of hospitality business or industry in the environment.
To identify the sustainability issues facing in present times.
To briefly analyze the steps to be taken for future sustainable development.

Hypothesis of the research

Hypothesis 1 the hospitality companies or industry adopting the CSR activities as their main business strategy faces lower financial risk exposure than the other companies.


The hospitality companies or industry adopting the CSR activities as their main business strategy faces lower average BV/MV ratios than other companies.

Current sustainability in the hospitality industry

According to Jones, Hillieramp Comfort (2016), the companies are become more aware of the sustainable business practices, in present time as the success of the business is somehow depends on healthy ecosystem and society. The sustainable development capability of the company plays an important role to gain the organizational advantages that include the premium profits. Moreover, he added that the company should only practice sustainable development when there is a financial advantage immerged from it. The ultimate goal of the company is to enhance the profit. Window dressing will not provide long term advantage to the company should not adopt that strategy which might reduce their market share as well as reputation.
In addition to it, He, Li, amp Tang(2012) says that sustainability is very crucial for the hospitality sector. These industries are having an immense impact on the environment through durable and consumable goods, water, energy and other waste creation that are hazardous too. The hotels need to take care of the proper disposal of the waste which is generated by used papers, batteries, bulbs, appliances and so on. Moreover, most of the people think that green operation can be done for sustainability. But it is very expensive and the guests are not interested in sustainability. The company might suffer from the lost if adopted.
On the other hand, Cornell Universitys center for hospitality research stated that green operation is very essential and useful for sustainability. It will contribute to the companys image and goodwill that sustainability is prime strategies for the company. In addition to it, the company takes care of the cleanliness of the environment. This strategy creates a very good image in the customers mindset and hence promotes the company to others as well. The advancement in technology has improved the techniques of using these kinds of energy in the industry.
He, Li, amp Tang (2012) and Jones, Hillier amp Comfort (2016) have given a similar point of view on the sustainable development in the hospitality industry. Both are supporting the activities which enable the company for sustainability. In contrast to both of them, Cornell Universitys center for hospitality research has given a different point of view. He promoted green operation for sustainability which was opposed by both the authors.

McDonalds CSR activities

Mujtaba amp Cavico (2013) has to define corporate social responsibility as taking the responsibility of the society by commitments of improving the standard of living of employees, their families and society as a whole in an ethical manner. It is very difficult for the hospitality industry to deal with corporate social responsibility as it is directly related to the consumers health. He further added that McDonalds has taken issues like obesity into consideration and make some changes in the strategies. The company changed its menu completely and thereby include some food which is good for health. The company has started serving buns that are made from grains. They are also working to reduce sugar and artificial fats in its food. McDonalds always try to serve best for their customers.
Lindgreen amp Swaen (2010) has added that McDonalds has certain collaboration with the NGOs Nutritionist Steering Group in Europe, Global Advisory Council for balanced Active Lifestyle along with Green Peace. The company has taken this step to make people aware of the companys contribution towards social responsibility. Moreover, McDonalds has also provided health education among the people, hence they collaborate with Alliance for Healthier Generation. This collaboration had developed the Clinton Global Initiative. After the collaboration of the company, low-fat dairy products, vegetable, fruits, and salad has added to the menu. The company always provides what consumer demands. Consumers are the king of the company. They follow the demand in the market and make the strategies to attain them. The company has made some other collaboration to make its food healthier. Earlier, people have a tendency to avoid fast food like burger and pizza. But McDonalds has set a new trend in the market by providing fast food in a healthier way.
Other researchers have also said that McDonalds has created a different identity in the market. Considering the growing population and diversity, the company adopt the local culture where they are serving. The menu varies from place to place according to the customers taste and preference.
From all the three cases, it can be found that all the authors and researchers mentioned above are supporting the company in respect to the CSR activities held by them. Being a responsible entity in the market, McDonald has done an excellent job in taking CSR initiatives. Various programs, charity, campaigns, and contribution to the development of society and protecting the environment has made the company one of the best CSR serving to the globe.

McDonalds environmental issues

According to Tate, Ellram amp Dooley (2012), McDonalds has faced many environmental issues. The main issue was global warming. The greenhouse gas from cows and demand for beef and grains damages the rainforest. McDonalds is the largest beef selling company in the world who uses more than 350000 beef per year. Moreover, the meats used for the burger are also cattle from the privatized farms which are not reported as eco-friendly farms. The company is also destroying the forest which becomes a major reason for global warming.
Furthermore, according to the study, it was found that these factors will ultimately affect the agriculture and environment which will affect the production of fast food. The crop production will also decline and the company will have to suffer for the ingredients of the food. It was also found that the farmers will shift to new land when they found it too warm or too cold. This will decline the revenue from food production. The disturbance in nature can disturb eco-system which will further damage the production. As the company is serving food beverages, they have to take care of the climate. The climate may affect transportation as the cost of fuel used in transportation will be high.
By observing both cases, we can detect that McDonalds has faced many environmental issues which they need to overcome and make new policies supporting the environmental factors. Both cases are highlighting the problems which the company might face in the future. All the above-mentioned issues can affect the future growth of the company. Moreover, the company is considering the demand of people very well but they are not promoting and encouraging the activities which are less harmful or harmless for the environment. The people will not support the company if they experience that their food is contributing to global warming and any other environmental issues.

