Proactive Environmental Strategies: A Stakeholder Management Perspective
Author(s): Kristel Buysse and Alain Verbeke
Source: Strategic Management Journal, Vol. 24, No. 5 (May, 2003), pp. 453-470
Published by: John Wiley & Sons
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Strat. Mgmt
Published
online
2002
6 December
inWiley
InterScience
Journal
Management
Strategie
/.,
24: 453-470
DOI:
(www.interscience.wiley.com).
(2003)
10.1002/smj.299
PROACTIVEENVIRONMENTALSTRATEGIES:A
STAKEHOLDERMANAGEMENT PERSPECTIVE
KRISTELBUYSSE1 and ALAIN VERBEKE2*
1
Research Department
National Bank of Belgium,
2
of Calgary,
University
Faculty of Management,
College, University of Oxford, Oxford, U.K.
This
paper
stakeholder
includes
an
empirical
First,
management.
between
analysis
of the linkages
it is shown
that several
simultaneous
resource domains are required for firms
stakeholder
limited
than
environmental
and
environmental
improvements
and
strategy
in various
to shift to an empirically significant, higher level of
more proactive
environmental
Second,
proactiveness.
broader
environmental
Third,
coverage
of stakeholders.
importance
of
between
firms
Brussels, Belgium
Calgary, Canada, and Templeton
strategies
are associated
leadership
a
suggesting
with
is not associated
a deeper
and
with a rising
role for
thereby
voluntary
cooperation
the linkages
between
environmental
and
Finally,
strategies
on a sample
more
in Belgium,
appear
operating
of 197 firms
to a large extent account
characteristics
these
may
Country-specific
for
regulations,
government.
based
management,
expected.
results. Copyright ? 2002 JohnWiley & Sons, Ltd.
INTRODUCTION
Most
firms now devote sub
large manufacturing
resources
to environmental man
stantial time and
This
is
agement.
important as it allows
industry
to contribute to ecologically
sustainable develop
ment through the application of total quality envi
or through the
ronmental management
processes
technolo
redesign of products and manufacturing
It
has
often
been
1995).
gies (Shrivastava,
argued
that environmental
regulation is instrumental to the
introduction of better environmental
management
practices within firms, and that more stringent reg
to further improve such prac
ulation
is needed
tices (Newton and Harte,
1997; Porter and van
der Linde,
when
1995). However,
spe
crafting
cific environmental
strategies, firms undoubtedly
attach importance to other stakeholders
than gov
ernment regulators
and
Pedwell,
(Neu, Warsame,
words:
Key
stakeholder
environmental
green
strategies;
strategies;
environmental
management;
regulation
to: Alain Verbeke,
of Management,
Correspondence
Faculty
of Calgary,
2500 University
Drive NW, Calgary,
University
1N4.
Alberta, Canada T2N
Copyright ? 2002 JohnWiley & Sons,
Ltd.
1998). This suggests the relevance of conducting
more inclusive stakeholder management
analyses.
a
The green business
literature usually makes
distinction
between
firms that are compliance
aim to meet
driven, and merely
legal require
ments, and those that adopt more proactive envi
ronmental
thereby taking into account
strategies,
a variety of forces other than government
regula
tion (Schot and Fischer,
1993). More
specifically,
the inclusion of environmental
issues into corpo
rate strategy beyond what is required by govern
as a means
ment regulation
could be viewed
to
improve a company's
alignment with the grow
concerns and expectations
of its
ing environmental
stakeholders
1993; Stead
(Garrod, 1997; Gladwin,
and Green,
Zimmerer,
1995). If the green
ing of corporate
strategies can be interpreted as
an attempt to meet these stakeholder expectations,
a
then identifying
salient stakeholders
becomes
critical step in corporate strategy formation. Yet,
not all stakeholders are equally important for cor
man,
when
crafting environmental
strategies.
and
(1996, 1999) evaluated
Henriques
Sadorsky
the perceived
importance of different stakeholder
porations
Received
5
October 2000
Final revision received 28 August 2002
454
K. Buysse and A. Verbeke
groups using data of Canadian
to government
that in addition
and found
it is
regulation
and local com
firms,
shareholders,
primarily customers,
that
affect
corporate environmental
munity groups
the content of
management
practices,
especially
toMitchell,
environmental
action plans. According
the
Wood
and
(1997)
importance of stake
Agle,
holders
is relative, can change over time, and is
issue-based.
The present paper evaluates empirically
tionship between the level of proactiveness
ronmental
strategies and the importance
the rela
of envi
attached
to stakeholders,
using survey data from Belgian
firms. The study of environmental
practices in this
is important for two rea
small open economy
sons. First, small open economies
such as Belgium
are populated by firms that rely to a large extent
on foreign markets,
through the pres
especially
ence of MNE
then arises
affiliates. The question
affiliates will
firms and MNE
whether
domestic
strate
different
select similar or fundamentally
is
It
sometimes
in
the
environmental
sphere.
gies
A CLASSIFICATION OF
ENVIRONMENTAL MANAGEMENT
STRATEGIES
The work of Azzone
and Bertel?
(1994), Hunt
and
and Auster
Roome
(1990),
(1992) is illustra
to clas
tive of the various
designed
typologies
man
to
firms
their
environmental
sify
according
These
represent an
agement practices.
typologies
to
two earlier
environmental
issues
of
application
by Carroll (1979) and Wartick
developed
and Cochrane
(1985) on corporate social responsi
Both
models
identified four 'generic,' firm
bility.
to corporate social responsibility:
level approaches
models
reactive,
accommodative,
defensive,
and
proactive.
These strategies reflect an increasingly
important
focus on societal issues, both in terms of strategy
formulation and implementation
1995).
(Clarkson,
on the resource-based
theory of the
Building
a more
firm, Hart
(1995) developed
grounded
re
The
of
environmental
strategies.
typology
that cor
view of the firm suggests
source-based
from pre
deviates
behavior
argued that MNE
because
domestic
foreign
practices, partly
vailing
MNEs
lack experience,
information, and tacit skills
to deal with
local conditions
(King and Shaver,
and
because
2001)
rely on an
they may
partly
strat
internal network approach to environmental
and
formation
Verbeke,
1998). Sec
egy
(Rugman
attach
studies
environmental
ond, many
strategy
to the specificity
of the
little or no importance
when
environment
local institutional
describing
only lead to sustainable com
if
it is supported by firm-level
petitive advantage
and Ver
1991; Rugman
(Barney,
competencies
reflect
Such
beke, 2002).
unique
competencies
that are rare, nonsub
of resources
combinations
stitutable, difficult to imitate, and valuable to cus
and prescribing
manage
particular environmental
ment approaches. The present study builds upon
that the local institutional context
the assumption
does matter, even in a small open economy.
as follows.
In the next
The paper is organized
environ
four types of resource-based
tinguished
the
mental
(1)
end-of-pipe
approach,
approaches:
or total quality manage
(2) pollution prevention
ment (TQM), (3) product stewardship, and (4) sus
in end-of-pipe
Investments
tainable development.
a
reflect
reactive
posture to environ
technologies
limited resources are com
mental
issues, whereby
that should per
section, the criteria are determined
to their
of firms according
mit the classification
level of environmental
Here, Hart's
proactiveness.
is
classification
tested, resulting
(1995)
empirically
in environmen
in three levels of proactiveness
tal strategies. The third section briefly reviews the
interests
that various
have
stakeholder
groups may
corporate environmental management.
are devel
In the fourth section, three hypotheses
a
between
that
suggest
specific relationship
oped
of environmental
the proactiveness
strategy and the
to
stakeholder
attached
groups.
specific
importance
the empirical research
The fifth section discusses
The sixth section presents the main
methodology.
in proactive
results.
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
porate
strategy will
resource combinations
tomers. These
may build
a
of
basic
includ
wide
components,
upon
variety
and
assets,
skills,
orga
employee
ing physical
In this context, Hart dis
nizational
processes.
to solving environmental
mitted
problems:
prod
are
uct and manufacturing
process
improvements
Pollu
to legal requirements.
to conform
made
tion prevention
implies that firms continually adapt
in order to
their products and production processes
levels below legal requirements.
reduce pollution
at the source allows
To the extent that prevention
at a lower
firms to achieve regulatory compliance
this environmen
cost and to reduce liabilities,
as a cost leadership
tal strategy may be viewed
can be viewed as
Product
stewardship
approach.
a form of product differentiation,
ucts and manufacturing
processes
Strut.
