Managerial discretion and corporate commitment to the natural environment

Looks at two approaches: the "managerial view" and the "inertial view".  The difference is whether executives significantly influence their firms' environmental commitment or if other factors are more influential and limit the influence of execs

Inertial: Organizational change comes externally
Managerial: Manager is the agent of change

Findings

• If one of the firms' environmentally responsible members is part of the dominant coalition the relationship between executives and environmental commitment is greater
• Study does not make definite statements about the direction of causality in the relationship (the same will be true of our study)
• having an executive with environmental responsibility does not guarantee environmentally important advances...the exec also needs discretion

"No study has empirically analyzed the interplay between external and internal factors in relation to organizations' environmental commitment" hmmmm

Aragón-Correa, J., Matías-Reche, F., & Senise-Barrio, M. (2004). Managerial discretion and corporate commitment to the natural environment. Journal Of Business Research, 57(9), 964-975. doi:10.1016/S0148-2963(02)00500-3

(Aragón-Correa et al., 2004)

A Brief Tutorial on the Development of Measures for Use in Survey Questionnaires

"Many well-conceived research studies have never seen the light of day because of flawed measures"

Guidelines for writing items:

• statements should be simple and short as possible
• language should be familiar to target respondents
• do not mix items that assess behaviors with items that assess affective responses
• leading questions should be avoided and they bias responses
• keeping a measure short is an effective means of minimizing bias caused by boredom and fatigue

Likert-type scales are the most frequently used scaling technique in survey questionnaire research and are the most useful in behavioral research

• some researchers use 7 and 9 point scales
• Likert (1932) developed the scales to be composed of the five qual appearing intervals with a neutral midpoint as we are already used to strongly disagree, disagree, neither agree nor disagree, agree, strongly agree
• Coefficient alpha reliability with Likert scales has been shown to increase up to the use of five points, but then it levels off

Reporting the manner in which the items are derived is important. Our items must be clearly linked to the theoretical construct being assessed.

Hinkin, T. R. (1998). A brief tutorial on the development of measures for use in survey questionnaires.Organizational Research Methods, 1(1), 104-121. doi: 10.1177/109442819800100106

Market-focused sustainability: market orientationn plus!

The Manager is still  the agent today.

The 100% owner of a business may in relatives terms own less because of stakeholders. 

• managers have additional "owners" such as customers, and various others stakeholders.  Often the manager wants to serve these stakeholders interest outside of profitability
• Typical Corporate Social Responsibility (CSR) doesn't involve customers, thus its often the bare minimum before customers will be interested in their products
• Market-focused sus. depends on relationship building with stakeholders
• Two theories have promise to explain sustainability efforts: Institutional theory and Systems theory

Institutional Theory: "attends to the deeper and more resilient aspects of social structure...it considers the process by which structures, including schemas, rules, norms, and routines, become established as authoritative guidelines for social behavior...it inquires into how these elements are created, diffused, adopted, and adapted over space and time; and how they fall into decline and disuse" scott 2005 p. 461-not one of our sources

Systems Theory: Basically the notion that all systems regardless of nature (social, ecological, biological, mechanical) is composed of multiple, interconnected elements.  Systems theory seeks to understand the interdependence of organizations within its environmental and social system.

Hult, G. (2011). Market-focused sustainability: market orientation plus!. Journal Of The Academy Of Marketing Science,39(1), 1-6. doi:10.1007/s11747-010-0223-4

Individual Environmental Initiative: Championing Natural Environmental Issues in U.S. business Organizations

There is little research on the process of how individuals help transform ambiguous environmental issues to actual organizational actions

Champions: "individuals who, through formal organizational roles and/or personal activism, attempt to introduce or create change in a product, process, or method within an organization

• There is difficulty for managers to acknowledge fault for negative environmental issues due to industrial activity and to change business systems to counter these detrimental effects."
• without a champion organizational innovations don't normally go beyond the idea stage

Three activities in the championing process: 1) identify/generate idea or issue 2) make it attractive 3) sell it to the decision maker

• They have a unique vantage point to monitor org, public and regulatory processes and stay up to date on business trends and upcoming environ. legislation
• Issue framing comes down to three important factors: opportunity/threat, urgency, and geographical impact
• champions direct their selling attempts to upper management

An Organization's Paradigm: "The collective values and beliefs of an organization's members about its distinctive attributes

Used qualitative data analysis (n=132) procedures recommended by Strauss (1987)!!! I can't find this fucking thing

Anderson, L. M., & Bateman, T. S. (2000). INDIVIDUAL ENVIRONMENTAL INITIATIVE: CHAMPIONING NATURAL ENVIRONMENTAL ISSUES IN U.S. BUSINESS ORGANIZATIONS. Academy Of Management Journal, 43(4), 548-570. doi:10.2307/1556355

The Stakeholder Approach Revisited

Idea Development of the term "stakeholder"

• Stakeholder "any group or individual that can affect or is affected by the achievement of a corporation's purpose"
• thus, managers need an "explicit strategy" to account with this group
• Executives find thinking of stakeholder relationships helpful to dealing with the types of change affecting their corporations

The Basic Argument for Stakeholder Theory in Business

• You have to take into account the effects of your actions on others and their potential effects on you. No matter what your purpose or orientation is
• Thus it is imperative that you understand stakeholder behaviors, values and backgrounds/contexts
• These ideas can be applied to rethink business functions, structures, and process and how strategic planning processes work to take these stakeholders into account

Implications:

• Freeman says we don't need a separate CSR approach as stakeholders are defined so widely
• Shareholders are stakeholders, they both have to move in the same general direction over time
• With changes brought on by globalization, information technology, and ethics scandals (Like banks and stuff) there is even more urgency to adopt the stakeholder approach

Freeman, R. (2004). The Stakeholder Approach Revisited. Zeitschrift Fuer Wirtschafts- Und Unternehmensethik, 5(3), 228-241.

