Presentación del trabajo Stakeholders’ influences on the comprehensiveness and visibility of facilities’ proactive environmental practices en el Gronen 2012

1. Stakeholders’ influences on the
comprehensiveness and visibility of
facilities’ proactive environmental practices
Vera Ferrón Vilchez
(University of Granada)
Nicole Darnall
(Arizona State University)
Juan Alberto Aragón Correa
(University of Granada)
Gronen, June 2012

2. Introduction
Since the mid-1990s facilities worldwide have
increased their adoption of advanced
environmental practices.
1. Variations exist in the comprehensiveness of a
particular practice and its visibility.
2. Prior literature argued that STK influences are
related to facilities’ adoption of advanced
environmental practices.
Gronen, June 2012

3. Objective
We extend prior literature by considering the
relationship between stakeholder influences and
facilities’ strategic choice to adopt different
variations of environmental practices across two
structural dimensions (comprehensiveness and
visibility) characterizing 4 types of facilities
choices:
Movers & Shakers Back room operators
Wannabes Passivists
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4. Stakeholder Theory
STK theory asks which groups of individuals deserve
managers’ attention (Freeman, 1984; Mitchell, Agle & Wood, 1997)
Literature has identified 4 types of environmental STK:
1. Internal STK: contractual labor relationship; directly involved
in the facility’s decision-making process.
2. Value Chain STK: suppliers, corporate buyers, household
consumers.
3. Societal STK: without a contractual relationship with the
facility; great capability to persuade the general public
4. Regulatory STK: governments agents who are tasked with
legislating environmental policies
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5. Structural Dimensions of environmental practices
Prior literature has typically regarded facilities’
adoption of any env. practice monolithically
(adopt or not to adopt) when, in fact, managers
undertake several strategic decisions that lead to
variations in overall structure.
We focus on adoption variations related to a
practice’s visibility and comprehensiveness.
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6. Environmental Visibility
Visible env. practices are those readily observable to STK.
By contrast, a facility’s env. practices that lack visibility are not
readily observable because external parties generally are not
directly involved in the adoption process.
Visibility signals may Are highly visible
enhance a facility’s practices related to
reputation and real improvements
legitimacy among to the natural
critical STK environment?
(e.g., Bansal & Hunter, 2003; Kollman &
(e.g., Tenbrunsel et al., 2000; Russo,
Prakash, 2001; Darnall, 2006)
2009; King et al., 2005; Aravind &
Christmann, 2011)
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7. Environmental Visibility
Why does this debate exist?
1. There is a general lack of institutional mechanisms that
discourage free-riding facilities from characterizing that
they are adopting a proactive environmental practice
when in fact they are not (Delmas and Keller, 2005).
2. Facilities may be more eager to invest in making their
environmental practices visible to external stakeholders
(rather than actually reducing their environmental risks)
because these facilities may be seeking to enhance their
reputational benefits (Tenbrunsel et al., 2000).
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8. Environmental Comprehensiveness
A comprehensive environmental practice addresses a
wide range of impacts a facility has on the natural
environment (e.g., use of natural resources, solid waste generation,
wastewater effluent, local or regional air pollution, and global pollutants)
By contrast, a facility that undertakes less comprehensive
environmental practice limits its assessments to only a few
environmental impacts.
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9. For instance…
Prior literature has suggested that facilities respond to stakeholder
pressures in a way that is more symbolic than sincere or substantive (King
et al., 2005; Aravind and Christmann, 2011).
Environmental monitoring is a practice used to measure a facility’s
env. impacts, to assess env. trends, and to evaluate variations over
time.
Facilities could make the their env. monitoring visible by way of
certification. The ISO 14001 guidance indicates that facilities must
have env. monitoring in place prior to certification, and that they
monitor on a regular basis.
However, despite most certified facilities place special emphasis on
showing visibly that they have obtained the certification label, it is
uncertain whether a facility’s env. monitoring is comprehensive.
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10. Our proposal: facilities’ choices
Comprehensiveness
High
Back room operators Movers & Shakers
(BRO) (M&S)
Passivists Wannabes
Low
(Pa) (Wa)
Low High
Visibility
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11. Hypotheses (1/5)
Internal STK influence M&S because:
1. Adopting a comprehensive env. practice can lower the facility’s
environmental risk (e.g., environmental accidents)
2. It is the “right thing to do”
3. Making this practice visible, the facility seek reputational benefits
Value Chain STK influence M&S because consumers, corporate buyers
and suppliers are increasingly registering their env. preferences by
purchasing/selling products that originate from “green facilities”,
persuading to make their practices comprehensive and visible.
Societal STK influence M&S because this STK group could wage public
protests, boycotts, strikes and other campaigns against facilities.
Regulatory STK influence M&S because the adoption of env. practices
reduces risks for non-compliance and the effects of env. liabilities.
H1: Internal, value chain, societal, and regulatory stakeholders influence
movers and shakers to a greater extent than wannabes and passivists.
Gronen, June 2012