Mgmt.
/.,
whereby
prod
so
are designed
24: 453-470
(2003)
Environmental
as to minimize
burden
the negative environmental
the products' entire life cycle. A minimum
of
requirement for the successful
implementation
this strategy, according to Hart, is that some form
of life cycle analysis (LCA) be implemented. LCA
burden cre
is used to assess the environmental
during
ated by a product from 'cradle to grave': material
con
selection, production, distribution, packaging,
and
and
Gouldson,
(Welford
sumption,
disposal
aims to
sustainable
1993). Finally,
development
the environmental
burden of firm growth
the
of
clean technologies.
It
through
development
a
vision
all
rel
shared among
long-term
requires
evant stakeholders
and strong moral
leadership,
which according to Hart (1995) is a rare resource.
minimize
The great contribution of Hart's classification
is
that it is not based solely on casual empiricism.
Hart's great conceptual
insight was that simultane
ous investments in several linked resource domains
are required to move from one environmental
strat
egy stage to the next. More
tified the interconnectedness
he iden
specifically,
among stages, as a
and embeddedness.
result of path dependencies
Path dependencies
primarily reflect the particular
resource accumulation
in var
of
required sequence
ious individual resource domains to move from one
stage to the next. Embeddedness
implies the co
evolution
of various resources and competencies
to a shift in environmental
strategy
instrumental
formation.
A
careful reading of Hart's
classifi
a
to
distinction
be
made
among
permits
five 'resource domains,' where firms can actually
action to become
engage in purposive
'greener.'
These five domains are the following:
cation
1. Investments
in conventional
green competen
cies related to green product and manufacturing
in accordance with Hart's defi
technologies,
nition of four distinct
stages of development
(included in our empirical research as item 1).
in employee
skills, as measured
allocation to environmental
training
and employee participation
(item 2).
as
in organizational
3. Investments
competencies,
2.
Investments
by resource
measured
by the
areas such as R&D
of
involvement
and product
functional
finance
and accounting,
stor
purchasing,
production,
and
age and transportation, sales and marketing,
human resources in environmental management
design,
(item 3).
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
4.
Strategy
455
and Stakeholders
in formal (routine-based) manage
Investments
ment systems and procedures, at the input, pro
cess, and output sides.1 At the input side, the
of a written environmental
development
plan
can
be used as a relevant parameter.
(item 4)
at the process
More
side, the implementation
some
of
form of LCA (item 5) is important. At
of internal and
the output side, the publication
external environmental
reports (items 6 and 7)
to environmen
and the importance
attached
as a parameter to evaluate top
tal performance
managers
(item 8) seem critical. Although Hart
the
(1995) did not discuss explicitly
formal incentive systems, the effective
of a shared vision of the future where
mental concerns prevail is, in practice,
dependent on the presence of formal
systems
to reward environmentally
need for
creation
environ
largely
incentive
responsible
behavior.
to reconfigure
the strategic planning
environmen
process, by explicitly
considering
tal issues (item 9) and allowing
the individ
for
environmental
uals)
manage
responsible
ment to participate
in corporate strategic plan
ning (item 10). As was the case with item 8,
item 10 was not considered
explicitly by Hart
5. Efforts
but his prescription
of an environmen
stance
to
be
taken toward the
tally proactive
firm's entire supply chain requires that envi
ronmental issues be dealt with in the strategic
planning process on the basis of inputs from the
either,
manager(s)
for these issues.
responsible
Hart's
(1995) resource-based
thinking has been
further extended
several
authors,
by
including
Christmann
(2000), Rugman and Verbeke
(1998),
Russo
and Fouts
(1997), and Sharma and Vre
denburg (1998). The first resource domain above
as the clearest
is usually
considered
reflection
of the firm's
ness (Rugman
level of environmental
proactive
and Verbeke,
in
1998). However,
this research, we tested empirically
stated
(using
preferences
through Likert scales, with possible
scores ranging from 1 to 5 for items 2, 3, 8, 9,
10 and a binary scale for items 4, 5, 6, 7) the
1
it could be argued that the adoption
of metastandards
Here,
as a measure
such as ISO 14000 could be viewed
of envi
as noted by Christmann
ronmental proactiveness.
and
However,
(2001), ISO 14000 does not require firms to act beyond
Taylor
In addition,
these metastan
government
respecting
regulations.
dards may be used for window-dressing
purposes
by firms with
to environmental
commitment
only a superficial
protection.
Strut.
Mgmt.
/.,
24: 453-470
(2003)
456
K. Buysse
and A. Verbeke
extent
to which managerial
attention devoted to the
four additional resource domains is consistent with
firm-level
of environmental
perceptions
strategy
choices as defined by the first item (investments
in green product and manufacturing
technologies,
following Hart's fourfold classification).
The data used
in this paper were
gathered
in Belgium, mainly
through a survey conducted
1999, before the dioxin crisis in the food
in the
industry. Firms were selected to participate
to either
survey if they contributed
significantly
water pollution or solid and hazardous waste
(or
taxes
both), as measured
by the environmental
in Belgium
paid.2 The relevant public agencies
were contacted
to obtain the coordinates
of com
during
to water pollution
panies contributing
significantly
or waste production.
The resulting population
of
water
450 companies,
for
of
80
percent
accounting
pollution and 80 percent of solid waste production
in 1998, was first contacted
in order to identify
which manager was responsible
for environmental
in
issues in each firm and to solicit participation
sent to each
the survey, which was subsequently
firm. For firms with multiple
facilities,
production
firm-level data rather than facility-level
data were
used, for two reasons. First, for most of these firms,
annual statements are publicly
only consolidated
is
available.
the environmental
Second,
manager
almost always hired at the level of the firm, imply
ing that a single individual is made responsible for
all production
facilities. Large firms are required
by law to create a 'position' for an environmen
to ensure
tal manager, who has the responsibility
that a company
complies with all environmental
In
regulations
(including reporting requirements).
the allocation
addition to this legal requirement,
to
of environmental
management
responsibilities
a single manager
at the firm level, rather than at
the plant or SBU level, may be typical for a small
for two reasons.
such as Belgium,
open economy
First, different plants of a single company are usu
to each
proximity
ally located in close geographic
other, so that a single manager can easily supervise
2
are responsible
In Belgium,
the regions
for environmental
levied on solid waste
and taxation. Taxes are currently
regulation
and water pollution.
The water pollution
load is calculated
using
a complex
takes into account the different forms
formula, which
have
of water pollution.
Both regions
(Flanders and Wallonia)
been applying
the same formula since 1994. For large industrial
consumers
of the pollution
load is based
of water, the calculation
on actual measurements
of wastewater
by the
quality, performed
relevant public agencies. Firms from both regions were included
in the sample.
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
different production facilities simultaneously.
Sec
ond, national subsidiaries of large, foreign multina
tional enterprises
typically hire a single individual
for implementing
corporate environ
responsible
mental
opera
strategy in the Belgian
production
tions and for directly reporting to headquarters on
environmental
issues. The research team provided
to all participating
the opportunity
to
managers
obtain extensive guidance (by telephone or through
a formal interview) when
the ques
completing
tionnaire. A total of 197 usable responses were
returned to the authors. The chemical
industry,
food industry, and textiles sector are particularly
well represented.3 Other characteristics
of the sam
are
its
bias
towards
firms
and
its high
ple
larger
incidence
prises
many
of
of multinational
enter
is a common
feature of
subsidiaries
which
(97 firms),
small,
open
economies.
so as to give all
variables were standardized
criteria an equal weight
in the subsequent cluster
environmental
analysis. The 10 items measuring
were
practices
subsequently
subjected to a cluster
the
cluster routine.
SPSS
Quick
analysis,
using
cluster
that
the number of
Quick
only requires
clusters (k) be specified ex ante. It then proceeds by
selecting k cases with well-separated,
nonmissing
values as initial cluster seeds with which to begin
The cluster seeds are updated
the classification.
as cases (firms) are added to each cluster. Quick
All
cluster uses a squared Euclidean
distance measure
to assign a firm to its nearest cluster.
