An Empirical Study of Impact of A Preventive Environmental Strategy On Environmental and Organization Performance in The Chemical Industry PDF

INFORMATION TO USERS
This manuscript has been reproduced from the microfilm master. UMI
films the text directly from the original or copy submitted. Thus, some
thesis and dissertation copies are in typewriter face, while others may be
from any type of computer printer.
The quality of this reproduction is dependent upon the quality of the

copy submitted. Broken or indistinct print, colored or poor quality
illustrations and photographs, print bleedthrough, substandard margins,
and improper alignment can adversely affect reproduction.
In the unlikely event that the author did not send UMI a complete
manuscript and there are missing pages, these will be noted. Also, if
unauthorized copyright material had to be removed, a note will indicate
the deletion.
Oversize materials (e.g., maps, drawings, charts) are reproduced by

sectioning the original, beginning at the upper left-hand comer and
continuing from left to right in equal sections with small overlaps. Each
original is also photographed in one exposure and is included in reduced
form at the back of the book.
Photographs included in the original manuscript have been reproduced

xerographically in this copy. Higher quality 6” x 9” black and white
photographic prints are available for any photographs or illustrations
appearing in this copy for an additional charge. Contact UMI directly to
order.
UMI
A Bell & Howell Information Company
300 North Zeeb Road, Ann Arbor MI 48106-1346 USA
313/761-4700 800/521-0600
Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.
AN EMPIRICAL STUDY OF IMPACT OF A PREVENTIVE ENVIRONMENTAL
STRATEGY ON ENVIRONMENTAL AND ORGANIZATION PERFORMANCE
IN THE CHEMICAL INDUSTRY
by
Jong Gon Yang
A DISSERTATION
Presented to the Faculty of
The Graduate College at the University of Nebraska
In Partial Fulfillment of Requirements
For the Degree of Doctor of Philosophy
Major: Interdepartmental Area of Business

(Management)
Under the Supervision of Professor Sang M. Lee
Lincoln, Nebraska
December, 1997
UMI Number: 9815913
UMI Microform 98I59I3

Copyright 1998, by UMI Company. All rights reserved.
This microform edition is protected against unauthorized
copying under Title 17, United States Code.
UMI
300 North Zeeb Road
Ann Arbor, MI 48103
DISSERTATION TITLE
A n E m pirical S tu d y o f Im pact o f a P r e v e n tiv e E n v iro n m en tal S tr a te g y

on E n v iro n m e n ta l a n d O rg a n iz a tio n P e rfo rm an ce
_____________ in th e Chemical I n d u s t r y _________________
BY
Jong Gon Y ang
SUPERVISORY COMMITTEE:
APPROVED DATE
Signature
P ro f e s s o r S ang M. Lee
Typed Name
Signature
2.
P r o f e s s o r M arc S c h n ie d e ria n s
h In 4 r -/ (2 / ? 7
Signature
P ro f e s s o r F re d C h o o b in eh
T yped Name
Signature
lignature
/V v/^ 7
Professor Rarhara Plakt*
T yped Name
Signature
T yped Name
Signature
T yped Name
GRADUATE COLLEGE
n UNIVERSITY OF NEBRASKA
AN EMPIRICAL ANALYSIS OF IMPACT OF A PREVENTIVE
ENVIRONMENTALTAL STRATEGY ON ENVIRONMENTAL AND
ORGANIZATIONAL PERFORMANCE IN THE CHEMCAL INDUSTRY
Jong Gon Yang, Ph.D.
University of Nebraska, 1997
Adviser: Sang M. Lee

4
Increased environmental legislation and enforcement and customers’ pressure have
prompted many firms to use environmental challenges as a strategic competitive weapon.
Nevertheless, most managers still have reservations about the implementation of a
proactive environmental strategy on a firm’s financial performance. Therefore, this
research examines the impact of preventive environmental strategy on both environmental
and organizational performance of U.S. chemical firms.
The primary research tasks are: 1) to examine the relationship between the degree
of environmental and organizational performance; 2) to examine determinants of the
preventive environmental management strategy; and 3) to identify obstacles to
implementing preventive environmental programs. The major objective is to examine the
impact of a preventive environmental strategy on a strategic advantage.
This research utilizes a cross sectional survey of chemical companies in the U.S.
that have implemented environmental strategies. A structured survey questionnaire was
mailed to 1,250 chemical manufacturing firms, o f which 87 firms responded. Simple and
multiple regression analyses were utilized to test determinants of preventive environmental
strategy on environmental and financial performance.
This research provide strong evidence that higher preventive implementation can
lead to better environmental performance in terms o f the EPA TRI data, reduction in
consumption of hazardous materials, reduction in the amount in the amount of chemical
spills, total number o f regulatory violations, and reduction in the amount of total
emissions. The other findings provide a strong relationship between preventive
environmental programs and organizational performance in terms of manufacturing cost,
plant efficiency, product yield, process yield, and product quality. Finally, the results of
analyses revealed that both attitude towards environmental issues and human resource
investment were significant determinants of preventive programs.
ACKNOWLEDGEMENTS
Writing a doctoral dissertation is not a sprint but a marathon. Without the help of
many considerate people, I would not have finished this work. I have been extremely
fortunate to have had Dr. Sang M. Lee as my adviser as provided me with academic
insight when I took his class. Even when I was depressed from personal problems, he has
always encouraged and supported me to continue to study. His academic inspiration,
kindness, and consideration proved critical for completion of this work. Additionally, I
was fortunate and grateful to have Dr. Marc Schneideijans, Dr. Fred Choobineh, and Dr.
Barbara Plake as my committee members. Dr. Scott Swenseth was another important
professor who helped me finish this work.
I must direct special thanks to Dr. Choong-sik Chang, chairman of the board of
directors o f Dankook University. Without financial support arranged by him, studying and
completing a Ph.D. degree in the United States would have been unthinkable for this
impoverished Korean student. His full support, financial assistance, and patience allowed
me to complete my formidable task.
English is often a daunting language for an international student; therefore, I would
like to thank to my American friend and colleague, Kendra Reed, for proofreading my
dissertation. Without complaint, her creative criticism greatly improved my work.
I also would like to thank to Dr. Sung Nyul Paek, Mr. Jiwhan Yum, Mr. Sang Jun
Lee, Mr. Seong Hee Bhoo, Mr. Seong Hoi Kim, Mr. Chanhoo Song, Mr. Shang-geun
Rhee, and Mr. Shan Ronghua for their help with mailing questionnaires and advice
iii
concerning statistical analysis. Other special thanks must go to participants o f the study as
their responses were vital input for completing this dissertation.
Finally, I owe a special debt to my son, Hojun Yang as he missed out on quality
family time as I completed my dissertation. My family has always had a strong belief that I
would successfully finish this work.
iv
TABLE OF CONTENTS
page
ABSTRACT OF THE DISSERTATION................................................................. i
ACKNOWLEDGEMENT...................................................................................... iii
LIST OF FIGURES................................................................................................vii
LIST OF TABLES..................................................................................................ix
CHAPTER ONE INTRODUCTION.......................................................................1
1.1 Overview............................................................................................................ 1
Efficiency......................................................................................................2
Social Responsibility....................................................................................3
World-Class Environmental Strategies....................................................... 4
Plan or React............................................................................................... 5
Strategy........................................................................................................6
Determinants............................................................................................... 8
Research Questions...................................................................................... 8
1.2 Purpose o f the Study.......................................................................................... 9

