Academic journal article Journal of East European Management Studies

Environmental Strategy and Its Implementation: What's in It for Companies and Does It Pay off in a Posttransition Context? *

Academic journal article Journal of East European Management Studies

Environmental Strategy and Its Implementation: What's in It for Companies and Does It Pay off in a Posttransition Context? *

Article excerpt

1. Introduction

Many companies have recently changed their attitudes toward the natural environment by introducing a wide range of environmental programmes (Min/Galle 2001) including: the integration of environmental issues into business processes (e.g. product greening, waste reduction, recycling, energy saving, etc.), integrating environmental management into planning processes, establishing environmental departments, creating environmentally sensitive organisational cultures and communicating the environmental philosophy to customers, suppliers and other stakeholders (Carter/Ellram/Ready 1998). The philosophy of the 'triple P (People, Profit and Planet)' became an important business philosophy that pointed to increased corporate environmentalism (Kleindorfer 2007).

Still, the emergence of corporate environmentalism does not necessarily mean that companies proactively formulate and implement environmental strategies. According to Banerjee, Iyer and Kashyap (2003), there are two sides to corporate environmentalism: environmental orientation and environmental strategy. Environmental orientation is defined as 'the recognition by managers of the importance of environmental issues facing their firms,' while environmental strategy can be understood as 'the extent to which environmental issues are integrated with a firm's strategic plans' (Banerjee et al. 2003:106). In this paper we analyse what companies actually do to include environmental issues in their strategic management, which means we deal with environmental strategies and not environmental orientation.

But research on environmental strategies cannot focus solely on the strategies themselves. Few companies are probably willing to introduce proactive environmental strategies without properly understanding the motives for and results of these strategies. Hitt, Ireland and Hoskisson (2005) even argue that the correct understanding of the motives behind any strategy is critically important for successful strategy development. A company must properly understand why it is doing something before this 'something' can be done in the best possible way. So, do companies execute environmental strategies because they have to or because they want to? In other words, are environmental strategies merely a result of increased local, regional and international regulation or are there also other, more proactive (e.g. an expected increase in profitability ratios) motives underlying them? The question of why a company should or would act environmentally friendly is also closely connected to (the perception of) the results of developing and implementing these strategies. If a company finds out that its environmental strategies lead to improved performance then the motives behind its future environmental efforts may be completely different than if the company had found out that its environmental activities merely produce extra costs and do not contribute to greater profit.

The purpose of this paper is to address these questions and contribute to the body of knowledge on companies' environmental strategies, as well as their implementation in the manufacturing sector of a post-transition economy by systematically addressing two research questions: (1) why do companies incorporate environmental issues into their corporate strategy; and (2) does the development of a corporate environmental strategy and its implementation through functional activities pay off? Specifically, we propose and test a structural equation model that builds on the consecutive link 'motives for environmental strategy → corporate environmental strategy → functional implementation activities → results of environmental strategy'.

The paper contributes to environmental strategy literature in several ways. First, to our knowledge no study simultaneously includes motives, strategies and results in one comprehensive model even though, as we have argued, a proper understanding of the motives for and results of environmental strategies calls for their simultaneous investigation. …

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