The environmental
in
strategy profiles described
the green management
literature suggest a four
cluster solution. Running
quick cluster with four
clusters resulted in the formation of a relatively
small group of firms characterized by strong envi
a larger group
ronmental management
practices,
of firms with poor environmental
and
practices,
two intermediate groups, which differed from each
other only in the application of some form of LCA.
some firms that reported the use
In other words,
on
did not appear to be more proactive
con
In
when
other
criteria.
average
judged by
trast, a number of firms with otherwise
relatively
of LCA
strong environmental
practices
This suggests that many firms
to environmental
commitment
or cannot
of LCA prohibitive
3
The
chemical
industry
the food
sample,
by 22 firms.
Strut.
industry
Mgmt.
was
by
do not apply LCA.
with at least some
issues find the costs
obtain good data to
by 23 firms
represented
55 firms, and the textile
in the
sector
24: 453-470
(2003)
J.,
Environmental
1.
Table
Final
means
cluster
resource-based
of
environmental
strategy
Item
green
1: investments
competencies
in product
457
and Stakeholders
profiles
Environmental
leadership
prevention
1.66
and
related
process
manufacturing
strategy
Pollution
Reactive
Conventional
Strategy
ANOVA
F
2.12
3.29
79.9
2.78
3.48
47.3
3.21
3.97
76.6
0.68
0.94
20.77
green
competencies
Employee skills
Item 2: investments in employee skills
competencies
Organizational
in organizational
Item 3: investments
2.04
2.41
competencies
and procedures
systems
Management
Item 4: development of a written
environmental
0.36
plan
Item 5: life cycle analysis (LCA) 0.00
environmental
Item
6:
Item
7: external
Item
8: environmental
internal
0.15
0.23
7.9
reporting
0.44
0.68
0.90
12.5
reporting
2.56
0.13
0.16
0.77
38.9
3.83
4.32
113.1
4.19
4.61
51.9
3.88
4.53
58.3
95
35
environmental
performance
in top management
inclusion
evaluation
Strategic
Item 9:
process
of environmental
planning
integration
3.37
issues
2.97
of environmental
10: participation
in strategic
planning
Item
managers
Number of firms 67
implement this approach. It also implies that Hart's
(1995) rather strong views on LCA must be moder
ated. Trying a three-cluster solution instead yielded
a clear separation among the clusters, along all
10 items, as shown in Table 1. This solution was
retained
for the subsequent
analysis
of stakeholder
management.
of the solution was
The robustness
ways.
First,
one-way
analysis
of
tested in two
variance
was
used
are significantly
different for all the variables
(Hair et al., 1998).
are
As shown in Table 1, all ANOVA
F-statistics
to test whether
the cluster means
Second,
highly
following
Henriques
significant.
and Sadorsky (1999), cluster analysis was repeated
on randomly selected subsamples
of our sample.
As the assignments made within these subsamples
were for the most part to the same clusters (90%
on average), the results can be considered
indepen
or other sample
dent of a particular classification
characteristics.
Firms
with
a
'reactive'
environmental
strat
the equivalent
of Hart's
(1995)
score
on
all
items.4
end-of-pipe
approach,
poorly
Firms with what we call a 'pollution prevention'
egy
(67 firms),
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
(95 firms) are characterized by the limited
of conventional
green competencies
development
terms
of
technolo
(in
product and manufacturing
little
of
skills, a lim
development
gies),
employee
strategy
ited degree of organizational
competency
develop
ment, some adaptation of formal management
sys
tems (but overall relatively little external reporting
a rather weak
and LCA),
and, finally,
integra
tion of environmental
issues into corporate strat
of the environmen
egy and limited participation
in strategic planning.
tal managers
'envi
The
an
ronmental
leaders'
with
(35 firms)
approach
strat
similar to Hart's
sustainable
development
on
the
other
firms
all
criteria,
egy outperform
of conventional
green
though it is the development
and the practice of external envi
competencies
ronmental reporting that really set them apart.5 It
4
We
to
the term 'reactive'
rather than 'end-of-pipe'
adopted
are
indicate that, from a resource-based
investments
perspective,
withheld
from several relevant resource domains,
and not only
from the manufacturing
process.
5
We chose the term 'environmental
rather than 'sus
leadership'
tainable development,'
because
the latter term, taken from Hart's
includes
the 'moral leadership'
dimension,
(1995) framework,
Strut.
Mgmt.
J.,
24: 453-470
(2003)
458
K. Buysse
and A. Verbeke
should also be noted that a positive
correlation
environmental
appeared between
strategy proac
tiveness and multinationality.
In the subsample of
35 firms with an environmental
leadership strategy,
25 are MNE
affiliates and only 10 are domestic
companies.6
A
stakeholder
environmental
based
to corporate
approach
management
The
section
established
that, from a
three distinct, empir
perspective,
ically significant environmental
strategies can be
observed. These are consistent with Hart's (1995)
of interconnectedness,
in the sense
suggestion
of a necessary
accumulation
and co-evolution
of
resources
resource domains
in various
to shift
from a lower stage of environmental
proactive
ness to a higher
section discusses
stage. This
previous
resource-based
Hart's (1995) related suggestion
that more proac
are
tive environmental
associated with
strategies
a stronger stakeholder
In his semi
orientation.
nal work Strategic Management:
A Stakeholder
Freeman
(1984) defined the concept of
Approach,
to include any individual or group
'stakeholder'
or who
who can affect the firm's performance
is affected by the achievement
of the organiza
tion's objectives.
Since
the publication
of this
book, numerous authors have expanded on the con
has been explored
cept. Stakeholder management
from various perspectives,
including agency theory
(Hill and Jones, 1992), corporate social responsi
bility (Donaldson and Preston, 1995), network the
ory (Rowley,
1997), and resource-based
thinking
literature has
(Frooman,
1999). The stakeholder
two broad branches: a strategic and a moral branch
1991; Frooman,
1999). The strate
(Goodpastor
stakeholder
literature
the active
gic
emphasizes
of
stakeholder
the
interests, whereas
management
moral
stakeholder
literature is interested primar
stakeholder
interests (Frooman,
ily in balancing
stakehold
1999). The former literature classifies
ers as primary or secondary, based on the type of
relationships
they entertain with the firm. The pri
stakeholders
refer to employees,
mary
suppliers,
to test directly
is difficult
and accurately
through self
reporting.
6
The further decomposition
of the sample of 97 MNE
affiliates
firms led to the
and 100 domestic
(Belgian and foreign-owned)
identification
of 29 MNE
affiliates with a reactive
strategy, 43
with a pollution prevention
strategy, and 25 with an environmen
tal leadership
firms are
strategy. These numbers for the domestic
38, 52, and 10 respectively.
which
Copyright ?
2002 John Wiley
&
Sons,
and public agencies
in for
customers,
engaged
mal relationships with the organization.
The sec
ondary stakeholder groups include actors such as
the media and special interest groups, not engaged
in formal transactions with the organization
(Clark
son, 1995; Savage et al, 1991).
et al. (1997)
Mitchell
classified
stakeholders
Ltd.
upon three attributes, namely power, legit
In their model,
stakeholder
imacy, and urgency.
as
is
salience,
perceived
by managers,
positively
related to the cumulative
impact of the three stake
holder attributes. Since the degree to which man
stakeholder claims
agers give priority to competing
is dynamic,
can vary over
stakeholder
salience
time and depends on the issue considered. Manage
are critical in this model, because
rial perceptions
determine
stakeholder
salience.
they ultimately
can be influenced by the man
These perceptions
and Sonnen
agers' (own) values (Agle, Mitchell,
and
feld, 1999; Egri
Herman, 2000; Sharma, 2000).
Jawahar and McLauglin's
(2001) recent study is
consistent with Mitchell
etal.'s
(1997) approach,
as it also argues that organizations
are likely to
use different strategies to deal with different stake
holders
and that these strategies may
change
over
time.
The above analysis
that the identifi
suggests
cation of salient stakeholders
for an organization
at any point in time largely remains an empir
ical question. The modern
stakeholder manage
ment
thus
that corporations
suggests
approach
should not narrowly
focus their strategic man
on creating shareholder value.
agement decisions
to address
should
broaden
their objectives
They
the expectations
and interests of a wide variety of
salient stakeholders
(Garrod, 1997; McGee,
1998).
