Environmental strategy and low waste operations: exploring complementarities

Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment

* Correspondence to: Dr. Dayna Simpson, College of Business, Oregon State University, 200 Bexell Hall, Corvallis, OR 97331-2603, USA. E-mail: [email protected]

Business Strategy and the EnvironmentBus. Strat. Env. 19, 104–118 (2010)Published online 22 September 2008 in Wiley InterScience(www.interscience.wiley.com) DOI: 10.1002/bse.626

Environmental Strategy and Low Waste Operations: Exploring Complementarities

Dayna Simpson1 and Danny Samson2

1 College of Business, Oregon State University, Corvallis, OR, USA2 Department of Management, Faculty of Economics and Commerce, University of Melbourne,

Parkville, Australia

ABSTRACTOrganizations require guidance on the most effective functional areas in which to invest in order to improve and sustain environmental performance. As managerial practices prog-ress from concerns with compliance towards practices seeking competitive advantage, more theory is needed regarding the manner in which corporate strategy and operational practices infl uence environmental performance. This research considers the potential for previously under-researched complementarities between strategy and operations and the bridging role of environmentally specifi c practices such as the use of environmental experts as determinants of environmental performance. Using a sample of manufacturing fi rms, this study explores the relative contribution to environmental performance of strategic intentions, core operational practices such as data and quality management and environ-mentally specifi c practices that link strategy to operations. The most signifi cant infl uence on environmental performance was found to be environmental expertise – which creates a bridge between strategy and operations – and information-intensive practices such as quality and data management. Strategic intentions or core operational practices in isolation were not considered suffi cient support to successfully maintain or improve environmental performance. This research provides a contribution to our understanding of interactions between those functions that have the greatest infl uence on environmental performance management in manufacturing fi rms. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.

Received 22 January 2008; revised 11 April 2008; accepted 14 April 2008

Keywords: environmental performance; environmental management; operation management; environmental strategy

Introduction

INCREASING PRESSURE FROM A RANGE OF STAKEHOLDERS HAS ENCOURAGED THE DEVELOPMENT BY MANY ORGANIZATIONS

of a set of goals and practices that articulate a perspective on interactions with the natural environment (Gupta

and Sharma, 1996; Angell and Klassen, 1999; Jimenez and Lorente, 2001). This growing attention to the

issue of environmental performance has led in recent years to a wave of organizations wanting to claim an

Environmental Strategy and Low Waste Operations 105

Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 19, 104–118 (2010) DOI: 10.1002/bse

interest in ‘caring’ for the natural environment (Bansal, 2005). This has given rise to an increasing number of

public statements of corporate environmental strategy and new types of environmentally themed product and

service. Antecedent theory proposes that the organization’s actions toward managing its environmental responsi-

bilities will be infl uenced by its level of strategic pro-activity (Hart, 1995; Russo and Fouts, 1997; Aragon-Correa,

1998). Owing to the fi eld’s development out of an increasing legislative push to reduce pollution arising from

organizations, however, much of the environmental performance management literature is based on the operation

management function (Gupta and Sharma, 1996; Angell and Klassen, 1999; Jimenez and Lorente, 2001). A stra-

tegic intention by the organization to protect the environment may not necessarily translate into actual performance

outcomes (i.e. pollution prevention, recycling activity or environmentally sound innovation) in the operations

system. Equally, the organization may choose to develop a set of operational practices that support its environmen-

tal performance and later be unable to resolve internal confl icts between environmental performance and other

economically relevant functions of the organization.

A relationship between corporate environmental strategy and the occurrence of environmentally benefi cial

operational or general practices in the organization has previously been explored (Henriques and Sadorsky, 1999;

Klassen, 2001; Aragon-Correa et al., 2004). Very little work however has been undertaken that explores a more

direct connection between strategy, operations and environmental performance within the same organization or

– as is described here – an assessment of the relative importance of one function over another.

The environmental performance management literature is a relatively recent fi eld of research in the manage-

ment sciences (Hoffman, 2001; Bansal, 2005). Two distinct streams or perspectives have emerged from this

literature. On one side, several authors write of the reputational benefi ts possible from incorporating the goals of

environmental protection into the organization’s strategic objectives. On the other side are proponents of the pol-

lution prevention benefi ts arising from combining the organization’s operational objectives with those of environ-

mental protection (Banerjee, 2002). One stream of research is fi rmly value based (strategy) whilst the other is

fi rmly practice based (operations). Much of the research in the environmental performance fi eld has stayed within

one or other of these two domains, with only cursory attention to the overlap, relative infl uence or complementa-

rities with other organizational functions. In much of this research, a strategic focus produces the articulation of

environmental policy or environmentally relevant goals that relate to the values of environmental protection;

an operation focus creates improvements to the manufacturing system that also prevent pollution and generate

environmentally relevant innovations.

A primary proposition of this research is to explore the question of whether or not these two functions are

independent, complementary or perhaps most effective in the presence of a third, bridging function that links the

two more directly to environmental performance. These issues are explored with a sample of manufacturing fi rms

using both a preliminary investigation and an industry survey. The unique contribution of this paper will be to

develop a greater conceptual understanding of the links between strategy and operations in the management of

environmental performance for organizations.