Objective 1 ................................................................................................. 10
Objective 2 ................................................................................................. 10
Objective 3 ................................................................................................. 10
1.3 Definition of Environmental Management....................................................... 11
1.4 Definition of Preventive Environmental Strategy.............................................13
1.5 Organization o f the Dissertation.......................................................................14
CHAPTER TWO LITERATURE REVIEW......................................................... 18
2.1 Introduction...................................................................................................... 18
2.2 Previous Research.............................................................................................18
2.2.1 Theoretical Framework of CSR (Corporate Social Responsibility)

and Economic Performance........................................................... 18
2.2.1.1. Benefits.................................................................................20
2.2.2 Review of Social Performance and Economic Performance...........26
2.2.2.1 Seven Previous Studies.........................................................30
2.2.22 Recent Studies....................................................................33
2.3 Environmental Strategy....................................................................................38

2.3.1 Strategy Development Continuum.................................................. 38
2.3.2 Strategic Choice.............................................................................. 43
2.4 Determinants of Preventive Strategy...............................................................45
2.5 Conceptual Model of Environmental Strategy................................................ 48
2.6 Summary..........................................................................................................49
CHAPTER THREE RESEARCH METHODOLOGY......................................... 52
3.1 Introduction......................................................................................................52
3.2 Development Hypotheses................................................................................ 54

3.2.1 Environmental Management Strategy............................................ 54
3.2.2 Prevention Strategy Programs........................................................56
3.2.2.1 Hierarchy Category............................................................... 57
3.2.2.2 Program Category.................................................................59
3.2.3 Organizational Performance...........................................................62
3.2.4 Environmental Performance...........................................................63
3.2.5 Implementation of Environmental Management............................ 65
3.2.6 Determinants of Environmental Strategy....................................... 66
3.2.6.1 Legitimacy Principle.............................................................70
3.2.6.2 Discretionary Principle.........................................................72
3.2.6.3 Public Responsibility Principle............................................. 73
3.2.7 Summary........................................................................................74
3.3 Description of Data Collection........................................................................ 77

3.3.1 Sample Selection............................................................................ 77
3.3.2 Development of the Structured Questionnaire...............................77
3.3.3 Development of Survey Response..................................................79
3.3.4 Data Analysis Procedures and Statistical Methods........................ 79
CHAPTER FOUR RESULTS AND ANALYSIS................................................ 81
4.1 Introduction......................................................................................................81
4.2 Description of Survey Respondent..................................................................82

4.2.1 Responding Companies’ Information............................................. 82
4.2.2 Job Title.......................................................................................... 85
vi
4.2.3 Implementation Status o f a Preventive EnvironmentalStrategy... 85
4.2.4 Summary Results of Determinants o f Environmental Strategy 87
Attitude Toward Environmental Issues........................................... 87
Human Resource Investment...........................................................89
Effect of Environmental Regulation on Competitive Position 89
Competitive Advantage.................................................................... 91
Environmental Pressure................................................................... 91
4.2.5 Descriptive Analysis o f Survey Responses.....................................94
4.3 Statistical Analysis of Determinants o f a Preventive Environmental

Management Strategy...................................................................................... 95
4.3.1 The Degree of Implementation of Preventive Programs................ 95
4.3.2 Reliability Analysis..........................................................................98
4.3.3 Correlation Analysis...................................................................... 100
4.3.4 Analysis of Multiple Regression...................................................102
4.3.5 Results of the Regression Model..................................................102
4.3.6 Summary of Determinants of Preventive Environmental
Programs...................................................................................... 107
4.4 The Relationship Between the Degree o f Implementation Programs

Environmental Management........................................................................... 109
4.5 The Impact of Implementation Programs to Organizational Performance..... 110
4.6 The Impact of Implementation Programs on Sales Growth...........................115
4.7 The Results of Implementation Programs on Environmental Performance.... 117
4.8 The Results of Implementation Programs and Toxics Release Inventory...... 119
4.9 Implementation Problems............................................................................... 122
CHAPTER FIVE CONCLUSIONS..................................................................... 129
5.1 Summary........................................................................................................ 129
5.2 Contributions of the Study............................................................................. 132
5.3 Limitations of the Study................................................................................. 135
5.4 Recommendations for Future Research......................................................... 136
REFERENCES.....................................................................................................138
vii
APPENDIX A Cover Letter and a Questionnaire..........................................149
APPENDIX B Correlation Matrix Among Independent Variables............... 159
viii
LIST OF FIGURES
1.1 Research Model..................................................................................................9
2.1 The Linkage of Environmental Management to Firm Probability.................... 22
2.2 The Conceptual Framework of Preventive Strategy.......................................51
3.1 Research Procedure..........................................................................................53
3.2 Hierarchy of Preventive Options......................................................................58
3.3 Prevention Techniques..................................................................................... 61
4.1 Summary of Results of Determinants.............................................................108
4.2 Summary of the Degree o f Preventive andOrganizational Performance 118
4.3 Summary of the Degree o f Preventive Programs and Environmental

Performance................................................................................................... 124
5.1 The Results of the Study...............................................................................133
ix
LIST OF TABLES
1.1 Organization o f the Dissertation...................................................................... 17
2.1 Benefits of Resource Productivity...................................................................25
2.2 Company-wide Pollution Prevention Programs and Goals............................. 27
2.3 The Relationship Between Environmental Performance and Economic