Such objectives
include customer
satisfac
may
tion, regulatory compliance,
good corporate citi
and
social
and
environmental
zenship,
responsibil
ity among others. This need to conduct stakeholder
analyses has also been identified in much of the
recent environmental
literature (rep
management
include Berry and Rondinelli,
examples
and Sadorsky,
1998; Beck,
1992; Henriques
1996,
and
Welford
and Gould
1999; Shrivastava,
1995;
son, 1993).
At the micro
level, poor environmental
perfor
mance
can seriously
strain a company's
relation
resentative
its stakeholders.
This may negatively
ship with
affect the firm. Shareholders
will
suffer mone
on
a company
losses
their
if
investments
tary
is found
Strut.
liable
for environmental
Mgmt.
J.,
damage
24: 453-470
or
if
(2003)
Environmental
the news
record makes
its poor environmental
a
but
result, shareholders,
1995). As
(Hamilton,
also financial institutions, perceive companies with
a poor environmental
record as riskier to invest
in, and may demand a higher risk premium (Hen
1996), or voice their discon
riques and Sadorsky,
tent by withdrawing
new
capital
or refusing
to extend
loans.
Moreover,
companies with a reputation for inef
fective environmental management
may also find it
harder to attract or retain highly qualified employ
themselves
have a strong pref
ees, who may
erence
for proactive
environmental
management
this context, the success of
In
(Reinhardt,
1999).
companies
aiming to develop green competencies
and involve
strongly depends on the participation
ment of their employees
(Nehrt, 1998; Sharma and
and Ste
1998; Hart,
1995; Ramus
Vredenburg,
consumerism
ger, 2000). Green
may also drive
the transition
towards more
environ
proactive
mental management,
in
that
industries
particularly
have close contacts with final consumers
(Arora
are increasingly
and Cason,
1995). Consumers
informed and more aware of the environ
mental
and may
impact of consumer
products,
better
demand
that industry improve the environmental
of its products (Williams, Medhurst,
performance
and Drew,
of green con
1993). The emergence
sumerism implies that some consumers
are will
a
to
for
pay
ing
premium
environment-friendly
and Oliff,
(Vandermerwe
1990). How
products
ever, consumer
groups may also exert negative
the products of a com
pressures by boycotting
for poor environmental
pany with a reputation
(Greeno and Robinson,
management
1992). Simi
larly, green suppliers may stop delivering
inputs
to protect
their own reputation
and
(Henriques
1999).
Sadorsky,
In addition, a firm with a reactive environmen
tal strategy may face an overall loss of competitive
advantage if proactive environmental management
becomes a common practice among its rivals (Gar
Strategy
and Stakeholders
the possibility
of spill-over effects
to other affiliates
iate's behavior
459
from one affil
(Rugman and
Verbeke, 2001).
The threats posed by the various stakeholders
to poor environmental
in response
management
to improve
thus induce firms
their cor
may
environmental
firms
practices. Moreover,
advanced
environmental
adopting
strategies often
some
with
stakeholders
such as regula
cooperate
tors and environmental,
nongovernmental
organi
zations (ENGOs),
in the development
of interna
tional environmental
standards (e.g., the European
porate
and Auditing
Scheme) and the con
Management
clusion of voluntary agreements
(e.g., the gradual
of CFCs). They may also form strate
phase-out
in order to
gic alliances with major competitors
address complex environmental
problems (e.g., the
to reduce
among U.S. car manufacturers
see also Steadman et al,
air pollution;
1995), or
work more closely with ENGOs
in their efforts to
resolve pressing environmental
issues (e.g., Ikea
teamed up with Greenpeace
to identify sustain
able sources of timber supply after criticism that its
alliance
practices
forests).
Public
in shaping
contributed
to the destruction
of tropical
also play a prominent
role
agencies
environmental
corporate
management
Conventional
welfare
at
economics
practices.
tempts to explain the 'greening' of corporations
as a direct response to the recent surge in environ
mental regulation in industrialized
countries (Bau
m?l and Oates,
1988; Cropper and Oates,
1992;
Palmer, Oates, and Portney,
1995), building upon
the 'polluter should pay' principle. The increas
ingly complex nature of environmental
regulation
has
rod, 1997) or when there are substantial first-mover
associated with early investments
in
advantages
environmental
It
(Nehrt, 1996).
may
technologies
also be confronted with negative
cam
publicity
increased
the risks of noncompliance
(Gar
rod, 1997).
the above context, Freeman, Pierce, and
Given
Dodd
could take a
(2000) suggest that business
to
role
the
natural
environment.
leadership
improve
Business must create value for stakeholders
such
as employees,
and
financiers,
customers,
suppli
issues. They
ers, taking into account environmental
recommend
that senior managers
rethink their cor
in
terms
of
four shades of green
porate strategy
green, stakeholder
(light or legal green, market
lobby groups or unflat
tering coverage by the media (Welford and Gould
face the additional
son, 1993). MNEs
complex
ity of a broader institutional field of stakeholders
countries and as well as
dispersed over multiple
green, and dark green), a framework
largely
sistent with Hart's
(1995) model. They also
gest that firms should define basic values
then design
strategies consistent with these
ues (Freeman et al, 2000). Most
importantly,
paigns
from environmental
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
Strut.
Mgmt.
/.,
24: 453-470
con
sug
and
val
they
(2003)
K. Buysse and A. Verbeke
460
a new approach7 to business,
propose
grounded
in values
and entitled
'stakeholder
capitalism'
or 'values-based
upon the
capitalism,'
building
we
of
'if
environmental
innovation:
under
concept
stand capitalism as a system of cooperation among
stakeholders
around important values, and if we
as being driven by enter
understand businesses
are no limits for greening
then
there
prise strategy,
of enterprise strategy' (Freeman et al., 2000: 32).
The above analysis
link
suggests
important
the
of
between
ages
corporate strategies
greening
and environmental
stakeholder management.
In the
we
a
make
distinc
below,
hypothesis development
in
tion among three key groups of stakeholders,
line with the strategic stakeholder
literature: regu
lators, primary stakeholders
(with the exclusion of
and
stakeholders.
However,
secondary
regulators),
is
the validity of this stakeholder decomposition
the
estab
then empirically
which
tested,
permits
lishment in a more grounded fashion of the link
environmental
ages
strategy and impor
tance attached to various stakeholders
(dependent
it is
in our statistical analyses. Here,
variables)
to
in
the
causal
mention
that,
practice,
important
stronger
ity is likely to work in both directions:
environmental
likely leads to more
proactiveness
between
to stakeholder pressures, but these pres
sensitivity
sures may themselves
trigger more proactiveness
in environmental
strategy.
Hypotheses
according to their envi
as determined
strategy,
second section, suggests
strategy do
end-of-pipe
as
a priority.
management
of firms
The classification
ronmental management
in this paper's
empirically
a reactive,
firms
with
that
not view environmental
merely
They invest in environmental management
to respect prevailing
regulations. These are viewed
as a mere
rather than as
constraint
institutional
an opportunity
to improve managerial
practices.
a
Such
response may become very expensive when
firms are faced with rapidly evolving and increas
environmental
regula
ingly severe and complex
1998). End-of-pipe
(Berry and Rondinelli,
to chang
must
be
continuously
adjusted
equipment
firms shift their
ing regulatory pressures. When
at the source,
focus towards preventing
pollution
tions
7
This approach captures values-based
to benefit over
allow all stakeholders
tion drives this form of capitalism.
Copyright ?
2002 John Wiley
innovation, which
time. Continuous
should
innova
&
Ltd.