12. Hypotheses (2/5)
BRO are more likely to reduce their environmental risks
because of the comprehensives of their approach.
Rationale similar to that discussed in H1
However, BRO lack stakeholder pressures to make their
environmental practice visible externally.
H2: Internal, value chain, societal, and regulatory
stakeholders influence back room operators to a greater
extent than passivists.
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13. Hypotheses (3/5)
How do M&S vary in their STK influences from BRO?
STKs’ pressures for adopting comprehensive practices are similar; what
differs is STKs’ pressures as they relate to visibility:
1. Reputational risk comes with negative press that arises from a
shutdown (that may follow from env. accidents); greater influence
from societal STK is related to adopt a comprehensive and visible
env. practice
2. By making their practices visible, M&S also increase the possibility of
obtaining goodwill with regulatory STK (e.g., collaborative and/or
cooperative trust-based relationships, greater latitude when a
discrepancy is discovered, …)
H3: Societal and regulatory stakeholders influence movers and shakers to a
greater extent than back room operators
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14. Hypotheses (4/5)
Facilities that adopt comprehensive env. practices
(regardless of whether or not they visible) have the
potential to reduce the relevance of env. regulatory
requirements.
Perception of greater influence from regulatory STK is
related to adopt a comprehensive env. practice rather than
a wannabe strategy.
Indeed, in the presence of strong regulatory influences, a
wannabe strategy would be less desirable because this
strategic choice may invite greater regulatory scrutiny.
H4: Regulatory stakeholders influence back room operators to a
greater extent than wannabes
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15. Hypotheses (5/5)
The distinguishing feature between Wannabes and Passivists is that a
wannabe strategy make their env. practices visible  Wannabes
produce one-shot symbolic changes (like certification)
Nevertheless the level of external scrutiny could be different:
1. Related to internal STK: facilities that have corporate headquarters
and/or managers who are especially keen on making visible their (less
comprehensive) environmental progresses are more likely to implement
a wannabe strategy than a passivist one.
2. Related to regulatory STK: passivists do not deal with regulatory env.
requirements, or they deal with moderately so (i.e., only when
necessary), meanwhile wannabes perceive influence from regulatory STK
in a greater extent than passivists (e.g., potential cooperative
relationships, threat of greater regulatory scrutiny, …)
H5: Internal and regulatory stakeholders influence wannabes to a greater
extent than passivists
Gronen, June 2012