Performance.................................................................................................... 36
2.4 Five Distinctive Stages of Environmental Management Programs..................40
3.1 Prevention Activities in the INFORM Study................................................... 60
3.2 Environmental Management Implementation Factors..................................... 67
3.3 Hypotheses...................................................................................................... 75
4 .1 Profile of Respondent Companies Based on the Number of Employees 83
4.2 Profile of Respondent Companies Based on Sales Volume............................ 83
4.3 The Status o f Report to EPA..........................................................................84
4.4 Job Title of Respondents................................................................................. 86
4.5 Profile of Detailed Job Title............................................................................ 86
4.6 The Status of Environmental Management Strategy.......................................88
4.7 The Results o f Environmental Issues...............................................................88
4.8 Human Resource Investment...........................................................................90
4.9 Effect of Environmental Regulation on Competitive Position......................... 90
4.10 Competitive Position o f a Proactive Environmental Action.......................... 92
4.11 The Results o f Environmental Pressure Sources...........................................93
4.12 The Degree o f Implementation Programs..................................................... 96
4.13 Types of Preventive Programs Implemented.................................................96
4.14 The Results of Reliability Test for Independent Variables............................ 99
4.15 Correlation Matrix among Independent and Dependent Variables.............. 101
4.16 The Results of Stepwise Multiple Regression Model.................................. 103
4.17 The Results of t-test between the Degree of Preventive Implementation

Programs and Planning and Systems Analysis............................................. I l l
4.18 The Results of t-test between the Degree o f Preventive Implementation

Programs and Management Control............................................................ 112

Programs and Organizational Structure.......................................................113

Programs and Organizational Performance................................................. 114
4.21 The Results of the Degree of Implementation Programs and Sales............. 116
4.22 The Results of the t-test between the Degree of Preventive Implementation
Programs and Environmental Performance................................................. 120
4.23 Analysis of the Degree of Preventive Implementation Programs and Toxics

Release Inventory (TRI)..............................................................................123
4.24 The Summary of Implementation Problems................................................ 126
xi
1
CHAPTER ONE
INTRODUCTION
l.I Overview
Everybody in the world, to some extent, is an environmentalist (Mclnemey &
White, 1995). Consumers and workforces in organizations constantly face concerns about
their health, that o f their children, and the environment. Growing populations, ozone
depletion, greenhouse effects, acid rain, and hazardous and toxic waste all fuel “green”
challenges that threaten not only the health o f the world but also the profitability and
survival of many businesses. Despite the potential destruction o f our natural environment,
some firms selfishly blame environmental regulations for increased cost and decreased
competitiveness. Investments in environmental technology for pollution control, landfills
and waste disposal costs, for example, have considerably increased over the past several
decades, causing some firms to close down or at least significantly change their
operations.
Increasingly stringent environmental legislation and enforcement, awareness of
environmental performance, and commercial pressure from customers all stimulate the
need for firms to design and implement environmental management strategy. The growing
influence of environmental protection and green consumerism is becoming an increasing
influence on business operation and profitability. Rather than being considered an
obstacle, environmental management has become a business necessity, with the well-being
of individuals, firms, and society as a whole depending on effective use of resources.
Taking care of the environment no longer is a choice or “nice-to-do,” but rather a
2
requirement of doing business. A study o f Fortune 200 companies showed that
environmental issues were “becoming central to corporate strategy and are being managed
as an area o f competition rather than as a compliance driven function (Lent & Wells,
1992, p. 379).” Companies that do a better job facing environmental challenges may
actually gain a competitive advantage with increased efficiency and demonstrated social
responsibility.
Efficiency
Both environmental innovation and regulation can help stimulate a competitive
advantage through efficiency. One important trend is the dematerialzation of the
consumption of the earth’s natural resources (Mclnemey & White, 1995).
Dematerialization implies that today’s products are made using fewer raw materials,
compared to products of the past. Better technology and manufacturing systems enable a
reduction in the use of natural resources. Environmental regulations also pressure firms to
develop more efficient production systems. Improvement o f existing operations or the
introduction of new manufacturing processes become new environmental standards within
an industry. A good example is 3M’s development of a water-based coating instead of a
solvent as a means of mitigating emissions o f solvent. More efficient resource utilization
without sacrificing quality standards and consumer preferences may offer firms a
competitive advantage.
Rather than considering environmental investments to be a cost for the company,
Porter (1987, 1991, 1995) argues that they provide a catalyst for constant innovation, new
market opportunities, and wealth creation. While being “green” is not easy, and Porter’s
optimism may be unrealistic (Walley and Whitehead, 1994), the economic, environmental,
3
and social need for efficient and responsible environmental management supports the
possibility that conscious strategic environmental management can be a positive and
profitable approach.
Social Responsibility
Social responsibility can also offer a competitive advantage for those firms
promoting the well-being o f the earth not only for today but also in the future. Socially
responsible firms demonstrate a certain obligation for social well-being (Wood, 1981).