Sons,
this is associated
with
in a variety
investments
as explained
of resource domains,
above. Given
these investments,
firms characterized
by a pollu
can
tion prevention
to attach
be
strategy
expected
much more importance, from a strategic manage
ment
to regulatory pressures, namely
perspective,
as
if they use the evolving
regulatory framework
the benchmark
for strategy development
and as
the basis for future resource allocation
(Henriques
and Sadorsky,
1999). In other words, firms with a
to gov
reactive strategy attach high importance
a
ernment
in
but
static
sense,
regulation,
only
as an almost mechanistic
and daily routine-driven
In con
response to new regulatory requirements.
create
in pollution prevention
trast, firms engaged
more
routines
that
include
sophisticated
adaptive
a learning component:
evolu
here, the dynamic
tion of government
is
the
driver
for
regulation
key
resource allocation
in various environmental man
In contrast, companies
agement domains.
environmental
leadership strategy view
as a
level creation of green competencies
which
is
competitive
advantage,
merely
with
an
the firm
source of
strength
ened by appropriate environmental
regulations. As
a result, it can be expected that firms with an envi
ronmental
strategy will not attach as
leadership
as
to
much
environmental
regulations
importance
firms adopting a pollution prevention
strategy.
1: The perceived
importance of reg
Hypothesis
in terms of impact on envi
ulatory pressures,
is highest for firms
ronmental decision making,
a
strategy, and
prevention
adopting
pollution
declines as firms adopt either an environmental
leadership strategy or a reactive environmental
strategy.
It has been noted that the primary
stakeholder
groups, who entertain formal relationships with the
customers,
shareholders,
firm, such as employees,
and suppliers, have the greatest impact on deter
the success or failure of any environmental
mining
these for
1991). It is precisely
strategy (Buzzelli,
that make primary stakeholders
mal relationships
directly relevant to the firm's survival, profitability,
and growth (Clarkson, 1995; Hill and Jones, 1992).
the most
and investors may benefit
Employees
environmental
from sounder corporate
practices
assets
because
(human capital and
they provide
that are tied to the
financial resources respectively)
be deployed
alterna
firm and cannot necessarily
loss
of
value
and
without
Jones, 1992).
(Hill
tively
Strut.
Mgmt.
/.,
24: 453-470
(2003)
Environmental
as a firm adopts an environmental
lead
in
ership strategy, employee
participation
solving
as well as the commit
environmental
problems
ment of substantial funds becomes
indispensable
1998; Hart,
(Nehrt, 1998; Sharma and Vredenburg,
1995). Environmental
strategies may
leadership
also permit establishing
better relationships with
customers
interested in products with a superior
Moreover,
environmental
and/or advanced
sup
performance
To
the extent that envi
strategies.
plier competitive
ronmental
leadership
strategies are implemented
in
all
countries
of operation,
interna
i.e.,
globally,
tional customers and suppliers rather than domes
tic customers
and suppliers are likely to become
more important (Garrod, 1997). In contrast, com
reactive environmen
panies with an end-of-pipe,
to devote much
tal strategy are unlikely
time or
resources
to managing
stakeholder
relationships
to poor
because
stakeholder
in response
actions
are
as a
not
environmental
performance
perceived
threat to the survival of the company. The impor
tance attached
to primary
stakeholders,
namely
and suppli
customers,
shareholders,
employees,
as
is
thus
to
increase
environmental
ers,
likely
shift toward environmental
strategies
leadership,
away from the reactive and pollution prevention
approaches.
2: Firms
themselves as
Hypothesis
identifying
an
strat
environmental
practicing
leadership
are
more
than
egy
likely
pollution-preventing
and reactive firms to attach high importance (in
terms of perceived
stakeholder
impacts on envi
to primary
ronmental decision making)
stake
holders
customers
shareholders,
(employees,
and, suppliers).
include
stakeholders
Secondary
competitors,
to
the
and
agencies
contributing
development
of
international
agree
implementation
voluntary
ments (usually these agencies have only limited or
no formal relationships
with the firms targeted),
NGOs
environmental
and the media
(Berry and
Strategy
and Stakeholders
461
that global competition
rather than local competi
tion is critical to the greening process. In addition,
environmentally
proactive firms from small, open
use international environmental
economies
agree
ments and standards as benchmarks
for their envi
ronmental strategy (Rugman, Kirton, and Soloway,
2000). Finally, the literature has identified reputa
tion effects as a major benefit of environmentally
leaders
proactive strategies. Hence, environmental
in the press and media, which
may seek publicity
are instrumental to shaping public opinion in favor
of (or against) a company. In contrast, firms with a
strategy have a more narrow
pollution prevention
as
can
be expected
to be concerned
focus,
they
environmental
regu
primarily about anticipating
lation (see Hypothesis
1). They can be expected
to interact less frequently with other than primary
stakeholders. Firms with a reactive environmental
as
strategy do not view environmental management
an important function, implying that they are likely
to perceive the claims of environmental NGOs and
the media as illegitimate,
and the framework pro
vided
and
agreements
by international
voluntary
the best practices of environmental
leaders as less
relevant to their corporate strategy.
3: Firms
Hypothesis
identifying themselves as
an
strat
environmental
practicing
leadership
than
egy are more
likely
pollution-preventing
to attach high importance
and reactive firms
stakeholder
(in terms of perceived
impacts on
environmental
secondary
tional
mental
Empirical
decision
to the firm's
making)
interna
rivals,
(industry
stakeholders
agreements,
organizations
environmental,
(ENGOs),
nongovern
and the media).
analysis
The importance
to different
attached
stakehold
ers was measured
to rate
by asking managers
on a Likert scale of 1 to 5 the impact of vari
ous
and Sadorsky,
Rondinelli,
1998; Henriques
1996,
Welford
and
1999;
Gouldson,
1993). Environmen
tal leaders are the most
likely to interact with
these stakeholders
in the context of joint problem
stakeholder pressures on decisions
related to
environmental
no
with
1
management,
denoting
at all and 5 a very strong influence.
influence
The list of stakeholders
included: domestic
and
international customers, domestic and international
and information sharing (Sharma and Vre
1998). Such firms may use the environ
denburg,
mental practices of other industry leaders as their
benchmark
in their efforts to remain competitive
1992). This view implies
globally
(Schmidheiny,
shareholders, financial insti
suppliers, employees,
and international rivals,
inter
tutions, domestic
national
treaties and agreements,
the media
and
and the national
ENGOs,
(and subnational)
gov
ernments and local public agencies.
solving
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
Strut.
Mgmt.
/.,
24: 453-470
(2003)
462
K. Buysse
and A. Verbeke
analysis
other
14 stakeholder
influence items were entered
into a principal component
the purpose
analysis,
of which was twofold: first, to reduce the num
ments,
factor
Principal
component
stakeholders. The second factor includes the
secondary stakeholder influences, namely domestic
and international competitors,
international agree
The
and the media.
ENGOs,
the fourth
at the
regulators
Finally,
represents
government
and local levels. The
(and subnational)
to replace the origi
factor scores were computed
nal set of variables capturing stakeholder pressures
by a smaller set to be used in subsequent analyses.
to allow a
of dependent
variables;
second,
classification
of
rather than
stakeholders,
grounded
to accept in a mechanical
fashion the distinction
ber
national
above among government
regulators,
pri
stakeholders
and
(other than government),
secondary stakeholders. Four factors emerged with
made
mary
1.04 and 1) and
(5.41, 2.15,
large eigenvalues
together accounted for 68 percent of the total vari
ance. The factor loadings (after Varimax rotation)
are listed in Table 2. As can be seen, all variables
had factor loadings of 0.55 or more on at least one
Control
character of a firm may strongly
the importance
attached to various
stake
holders. Subsidiaries
of multinational
enterprises
as
to national regulation
may be less responsive
coun
to
if
local
the
firms,
compared
especially
try involved is a small open economy representing
The multinational
affect
factor.
An analysis of the factor loadings suggests that
the first and third factor capture primary stake
holder pressures. The first factor represents most
domestic
'external'
namely
primary stakeholders,
and international customers and suppliers, whereas
the third factor includes mainly
'internal' pri
decision
making,
than
decisions,
especially
conventional
enter
portion of the multinational
total
and
sales
(Rugman, 1995).
prise's
production
are also more
Multinational
enterprises
exposed
to pressures from international customers,
suppli
ers, and rivals
subsidiaries of multinational
are
also more
enterprises).
