The link between environmental and economic performance has been widely debated in the literature for the last ten to fifteen years. One view is that improved environmental performance mainly causes extra costs for the ®rm and thus
reduces profitability. However, also the opposite has been argued for: improved environmental performance would induce cost savings and increase sales and thus improve economic performance. Theoretical and empirical research have provided arguments for both positions and have not been conclusive so far. This article discusses reasons for the
different views and the differences in empirical research and presents a theoretical framework to explain the coexistence
of the conflicting views. It is argued that not merely the level of environmental performance, but mainly the kind of
environmental management with which a certain level is achieved, influences the economic outcome. The model
presented provides implications for both empirical research and company management in practice. Research and
business practice should focus less on general correlations and more on causal relationships of eco-ef®ciency, i.e. the
effect of different environmental management approaches on economic performance