Socially responsible firms can gain a competitive advantage by providing new
environmentally friendly products and services.
Under the guise of social responsibility, consumers and stakeholders scrutinize
corporate management of environmental issues. For example, the Johnson & Johnson
Tylenol accident proved that favorable public image base on social/ethical responsibility in
response to a deadly crisis can be a reason for success. The success of Body Shop
International, which sells only nonsynthetic products, proves that environmentally
conscious consumers present large market opportunities. The strategic importance of
environmental management and services is evidenced by the fact that worldwide the
market for environmental products and services is valued at approximately $300 billion
annually, and it might surpass $500 billion by the year 2000. This amount exceeds the
automobile market and equates to half of the size of information technology market
(Mclnemey & White, 1995). According to the New York Times (May 31, 1992), the
growth rate of environmental technology is faster than biotechnology, software, and
telecommunications equipment.
4
The avoidance of legal and other social sanctions are another competitive
advantage for environmentally responsible firms, although this is a defensive rather than
offensive approach. Avoiding legal sanctions and fines can be managed effectively as
opposed to trying to anticipate society's reactions or demands. For example, cleanup
costs of the Exxon Valdez oilspill accident were significant. Socially irresponsible firms
have a difficulty in obtaining business loan. Bank of America, for example, includes
environmental performance as a loan decision criterion.
World-Class Environmental Strategies
Firms that embrace both efficiency and social responsibility in their approaches to
environmental management will position themselves best for a world-class competitive
position. Lee (1994) coined the inspirational management term "world-class organization
(WCO),” which provides organizations a new paradigm for becoming leaders in the global
market place. More specifically, a WCO is “the best in its class or better than its
competitors around the world, at least in several strategically important areas (p. 14).” A
WCO encompasses the idea of an egalitarian climate and business ethics in which
environmental management plays an active role (Lee, 1994; Luthans, et al., 1994).
WCOs benefit because they can reduce cost and provide differentiated products
for an environmentally conscious market, thus establishing a competitive advantage.
Consumers and society also win because better environmental performance helps protect
the ecosystem. In order to become and sustain a WCO status, establishing an
environmental management strategy better than that of its worldwide competitors may be
a necessary competitive advantage for firms in the current global market.
5
A world-class environmental strategy is based on the concept that protection of
environment will excel in the future, and create market opportunities. Environmental
issues are part of business operations across all levels and functions (Schot & Fisher,
1993). A WCO strategy strives to increase all o f a firm’s capability to innovate
environmentally friendly product/market combinations and production processes. Rather
than a traditional compliance approach to environmental management, a WCO strategy is
a innovative or proactive environmental strategy.
Under a WCO strategy, the goal of zero emissions is more accurately stated as
continuous improvement o f waste and emission reduction at the source. To accomplish
this goal, a WCO strategy incorporates good relationships with the customers, public, and
governments. Moreover, WCO strategy requires periodic disclosure of environmental
information, which in turn facilitates continuous improvement of the firm’s emission and
emissions streams. A WCO environmental strategy can and should be anticipated,
planned for, and implemented in such a way to be part of a WCO’s competitive advantage.
Plan or React
Is it possible to simultaneously achieve a competitive advantage and improve
environmental performance? In a manufacturing industry, what types of environmental
strategy can provide a competitive advantage for an organization? Historically,
management viewed environmental issues with a reactive and minimal legal compliance
approach, responding to environmental crises and government regulations rather than
taking a proactive or optimistic approach. Unfortunately, most firms still view
environmental strategies and investments as narrowly defined legal functions, and not
much beyond these.
6
Thus, a study of the impact o f proactive versus reactive environmental strategies
on performance outputs offers an opportunity to cure management’s doubts concerning
the potential of environmental management becoming a competitive advantage. By
demonstrating that pollution prevention efforts lead to environmental and economic
excellence, managers can be confident in taking a proactive role in environmental
management.
Until now, environmental studies have been primarily concerned with conceptual
frameworks and anecdotal case studies of the impact of environmental management on
firm performance. This prior theoretical, exploratory approach stems from the difficulty
of generalizing across industries and firms with respect to environment management issues
and strategies (Shrivastava, 1996; Piasecki, 1995; Porter, 1991). While case studies
provide specific instances of success in environmental management, they make it difficult
to develop guidelines for other situations. Most prior empirical studies (Cochran and
Wood, 1984; Spencer and Taylor, 1987; Chen and Metcalf, 1980) focused only on the
relationship between environmental results and financial performance, neglecting the
impact of environmental strategy on performance. Thus, to improve validity and value,
research in environmental management needs to be expanded to include environmental
strategy (proactive and reactive) and determinants, different measures o f performance, and
a more rigorous and systematic research methodology.
Strategy
Proactive environmental strategy requires the development of environmentally
sound products and/or major change in the production process or product design in efforts
to gain a competitive advantage. Previous empirical environmental studies exemplify the
7
difficulty in distinguishing a proactive firm in environmental management strategy. The
selection of strategically “proactive” firms with respect to environmental management has
been neither clear nor specific. In one empirical study, Henriques and Sadorsky (1995)
classified proactive firms as those that merely had an environmental plan. The study
described in this dissertation more clearly classified proactive firms as those that had
implemented preventive pollution strategies as evidenced by number o f preventive