They
likely to use
international
standards and other voluntary agree
ments as a benchmark
for their own environmen
use
The
of
tal strategy.
standardized environmen
tal strategies has been shown to generate finan
board
sup
the impact that a
pliers of other inputs, given
threat of removal of financial resources could have
on the firm and its negative
signaling effect on
Table 2.
a small
only
and share
mary stakeholders,
namely employees
it also includes financial
insti
holders. However,
tutions. To a large extent, financial
institutions
often have a much more
direct impact on top
management
of directors'
Factor loadings of stakeholder influences
primary
stakeholders
customers
1. Domestic
0.76
customers
International
0.69
6.
International
rivals
10.
International
agreements
(and
public
regional)
governments
0.09
0.28
Shareholders
0.49
0.62
0.29
-0.19
0.14
0.69
0.32
0.08
5.41
Eigenvalue
0.84
Alpha
Copyright ?
2002 John Wiley
& Sons, Ltd.
0.24
0.09
0.20
0.19
0.77
0.16
0.71
-0.09
-0.01
0.12
0.18
0.28
0.80
0.65
-0.01
-0.02
agencies
Regulatory
stakeholders
0.11
-0.14
11.0.12
ENGOs
12.0.02
Media
14. Local
primary
stakeholders
0.25
-0.23
0.76
0.21 0.24 0.02
0.520.58
7. Financial institutions
8. Domestic rivals
9.
0.12
0.28
Internal
Secondary
stakeholders
0.23
0.20
0.06
0.85
0.15
0.85 0.11 0.22
0.19
0.17
5. Employees
3. Domestic suppliers
4. International suppliers
13. National
(often
cial benefits for MNEs
(Dowell, Hart, and Young,
to
2000). Such standards are likely to conform
the pressures of the most demanding
stakeholders
External
2.
variables
0.80
0.02
0.86
2.15
0.80
1.04
1.00
0.72
0.72
Strut. Mgmt. J., 24: 453-470
(2003)
Environmental
1998;
(Rugman and Verbeke,
globally
and Taylor, 2001).
A second moderating
factor in the
between
environmental
strategy and
orientation may be firm size (though,
Christmann
relationship
stakeholder
in this sam
character of
ple, correlated with the multinational
the firm). It is important to emphasize
that many
are family
smaller domestic
firms in Belgium
owned and do not have their shares listed on the
stock exchange. This may be reflected in the per
ceived importance of shareholder pressures. More
over, smaller enterprises may attach less impor
tance to international
and
customers,
suppliers,
rivals than large firms. The natural logarithm of
annual sales has been used most
to
frequently
control for firm size, for example
in studies of
1990)
performance
(Capon, Farley, and Hoenig,
and was therefore also used in this study. Data
on annual sales were obtained
from the finan
cial statistics compiled
Bank of
by the National
Belgium.
in their perception
industries
vary
to?stakeholder
response
pressures,
to the heritage of stakeholder manage
according
ment in the industry's history. Industries also dif
fer in the perceived
importance of?and
approach
Finally,
of?and
to?environmental
For example, the
management.
chemical
to the devel
industry was instrumental
care systems.
In order to
opment of responsible
account for these differences
and their potential
between
environmen
impact on the relationship
tal strategy and importance attached to stakehold
ers, six sectoral dummy variables were included:
(1) food and beverages,
(2) other light industries
such as textiles, pulp and paper, printing,
fur
and other packaging
niture, plastics,
materials,
(3) chemical products
including pharmaceuticals,
and cosmetics,
oils, detergents,
(4) heavy manu
and
natural
resources, and
(5)
facturing
machinery,
(6) other sectors such as wholesale
distribution,
construction,
transportation,
and utilities.
Analysis
the means
and standard deviations
of
First,
the importance
of each
individual
stakeholder
for each environmental
group were
computed
of variance
strategy cluster. One-way
analysis
then used
to test whether
the
(ANOVA) was
in the perceived
differences
of
importance
each stakeholder among the three environmental
strategies were
significant. Post hoc
statistically
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
Strategy
and Stakeholders
463
tests
statistical
also
(Bonferroni
test) were
to test for
conducted
statistical
differences
between
clusters
As
the importance
pairwise.
to various
attached
stakeholder
is often
groups
correlated, this procedure increases the probability
a linkage
of mistakenly
between
accepting
environmental
stakeholders
strategy and importance attached to
in general. Therefore,
as mentioned
factor analysis was used to reduce the
above,
number of dependent
variables
in
and resulted
broad
of stakeholder
influences:
groups
(a) primary, external
stakeholders,
(b) secondary
internal stakeholders,
stakeholders,
(c) primary,
and (d) regulators at various
institutional
levels,
each
its
group
represented
by
corresponding
score. The ANOVA
factor
test was
repeated
four
for each
of
stakeholder
A
group
pressures.
multivariate
of
variance
(MANOVA)
analysis
was also performed
to test the linkage between
environmental
strategy and the overall stakeholder
orientation of firms. Finally, control variables (for
size and industry) were entered
multinationality,
as covariates,
into the analysis
and one-way
(ANCOVA) was performed
analysis of covariance
to verify whether
in environmental
differences
were
still
associated
with
differences
strategy
in the perceived
importance of each stakeholder
after
the
other
effects had been accounted
group,
for. A similar test was performed on all stakeholder
groups taken together (MANCOVA).
RESULTS
The importance attached to each individual stake
holder by each group of firms is reported
in
Table 3. The corresponding ANOVA F-values
are
also listed. High F-values
indicate that variations
between firms in the perceived
importance of an
individual stakeholder are related to differences
in
the environmental management
strategies adopted
between
by firms. In addition, pairwise differences
cluster means
that were statistically
significant at
5 percent are underlined.
The descriptive
statistics show that firms with
a reactive environmental
strategy attach impor
tance primarily to domestic regulators, local public
agencies, and international agreements. These find
ings confirm that firms pursuing a reactive envi
ronmental strategy would probably not even have
addressed environmental
issues in the absence of
Strut.
Mgmt.
/.,
24: 453-470
(2003)
K. Buysse
464
Table
3.
and A. Verbeke
Perceptions
of
individual
stakeholder
Stakeholder types
pressures
stakeholders
primary
customers
External
(0.95)
Domestic
suppliers
International
suppliers
2.39
Environmental
NGOs
1.78
1.87
(0.88)
(0.84)
3.09*
1.49
1.78
1.94
(0.77)
(0.91)
(0.99)
2.06
2.75
_
3.48*
2.10
_
(1.11)
2.07
Press
_
6.8
_2.55
(1.09)
(1.31)
2.02
2.19
(0.96)
(1.17)
5.20*'
3.45
_3.21
(1.19)
5.65*
(1.04)
(1.09)
2.55
2.52
(1.19)
(1.16)
3.34*
5.62*
2.65
_2.63
(1.31)
(1.05)
(1.13)
2.21
2.28
2.84
(0.94)
(1.21)
stakeholders
primary
Employees
(0.99)
Shareholders
2.14
2.75
_
1.70
1.98
(0.90)
(0.95)
4.51*
9.71*
3.19
(1.25)
(1.22)
(1.19)"
Financial institutions
4.11*
2.26
(1.06)
stakeholders
(and
regional)
3.76
governments
4.07
_
public
3.41
agencies
_
2.83+
3.45
(1.23)
(0.91)
**/? < 0.01
in accordance with Hypoth
regulation. However,
that firms pur
demonstrate
esis 1, the findings
strategy attach even
suing a pollution prevention
indi
more
to regulatory
pressures,
importance
as
a
of
set
of
the
regulation
perception
cating
resource
in
various
to
invest
further
guidelines
and to improve environmental
perfor
In addi
rather than as a mere constraint.
tion, these firms also appear to attach substan
and
the media,
to shareholders,
tial importance
lead
The firms with an environmental
ENGOs.
ership strategy appear to be associated with the
as important.
largest set of stakeholders perceived
a
firms
from
with
differ
pollution prevention
They
domains
mance,
2002 John Wiley
2.454
(1.06)
_3.76
(0.99)
*p < 0.05;
3.87
(0.80)
(0.99)
Copyright ?