Literature Review

Since the publication of the Brundtland report in 1987 (WCED, 1987), academic and practical discourse has inten-

sifi ed around the issue of why and how organizations might incorporate goals and practices relevant to environ-

mental performance (Pearce and Turner, 1990; Ketola, 2007). The fi eld has expanded from a basic expectation

that organizations will protect the environment only in response to the tightening of regulations into an improving

knowledge of related values, functions and practices that better enable the organization to self-manage. This body

of literature points to a diverse range of fi nancial and structurally benefi cial reasons for organizations to improve

the management of their environmental performance. Early studies established a base from which organizations

could consider ‘why it matters’ (Porter and Van der Linde, 1995; Hart and Ahuja, 1996; Klassen and McLaughlin,

1996). Later studies have attempted to establish a greater understanding of ‘how it works’, focusing on either the

strategic or operational functions of the organization and their relationship to environmental performance (Angell

and Klassen, 1999; Jimenez and Lorente, 2001; Melnyk et al., 2003).

106 D. Simpson and D. Samson


Attempts to internalize the benefi ts of environmental performance for the organization have focused predomi-

nantly on the infl uence of two fundamental organizational functions – strategy and operations. These two distinct

research streams can be seen in Table 1, which provides a summary of the key management studies literature on

environmental performance issue during the last ten years.

As described in Table 1, authors write separately of the fi nancial, operational and reputational benefi ts possible

from including goals of environmental protection in either the organization’s strategic objectives or its operational objectives. The strategic management literature has focused more on the development and inclusion of core values

that act to inform and, most importantly, resolve substantial goal confl icts (usually between cost and environmen-

tal benefi t). The operation management literature has been predominantly concerned with the types of organiza-

tional practice that directly contribute to the reduction of environmental impacts, the reduction of pollution or the

development and import of environmental innovation or technologies.

Environmental Performance as a Strategic Objective

The foundational work of Hart (1995) and Florida (1996) proposed that the fi rm’s strategy toward the environment

should be aimed at going beyond simple regulatory compliance and take a more proactive stance toward emission

control and treatment. They posited that a more proactive environmental strategy would also provide reciprocal

benefi ts to the fi rm’s fi nancial performance. Firms that are highly proactive in their support of the environ-

ment at the strategic level of the organization have also been found to demonstrate high levels of environmental

performance (Aragon-Correa, 1998).

The inclusion of environmentally relevant goals at the strategic level of the organization is described as the

mechanism through which the organization (a) manages the environmental requirements of its primary and sec-

ondary stakeholders, (b) makes choices with regard to its environmental responsibilities and (c) makes choices

with regard to the provision of resources for managing environmental performance at the operational level (Zeffane

et al., 1994; Porter and Van der Linde, 1995; Welford and Starkey, 1996; Theyel, 2000; Jimenez and Lorente,

Positive infl uence on environmental performance Authors

Strategic management focusPressure from stakeholders Sharma and Henriques (2005); Thornton et al. (2003),

Buysse and Verbeke (2003)Strategic planning processes Aragon-Correa (1998); Judge and Douglas (1998);

Henriques and Sadorsky (1999); Kuk et al. (2005); Judge and Elenkov (2005); Epstein and Roy (2007)

Value orientation toward the environment (at the fi rm and managerial level)

Stanwick and Stanwick (1998); Sharma and Vredenburg (1998); Klassen and Whybark (1999); Klassen (2001)

Operations management focusCertifi cation to ISO 14001 Melnyk et al. (2003); Sroufe (2003)Advanced manufacturing i.e. use of practices such as lean,

JIT, or TQMKlassen (2000a); Theyel (2000); King and Lenox (2001);

Rothenberg et al. (2001); Pil and Rothenberg (2003); Lenox and King, 2004; Zhu and Sarkis (2004)

Increased investment in manufacturing or technologies Klassen and Whybark (1999); Klassen (2000b)Increased collaboration, communication or teamwork

amongst staffKing (1995); Kitazawa and Sarkis (2000); Russo and Harrison

(2005)Employee involvement and suggestion schemes Hanna et al. (2000); Kitazawa and Sarkis (2000);

Rothenberg (2003)

Table 1. Major research articles on environmental performance in the management studies literature1

1 Articles listed were derived from a search of journals listed by ISI (2006) as the top 60 ranked journals in the economics and business category of essential science indicators. The search was limited to articles published during the last 10 years that pro-vided empirical data on environmental performance.



2001). Inclusion of these kinds of goal as part of the organization’s strategic objectives has been described by

previous authors as an orientation or an expansion of the organization’s economic function to include environ-

mentally relevant goals that represent a responsibility toward the natural environment (Banerjee, 2002; Aragon-

Correa et al., 2004).