«
programs.
Within the chemical manufacturing context, the principle of control or end-of-pipe
control strategy has been the main theme in environmental contamination reduction.
Recently, the new environmental paradigm of pollution prevention has emerged for a
better way to manage the environment. Pollution prevention approaches encompass
environmentally friendly products, low-emission processes, recycling systems, and
chemical materials substitution. Rather than reacting to pollution, pollution prevention
strategies in the chemical industry focus on waste minimization at the source (source
reduction). Similar to the Total Quality Management (TQM), firms aim for problem
prevention instead of problem solving.
An empirical study confirming that pollution prevention strategies can improve
environmental and business performance in the chemical manufacturing industry could
help eliminate doubts regarding WCO environmental outcomes. This study examined both
environmental and business performance resulting from proactive environmental
strategies. Performance measures were based on both subjective and objective data.
8
Determinants
As previously stated, prior studies have neglected to describe the determinants of
environmentally conscious companies. While some recent empirical studies (Klassen,
1995; Henriques & Sadorsky, 1995; Lawrence & Morell, 1995; Winn, 1995) have begun
to examine the determinants o f environmental excellence, less is known about
determinants o f selecting proactive environmental strategies and programs. Only one
study to date (Henriques & Sadorsky, 1995) has addressed these issues comprehensively,
although it examined across broad industries. The results (Klassen, 1995; Stead & Stead,
1995) indicated that implementation of proactive environmental strategy provides firms
with economic benefits through excellent environmental performance.
Research Questions
In order to examine the mechanisms by which (1) a proactive environmental
management strategy is decided, and (2) how such strategy impacts on organizational and
environmental performance, two major research questions are addressed in this study:
1) What is a relative impact of a proactive environmental strategy on
environmental and business performance in the chemical manufacturing
industry? Moreover, does the degree of implementation o f a proactive
strategy make a significant difference on environmental and business
performance? (see Figure 1.1)
2) What are determinants of implementing a proactive environmental
strategy? In other words, what factors influence the degree of a proactive
environmental strategy implementation? (see Figure 1.1)
9
Figure 1.1 Research Model
Environmental &
Determinants Environmental Business
Strategy Performance
1.2 Purpose of the Study
In the context o f resource conservation and social responsibility, the potential of
reducing manufacturing costs and improving quality through implementation of a
preventive environmental management strategy should interest many US chemical firms.
Preventive environmental management can lead to both process and product benefits that
can result in a competitive advantage (Porter & Linde, 1995; Klassen, 1995).
Many prior studies on preventive environmental management evaluated the impact
of preventive programs on an organization's economic performance. In one study,
Klassen (1995) examined proactive environmental strategies, measured by percentage of
environmental control and preventive control investments. Using a sample of 64 furniture
manufacturing plants, this research evaluated the impact of the degree of preventive
environmental management practices on manufacturing performance at the factory level.
Klassen’s findings of reduced costs and improved quality are interesting because his model
and propositions of preventive environmental strategies may be particularly applicable to
more regulated and high-polluting industries in which environmental strategies are
expected to be essential.
This study addresses three primary objectives.
10
Objective 1
The first objective of this study is to investigate the impact o f preventive
environmental management strategies on environmental and economy performance of
chemical manufacturing companies. More specifically, this empirical study tests whether
or not the companies that implement more preventive pollution program perform better
than those that implement fewer or no preventive pollution programs. The measurements
of environmental and organizational performance are based on both perceptive (survey
respondents) and objective (using third party sources) data. Objective environmental
performance is captured using EPA’s (Environmental Protection Agency) TRI (Toxics
Release Inventory) data. Economic performance is based on several criteria, including
manufacturing cost, quality, and product yields.
Objective 2
The second objective o f this study is to examine factors that determine the degree
of preventive environmental program implementation of the chemical firms. Using the
conceptual framework of corporate environmentalism by Henriques and Sadorsky (1995),
determinants are based on three motivating principles of corporate social responsibility:
(1) legitimacy; (2) discretionary; and (3) public responsibility. The firm size is an example
of a legitimacy determinant. The decision to make a human resource investment in
environmental issues is an example o f a discretionary determinant, whereas the attitude
toward environment is an example of the public responsibility determinant.
Objective 3
The third objective o f the study is to identify key organizational problems that US
chemical manufacturing companies typically encounter when implementing preventive
11
environmental management programs. An exploratory approach o f this objective is to
tackle obstacles of preventive implementation and to further expand this study. In order
to successfully employ these programs, obstacles should be identified and reflected in
planning. Conceptual, technical, organizational obstacles, and economic obstacles are
examined in this study.
1.3 Definition of Environmental Management
Because environment management studies are still relatively new, there is no clear
and agreed upon definitions in this area of research. It is clearly necessary to define the
term “environmental management” to meet the objective of a more scientific approach.
Researchers have approached environmental management from several angles.
Taylor (1992) defines environmental management as “a management concept
which rewards its adherents with: cost reductions and improved efficiencies; new
marketing outlets; enhanced corporate image; opportunities to sell new products and
services; an improved competitive position; a more dedicated and motivated workforce;
and the ability to set the agenda for the industry (p. 670).” Environmental management
requires commitment from all members of a corporation, from top management to
employees. He describes environmental management as “viewing the organization in its
entire entity rather than as a collection of smaller entities; managing for the long-term
success of the company; a commitment to being the best; committing to quality in all the
activities of the organization; listening closely to the customer, sustaining enthusiasm and
finding solutions through a commitment to employees; and, remembering that the
company is part of environment (p. 670).” Based on this approach one might take a
12
system approach in examining the parts o f a firm’s internal and external environment and
their interrelationships.
According to ISO 14000 (Sayre, 1996), an environmental management system
must include a written management program, education and training, environmental effect
assessment, and an inventory of regulatory requirements specific to that location. Thus,
this perspective requires formalization o f what is employed as environmental management.
Piasecki (1995) describes strategic environmental management as occurring when
“measurable, traditional business benefits are produced by holistically integrating
environmental issues into a company’s business structure and operations (p. 134).” He
states the most successful corporate environmental management programs are
characterized by: (1) clear, articulated company’s policies and practices; (2) two-way
communication structure; (3) effective information management and compliance systems;
(4) top management support and commitment; and (5) risk assessment and risk
management practices. He qualifies, however, that his theoretical definition of
environmental management needs to be tested.
Like Taylor (1992) and Piasecki (1995), Saunders and McGovern (1993) also
define environment management. They more specifically classify the objective in stating
that environmental management is “a holistic, systematic approach to practising
environmental responsibility aimed at the thoughtful and ethical use of our natural
resources (p. 2).”
Based on this review, environment management means different things to different
people. The main theme across all definitions can be summarized by Welford’s (1995)
presentation of a holistic approach. He states three major attributes of an environmental
!
13
management system: (1) comprehensiveness o f all the activities of the organization; (2)
understanding of everybody in the organization; and (3) openness and commitment of
improvement in the operation. Above all, these characteristics center on pulling a
disparate understanding of environmental management into an integrated and organized
system.
The definition of environmental management used in the study includes: 1) a
systematic approach for managing and improving environmental issues; and 2) a holistic
approach to the parts of the internal and external environment and interrelationship.
1.4 Definition of Preventive Environmental Strategy
The ambiguity of the concept of environmental management makes the definition
o f environmental management strategies even more challenging. For example, it is
difficult to define a “preventive environmental paradigm.” Previous studies have used this
construct to refer to several forms of environmental action, such as pollution prevention,
source reduction, waste reduction, waste minimization, toxic use reduction, and clean or
cleaner technology. Attempts to clearly define the term “preventive environmental
management strategy” are needed for value-added research in the area o f environmental
management.
The EPA defined pollution prevention as source reduction. Source reduction
practices include: I) the reduction of the amount of any hazardous substance, pollutant, or
contaminant entering any waste stream or otherwise released into the environment
(including fugitive emissions) prior to recycling, treatment, or disposal; and 2) the
reduction of the hazards posed to public health and the environment associated with the
14
release o f such substances, pollutants, or contamination. According to EPA’s definition,
