Business Strategy and the Environment

While both fundamental types of abatement measures mitigate the adverse environmental impacts of production, cleaner production technologies are frequently more advantageous than end-of-pipe technologies for environmental and economic reasons. This paper analyzes a variety of factors that might enhance firms’ propensity to implement cleaner products and production technologies instead of end-of-pipe technologies. On the basis of a unique facility-level data set derived from a recent OECD survey, we find a clear dominance of cleaner production in seven OECD countries: Surprisingly, 76.8% of the facilities report that they invest predominantly in cleaner production technologies. With regard to environmental product innovations, the large majority of facilities reports that the measures they have undertaken to reduce environmental impacts were geared at production processes and not so much at products. Our estimation results are based on multinomial logit models which indicate that regulatory measures and the stringency of environmental policies are positively correlated with end-of-pipe technologies, while cost savings, general management systems, and specific environmental management tools tend to favor clean production. We conclude that improvements towards cleaner products and production may be reached by the continuous development and wider diffusion of these management tools. Improvements may also be stimulated by widening the cost gap between the two types of technologies, for instance, by additionally charging for waste and energy use.

A trend towards softer regulation, especially in the form of negotiated environmental agreements, is observable in national and international environmental policies. Such agreements are controversial, because there are fears that government will relinquish its responsibility for environmental protection. This paper analyses recent experiences with voluntary agreements in Germany. Topical German examples that have prompted public debates include the takeback agreement for cars, the voluntary agreement made by a number of industries on a C02 reduction by the year 2005 and the voluntary agreement made by the automobile industry on the development of energy-efficient cars. Proponents of voluntary agreements argue that this instrument provides incentives to the business sector for the development of efficient, innovative and environmentally-friendly solutions. Analysing the examples mentioned above, we conclude that it is hard to detect solutions derserving such attributes. These agreements are unlikely to produce results that go beyond what industry would have done in any case and they avoid using economic incentives. The agreements are' non-binding and unenforceable, with the negotiating process leading to a watering down of the environmental goals government had originally aimed at. A preference for negotiated solutions on principle, as currently espoused by the Federal Government in Germany, seems to be counterproductive. If the government clearly signals its willingness to refrain from using regulatory or economic instruments in favour of industry agreements, it weakens its negotiating position. The government also limits its options should the implementation of the agreement prove unsatisfactory. Government needs to be �in control in order to leave its choice of policy instruments open and to be flexible. In a last step, we derive some general conclusions concerning reasonable strategies and applications of voluntary agreements within the European Union. --

The study assesses net employment effects of technical progress which can be expected by the ongoing transition from end-of-pipe technologies towards cleaner production. Empirical evidence is presented on the basis of case studies and panel data including a telephone survey in German industry. The main result ist that cleaner production leads in more firms to a net creation of jobs than end-of-pipe technologies. However, eco-innovations like other innovations tend to require higher qualification. Thus, the demand for skilled and high-skilled labour rises while the demand for unskilled labour decreases. The results imply that supporting cleaner production is not in conflict with labour market policy. Synergies are identified, they are however small and specific. Thus, technology policy in general and supporting cleaner pro-duction in particular can not be expected to give substantial contributions to the solution of mass unemployment in Germany without using additional instruments (e.g. concerning a reduction of labour costs, increasing flexibility of labour markets).

This essay provides an overview of the 11th International Conference of the Greening of Industry Network held in San Francisco, USA, on 12–15 October 2003. The conference gave Greening of Industry Network (GIN) members the opportunity to debate issues around the theme of Innovating for Sustainability in a location central to technological innovation in the United States. This special issue of Business Strategy and the Environment focuses on the diverse interpretations of innovation and their impacts on the different strands of sustainability. The conference was timely in its debates about the nature of innovation from system level to product level, and from technological innovation to innovations in the management of a wide range of stakeholders and the resulting impacts on environmental, economic, social and ethical sustainability. This essay briefly discusses the relationship between innovation and sustainability, and considers the factors that either facilitate progress towards a more sustainable future, or present barriers to achieving sustainability. Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment.

Function-oriented business models or product–service systems (PSSs) are often seen as an excellent means for achieving ‘factor 4’. SusProNet, an EU network on PSSs, showed a more complicated reality. At least eight different types of PSS exist, with quite diverging economic and environmental characteristics. The economic potential of each type was evaluated in terms of (i) tangible and intangible value for the user, (ii) tangible costs and risk premium for the provider, (iii) capital/investment needs and (iv) issues such as the providers' position in the value chain and client relations. The environmental potential was evaluated by checking the relevance of certain impact reduction mechanisms (e.g. more intensive use of capital goods, inherent incentives for sustainable user and provider behaviour etc.). Most PSS types will result in marginal environmental improvements at best. The exception is the PSS type known as functional results, but here liability and risk premium issues, amongst others, need a solution. Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment.