Generally, the organization’s environmental performance has been shown to be higher in those organizations

where the strategic level of commitment toward the environment has taken a more proactive form (Hart, 1995;

Sharma and Vredenburg, 1998; Aragon-Correa, 1998). Strategic commitment alone however may not be enough

to sustain high levels of environmental performance or sustain supporting operational practices (Epstein and Roy,

2007).

Environmental Performance as an Operations Objective

A number of positive relationships have been found between improvements to the manufacturing system and an

organization’s environmental performance, particularly with regard to the reduction of waste. Previous notions of

environmental performance as being external to the operations function have required a re-positioning alongside

or as a part of a modern operations strategy (Gupta and Sharma, 1996; Angell and Klassen, 1999; Jimenez and

Lorente, 2001). The operation management function consumes a majority of natural resources, is responsible for

the maintenance of equipment from which pollution is most likely to occur and generates important innovations

and technologies (Florida, 1996; Angell and Klassen, 1999; Kitazawa and Sarkis, 2000; Klassen, 2000b; King and

Lenox, 2002).

A body of recent research has investigated the mutual benefi ts possible from integrating the goals of operational

effi ciency and environmental performance. Several authors establish a relationship between quality management

practices and the organization’s environmental performance (Klassen, 2000a; Kitazawa and Sarkis, 2000; King

and Lenox, 2001; Zhu and Sarkis, 2004; Curkovic et al., 2008). Other articles explore a relationship between

specifi c operational practices that involve information management and provision (Theyel, 2000; King and Lenox,

2002). In a smaller and more foundational area of research, the involvement of employees has been found to be

highly important to waste reduction (Kitazawa and Sarkis, 2000; Rothenberg et al., 2001; Klassen, 2001; Theyel,

2000). King (1995) found that the use of environmental specialists in operations provided an important source of

knowledge on environmental regulations and technologies. Rothenberg (2003) similarly found that specialist staff

added signifi cant benefi ts to employees already participating in environmental improvement projects by providing

critical access to new knowledge.

The question rarely asked within operations research is whether these environmentally benefi cial outcomes are

sustainable in the longer term or in the face of substantial cost or strategic pressures. Equally lacking in much of

the discussion is the role of more specifi c environmental practices. Most core operation practices (lean, TQM,

teamwork and employee involvement) do not encapsulate more specifi c goals of environmental protection or skills

and knowledge. Deliberate or advanced environmental performance through operations is likely to also require

strategic support over and above the mostly accidental or at least incidental gains described so far by the operation

management literature.

Development of Hypotheses

Organizations run the risk of ‘talking but not walking’ when it comes to the issue of environmental performance.

What can be readily identifi ed from public displays of corporate attention to environmental performance is a greater

publicity of the issue. What cannot be legitimately identifi ed from this promotion however is whether such state-

ments translate into practices, commitment of resources and legitimate improvements to environmental perfor-

mance (Epstein and Roy, 2007). In the following, we develop the supporting hypotheses of this study as depicted

in Figure 1. We propose only limited infl uence on environmental performance arising from either strategic or

operational functions when considered in isolation. We propose that the presence of a third and more environ-

mentally specifi c set of practices that connects strategy and core operations would provide a more effective infl u-

ence on environmental performance.



An organization’s written values, policies and goals toward reducing environmental impact, or its internal and

external expression of a willingness to protect the environment, is defi ned here as corporate environmental strategy.

Only limited research has considered the question of how strategy alone – superfi cial statements of intent without

subsequent development of supportive practices and resource commitment – may or may not support environ-

mental performance improvement. What the organization does (operating practices) is likely to matter as much or

more than simply what the organization states (environmental strategy) with regard to environmental performance

management (Goldsmith and Samson, 2006; Epstein and Roy, 2007).

Previous studies have demonstrated a connection between corporate environmental strategy and use by the

organization of environmentally conscious operational practices. These studies inferred that the presence of cor-

porate environmental strategy frequently led to a greater occurrence of operational practices such as pollution

prevention (Sharma and Vredenburg, 1998; Klassen, 2001), environmentally sensitive product design (Buysse

and Verbeke, 2003), greater inclusion of environmental stakeholders (Aragon-Correa, 1998), environmentally

conscious manufacturing practices (Bowen et al., 2001a, 2001b) and an increasing desire to preserve ecological

integrity (Judge and Elenkov, 2005). Very few of these studies investigate whether the presence of a corporate

environmental strategy on its own may or may not generate environmental performance improvements. The dis-

tinction becomes critical especially as the number of organizations that make statements regarding their environ-

mental performance have increased substantially in the last few years. The presence of an environmental strategy

without the benefi t of operationalized practices may potentially lead to (a) false legitimacy for products and services

amongst stakeholders and (b) cynicism or low prioritization of environmental projects amongst the organization’s

employees and suppliers.

During preliminary discussions with six automotive component manufacturers as part of this study, fi rms with

both high and low levels of environmental performance were visited to establish patterns between strategy, oper-

ations and environmental performance. High performing fi rms tended to exhibit both strategic-level commitment

to environmental performance management and operational practices supportive of effi cient, low waste manufac-

turing systems. Firms with low levels of environmental performance tended to display only a superfi cial level of

corporate environmental strategy. This included statements of an environmental strategy – present in policies,

shareholder reports, in advertising and generally expressed by senior management, though not extended into

investments such as trained and dedicated environmental managers or ongoing projects.