pollution prevention includes “equipment or technology modification, process or
procedure modifications, reformulation or redesign of products, substitution of raw
materials, and improvements in housekeeping, maintenance, training or inventory control”
(EPA, 1990).
Hirschhom, et al. (1993) define pollution prevention similar to the EPA.
Prevention, they argue, is a new paradigm in environmental management compared to the
end-of-pipe, reactive, or “clean-it-up” approach. In contrast to reaction, prevention is an
attempt to prevent negative effects “by nipping them in the bud.” Reaction programs only
focus on the explicit use of environmental technology, while prevention programs focused
on holistic implementation o f knowledge and changed behavior as well as technology. In
terms of environmental management, prevention programs focus on “identification and
reduction or elimination of the use of materials that could inflict harm, injury, or damage
to the environment under various scenarios (Hirschhom, et al, 1993, p. 132).”
Preventive environmental management strategy involves both technology programs
and a strategic plan to continuously improve processes and products that impact the
environment. These dimensions are used in this study concerning preventive
environmental management strategies.
1.5 Organization of the Dissertation
This dissertation is organized in five chapters: 1) Introduction; 2) Literature
Review; 3) Research Methodology; 4) Results and Analysis; and 5) Conclusions. Table
1.1 presents an overview o f the organization o f this dissertation.
15
Chapter One has provided an introduction to the entire study. It briefly reviewed
the importance of environmental management and possibility o f proactive environmental
strategy as a competitive weapon. This discussion lead directly to the research questions
addressed in this dissertation. Definitions of environmental management and the
preventive environmental strategy were provided.
Chapter Two is composed of two sections. The first part reviews literature
focusing on studies about the relationship between social performance and business
performance particularly that which pertains to the development of hypotheses in this
study. This literature review builds a theoretical framework to explain the relationship
between preventive strategy and business performance. The second part of chapter two
discusses previous research on the measurement of environmental and economic
performance as well as determinants of preventive environmental management.
Chapter Three describes research methodologies employed in this study to
investigates preventive environmental strategy and its impact on economic performance o f
an organization. Preventive implementation programs are discussed in further details.
This chapter includes sampling techniques, definitions o f variables, and statistical methods
used in this dissertation.
Chapter Four presents the results of the statistical analyses used to test the
hypotheses. This chapter is made up o f four parts in correspondence with the four
research hypotheses: 1) analysis of the impact of preventive pollution strategy on
environmental performance; 2) analysis of the impact of preventive pollution strategy on
economic performance; 3) analysis of determinants of preventive pollution strategy; and 4)
16
identification of key organizational barrier that US companies encounter in implementing
prevention strategy.
The final chapter, Chapter Five, summarizes the study by discussing contributions,
limitations, and future research needs.
17
Table 1.1
Organization of the Dissertation
Chapter Contents
Chapter One 1. Introduction to the Study.
2. Purpose of Study.
3. Definition of Prevention Strategy.
4. Definition of Environmental Management.
5. Organization o f Dissertation.
Chapter Two 1. Review of the Relationship Between Environmental Performance
and Business Performance
2. Theoretical Framework on Preventive Pollution Strategy
3. Measurement of Environmental Performance and Economic
Performance
4. Determinants o f Prevention Strategy.
Chapter Three 1. Research Methodologies and Hypotheses.
2. Preventive Implementation Programs
Chapter Four 1. The Results and Analysis
Chapter Five 1. Summary
2. Limitations of the Study
3. Contributions of the Study
4. Future Research Needs.
18
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
In this chapter, the relevant literature for this study is reviewed in detail. This
chapter consists of the following: (1) a theoretical framework of social performance and
economic performance; (2) literature review concerning social performance and economic
performance; (3) literature review of environmental management strategy; and (4)
discussion o f determinants for implementation o f prevention environmental management (a
proactive strategy) and control environmental management (a reactive strategy). In
addition, a modified conceptual model o f environmental strategy is proposed and
discussed.
2.2 Previous Research
This section views on theoretical frameworks o f environmental management
strategy, social performance and economic performance, environmental strategy, and
determinants of preventive environmental strategy. This review helps to establish a
theoretical basis for the research model used in this study.
2.2.1 Theoretical Framework of CSR (Corporate Social Responsibility) and
Economic Performance
McGuire, Sundgren, and Schneeweis (1988) suggest two theoretical arguments
about social responsibility and financial performance. One argument is that socially
responsible firms obtain competitive disadvantage because o f added costs, such as making
19
extensive charitable contributions, promoting community development plans, maintaining
plants in economically depressed locations, and establishing environmental protection and
prevention. In contrast, the other argument is that there is a positive relationship between
socially responsible firms and economic performance. Socially responsible firms can place
themselves in a better economic position compared to socially irresponsible firms.
McGuire et al. (1988) state that the outcome of social responsibility can improve
employees’ and customers’ goodwill, decrease labor and union problems, and enhance the
reputation of the company and the company’s products. Institutions such as banks and
government agencies consider social responsibility of the company or environmental
excellence of the firm as an important factor in investment decision making (Cornell &
Shapiro, 1987). As a result, responsible excellent firms may have easier access to sources
of capital provided by banks and government agencies than environmentally irresponsible
firms.
McGuire et al.(1988) argue for a positive relationship between CSR and economic
performance based on Cornell and Shaopiro’s (1987) corporate stakeholder theory that
“the value o f a firm depends on the cost not only of explicit claims but also of implicit
claims (McGuire et al., 1988, p.856).” According to Cornell and Shapiro (1987), a firm’s
explicit claimants include wage contracts and product warranties and the implicit claims
include the successive service to customers, promise of job security to employees, and
social responsibility.
The results of environmental problems can ruin the public image for a firm,
increase cost, and strain relationships with suppliers, customers, and governments. For
example, in the case of Exxon Valdez oil spill disaster, negative customer relations,
cleanup costs, and management distraction hindered Exxon’s competitive advantage for
years. Thus, if firms do not abide by implicit claims, they could be forced to accept
implicit contracts that may become explicit claims resulting in higher costs to the firms
(Cornell & Shapiro, 1987). Moreover, the government may pass more stringent
regulations that lead environmentally irresponsible firms to have high cost of implicit
claims. It follows that firms that are environmentally responsible have lower-cost implicit
claims than those who are environmentally irresponsible (McGuire et al., 1988). The
lower-cost implicit claims result in higher financial performance to socially responsible
firms ( Cornell & Shapiro, 1987).
While these two arguments explicitly describe the relationship between social
responsibility and financial performance, they regard a firm’s environmental responsibility
as only one of the important factors in the theoretical framework of social responsibility
and financial performance. Therefore, it is necessary to review more specifically the
relationship between environmental and financial performance, as this study examines this
relationship in chemical industry.
2.2.1.1 Benefits
Johnson (199S) describes one philosophical foundation for a framework that posits
the relationship between environmental performance and financial performance. He states
that there is a major difference between environmental performance and CSR. He argues
that the objective of environmental performance is consistent with economic objective,
such as reducing cost. There is a synergistic effect between environmental performance
and operating efficiency. The objective of environmental performance is to enhance
21
economic performance. Social responsibility, on the other hand, ignores the objective of
minimizing cost.
Johnson (1995) further contends that environmental performance can lead to better
financial performance rather than causing higher cost. The present economic/financial
performance o f a firm may or may not limit its environmental performance efforts. He
concludes that “a system of rules, regulations, and societal sanctions” (p. 14) may lead to
environmental performance investment and, in turn, result in improved financial
performance.
Klassen (1995) also argues that environmental performance can lead to better
financial performance, based on McGuire et al.’s (1988) argument that socially responsible
firms can improve financial performance. Klassen & McLaughlin (1994) proposed an
elaborate conceptual model concerned with environmental management in manufacturing
and financial performance (Figure 2.1). According to this model, firms that have
improved environmental performance can have two benefits: (1) market gains; and (2)
cost savings.
On the market side, customers prefer the products of environmentally responsible
firms rather than irresponsible firms (Klassen & McLaughlin, 1994). Thus, manufacturers
that make efforts to produce environmentally friendly products and minimize negative
environmental impacts can expand their markets and develop a competitive advantage.
With regard to costs, Klassen & McLaughlin (1994) propose that firms can lower costs
with the best available environmental technologies and management practices. Prevention
of spills and environmental liabilities can avoid costs, penalties, and management time, and
22
Figure 2.1 The Linkage of Environmental Management to Firm Profitability