Technological change has a relevant role to play in the transition towards a sustainable industry. However, slow diffusion of clean technologies can be observed in OECD countries. The analysis of the determinants and barriers to clean technology adoption should be a main goal of economists and social scientists. This paper shows that three sets of interrelated factors prevent but also stimulate the widespread adoption and diffusion of clean technology: these are factors external and internal to the firm, conditions of the potential adopters and characteristics of the environmental technology. These factors are included in the so-called ‘triangular model’, which is further applied to the analysis of clean technology adoption in the pulp and paper industry in Spain. The empirical study shows that clean technology adoption decisions are the result of an interaction between these factors, often involving contradictory signals for the potential adopter. The paper closes with some public policy recommendations for the effective and efficient promotion of clean technology diffusion. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

Many developing country small and medium sized enterprises (SMEs) that are exporters see themselves facing a dilemma. They do not know how to respond to the rising social and environmental requirements of global buyers and supply chains and fear that were they to do so they would lose their competitive edge. However, they are aware that if they do not meet these requirements, they will not be able to access new foreign markets and may lose the contracts they already have. To investigate whether practical methods exist for resolving this dilemma, the United Nations Industrial Development Organization (UNIDO) carried out a one year project with 22 SMEs in four Asian countries. The results suggest that well targeted, enterprise-specific efforts to meet corporate social responsibility (CSR) requirements can make a positive contribution to both short-term profitability and longer-term competitiveness. The ‘business case’ for CSR appears strongest in the environmental area, but measures in that area can act as a ‘starter motor’ for tackling more systemic ‘social’ problems. Furthermore, tackling social issues at the workplace can feed back positively to improve the sustainability of the environmental improvement measures. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.

Business is totally dependent on society although we sometimes do not experience it that way. All business, even in their most limited form, confront environmental issues, some more than others. Business leaders will be actively addressing social and environmental issues. These companies will be going for certification to ISO 14001 (EMS) and progressive organizations have moved beyond EMS requirement, seizing control of environmental operations through Total Quality Environmental Management (TQEM). Industry leaders are incorporating environmental thinking into every aspect of their operations. As a long-range plan towards TQEM, an organization can have a road map and a clear model for achieving excellence in the area of Environmental Management. Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment

Formally adopted in 1996 by the International Organization of Standardization, ISO 14001 represents a voluntary international environmental standard, which will likely be adopted by a vast majority of corporations. Its major focus is on the structure, implementation and maintenance of a formal environmental management system. Despite its international acceptance, ISO 14001 is surrounded by controversy and criticism. The literature is clearly divided in its assessment of ISO 14001, which is viewed as a variant of total quality environmental management or a paper-driven process of limited value. In this study, case-based research is used to address the competing views of the standard to show that ISO 14001 registration can be leveraged across the supply chain into a competitive advantage. By looking at ISO 14001 registered firms, we compare different amounts of integration and sustainability in the supply chain. We then posit several research propositions to provide an empirical framework for the impacts of ISO 14001 on supply chain design and how it will evolve in the future. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.

More than 60000 organizations worldwide have implemented environmental management systems (EMSs). About 800 of them are located in Austria. As Austria was one of the leading countries in promoting the EU scheme EMAS, and as there has been no specific study on Austrian experiences with ISO 14001, the purpose of this study is to describe the experiences with and effects of ISO 14001 in Austria. The results show that ISO 14001 often leads to reduced environmental impact, especially in the area of waste. A strong driving force behind implementation is the expected improvement of an organization's image. The average repayment time on an investment in an EMS is less than two years. Legal compliance tends to be difficult to implement, but on the other hand it works well in daily practice. To develop an EMS into a sustainability management system, the two most important challenges are to improve coordination between the EMS and the organization's strategies and to synchronize the EMS with central value chains. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.

I draw upon the dynamic capability model to explore how new process standards influence the ability of manufacturing facilities to improve environmental performance by reducing toxic emissions. The process standards studied are the ISO 14001 environmental management standards, in use since 1996. Hypotheses are developed to account for how early adoption of ISO 14001 and experience with the standards influence emission levels. These hypotheses are tested using a large sample of electronics manufacturing facilities and data from 1996 through 2001. Consistent with theoretical expectations, analyses show that being one of the first facilities to adopt ISO 14001 was associated with lower emissions. Further, a separate effect is due to experience: the longer a facility operated under ISO 14001, the lower its emissions. The paper discusses the implications of these results for theory and policy development. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.