Separation of corporate environmental strategy from the use of environmentally benefi cial practices and envi-

ronmental investment within the organization represents our fi rst hypothesis.

Figure 1. Study model indicating hypothesized relationships



H1. Corporate-level environmental strategies without supporting operational practices will not have a signifi cant infl u-ence on fi rm environmental performance.

In the relationship between strategic commitment and environmentally benefi cial operational practices, low waste

operation practice may generate accidental environmental performance benefi ts. The knowledge that operational

practices which are intended to reduce defects and scrap rates, lower material use costs, lower inventory holdings

and reduce material buffers lead to reducing organizational wastes is well established. An outcome of our pre-

liminary discussions with manufacturing fi rms was the discovery of several organizations that demonstrated

advanced manufacturing performance but low levels of environmental performance. Use of such manufacturing

technique by these fi rms certainly superfi cially assisted with the goal of overall waste reduction but did not con-

tribute anything to the goals of hazard reduction and environmentally sound product innovation. In the work of

Klassen (2000a) and King and Lenox (2002), managers and shop-fl oor staff were likely to miss opportunities of

environmental benefi t because they failed to believe that such opportunities existed until provided with direct data

or evidence. Managers are described as often being discouraged from investing the time and resources in search-

ing or providing relevant information or data to their employees, when strategic commitment is absent (King and

Lenox, 2002, p. 289).

A distinction is made between organizational practices that are environmentally specifi c and those that are envi-ronmentally benefi cial. This becomes important when we consider the increasing use and range of specialized

practices such as environmental management standards (i.e. ISO 14001, 14020, 14064), greenhouse accounting

programs, the Equator Principles, the UN Compact, the GRI, environmental teams, and other examples of practices

or programs that are wholly oriented toward environmental performance management and improvement. A

separation occurs between the types of practice used in the operation system that incidentally ‘benefi t’ environ-

mental performance through an overlap in purpose, and those more environmentally specifi c practices that encap-

sulate the fi rm’s knowledge of and skills in environmental management. Operational practices that have been

demonstrated to incidentally provide reductions in environmental impact through waste and material use reduc-

tions are referred to here as environmentally non-specifi c or environmentally benefi cial practices. These provide

environmental performance improvements from the side-effects of advanced manufacturing technique such as

quality management (fewer defects), lean manufacturing (reduced waste and energy use), problem solving teams

(greater number of innovations) and returnable packaging systems (reduced waste again). These very basic opera-

tional practices do not aid us in understanding the complexity of confl icting goals such as cost versus material

hazard. In the absence of clear corporate environmental strategy, operational excellence may not translate into

long-term environmental performance benefi ts, which leads to the next hypothesis.

H2. Operation practices that are environmentally benefi cial and only indirectly support environmental performance will not have a signifi cant infl uence on fi rm environmental performance.

Rothenberg (2003) and King (1995) described the importance to successful environmental projects of environ-

mental specialists who represented the physical investment of organizational resources in environmental perfor-

mance management. They demonstrated the practical application of a corporate environmental strategy and

provided much needed knowledge enhancement.

During our preliminary study, we visited one organization with high levels of environmental performance that

went to great lengths to ensure that all employees were made aware of the importance of the organization’s com-

mitment to the environment. Across all of the organizations visited during a preliminary study there appeared a

strong culture of environmental performance improvement wherever environmental specialists worked regularly

with shop-fl oor employees. The interaction of these in-house specialists provided expert and environmentally

specifi c information that production employees were able to employ and overlap with their routine production

activities.

Our third hypothesis provides for the connection between strategy and operations by expressing the relevance

of a connective function – that of environmentally specifi c knowledge and resources. This is proposed to be indicated

by the use of specialists who integrate environmental strategy into everyday operation practice.



H3. Operation practices that are environmentally specifi c and intended to directly connect strategy and operations will have a signifi cant infl uence on fi rm environmental performance.

We do not yet understand the interplay between environmental strategy and the operation system. There may be

an intermediate role provided by a set of unique and still developing environmentally specifi c practices that provide

specialized knowledge and add critical value (Figure 1). The testing of H3 will provide the justifi cation or otherwise

for the bridging role that environmentally specifi c practices provide.

Methodology

Owing to the more exploratory nature of this study, a mixed method approach was used to develop hypotheses

and ground a set of concepts for exploratory testing (Snow and Thomas, 1994; Wacker, 1998; Yin, 2003). Several

manufacturing fi rms were visited during 2005 to conduct a preliminary investigation prior to survey development.