(1.43)
1.51
(0.76)
agreements
p < 0.10;
4.85**
_2.97
(0.71)
1.63
International
+
2.35
(1.17)
(1.20)
ANOVA
F
3.26*
2.20
2.13
(0.93)
Local
leadership
(1.07)
(1.26)
1.70
rivals
Domestic rivals
Regulatory
National
Environmental
strategies
stakeholders
Secondary
International
Internal,
environmental
prevention
1.86
customers
International
different
Pollution
Reactive
strategy
Domestic
under
&
Sons,
Ltd.
by the importance
mainly
international
rivals, and
employees,
strategy
to
attached
international
customers.
of the four stake
importance
perceived
holder groups (as measured
by the factor scores)
are reported
and corresponding ANOVA F-values
in Table 4.
1 predicted that regulatory pressures
Hypothesis
would be perceived most
strongly by firms pur
strategy and less
suing a pollution
prevention
The
of firms.
the two other categories
score capturing
of
the importance
for the cluster of
is indeed highest
for
second highest
firms,
prevention
strongly by
factor
The
regulation
pollution
Strut.
Mgmt.
/.,
24: 453-470
(2003)
Environmental
Table
4.
Perceived
importance
Stakeholder types
of
stakeholder
Reactive
strategy
External
under
groups
Pollution
environmental
Environmental
leadership
prevention
0.08
Mean -0.21
0.23
1.05
0.91
strategies
ANOVA
F
MANOVA
Wilki's ?
2.76+
1.31
stakeholders
Secondary
0.11
0.23
0.97
0.94
-0.02
0.46
Mean -0.25
1.03
S.D.
primary
3.86*
stakeholders
Mean -0.17
1.02
S.D.
0.91
4.68*'
1.11
stakeholders
Regulatory
0.17
Mean ?0.14
0.99
S.D.
-0.22
0.85
2.90+
1.32
Overall effect
+
465
and Stakeholders
stakeholders
primary
S.D.
Internal
different
Strategy
p < 0.10;
0.86*
*p < 0.05;
**/? < 0.01
the cluster of reactive firms, and lowest for the
cluster of environmental
leaders, but the perceived
differences
in the importance of regulation among
the clusters are small, as shown by the F-value.
This is not surprising as the initial analysis
of
individual
and international
(more than domes
agreements
that
environmental
leaders
tic) rivals, suggesting
are interested in the development
and transfer of
area. It should
best practices in the environmental
be emphasized,
that
all
firms
however,
perceive
international agreements as important, irrespective
found
of their environmental
stakeholder
(see Table 3)
importance
the difference
between
reactive firms and
firms significant but not the
pollution-preventing
firms and
pollution-preventing
leaders.
2 predicted
that the importance at
Hypothesis
tached to primary stakeholders would be highest
for environmental
lower for
leaders, somewhat
firms
and
lowest
for
reactive
pollution-preventing
firms. The factor score capturing internal, primary
stakeholders (which, in this research, include finan
cial institutions)
and the corresponding
F-values
In contrast, the fac
both support the hypothesis.
tor score capturing external, primary stakeholders
difference
between
environmental
(customers and suppliers) and the corresponding
do not provide much support for Hypoth
F-value
esis 2.
3 suggested that the impor
Finally, Hypothesis
tance attached to secondary
stakeholders
(rivals,
international agreements, ENGOs,
and the media)
would be highest for environmental
leaders, much
lower for pollution-preventing
firms, and low
est for reactive firms. However,
Table 3 reveals
a complex
set of linkages between
the impor
tance attached
to individual
and the
stakeholders
set
environmental
The
of
environ
strategy type.
mental leaders (dominated by MNE affiliates) does
to international
appear to attach most importance
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
strategy, implying that such
a suitable
institutional
agreements may provide
for public-private
framework
Inter
cooperation.
not
environmental
leaders
do
estingly,
perceive
as more
ENGOs
and the media
important than
firms. Better environmental
pollution-preventing
management
practices may thus be associated with
efforts to avoid the threat of negative publicity and
loss of legitimacy up to a point, but ENGOs and
the media do not yet appear linked to environmen
tal leadership.
The result of the MANO VA analysis for the four
stakeholder groups taken together is significant. In
the absence of other control variables, differences
in environmental
strategies are associated with 14
of
the
in the importance attached
variation
percent
to stakeholders.
THE IMPACT OF MULTINATIONALITY,
SIZE, AND INDUSTRY
As
before, the sample can be decomposed
100 domestic
firms and 97 MNE
affiliates
or
This
raises
the
(Belgian
foreign-owned).
possi
bility that any observed
linkage between environ
mental
strategy type and stakeholder management
noted
into
Strut.
Mgmt.
J.,
24: 453-470
(2003)
K. Buysse and A. Verbeke
466
could result solely from the firms' status as MNE
affiliates or domestic companies. The status of the
firm as an MNE affiliate indeed appears to have an
important effect on several linkages between envi
ronmental strategy choice and stakeholder manage
ment. The following
examples,
resulting from the
of
the
statistics
for MNE
comparison
descriptive
affiliates
and domestic
firms
(available
Belgian
from the authors) are illustrative:
on the implications
strong, general prescriptions
of environmental
choices
for stakeholder
strategy
as
such
voiced
(1995),
management,
by Hart
as more
critical.
that
Here,
many of the
domestic Belgian firms export a substantial por
and are therefore also
tion of their production
customers on a daily
faced with international
The difference with the MNE
affiliates
net
is that the latter operate in a multinational
the
firm's
work, whereby
physical presence in a
of
countries
variety
provides an internal incen
its environmental
of
tive, irrespective
strategy,
to attach as much importance to foreign markets
as to the local market.
inmagnitude
2. Example of a difference
of impor
tance in the results: the importance attached to
basis.
is stronger for MNE
international competitors
in every
than for domestic companies
5.
of
importance
and industry
Perceived
size, multinationality,
stakeholder
groups
should again be moderated.
The following
observations
under
nationality,
link
The
between
the
importance
and
stakeholders
primary
stakeholders
Environmental
1.95
strategy
Secondary
stakeholders
in the
for multi
(Table 5).
to
attached
environmen
internal, primary
is weakened
tal strategy choice
after inclusion
of the variables
for firm multination
controlling
the
industry. More
specifically,
is
moderated
the
size
effect, prob
by
relationship
are
smaller firms in Belgium
ably because many
still family-owned.
also
tends
power
Employees'
are by
to be stronger
in larger firms, which
a social council with
law required to establish
size,
ality,
and
When multinationality,
have been accounted for,
different
environmental
strategies,
ANCOVA F
External
out
stand
analysis when accounting
size, and industry effects
quantitative
representation.
employee
size, and industry effects
affiliates
Table
of MNE
above results are important as they suggest
that some of the linkages between environmental
are
strategy choices and stakeholder management
a
as
status
firm's
the
determined
fundamentally
by
domestic firm or MNE
affiliate. Hence,
relatively
of domestic
firms, only those with environ
mental
leadership strategies view international
customers as important, but even there domes
are still viewed
it is important to note
important by all strategy categories
affiliates and domestic firms.
The
1. Example
of a strong divergence
in results:
MNE
in all three strategy categories
affiliates
environmental
(reactive, pollution
prevention,
to
attach
substantial
leadership) appear
impor
tance to international
customers.
In the case
tic customers
strategy category. Here, too, the internal MNE
network effect appears to separate MNE
affili
ates from domestic firms, which are otherwise
equally exposed to international competition.
across strategy cat
3. Example of full consistency
are viewed as
international
egories:
agreements
accounting
for
firm
MANCOVA Wilki's
Internal primary
Regulatory
?
All
stakeholders
stakeholders
stakeholders
2.81*
0.45
2.56+
0.92*
Covariates
MNE
Size
affiliate
Natural
1.40
resources
+
p < 0.10;
Copyright ?
*p < 0.05;
0.39
7.42"
0.95*
2.83
8.34*'
1.19
0.93*
0.56
1.68
0.13
0.98
0.10
0.52
8.09*'
3.42
0.935*
4.15**
2.15
2.10
0.96
1.67
0.44
2.43
0.93+
0.32
0.92
0.995
0.03
Chemical
industry
Manufacturing
Light Industries
Others 0.01
0.25
0.02
0.06
9.06*
0.13
**p < 0.01
2002 JohnWiley
& Sons, Ltd.
Strut. Mgmt.