Theoretical as well as empirical evidence regarding the influence of institutional ownership on corporate environmental strategy not only is inconclusive but also reflects experience from either the Anglo-American context or other developed countries. The underlying assumption of most of this literature is that institutional shareholders are always ‘active’ or ‘passive’ in their actions towards corporate environmental strategy. However, this study argues that this relationship might be moderated by various motivations such as legitimizing existence and operations, conforming with industry norms or lessening managerial entrenchment. Econometric analysis, using a sample of Egyptian firms, as hypothesized, demonstrated that institutional ownership exerted positive and significant effects on a corporation's tendency to adopt environmental management standards only when financial resources are available and investment opportunities are limited. A possible explanation of this finding is that Egyptian institutional investors are more likely to use corporate environmental responsibility to offset their inability to confront managerial discretionary power. An implication of this finding is that not only will different types of stakeholder ask for different levels of social and environmental responsibility, but also the same type of stakeholder may ask for different levels of social and environmental responsibility in different contexts. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.

Environmental policy in the UK has tended to reflect orthodox textbook responses, focusing upon standard setting and taxation, both impacting upon the supply side of the economy. In addition, economic agents have the option of legal recourse to settle environmental disputes. Complementing this command and control framework is a growing tendency for firms to subscribe to additional voluntary environmental standards by, for example, registering with an appropriate agency, thereby signalling to others that they have adopted a particular scheme. This growing trend has far reaching consequences for future policy decisions and for financial and environmental performance of the firms. We aim here to identify the attributes of many firms which participate in ISO 14001. We use a probit model to determine, from a vector of firm and industry characteristics at one point in time, what factors influence the probability of firms registering with ISO 14001. We then utilize survival analysis to analyse how these characteristics impact upon the ‘hazard’ of accreditation over time. If significant differences exist between 14001 firms and others, important questions arise for academics and practitioners alike. Are certain types of firm hindered by their firm characteristics? Does the scheme favour larger firms over smaller firms, or high tech firms over low tech? Why do some industries have many accreditations whilst others have none? The analysis of such issues is not only an under‐developed area of academic debate, but also of direct relevance to practitioners within the field of environmental management and policy. Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment

This paper seeks to understand what factors contribute to voluntary adoption of the ISO 14001 environmental management system by private sector facilities in Japan. A model based on regulatory, competitiveness, social responsibility and organization theory is applied to 1999 survey data. Analysis shows systematically different factors to be important indicators of voluntarism in different industries and for facilities at different stages of certification. First adopters and second adopters appear to be fundamentally different types of organizations driven by different internal and external factors. Although results do not indicate a clear causal linkage between ISO adoption and greening activity, evidence shows that at least two different stages of adoption have taken place in Japan and that ISO adoption is associated with environmental action. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment

Institutional theories and resource-based views have suggested that, although they appear similar externally, standardized management systems may be implemented very differently in different organizations. This variability in implementation may be responsible for the heterogeneous performance of these standardized management systems. The current literature on the environmental impacts of ISO 14001 certification has largely neglected this phenomenon. Drawing on our survey of all US 14001 certificate holders, this study finds that great variability does exist in facilities' implementation of ISO 14001 standards. This heterogeneity has a significant impact on the linkage between ISO 14001 certification and facilities' environmental performance. In particular, we find that facilities that integrate ISO 14001 standards into their daily operations are more likely to report improvements in environmental performance. Environmental improvements are also more likely to occur in facilities that include performance management elements in their ISO 14001 standards. Furthermore, both types of facility are more likely to report that ISO certification contributes to this improvement. Neglecting the heterogeneity in facilities' implementation of ISO 14001 standards may explain the instability of findings from the empirical literature investigating the impacts of ISO 14001 certification. Theoretically, this paper informs the understanding of heterogeneous organizational behavior under isomorphic pressures. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.

Building on Hart's natural resource-based view of the firm, this paper reports the results of a case study of the privately owned, high-end outdoor apparel company Patagonia. In this study we examined Hart's three interlinking strategies of pollution prevention, product stewardship and sustainable development, and sought to test whether the resources for their implementation must be accumulated sequentially or whether they can be accumulated in parallel. The case study revealed that Patagonia has made significant progress, and continues to make progress, in each of these three areas. The results also suggested that the company's progress in one area has not necessarily been dependent on progress in another. While acknowledging the limitations of a single case study, we conclude that Patagonia's experience offers strong support for the notion that the resources for implementing strategies towards sustainable development can be accumulated in parallel – as opposed to sequentially. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.