During this preliminary study a series of conceptual hypotheses were explored and tested and a preliminary survey

was pre-tested with senior operations managers. These organizations (a) were all ISO 14001 certifi ed with one

exception, (b) were manufacturing fi rms and (c) represented a range of environmental performance levels. Envi-

ronmental performance for each organization was established prior to site visits and used for theoretical sampling

purposes (Glaser and Strauss, 1967; Eisenhardt, 1989). The unit of analysis for both the preliminary study and

industry survey was the fi rm. Following the preliminary investigation an industry survey was developed and mailed

out to organizations in the Australian automotive industry during 2005. This second stage of empirical testing is

described in the following.

Sample and Data Collection

Survey items and appropriate measurement scales were developed after DeVellis (2003). Scales and items used

in the questionnaire, analysis techniques and fi nal results are described in the following sections. The fi nal method

of survey delivery and collection were selected as suggested by Dillman (1999). The survey was mailed out to

respondents and two additional reminder letters were sent. The research sample was sourced from two known

industry databases with up-to-date memberships (400 members in total). Respondents were predominantly

operations managers or managing directors in the smaller fi rms. The instrument was distributed by both mail

and email. Of the 400 surveys distributed, 55 usable surveys were returned, for a response rate of 14%. Such a

response rate could be considered small in comparison with some research (Klassen and Vachon, 2003); however,

other comparable studies exploring environmental performance issues have relied on comparable sample sizes

(Bowen et al., 2001a; Rao, 2002). The study’s exploratory nature also allows for use of a smaller sample size (Hair

et al., 2006). Ideally most studies provide a response rate of over 15%. The sample used for this study however

both (a) meets the minimum recommended size for regression analyses (n = 50 according to Hair et al., 2006)

and (b) provides a sample of fi rms that is representative of the larger population (Table 2) (ILO, 2004; AIG,

2005).

Demographic variable Population1,2 Survey respondents

Average number of employees Between 60 and 500 232Dominant type of organization Component manufacturer Component manufacturer (82%)

Table 2. Population demographics and respondent demographics1 ILO (2004).2 AIG (2005).



To assess the possibility of non-response bias, a comparison of the demographics of the survey respondents was

made to the expected demographics of the larger population and global automotive fi rms using industry reports

(ILO, 2004; AIG, 2005). It was concluded that the responding population was representative of the larger and

target population. Non-response was attributed to ‘lack-of-interest’ bias only (Armstrong and Overton, 1977). Total

missing values in the dataset ranged between 1.8 and 3.6% missing, which is too low to be of concern to the

analysis (Tabachnik and Fidell, 2001). Missing values were replaced using mean substitution.

Measure Development

The fi nal survey was developed from both the preliminary qualitative study and the work of previous authors and

pre-tested with operations managers and senior academics. The fi nal instrument used a fi ve-point Likert scale

(1 = not at all; 3 = to some extent; 5 = to a very large extent).

Environmental PerformanceThe operationalization of a general construct that measures ‘environmental performance’ varies widely across the

management studies literature. Three general types of environmental performance however are predominantly

measured: (a) reduction of pollution, (b) compliance with internal and external regulatory requirements and (c)

management of external stakeholders (Schramm, 1998). Of these outcomes, pollution prevention delivers the most

tangible gains in both economic benefi t to the organization and protective benefi t to the natural environment. The

activities of pollution prevention achieve this through minimizing risks, attaining a greater likelihood of compli-

ance with local and international regulations and meeting the concerns of most stakeholders (Buysse and Verbeke,

2003).

Assuming that the principles and practices of pollution prevention provide the most tangible benefi ts for fi rm

environmental performance, a measure is required that encapsulates waste minimization and effi cient use of

natural resources. In our study, environmental performance was derived in terms of the organization’s perfor-

mance on overall waste reduction and material use effi ciency (Florida, 1996; Kitazawa and Sarkis, 2000). Such

a measure provides comparability to studies that use public database measures of environmental performance

(i.e. the TRI or NPRI).

Corporate Environmental StrategyA measure for corporate environmental strategy was drawn from the fi ndings of previous authors (Banerjee, 2002;

Aragon-Correa, 1998; Henriques and Sadorsky, 1999; Buysse and Verbeke, 2003). In their work an organization’s

environmental strategy has been measured from the perspective of proactivity – the organization describes its

strategy as existing somewhere between an inactive or reactive stance (limited to no environmental strategy) and

an active or proactive stance (comprehensive and highly expressed strategy) (Aragon-Correa and Sharma, 2003).

The strategy should describe a set of values, policy or commitment to environmentally relevant goals (Zeffane

et al., 1994).

An additional item was also included to describe the organization’s willingness to advertise its products and

services as ‘environmentally sound’ or relevant to the environmentally conscious consumer. This item captures

the capacity of an organization to distinguish between ‘saying and doing’. Once the corporate environmental

strategy becomes a part of the organization’s advertising, the difference between fact (legitimate environmental

performance management) and fi ction (no practical environmental performance management) becomes critical.

Operational PracticesWithin the environmentally benefi cial operations literature three continuing themes are evident with regard to

waste reduction for environmental benefi t. These include the importance of employee interaction (for waste iden-

tifi cation and sharing of relevant information), the standardization and provision of information that assists with

waste identifi cation and the use and cultivation of environmental expertise in the organization to increase the

knowledge base of those involved in waste identifi cation and reduction.