J., 24: 453-470
(2003)
Environmental
in environmental
differences
strategy are still asso
ciated with 8 percent of the variance in the impor
to stakeholders
tance attached
(Table 5, MAN
a
moves
from
reactive
Thus,
COVA).
strategy
toward a pollution prevention
strategy and an envi
ronmental leadership strategy are indeed associated
with both a 'deeper' and 'broader' stakeholder ori
entation. However,
the analysis above has demon
strated that such moves do not imply a linear and
equal increase
holders across
in the importance attached to stake
the entire set of relevant stakeholder
groups.
CONCLUSION
This
the linkages between
paper has evaluated
environmental
corporate
strategies and stakeholder
an
with
management,
empirical application to large
polluting firms active in Belgium.
In this study, the firms were
first classified
to
their
environmental
management
according
(1995) resource
practices,
building upon Hart's
a
based framework.
Cluster
analysis
suggested
classification
of
three
envi
dominant
consisting
ronmental management
(1) reactive,
strategies:
and (3) environmental
prevention,
Whereas
many firms included in the
leadership.
to
had
shifted from a reactive
sample
already
a pollution
a
strategy, only
prevention
minority
(2) pollution
had adopted an environmental
leadership strategy,
most of them MNE
affiliates. Overall,
the com
in
the
panies included
sample attached the high
est importance to regulators (national government
and local public agencies) and international agree
ments.
Strategy
and Stakeholders
467
various stakeholders,
other than regulators. How
not
all
stakeholders
ever,
appear to be perceived as
for
firms
with an environmen
equally important
tal leadership strategy. More specifically,
only the
between
environmental
and
inter
linkage
strategy
stakeholder
nal, primary
management
(Hypothe
sis 2) appears rather strong. This linkage does not
for external,
appear to be statistically
significant
stakeholders.
This
result
be
may
primary
explained
opera
large manufacturing
by the fact that most
tions
in Belgium
tend to specialize
in the
of
intermediate
The
production
goods.
resulting
relative absence of direct contact with final con
sumers may help explain inertia in prevailing
sup
located
ply chain management
practices, even when firms
become more environmentally
proactive.
as a set
the secondary
stakeholders
Although
as
more
to
be
viewed
appear
important by envi
not hold for all
ronmental
this
does
leaders,
individual secondary stakeholders
3).
(Hypothesis
are not
More
ENGOs and the media
specifically,
as more
perceived
important by firms with an
environmental
leadership strategy as compared to
companies.
pollution-preventing
the linkage between
environmental
Overall,
and
stakeholder
albeit
strategy
management,
a
has
moderate
statistically
significant,
only
this situation characteristic
importance. However,
of manufacturing
located in Belgium
operations
could
in
the future,
if a number
of
change
trends observed
in other developed
economies
such as Canada and the United
States also took
place there. For example, ENGOs could indirectly
become more influential by targeting some of their
lobbying efforts towards consumers and suppliers.
In addition,
the move
toward more sophisticated
In accordance with the predictions
of Hypoth
esis 1, there is some support for the view that
firms with a pollution prevention
strategy attach
the highest importance to regulation. This finding
that an environmental
strat
suggests
leadership
environmental
it easier for
reporting could make
as well as the
the primary, external stakeholders
to reward leaders and punish
financial markets
in
stakeholders
egy has little to do with managing
the regulatory sphere. It also suggests that further
shifts from pollution prevention
toward environ
implication
of important
agement
requires the identification
stakeholders. The key stakeholders may vary sub
strat
stantially depending upon the environmental
context
egy chosen and the relevant institutional
an environ
faced by the firm. Firms adopting
mental
leadership strategy clearly view as critical
a broader range of stakeholders
than pollution
mental
envi
leadership may require conventional
ronmental policy (e.g., command and control mea
to be complemented
sures, economic
incentives)
efforts
between
by cooperative
industry and regu
latory agencies.
This research supports the view that environ
mental
leadership is associated with actively man
norms and expectations
of
aging the changing
Copyright ?
2002 John Wiley
&
Sons,
Ltd.
noncompliers.
This study has
six key implications.
The first
man
is that effective
environmental
firms or reactive firms, but even for
preventing
some stakeholder groups are per
these companies
ceived as much more important than others.
Strut.
Mgmt.
/.,
24: 453-470
(2003)
K. Buysse
468
and A. Verbeke
Second,
is closely
environmental
stakeholder management
related to the development
of green
we
demonstrated
that
shifts
from
competencies:
1999). Nev
policy (Buysse, Coeck, and Verbeke,
are
that
firms
still in the
ertheless,
many
given
reactive and pollution prevention
stages, this vol
a reactive
untary approach needs to be combined with a more
of conventional
stringent enforcement
regulation.
as
future
Fifth,
research, it appears crit
regards
ical in empirical studies on this subject not to take
toward pollution
approach
prevention
and then to environmental
leadership require sub
stantial resource allocations
in multiple
domains:
in green product and manufacturing
in employee
skills, in organizational
investments
technologies,
competencies,
ment systems
in formal
(routine-based)
manage
and procedures,
and, finally, in the
of the strategic planning process.
reconfiguration
This
stakeholder manage
implies that effective
ment is much more than a skillful public relations
exercise; it is the visible reflection of an underlying
resource-based
in line with Hart's
strategy, much
(1995) and Freeman etal.'s
(2000) seminal work
in this area.
as a set appeared
Third, in this study the MNEs
to have adopted more sophisticated
environmental
some
than
domestic
firms.
To
extent, this
strategies
reflects the nonlocation-bound
nature of their firm
in greening. However,
these
specific advantages
do not arise primarily from government
regulation,
in contrast to the prescriptions
of Porter and van
der Linde
to government
sense, and taking
is insufficient to push
(1995). Responsiveness
even in the dynamic
regulation,
into account learning effects,
firms to move beyond pollution prevention. Envi
ronmental leadership builds upon a very different
approach to strategy: it is associated with a long
term vision
to broaden and deepen
the linkages
with a variety of salient stakeholders,
in addition to
the allocation of resources
domains described above.
A
in the various
resource
related to the above,
is
implication,
toward
should
geared
They
public policy-makers.
envi
pay attention to the finding that conventional
as having a some
ronmental policy
is perceived
what
fourth
importance by firms adopting envi
ronmental
since
leadership
strategies. However,
com
such firms view the development
of green
as a source of competitive
petencies
advantage,
in
they are likely to cooperate with
regulators
the development
of new regulations
tailored to
reduced
their firm-specific
needs. In fact, there is
a
to con
for
already
tendency
regulatory agencies
sult with industry before enacting or implementing
new environmental
rules, and a greater emphasis
on voluntary
in most
industrialized
regulation
countries (Rugman et ai, 2000). This tendency is
satisfy
also reflected
Copyright ?
in the post-1992
2002 John Wiley
EU
&
environmental
Sons,
Ltd.
mainstream
classifications
of environmental
strate
or
relevant
stakeholder
in the
found
groups
gies
academic
literature for granted. Each new piece
of research should first carefully
the
investigate
actual environmental
of
the
firms
strategy profiles
included in the sample, as well as the decomposi
tion of the stakeholder
considered.
groups
Sixth, managerial
(stated prefer
perceptions
ences) merit more scholarly attention. The impor
tance attached to specific sets of stakeholders,
and
which
appears to be associated with a particular
environmental
determined
strategy, is ultimately
values, in line with Freeman et al.
by managerial
(2000). Future empirical analysis could study the
forces influencing managerial
values in the realm
of environmental
strategy. It could also investigate
whether
the match or conflict (mismatch) between
values and corporations'
values
influ
managers'
ences the proactiveness
of environmental
practices.
the study's limitations should be noted.
Finally,
The findings reflect the perceptions
of the compa
nies
that accounted for the bulk of water pollution
and solid waste production
in Belgium.
Since it
was primarily larger firms (as measured
by annual
in the survey,
this bias
sales) that participated
should be kept in mind when interpreting the find
limitation of the study is related to
ings. Another
the nature of the country where
the data were
collected.
The results reflect the perceptions
of
a
econ
firms
in
small,
open
polluting
operating
in producing
omy specialized
and may not be generalizable
systems or to firms operating
intermediary goods,
to larger economic
in regions with a dif
structure of industry as these may be faced
a different configuration
of salient environ
mental
stakeholders.
ferent
with
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attributes
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and
salience,
Academy
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