The mechanisms are examined by which environmentally informed business practices and technologies may diffuse through industry as a result of the ‘greening’ of purchasing and supply. The efforts of official bodies in the UK to raise environmental awareness among industrial purchasers are reviewed. It is then argued that the supply chain model is an important way of interpreting the industrial landscape from a green perspective and that it is in some ways a more hopeful and positive starting point for achieving industrial transformation. The results of an analysis of some UK companies practices in using their purchasing policies to ‘green’ their supply chains are presented and opportunities for further research indicated.

Cooperative interorganizational relationships are seen by many as indispensable vehicles for accessing external knowledge and accumulating capabilities. Surprisingly, the question of whether companies can also build capabilities through adversarial relationships has received little attention. This paper reports a study of the learning–action network of a major Anglo-Dutch food and personal care company. The firm's present relationships with consumer representatives and environmental activists are strongly adversarial, due to the recent introduction of genetically modified ingredients. The study shows that companies can still build capabilities in a hostile environment, but that adversity influences capability building processes as well as capability content. Copyright © 2003 John Wiley & Sons, Ltd and ERP Environment.

The purpose of this article is to analyse in what way a conflict in the early 20th century (1904–1911) over a Swedish pulp mill's emissions into air and water impacted on the technology choices and strategies of the mill. The article also analyses what characterized the company's other responses to the complaints, in the form of counter-arguments, as well as engagement of experts. The access to information about the deliberations at the mill's board meetings is very rare in historical studies of company behaviour in relation to the environment, and provides us with a unique opportunity to comprehend in what way business strategies were developed during the course of the conflict. Technology choices are often characterized by the search for knowledge that enables a company to employ existing but not yet developed technical potentials, rather than choices between known technical solutions. We emphasize that this is particularly evident in a case where a company is forced to alter its technology in order to solve previously unknown environmental problems. In spite of a persistent search, the mill did not find any ready-made technological solutions to the environmental problems faced and was therefore forced to engage scientific expertise and even initiate basic scientific research. In 1911, the Swedish Supreme Administrative Court ordered the mill to undertake a number of pollution abatement investments. Interestingly – and partly in line with the so-called Porter hypothesis – the long-run economics of these investments turned out to be more favourable than anticipated prior to the verdict. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.

This essay provides an overview of the Ninth International Conference of the Greening of Industry Network held in Bangkok, Thailand, on 21–25 January 2001. For the first time in its ten‐year history, the Greening of Industry Network (GIN) gathered outside Western Europe and North America, with the theme Sustainability at the Millennium: Globalization, Competitiveness and the Public Trust . To highlight this important event, this special issue of Business Strategy and the Environment will place special emphasis on the Asian region, particularly on the issues confronting the economically less advanced countries. The overarching theme of the conference as well as many of the papers and discussion at the conference was globalization and sustainable development, and the relationship between these two issues. There was a rich if not a divergent perspective on what the relationship implies for the different Asian economies as well as for economically less advanced countries in general. After examining the relationship between sustainable development and globalization in the Asian context, this essay will discuss two themes with important implications for sustainable commerce: stakeholders and civil society and industrial competitiveness and transformation. The essay will conclude with some thoughts on the path that globalization has taken since the terrorist attack in the US on 11 September 2001 and on the 10 year anniversary of the Greening of Industry Network. Copyright © 2002 John Wiley & Sons, Ltd. and ERP Environment

Until relatively recently the majority of large publicly listed UK companies have not produced annual environmental reports. Of particular note is the slow take-up of environmental reporting amongst the UK's top 350 companies, the FTSE 350. Using the results of a postal questionnaire, the reluctance of a majority of the FTSE 350 to voluntarily report is linked to 13 drawbacks. Results from non-reporting respondents to the questionnaire allowed the relative importance of these drawbacks to be placed in a ranked order. Senior management doubt over the advantages of reporting was shown to be the most important drawback, closely followed by the effort required for data collection. A comparison in the uptake of corporate environmental management practices (other than reporting) was also made amongst reporters and non-reporters. Reporters were shown to have a generally higher level of uptake, although company sector type and size was influential on environmental engagement overall. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.

This paper examines the correlation between the excess stock market returns and the adoption of an environmental protocol by companies. The underlying hypothesis that I test is whether evidence of the adoption of environmental policy, prosecution by an environmental agency or the routinized training of staff in environmental protocols, which proxies for the willingness of managers to invest for the long term, is associated with superior economic returns to shareholders. I find that both the adoption of an environmental policy and prosecution for breach of environment standards have significant explanatory power in an analysis of excess returns. Copyright © 2001 John Wiley & Sons, Ltd. and ERP Environment