Environmentally Benefi cial Operation PracticeSeveral authors have established a relationship between quality management practices and the organization’s

environmental performance (Klassen, 2000a; Kitazawa and Sarkis, 2000; King and Lenox, 2001; Zhu and Sarkis,

2004). Quality management activities provided standardization benefi ts to the process of environmental informa-

tion collection and documentation. Other research has explored the relationship between specifi c operational

practices that involve information management and provision (Theyel, 2000; King and Lenox, 2002). In a smaller

body of research, several authors found empowerment amongst employees and a willingness of employees to make

suggestions for improvement a critical factor in continuous source reduction programs (Kitazawa and Sarkis,

2000; Klassen, 2001; Theyel, 2000).

Specifi c operational practices that are proposed to provide the most benefi t to the organization’s environmental

performance are those relevant to (a) quality and data management and (b) employee empowerment. Two measures

were developed that provided these separate dimensions of environmentally benefi cial operation practice. Quality and data management describes a bundle of operational practices that provide the core elements of quality control

and data management (White et al., 1999; King and Lenox, 2001; Shah and Ward, 2003; Melnyk et al., 2003).

Employee empowerment describes a bundle of operational practices that facilitate employee collaboration and

empowerment in the trialling of ideas and making suggestions toward improvements (Kitazawa and Sarkis, 2000;

Theyel, 2000; Rothenberg et al., 2001; Klassen, 2001).

Environmentally Specifi c Operation PracticeSeveral researchers have identifi ed a signifi cant relationship between ISO 14001 certifi cation and environmental

performance (Kitazawa and Sarkis, 2000; Melnyk et al., 2003). The core practical elements of the ISO 14001

standard are environmental policy, continuous improvement and data management. The core enabling feature of

these types of specialized management standard is arguably the augmenting role of specialized knowledge and

awareness that the standard introduces to the production system.

Specialist staff add signifi cant benefi ts to employees already participating in environmental improvement proj-

ects by providing critical access to new knowledge (King, 1995; Rothenberg, 2003). Environmental Expertise describes a bundle of practices that bridges corporate environmental strategy and the operations function. The

commitment of resources by the organization is assessed by the provision of dedicated environmental specialists

(King, 1995) or experts. The integration of these specialized resources is assessed by the level of availability and

involvement of such specialists (Rothenberg, 2003; Lenox and King, 2004). This bundle represents collectively the

presence, availability and integration of specialized environmental skills or knowledge in the operation function.

Factor and Hierarchical Regression Analysis

According to Hair et al. (2006), a minimum number of 50 observations are required to conduct a factor and

regression analysis. The ideal ratio of observations to variables in a regression analysis is 20 : 1; however, a

minimum standard of 5 : 1 is accepted (Hair et al., 2006). To ensure the minimum variable to observation ratio

was not exceeded, the study used summated scales (not factor scores). Conceptually consistent scale structure was

established initially using factor analysis. Initial and fi nal factor extraction used a principal component analysis

with a varimax rotation. The maximum number of factors was determined by an eigenvalue of greater than 1.0

and a factor loading cutoff value of 0.60 (Tabachnik and Fidell, 2001; Hair et al., 2006). Other criteria for item

inclusion included a lack of signifi cant cross-loading on multiple factors. Final tests for discriminant validity were

conducted to ensure that each scale measured a conceptually distinct concept (Hair et al., 2006; Trochim, 1999)

– this was achieved by performing a separate factor reduction on all items describing an (a) environmental or

(b) operational concept. Factor loadings for conceptually similar constructs are shown in the appendix. Final

summed scales and associated validity statistics are provided in Table 3.

In this study the total number of variables (scales) used at any one time in the hierarchical regression was six,

including control variables. Using a hierarchical regression model, each of the constructs was included in one

model to provide relative contributions of each scale to environmental performance (Hair et al., 2006). Owing to

the small sample size of 55 observations we have chosen to use a hierarchical regression, which is more advanced



than exploratory factor analysis or singular linear regressions. Hierarchical regression allows us to identify the

step-wise contribution of multiple constructs and also provides a complete model including control variables (Hair

et al., 2006). The use of confi rmatory factor analysis or structural equation modeling was deemed inappropriate

because of the small sample size. The hierarchical regression results were further assessed in the presence of two

separate control variables – size of fi rm (number of employees) and age of plant (years since start-up) (Klassen

and Whybark, 1999; King and Lenox, 2001). ISO 14001 was excluded as a control variable because of the high

conceptual overlap between the elements of the standard and study’s constructs.