(Klassen & McLaughlin, 1994)
Market share Experienced

Market gains gains based scale
Environmental
management Environmaital
product or process
certification
Product and process
technology desigied
to minimize their
mvironmental impact
Structural investments
Improved Improved
H itter Product
environmental contribution financial
Stronger performance margins performance
environmaital (profits)
management system
Infrastructural investments Establish industry Strang

wide standards for competitive
technology & mana position for lower
gement practiccs
Avoid costs, p ai-

Prevent spills & alities and mana-
Cost savings environmental gcm ait tim e dir
liabilities ected at clean-up
& remediation
Reduced materials
energy Productivity
consumption
23
in turn, result in improved financial performance. Moreover, reduced material and
consumption can lead to improved productivity (Klassen & McLaughlin, 1994).
In support of Porter’s theoretical framework (1987), Porter and Linde argue
(1995) that conflict between environmental excellence and competitiveness is not
necessarily true. Environmental excellence can be a competitive advantage not only for
nations but also for firms. Porter and Linde suggest that the mind-set of industry’s
private cost for prevention, remeditation, and pollution control that lead to higher prices
and reduced competitiveness, is based on a static view o f environmental issues. In the real
world, technology, products, processes, and customer needs, for example, are changing
rapidly. Only a dynamic mind-set can explain the win-win relationship between
environmental protection and competitiveness.
Little evidence exists to support adverse effects o f stringent environmental policies
of the US government have had on the competitiveness of US manufacturers (Jaffe,
Peterson, Portney, and Stavins, 1995). Porter and Linde contend that properly designed
environmental regulations can trigger innovations that lower the cost of products, and, in
turn, result in resource productivity making firms more competitive. According to their
resource productivity model (Porter & Linde, 1995), pollution reflects inefficiency,
ineffectiveness, and incompleteness o f resources. Improving efficient processes and
products could lead to reduced manufacturing cost and increased the true economic value
of products.
Product benefits can result from not only producing less pollution but also creating
high-quality products, safer products, lower product costs, or lower costs of product
disposal for the user. Process benefits result not only from the reduced pollution but also
24
higher process yields, less downtime through more careful monitoring, more materials
savings, better utilization o f by-products, reduced material storage and handling, increased
savings from safer workplace conditions, and improved disposal o f the products as a by
product o f process changes (Porter & Linde, 1995).
Companies that improve environmental performance and introduce
environmentally friendly products and processes in the market may be able to enjoy
premium prices for green products and define new markets. Table 2.1 summarizes these
resource productivity benefits.
Porter & Linde’s theoretical framework considers environmental regulation to be
the most important motivational factor for innovating environmental technology and
resource productivity. They also argue that the real world is dynamic and everything is
changing, and the motives to improve environmental performance are not environmental
regulations alone. Other factors such as firm’s size and firm’s goals and strategies also
inspire improvements in environmental performance.
Recently, environmental factors are playing an increasingly important and
beneficial role in strategic decision making. Hart (1995) argues that pollution prevention,
product stewardship, and sustainable development are three strategic capabilities for
achieving a sustainable competitive advantage. These capabilities help firms possess
certain resource-based properties: 1) causally ambiguous, 2) process based, and 3) firm
specific (Barney, 1991). Thus, consideration of environmental capability for strategic
decision can be a competitive advantage for the firm.
25
Table 2.1 Benefits of Resource Productivity (adapted from Porter and Linde (1995))
Process Benefits
• Materials savings resulting from more complete processing, substitution, reuse, or

recycling o f production inputs
• Increase in process yields
• Less downtime through more careful monitoring and maintenance
• Better utilization of by-products
• Conversion of waste into valuable forms
• Lower energy consumption during the production process
• Reduced material storage and handling costs
• Savings from safer workplace conditions
• Elimination or reduction of the cost o f activities involved in discharges or waste
handling transportation, and disposal improvements in the products as a by-product of
process changes (such as better process control)
Product Benefits
• Higher quality, more consistent products

• Lower product costs (for instance, from material substitution)
• Lower packaging costs
• More efficient resource use by products
• Safer products
• Lower net costs of product disposal to customers
• Higher product resale and scrap value
In addition to the above theoretical arguments, there are a number of case studies
that demonstrate a causal relationship between environmental performance and financial
performance (Kolluru, 1994; Schrader; 1995, Jackson, 1993, Mclnemey & White, 1995;
Bennett, et al., 1993; Shrivastava, 1996; Saunders and McGovern, 1993; Denton, 1994;
Schmidheiny, 1992; Poduska, et al., 1992; and Piasecki, 1995). Monsanto, Dow
Chemical, and 3M offer the famous examples of companies that implemented effective
environmental programs and achieved cost savings because of these programs
26
(Hutchinson, 1996). These case studies show that not only manufacturing but also the
service industries can enjoy benefits from environmental programs.
Table 2.2 presents some company-wide pollution prevention programs and goals
by firms. Many companies across industries accomplish beyond goals of hazardous-waste
reduction. For example, General Dynamics achieved elimination of 40 million pounds of
hazardous-waste discharge from 1984 to 1988 and approximate $ 2 billion sales increase
implementing several source reduction programs. These case studies primarily examine
programs of large companies, ranging from consumer goods such as Xerox and AT&T to
chemical industry firms. BP America, Hoechst Celanese, and Chevron adopt EPA’s
environmental management hierarchy, while Boeing focuses on process changes which
reduce toxic chemicals in operations.
2.2.2 Review of Social Performance and Economic Performance
In the last section, a theoretical basis supporting the notion that environmentally
friendly firms can enjoy better financial performance was discussed based on a review of
prior literature. In this section, empirical studies examining the relationship between
environmental and economic performance will be reviewed.
Since the early 1970s, many studies examined the relationship between corporate
social responsibility and economic/financial performance. The results of these studies,
however, have not always been consistent. Some o f problems of these studies include
sample sizes and research methodologies used. Thus, it is not unexpected that these
studies had conflicting results. The nine reviewed studies are summarized in Table 2.3
(modified from Johnson, 1995).
27
Table 2.2 Company-Wide Pollution Prevention Programs and Goals (Adapted from
Bringer and Benforado, 1994)
Company and Procram Scone Goal Accomplishments