FROM GREEN-BLINDNESS TO THE PURSUIT OF ECO-SUSTAINABILITY: AN EMPIRICAL INVESTIGATION OF LEADER COGNITIONS AND CORPORATE ENVIRONMENTAL STRATEGY CHOICES

Branzei, O.,Vertinsky, I., & Zietsma, C. (2000). FROM GREEN-BLINDNESS TO THE PURSUIT OF ECO-SUSTAINABILITY: AN EMPIRICAL INVESTIGATION OF LEADER COGNITIONS AND CORPORATE ENVIRONMENTAL STRATEGY CHOICES. Academy Of Management Proceedings & Membership Directory, C1-C6.

Difference between corporate instrumental and normative approaches with regards to environmental concerns.

• Instrumental orientation states that "firms do what they have to do to manage the natural environment in order to maximize their profits".
• Normative view suggests that "since corporate decisions affect the state of the natural environment, firms should espouse a fundamental moral obligation to protect nature, adopting proactive environmental strategies".

The study investigates "how leaders' personal values, and their perceptions of corporate environmental commitment, influence their firm's pursuit of proactive strategies towards the natural environment and their firms' subsequent adoption of environmental innovation."

According to their literature review when companies do not have a long-term commitments to proactive environmental strategies, change is brought on by government regulation and the market. Both of these are subject to failure since government regulation may not be adequately enforced and market mechanisms can be ineffective if consumers cannot verify "green" claims by manufacturers. Therefore "voluntary corporate commitments are seen as essential for achieving long-run sustainability".

"The more the leaders of the organization are committed to environmental protection, the more likely that the firm will develop an environmental plan and environmentally-oriented organizational structures". Ultimately the organization's leaders' personal values, roles, and commitments influence the company's actions and environmental performance. Also leaders are not necessarily the CEO or CFO, a leader is someone that can closely communicate with top management and is proactively interested in pro-environmental issues.

Hypothesis:
1) There is a positive relationship between a leader's personal values and the firm's adoption of proactive environmental strategies.
2) The CEO's perception of corporate environmental commitment mediates the relationship between the CEO's personal values and the adoption of proactive environmental strategies.
3) There is a positive relationship between the CEO's personal values and the firm's environmental innovation activity.
4) The CEO's perception of corporate environmental commitment mediates the relationship between the CEO's personal values and the firm's environmental innovation activity.
5) There is a positive relationship between the use of proactive environmental strategies and the firm's environmental innovation activity.

Results:
"CEO's personal values had a significant positive effect both on firms' adoption of proactive environmental strategies (H1) and environmental innovation (H3).

The perceived corporate commitment mediates both relationships (H2&H4) so that the stronger the perceived commitment the more likely the choice of proactive strategies and, respectively, the adoption of environmental innovation.

Finally, the choice of proactive environmental strategies had a significant effect on firms' environmental innovation (H5)."

"Findings suggest that pro-environmental personal values and the perceived corporate environmental commitment represent key variables in the choice of proactive environmental strategies and in the adoption of environmental innovation"

Sustainability Rises: On the CFO's 'To-Do' List

LeBlanc, Brendan. (2012). SUSTAINABILITY RISES: On the CFO’s ‘To-Do’ List. Financial Executive, 28(2), 54-57.

"Chief financial officers are becoming increasingly familiar with sustainability, due to a heightened understanding of the impact of social and environmental policies on a company's financial performance."

Sustainability issues of concern: 

1) Stakeholder engagement - In recent years stakeholder expectations have been increasingly focused around the company's social and environmental practices and polices. New resolutions in the boardroom are not only including more environmentally conscious issues, but are receiving the support by vote to make significant changes in the company's policies and actions. 

"The 2011 proxy season was a clear indicator of where things are going - with votes on the largest category of all shareholder resolutions focusing on social/environmental issues."

"In 2005, less than 3 percent of all shareholders' resolutions on social and environmental issues reached the critical support threshold of more than 30 percent. By 2010, 26.8 percent hit that level, and in the 2011 proxy season, the number was 31.6 percent." This drastic increase in percentage indicates that the new focus was more than just a trend.

"This boardroom movement towards more responsible practices and transparency is clearly tied to the company's purse strings. Investors are being guided by more clearly defined social principals and companies must follow suit or risk losing needed capital"
 
2) Resource use
3) Green house emissions

Financial Risk Management

It was through the Financial Risk Management segment that sustainability became more prevalent.

"In 2009, the U.S. Securities and Exchange Commission began to allow the term "financial risk" in shareholder proposals discussing environmental and other issues. Then, in February 2010, the SEC issued guidance to companies regarding their responsibility to disclose material risks related to climate change".

Once the SEC took action in their guidance methods, CFOs began integrating sustainability with finances. Using data CFOs could see how much water and energy was used, "greenhouse gas emissions, employee transportation, telecommuting, virtual conferencing, copy paper purchases, supply and distribution chain polices and practices - anything that contributes to the company's environmental impact." Global impacts of multinational organizations have also been added to the list of interest.

"Even if legislation does not require additional reporting, companies will have to continue to respond to shareholder pressure. CFOs, seeing financial risk tied directly to sustainability resolutions, are uniquely able to influence their organizations and build a consensus towards action..." 

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