Cronbach alpha Bartlett’s Mean Std dev. VIF

Environmental performanceReduced the amount of raw materials which are required to

manufacture our productsReduced the total tonnage of solid waste needing to be disposed of

off siteReduced the total volume of liquid waste needing to be disposed of

off siteReduced the kW h energy usage per unit of productionIncreased the tonnage of material to be sent for recycling

0.86 0.000 2.8 0.9 –

Corporate environmental strategyWe have dedicated environmental specialists at our fi rmWe use consultants to provide us with specialist environmental

expertiseOur environmental specialists are regularly involved in projects with

manufacturing staffOur environmental specialists are available for advice at short notice

0.78 0.000 3.1 1.0 1.825

Environmental expertiseWe have dedicated environmental specialists at our fi rmWe use consultants to provide us with specialist environmental

expertiseOur environmental specialists are regularly involved in projects with

manufacturing staffOur environmental specialists are available for advice at short notice

0.80 0.000 2.4 1.0 2.210

Quality and data managementOur plant forms teams to solve problemsEmployees are trained to collect and chart production dataEmployees are trained to statistically analyse production dataWe monitor our processes using statistical process control

0.87 0.000 3.1 1.0 1.747

Employee empowermentSenior management regularly attend meetings organized by

manufacturing staffPercentage of employee suggestions implemented at your plant

during the last 3 years2

Employees are able allocate time to trial production ideas or technologies

0.70 0.000 3.1 0.85 1.212

Table 3. Descriptive statistics for summated scales1

1 Items were reduced into summated scales using an orthogonal rotation method in SPSS (factor loadings are provided in the appendix). Statistics provided for each of the summated scales show evidence of reliability (Cronbach alpha), internal consistency (Bartlett’s test of sphericity) and low multi-collinearity following subsequent regression analyses (variance infl ation factor). Scales were combined using an additive method.2 Measured on fi ve-point Likert scale as follows: 0–10%; 10–30%; 30–50%; 50–70%; >70%.



Results

The results of the regression analysis are presented in Table 4. These results indicate the value of each of the three

hypotheses: H1 – the relative importance of corporate environmental strategy; H2 – the relative importance of core

operation practices that indirectly benefi t environmental performance (quality, data management and employee

empowerment) – and H3 – the relative importance of a bridging function that articulates strategic intention into

operational practice (environmental expertise).

Model 4 (all constructs) indicated that the environmental expertise and quality and data management constructs

demonstrated the strongest relationship with fi rm environmental performance. The construct employee empower-

ment demonstrated a weak relationship with environmental performance and the corporate environmental strategy

construct demonstrated a much less signifi cant contribution to environmental performance when assessed in the

presence of the three practice-oriented constructs. The results point to the overwhelming importance of grounded

environmental and operational practices in the management of the organization’s environmental performance.

The two control variables did not demonstrate a signifi cant relationship with environmental performance.

In Model 1 the predictive value of the organization’s environmental strategy in the explanation of its environ-

mental performance was highly signifi cant. This is expected to provide a misleading perspective on the issue of

environmental performance management.

Discussion and Conclusions

In the regression analysis, two of the operational practice constructs demonstrated the strongest relationship to

environmental performance – both were specifi c to the role of information (both environmental and operational)

and data management. These practices are proposed to provide a key infl uence on environmental performance

even without the advantage of a corporate environmental strategy, though rather shorter term in the absence of

strategy.

According to the demographic breakdown of the organizations that responded to the survey, a majority of fi rms

were involved in just-in-time manufacture and delivery. This implies that the shop-fl oor employees involved in

these manufacturing environments are already well trained in quality management and in most circumstances

the principles of just-in-time manufacturing. The outcome then of the regular provision of a small amount of

specialist environmental expertise to these already well informed employees is important. Very few studies explore

the role of ‘bridging’ experts or those specialized personnel that integrate production and environmentally specifi c

knowledge.

Summated scale Model 1 Model 2 Model 3 Model 4

Corporate environmental strategy 0.53*** 0.29α 0.21 0.07Environmental expertise 0.47** 0.54*** 0.44**Employee empowerment 0.30* 0.19α

Quality and data management 0.43**Age of plant (years since start-up) −0.09 −0.16 −0.11 −0.01Size of fi rm (number of employees) 0.18 0.02 −0.05 −0.13Adjusted R2 0.27 0.38 0.45 0.56Standard error of estimate 0.80 0.74 0.69 0.62Signifi cance of model change (change in F) 0.007 0.013 0.002

Table 4. Results of hierarchical regression analysisα p < 0.1, * p < 0.05, ** p < 0.01, *** p < 0.001.Values shown are standardized coeffi cients (beta) for each construct within each model. Regression results are for a hierarchical regression model with Environmental Performance as the dependent variable. N = 55. Model 4 indicates a full model with all four constructs and control variables being measured at once.



Two operational constructs – environmental expertise and quality and data management – are proposed to

provide just the right combination of information management and expertise to facilitate longer-term environmen-

tal performance benefi ts. The element of environmental expertise is proposed to bear a strong relationship to

corporate environmental strategy in that it provides the practical and visual application of strategic intent. The

elements of quality and data management are proposed to provide the aspects of continuous improvement and

structured accessibility of critical production information relevant to basic environmental performance measures

such as waste and material use reduction. Expertise without structured and accessible data lacks the building blocks

of successful operation practice and will likely fail to have any infl uence. Successful operation practice requires

specialized environmental knowledge if it is to move beyond very basic environmental performance realized

through simplistic waste reduction or cost-cutting. It is likely to lead to value-added activities such as the develop-

ment of environmentally sound products, services and technologies.