Critically assess the steps to be taken for future sustainable development

Johnston (2013) has stated that sustainable development is the basic requirement of any successful company. Sustainable development is connected to customers and society. The companys image and goodwill are based on the customers feedback. If the society is not happy with the company management of waste, production and so on. They will not like the companys product. The community which is surrounded by the company plays a vital role in making the company succeed or fail. It was found that the company needs to take some future sustainable development steps to contribute to the environment. The finding of this study reveals that the hospitality company should use the eco-friendly process of production. Moreover, the company should not buy any product that supports deforestation and environmental damage.
Christen amp Schmidt (2012) has recommended that the company should have a team or department for the environmental care that is responsible for any environmental issues arises. The company must use eco-friendly resources and promote the recycling process for sustainable development. In the case of the hospitality industry, the company should take care of the ingredients and its source. The process of production must be environmentally friendly.
Corporate sustainability and financial risk exposureAccording to Busch amp Hoffmann (2011) says that the relationship between sustainability and financial risk is very important for the financial department. It can affect the cost of capital, financial capacity, investments and so on. In this literature review, a hypothesis is that the hospitality companies or industry adopting the CSR activities as their main business strategy faces lower financial risk exposure than the other companies. According to the findings and research, the results are supportive of the hypothesis1. The ratio of equity and debt is positively affecting corporate sustainability. The higher financial leverage enhances the volatility to net income which provides the finance to the manager to contribute to the sustainable development (Weber, Scholz amp Michalik, 2010). The higher management tolerance of the company influences the social, environmental and financial sustainable activities.


After the analysis of the market and considering the views of the authors and researchers, it can be concluded that sustainable development plays a vital role in the success of the company. Moreover, it provides financial support to the company. It was analyzed that most of the researchers are lacking in identifying some of the gaps which are necessary to be fulfilled. One of the best market leading company McDonalds has known for contributing to sustainability. On the other side, it was also found that being the leading company in the market. McDonalds has also faced many environmental issues on which they are performing to solve. Corporate sustainability and financial risk are very vast area to analyze. So, there are many more researches to be done to get the most appropriate result. This literature review also intended towards the current sustainability in the hospitality industry. The hospitality industry needs to focus more on the use of sustainable development. Furthermore, it was found that the consumers will not compromise in the quality of the food however, the company needs to provide the best food to the consumer with the best utilization of the resources to without harming the environment.
It is also revealed that McDonalds needs to focus more on environmental factors as it will further effects their production and transportation. Moreover, any disturbance in the climate will directly affect the production of the products. So, the main aim of the research is to understand and identify the impact of sustainability in the hospitality sector. This literature review can be further used to improve the strategy of the company based on environmental factors. The outcome of the research can also be used for the analysis of the hospitality industry in favour of sustainability.


Busch, T., amp Hoffmann, V. H. (2011). How hot is your bottom line Linking carbon and financial performance. Business and Society, 50(2), 233265.
Christen, M., amp Schmidt, S. (2012). A formal framework for conceptions of sustainabilitya theoretical contribution to the discourse in sustainable development.Sustainable Development,20(6), 400-410.
He, T., Li, W., amp Tang, G. (2012). Dividends behavior in a state versus familycontrolled firms Evidence from Hong Kong. Journal of Business Ethics, 110, 97112.
Johnston, L. F. (Ed.). (2013).Higher education for sustainability Cases, challenges, and opportunities from across the curriculum. Routledge.
Jones, P., Hillier, D., amp Comfort, D. (2016). Sustainability in the hospitality industry Some personal reflections on corporate challenges and research agendas.International Journal of Contemporary Hospitality Management,28(1), 36-67.
Lindgreen, A., amp Swaen, V. (2010). Corporate social responsibility.International Journal of Management Reviews,12(1), 1-7.
Mujtaba, B. G., amp Cavico, F. J. (2013). Corporate social responsibility and sustainability model for global firms.Journal of Leadership, Accountability and Ethics,10(1), 58-75.
Tate, W. L., Ellram, L. M., amp Dooley, K. J. (2012). Environmental purchasing and supplier management (EPSM) Theory and practice.Journal of Purchasing and Supply Management,18(3), 173-188.
Weber, O., Scholz, R. W., amp Michalik, G. (2010). Incorporating sustainability criteria into credit risk management.Business strategy and the environment,19(1), 39-50.
Zhang, J. J., Joglekar, N. R., amp Verma, R. (2012). Exploring resource efficiency benchmarks for environmental sustainability in hotels.Cornell Hospitality Quarterly,53(3), 229-241.

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