Empirical research on Sustainability Management

Essay , 2005 , 13 Pages , Grade: 1,3

Business economics - Operations Research

Environmental management practices are influenced by :
- external stakeholders such as governments, regulators, customers, competitors, the community, environmental groups and industry associations
- firm characteristics and organizational structure
- industry effects

Analyzing the possible reactions of the actors involved in these three aspects could help finding out the implications of a given trend in the reality of environmental management in ten years time.

Contents

1. Status and trends of environmental management
1.1 What is affecting the development of environmental management?
1.2 “Small enterprises are rather passive” – implications
1.2.1. External Stakeholders
1.2.2. Firm characteristics and organizational structure
1.2.3. Industry effects

2. Influence of social management and performance on economic performance and competitiveness
2.1 Findings
2.2. Differences between the findings of earlier and recent studies
2.3. Milestones and obstacles of empirical analysis

3. Non-financial reporting
3.1. Social demands faced by companies regarding non-financial reporting
3.2. Spillover effects of non-financial reporting

4. The empirical evidence on the Porter hypothesis
4.1. Difficulties of empirical testing of the Porter hypothesis
4.2. Ways to overcome empirical testing difficulties

Literature
Internet links

1. Status and trends of environmental management

The following ten trends are named in the Ökoradar survey carried out in 2002^[1]:

1. The number of sustainability oriented companies is increasing
2. Sustainability oriented companies have a better business performance
3. Companies in environmental sensitive sectors are more active in sustainability matters
4. Small enterprises are rather passive
5. Self commitment beyond regulatory compliance is not yet well established
6. Social effectiveness is not yet a field of action
7. Social standards are rarely used
8. Environment protection stays an important issue
9. Environmental Management Systems are only found in bigger companies
10. Environmental Management is used for image reasons

It is difficult to isolate one of the trends and find out its implications for the reality of environmental management since:

a) there is a strong correlation between all trends
b) there is a number of factors playing a role in the development of environmental

management, which should also be taken in mind

Nevertheless, it is possible to develop a hypothesis assuming all other trends are held constant (ceteris paribus).

1.1 What is affecting the development of environmental management?

The trends described in the Ökoradar survey are to be seen as “effects” of several “causes”. Forecasting the changes in environmental management due to the endurance of a given trend requires the assumption of the isolated trend as the “cause” and not any more the “effect”.

Environmental management practices are influenced by^[2]:

- external stakeholders such as governments, regulators, customers, competitors, the community, environmental groups and industry associations
- firm characteristics and organizational structure
- industry effects

Analyzing the possible reactions of the actors involved in these three aspects could help finding out the implications of a given trend in the reality of environmental management in ten years time.

1.2 “Small enterprises are rather passive” – implications

1.2.1. External Stakeholders

Assuming that stakeholders are interested in promoting environmental management practices in enterprises, these would react in the following way:

Governments: the passivity of small enterprises is, as declared in the Ökoradar survey, caused by financial constraints. In order to alleviate this hindrance the government interested in promoting environmental management practices, would develop programs of financial aid for small enterprises. This can be e.g. in form of tax reduction for environmentally friendly enterprises.

Regulators: strong regulations would discourage small enterprises from introducing environmentally friendly business practices due to lack of financial resources for investing in innovative technologies. Since their activities do not affect the environment in the same dimension as those of the bigger sized ones, they could be stimulated with special, milder regulations.

Customers and competitors: enterprise customers of small businesses could be negatively affected by non-environmentally friendly suppliers. These customers could renounce to the business relation and look for other suppliers. Retail customers’ pressure could, in the same way, negatively affect small enterprises’ performance if, environmentally friendly products could alternatively be obtained from competitors. In this aspect, small enterprises would suffer from not adapting to the demand’s trend rather than negatively affect the development of environmental management at all.

Community and environmental groups: pressure groups and the community shed light on rather larger than smaller enterprises since, among other reasons, the environmental damage of small enterprises is rather insignificant compared to the impact business activities of bigger companies can have on the environment. If, except small enterprises, all other businesses would implement environmental management practices, this could change and the pressure focusing small businesses would grow. Furthermore, if government and legal regulations are modified intending to reduce the hurdles which have been stopping small companies from acting in an environmentally friendly way, pressure groups would not see any reason for small companies to refuse the introduction of such practices.

Industry associations: depending on the grade of market concentration within an industry, small enterprises supplying a few big players are more likely to be forced by their customers to implement environmental management practices than in a more fragmented industry.^[3]

1.2.2. Firm characteristics and organizational structure

Depending on the type of business and their organisation, the implications of small enterprises’ passivity for the reality of environmental management can be either of significant or just unperceivable measure.

In most of the cases, the benefit small enterprises can have from introducing an environmental management system may not compensate the effort.^[4] It would be just under the favourable (government and legal regulations) or adverse (competitors, customers and social pressure) conditions above explained, that the implementation of environmental management practices would pay off.

Being part of the supply chain of e.g. a multinational company, small businesses would indeed play an important role since their conduct could stop their customers from complying with environmental requirements.

Small businesses serving end consumers or those in e.g. the printing industry whose customers do not see the benefit of paying higher margins for the sake of sustainable development, would keep reluctant to follow environmental management practices.^[5] In this case, the market pressure would not exist. The implications for other businesses fulfilling environmental expectations would be minimal or null.

[...]

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^[1] http://www.oekoradar.de/imperia/md/content/pdfdokumente/51.pdf

^[2] Delmas, M., Toffel, M.W. (2004): „Stakeholders and environmental management practices“ Business Strategy and the environment 13, 209-222,

^[3] Delmas, M., Toffel, M.W. (2004): „Stakeholders and environmental management practices“ Business Strategy and the environment 13, 209-222,

^[4] Schulz, F.W., Gutterer, B., Sprenger, R.U., Rave, T. (2002): „Nachhaltiges Wirtschaften in Deutschland. Erfahrungen, Trends und Potenziale“ Ökoradar: Hohenheim. Seite 10.

^[5] Goldsmith, S., Samson, D. (2005): “Sustainable Development and Business Success. Reaching beyond the rhetoric to superior performance.” Foundation for Sustainable Economic Development. University of Melbourne Page 44.

• College: University of Lüneburg
• Grade: 1,3
• Author: Elena Rueda (Author)
• Publication Year: 2005
• Pages: 13
• Catalog Number: V74359
• ISBN (eBook): 9783638635073
• ISBN (Book): 9783638820288
• Language: English
• Tags: Empirical, Sustainability, Management