At the operational level of an organization there is no doubt that much of the core philosophy of advanced

operation practice provides benefi cial outcomes for the organization’s environmental performance. This has been

proven particularly signifi cant when past studies have explored the relationship between pollution reduction and

operational practices that support low waste manufacturing. Costly events however such as major product recalls

through choosing low-cost but high-hazard materials (i.e. Mattel’s China toys scandal during 2007) refl ect a choice

to save costs over and above environmental harm or hazard reduction. Such environmentally expedient choices

represent a lack of specifi c environmental knowledge that may have more effectively highlighted the un-foreseen

costs of a product recall.

It is proposed that operational practices transfer the intangible benefi ts of environmental information and

expertise into tangible environmental performance outcomes and are thus more likely to be expressed directly in

performance outcomes. It is proposed that strategic intentions toward environmental performance in the fi rm also

matter in the way in which they demonstrate relevance of environmental performance management to all internal

stakeholders and provide resources. External stakeholders such as customers, suppliers and the political and social

spectrum also perceive the organization’s level of environmental responsibility through strategic expression. Exter-

nal stakeholders are unable to directly identify how this strategy translates into tangible practices internal to the

fi rm. Inexperienced organizations desiring to be seen by the consumer as more environmentally responsible also

run the risk of creating strategy without supporting practices.

One of the major propositions arising from this research is that the basic philosophy of the low waste manu-

facturing system provides only superfi cial environmental performance benefi ts to the organization. With regard

to issues such as environmental product development, keeping up to date with environmental legislation changes

and training employees in environmentally relevant process changes, most operation managers possess limited

infl uence. The commitment of personnel dedicated to learning about, advocating and enabling environmentally

specifi c activities brings substantial infl uence to environmental performance enhancement in the operations

system.

The research described here is focused on the activities and environmental performance of manufacturing fi rms.

In less material-intensive fi rms such as product assemblers, wholesalers, retailers and service fi rms the potential

types of environmental impact will likely be different. For these types of organization, not explored by this study,

the importance of strategic intent may be higher. These types of organization are likely to measure their environ-

mental presence in different and more ‘enhancing’ ways that benefi t the environment and fi rm reputation through

awareness-raising – such as community involvement, green-branding, philanthropic activity, products that inform

or provide consumers with more sustainable choices, and so on.

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Item1 Factor loadings Explained variance

Environmental expertise 27.1We have dedicated environmental specialists at our fi rm 0.77 0.05 −0.14We use consultants to provide us with specialist environmental expertise 0.78 0.16 0.06Our environmental specialists are regularly involved in projects with

manufacturing-staff0.89 0.27 −0.03

Our environmental specialists are available for advice at short notice 0.87 0.27 −0.10

Quality and data management 27.0Our plant forms teams to solve problems 0.25 0.80 0.20Employees are trained to collect and chart production data 0.08 0.90 0.06Employees are trained to statistically analyse production data 0.14 0.81 0.22We monitor our processes using statistical process control 0.28 0.75 0.11

Employee empowerment 17.4Senior management regularly attend meetings organized by manufacturing staff −0.19 0.07 0.74Percentage of employee suggestions implemented at your plant during the last

3 years2−0.10 0.11 0.81

Employees are able allocate time to trial production ideas or technologies 0.16 0.32 0.76

Table A2. Items referring to operational concepts1 Extraction method: principal component analysis; rotation method: varimax with Kaiser normalization.2 Measured on fi ve-point Likert scale as follows: 0–10%; 10–30%; 30–50%; 50–70%; >70%.

Appendix. Factor Analysis Results for Study Scales

Item1 Factor loadings Explained variance

Environmental performance 27.5Reduced the amount of raw materials which are required to manufacture our

products0.74 −0.01 0.07

Reduced the total tonnage of solid waste needing to be disposed of off site 0.84 0.20 0.20Reduced the total volume of liquid waste needing to be disposed of off site 0.78 0.30 0.17Reduced the kW h energy usage per unit of production 0.74 0.24 0.34Increased the tonnage of material to be sent for recycling 0.67 0.20 0.12

Corporate environmental strategy 24.4Protecting the environment is a central corporate value in our fi rm 0.18 0.39 0.77We make a concerted effort to make every employee understand the

importance of environmental management0.21 0.33 0.77

We emphasize the environmental aspects of our products and services in our advertising

0.19 0.04 0.79

Environmental expertise 18.8We have dedicated environmental specialists at our fi rm −0.08 0.78 0.26We use consultants to provide us with specialist environmental expertise 0.33 0.76 0.02Our environmental specialists are regularly involved in projects with

manufacturing-staff0.37 0.79 0.30

Our environmental specialists are available for advice at short notice 0.33 0.79 0.31

Table A1. Items referring to environmental concepts1 Extraction method: principal component analysis; rotation method: varimax with Kaiser normalization.

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