16. Research Methods (1/4)
Data: survey developed by the OECD Environment
Directorate sent to publicly and privately owned facilities
(each of which had at least fifty employees) from
manufacturing industries in Canada, France, Germany,
Hungary, Japan, Norway, and the United States.
Response rate and sample size: 24.7% (a total of 4,195
facilities responded). After accounting for missing data
related to item non-response, our final sample was 1,072
facilities
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17. Research Methods (2/4)
Dependent variable: combination of env. monitoring and env.
certification.
Comprehensiveness  Env. Monitoring Visibility  Certification
‘Had your facility acquired ISO14001?’
‘Which of the following environmental performance
measures does your facility regularly monitor?’: 1= Yes; 0 = No
1. use of natural resources (energy, water, ...)
2. solid waste generation
(Comprehensiveness)
3. wastewater effluent
4. local or regional air pollution Back room operators Movers & Shakers
Monitoring
5. global pollutants (1,0) n=442 (1,1) n=184
Max: 5; Min: 0; Mean: 3.57 Passivists Wannabes
(0,0) n=344 (0,1) n=102
1 = Facilities reported monitoring 4 or 5
env. impacts Certification (Visibility)
0 = Otherwise
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18. Research Methods (3/4)
Explanatory variable: STK influences
Factor Loadings
Stakeholders
Internal STK Value Chain STK Societal STK
Corporate headquarters .676 .201 .122
Management employees .854 .134 .238
Non-management employees .808 .149 .306
Household consumers .064 .732 .301
Commercial buyers .185 .840 .071
Suppliers of good and services .255 .678 .255
Labor unions .367 .103 .681
Industry or trade associations .259 .173 .734
Environmental groups or organizations .136 .184 .805
Neighborhood/community groups and organizations .130 .291 .710
Cronbach’s Alpha coefficients 0.766 0.734 0.791
Regulatory STK: ‘How many times has your facility been inspected by public
environmental authorities in the last three years?’
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19. Research Methods (4/4)
Empirical approach: multinomial logistic regression
Movers & Shakers
Back Room operators α + b1Internal + b2Supply Chain + b3Societal + b4Regulatory +
Wannabes = Size + Country dummies + Clean/Dirty/Neutral Sector
Passivists
This technique is especially appropriate for categorical
dependent variables, and was suitable for our purposes
given our 4-category dependent variable.
Multinomial logistic regression estimates jointly all
coefficients on explanatory variables, and uses one of the
categories as reference to allow for comparisons among
responses observed in the dependent variable.
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20. Results
Comparison C
Comparison A Comparison B
Variables Ref. category =
Ref. category = Pa Ref. category = Wa
BRO
M&S BRO Wa M&S BRO M&S
(H1) (H2) (H5) (H1) (H4) (H3)
Internal STK 1.659*** 1.437*** 1.231* 1.347** 1.167 1.154
Value chain STK 1.163 1.292** 1.077 1.079 1.200 0.899
Societal STK 1.500*** 1.263** 1.072 1.400** 1.178 1.188*
Regulatory STK 2.090*** 2.010*** 1.435* 1.456** 1.401** 1.040
-2loglikelihood 2365.701 ***
R2 Cox and Snell 25.95%
R2 Nagelkerke 28.20%
R2 McFadden 11.88%
Results about control variables were ommitted in this presentation
Gronen, June 2012

21. Discussion
Our results indicate that…
1. While facilities may elect to adopt a proactive
environmental practice, different sorts of stakeholders
are related to variations in the adoption process.
2. Symbolic behaviors are characterized by wannabes in that
they fail to adopt a comprehensive environmental
practice, but make their environmental efforts visible to
STK.
3. Across all STK categories, regulators have the strongest
relationship with facilities’ choice of adoption strategy
4. The enforcement of environmental regulations was the
strong connection with facilities’ comprehensive
environmental approaches.
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22. What we would like to discuss…
1. Do you agree with our proposed facilities’ choices?
o Do you like them?
o What is missing?
2. Do you agree with the following relationships?
How do you improve them?
 Comprehensiveness Env. Monitoring
 Visibility Env. Certification
3. Is it really interesting the debate “symbolic versus
substantive” or what really matters is that facilities adopt
env. practices (regardless its intention)?
Gronen, June 2012

23. Thank you very much for your
attention and suggestions!!
Vera Ferrón Vilchez
(vferron@ugr.es)
University of Granada
Nicole Darnall
Arizona State University
Juan Alberto Aragón Correa
University of Granada
Gronen, June 2012