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External changes
The impossibility of having a direct control over the whole product life cycle
and the multi-dimensional nature of the “green” competencies induce an
innovative firm to define co-operative relationships with external stakeholders
and consider communications a basic element for the amplification of the
achieved environmental results.
From an operating viewpoint, executives should be engaged with the
introduction of vertical co-operation along the supply value chain (suppliers
and customers). Specifically, in the case of suppliers, it is often a matter of:
• exchanging information frequently with them to better evaluate the
environmental properties of the supplied materials and to identify how
they affect the overall environmental performance of the end product. In
the light of this issue, it is clear that a significant change in the suppliers’
attitude towards customers is required, since they must be available,
with the aim to achieve a supply value chain advantage, to disclose all
JOCM the necessary information, even if it may imply some disadvantages in
11,2 the short term;
• Providing them with a significant support for the improvement of their
environmental management system. In this respect, within our empirical
investigation, a significant share of the (large) sample firms (ABB-Italy,
Ciba-Italy, Dow Chemical, Fiat, IBM, SGS) declared themselves
106 committed in the development of new management solutions specifically
addressed towards suppliers who do not have enough competencies and
resources to organise effectively their environmental management
system.
Regarding customers, two basic elements must be carefully considered for the
successful implementation of innovative environmental programmes. It is
important to identify the innovation-oriented and trend-setting customers with
whom new solutions to the problem of environmental protection can be tested;
they usually represent the major source of weak signals which have led
corporate managers to develop the “green” innovation. Second, companies need
to define, with customers, new relationships aimed at taking back end-of-life
products, thus facilitating the development of recycling-based initiatives. Such
a change in the customer-supplier relationships has a basic importance, since it
is expected that in few years new regulations, forcing the industrial system to
take back their goods, will be introduced; the Töepfer German law is a
meaningful example: when it was promulgated, in 1993, it had dramatic
implications on those firms that did not modify their management systems and
relationships with supply value chain partners to recover their product
packaging.
Again, in terms of co-operative relationships, it must be noted that the
complexity of the “green” challenge (impact on a wide set of technologies and
radical modification/s of the corporate management processes) often requires
executives to introduce and/or modify their relationships with non-traditional
stakeholders, i.e. competitors and research centres involved in the
environmental field. Specifically, horizontal co-operation with competitors
becomes important when environmental protection cannot be viewed as a
market advantage, but when a uniform course of action is required to avoid
competitive disadvantages, resulting, for instance, from the perceived
environmental risk associated to the operations of firms operating in a specific
field – this is the case in the “Responsible Care”, an industry-wide programme-.
However, joint projects with external research institute/s (private and public
research centres which have accumulated knowledge in relation to specific
environmental problems) are fundamental to deal with the development of:
• new “green” products. Indeed, it is very unlikely, even in large and multi-
national firms, that all the competencies to launch a product innovation
are available in a single company. Within our empirical investigation, for
instance, the Fiat group – the biggest Italian car manufacturer –
developed a research project, jointly with external research centres, to
eliminate polyurethane from car bumpers, thus making the recycling Seeing ecology
process feasible; innovations as a
• new “cleaner” technologies, permitting a significant breakthrough in the source of change
company’s impact on the eco-system. Within our sample firms, SGS-
Thomson invested significant financial resources to develop a research
project jointly with an Italian university and aimed at reducing the
quantity of PFCs emitted from its sites. 107
Regarding communications, two types of changes appear important for the
successful implementation of innovation-based environmental strategies. Their
adoption requires corporations first to view some stakeholders from a new
perspective; specifically, in determining which environmental themes achieve
political relevance, the media are important amplifiers, not selectors. Hence,
they are simultaneously a major instrument of, and a target group for,
environment-related communication activities: companies operating in
industries characterised by a high environmental risk of their operations (for
example, chemicals) experimented with pro-active media strategies in a
continuous manner with some success, thus reducing conflicts with local
communities and public institutions.
Second, executives need to modify the tools they adopt to communicate to
external stakeholders the achieved environmental results and the intended
“green” strategies. In this respect, the environmental reporting practice must
change, ensuring a complete disclosure of information, as well as better
reliability of the collected data. Indeed, one of the major problems which did not
allow companies to establish an effective dialogue with external stakeholders
(governments, regulators, local and financial communities) was the
impossibility for the reader to understand precisely how a company’s
operations and products affected the state of natural resources and to trust the
reported information. Many studies have been suggested to support executives
with new frameworks for external communication on environmental issues
(Adams, 1992; Forum of Environmental Reporting, 1995; Gray and Stone, 1994);
most of them highlight the importance of introducing both:
(1) qualitative information characterising the adopted environmental
policies and the developed environmental management system; and
(2) quantitative data describing specific impacts on the eco-system resulting
from the corporate activities.
In light of the above issues, it is clear that the traditional boundaries of
corporations no longer apply, since product stewardship requires a view of and
control over the whole life cycle of the product. In particular, it is the authors’
opinion that the growing importance of the ecological dimension, both in
competitive and economic terms, implies a change from a company’s value
chain concept to a fuzzy supply value chain logic. This means that the success
of an innovation-based “green” strategy does not only depend on the
executives’ capacity to manage the corporate activities, but also on their ability
JOCM to integrate the company’s value chain with activities of the other supply value
11,2 chain partners (Steger, 1996). Hence, within this view, all activities along the
fil ière must represent the reference system for managers who aim at
introducing successful environmental (product and process) innovations; thus,
the boundaries of the corporate value chain become fuzzy.
Conclusions
The growing importance of the ecological variable requires executives to
modify their business strategies. The above discussion highlighted that over the
last few years three options were available to managers (a re-active, an
anticipatory and an innovation-based pattern of environmental behaviour) to
deal with “green” issues; but, it also demonstrated the importance for firms to
anticipate the expected evolution of the external context, because of the
continual renewal of the stakeholders’ environment related requirements.
Unfortunately, only a limited number of firms consider the environment as
an important factor of strategic change; hence, the question is: “what is the
future of the ecological dimension?”. In this respect, two different scenarios can
be identified:
JOCM (1) Ecology is one of the announced revolutions. Like quality, time, flexibility,
11,2 with the risk that employees are not motivated to change their mind-set.
The case of ABB, within our sample, effectively clarifies such a situation:
when different Italian sites achieved environmental certification
according to the EMAS scheme, employees did not any pay attention to
“green” issues, thus overlooking the certification itself.
110 (2) The need to improve a company’s environmental performance is seen as
a major source of change, leading significant modifications of the reward
systems and of the corporate relationships with external stakeholders.
This is the case in the Fiat group which, to introduce a recyclable car,
modified its relationships with supply value chain partners (suppliers
and shredders) to make the return and the recycling of end-of-life
components possible.
Of course, the latter business stance towards environmental management is
preferable for two main reasons:
(1) in ecological terms, because of the growing scarcity of natural resources;
and
(2) in competitive terms, since the speed of change in the stakeholders’
environmental requirements will be so high in the short term that only
those firms which have implemented early programmes will be
competitive in the long run.
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