Allied Sigpal w ntM edudion Includes waste minimization Reduce the quantity and The amount o f
program under RCRA, as well as toxicity ofhazardous waste that cydahexylamme waste
nonhazarodous waste; and must be stored, treated, or produced m 1987 was only
evaluates various disposal disposed o f as tnudi as 15% o f the volume o f the same
alternatives and methods fix economically practicable waste produced in 1984
detoxification.
Plant and project basis

Amoco waste-minimization Primary focus on minimization Eliminate the generation and Between 1983 and 1988,
program (1983) hazardous-waste disposal, also disposal ofhazardous wastes Amoco reduced its hazardous
minimize and trade waste by 86%, savingthe
nonhazarodous wages company about S50 million
AT&T aiviranmental program Industrial source reduction and Achieve a 50% reduction o f Substituted a derivative o f
toxic chemical use substitution CFCs by 1991, and 100% by citrus fruits and other organic
are priorities 1994. Eliminate toxic air compounds, called BIOACT,
emissions o f all types by the fix solvents th at are used to
year 2000, with a 50% dean electronic equipment.
reduction by 1993 and a 95% Eliminated CFC use in
reduction by 1995 chcuithoaid manufacturing
processes through use o f the
Decrease disposal o f total AT&T low solid fluxer
manufacturing process wastes
by 25% by 1994
BASF Toxic air emissions reduction Decrease toxic ah'emissions
(lb/year) by 89% by December
1992 (base year July 1989)
Boeing wasto-minimizatian Focus is on process changes Reduce use ofhazardous Case study; a chemical
program which reduce the volume and/or materials substitution in one photoresist
toxicity ofhazardous materials stripping operation has
used in operations Minimize the generation o f increased stripping speeds by
hazardous waste 50% and because o f its longer
useful life, should reduce
Ensure proper handling and annual hazardous waste
disposal o f all wastes generation by 50%
BP America waste- Adopts EPA’s environmental All facilities are to have annual One refinery operates a
minimization program (1989) managemait hierardiy, with wastc-minimization goals Podbielniak unit which
source reduction preferred processes spent caustics into
adds, which are then sold. The
unit paid fix itself in less than 8
months
Chevron save money and SMART adapts EPA’s Reduce hazardous w aste From 1987to 1990, Chevron
reduce toxics program hierarchy, with an emphasis an generation by 65% by 1992 and reduced hazardous waste by
(SMART. 1987) industrial source reduction, recycle what is left 60% and saved more than S10
toxic chemical use substitution, million in disposal costs
and recycling for hazardous and Find nontoxic alternatives to
nanhazardous solid wastes toxic materials and processes Case study: Chevron used to
dispose o f tank bottoms in
Devise safer operating landfills. It now uses a
procedures to reduce accidental centrifuge to separate oil from
release water; it reuses the oil and
treats the water, leaving only a
Ensure that pollution reductions small amount o f solid to be
in one area do not transfix landfilled (less lhan 5% o f the
pollution to another original sludge)
Dow waste reduction always Industrial source reduction and Increase management support SARA313 overall release are
pays (WRAP. 1986) on-site recycling for wasteroductian activities, down from 12,252 tons in 1987
establish a recognition and to 9659 tons in 1989, a 21%
reward system fix individual reduction. OflM te transfers are
plants, compile waste-reduction down from 2855 tons in 1987,
data, and comrmmicatr a reduction o f 15% Air
28
information on waste-reducticn for 1989 showed a

e m is s io n s
activities 54% decrease from 1984
Decrease SARA 313 air

emissions by 50% by 1995,
w hat compared with 1988
Decrease toxic air emissions

(lb/year) 71% by December
1992 (base year December
1988)
Exxon Toxic air emissions reduction Docreasc toxic air emissions
(lb/year) by 14% by January
1988)
General Dynamics zero Industrial source reduction, Have no RCRA manifested Nearly 40 million lb o f
disdiarge (1985) toxic chemical use substitution, wastes leaving company hazardous-waste discharge
recycling treatment, and facilities eliminated from 1984 to 1988
moderation (approx. 72% ), while sales
increased from S7.3 billion to
S9.35 billion over same period
General Electric pollution, Program encompasses all waste Prevmt or minimize “the
waste, and emissions reduction streams ( e .g , hazardous, generation or release o f wastes
program (POWER, 1989) nanhazardous, packaging and and pollutants, to the extent
ultimate disposal o f product) technically and economically
and adopts EPA’s hierarchy feasible, throughout the
which places source reduction product, including its design,
first production
Goodyear toxic air emissions Industrial source reduction Decrease toxic air emissions Decreased air emissions from
reduction (lb/year) by 71% by January operations through improved
1991 (base year December maintenance and monitoring of
1988) equipment and through
decreased use o f acrylonitrile,
butadiene, and styrene
Hoechst Celanese toxic Adopts EPA’s hierarchy, which An average 70% cut in
chemical emission reductions makes source reduction a emissions o f TRI chemicals
priority, with a main focus on (with 80% reductions at 9
substituting cleaner production plants w ith the highest
processes for those generating emissions) by 1996, with 1988
high volumes o f waste TRI emissions as comparison
IB M Industrial source reduction and Pledged to eliminate ozone- Hazardous waste generation
toxic chemical use substitution depleting chemicals Ira n IBM was reduced 38% from 1984 to
are priorities, followed by products and processes by end 1988; 84% o f IBM’s hazardous
recycling reuse, and o f 1993 and to recycle 50% o f waste was recycled in 1988;
reclamation, incineration, solid w aste by 1992 28% o f all solid waste from
detoxification, and diqtosal in a IBM U.S. operations was
secure or sanitary landfill, in recycled in 1988; IBM U.S.
that order emissions were reduced 20%
from 1987 to 1988; and IBM
U.S. bad a decrease o f 25% in
its CFC emissions between
1987 and 1988
3M pollution prevention pays Eliminate pollution source By 2000, cut all hazardous and From 1975 to 1989, the 3P
(3P, 1975) and 3P Plus (1989) through product reformulation, nanhazardous releases to air, program has cut 3M pollution
process modification, land, and water by 90% and in h a lt per unit o f production,
equipment redesign recycling reduce the generation o f with implemaitatian o f 2511
and recovery o f waste materials hazardous waste by 50%, with recogpizcd 3P projects
for resale 1987 as the base year throughout the cotqpany from
1975 to 1990
Monsanto priority one (TRI Source reduction, A 90% reduction in hazardous From 1987to 1990, Monsanto
wastes) reengineering process changes, air emissions from 1987 to adiieved a 39% reduction in
reuse, and recycling to reduce 1992 hazardous air emissions
hazardous air emissions and
TRI solid, liquid, and A 70% reduction in TRI solid,
hazardous wastes liquid, and gaseous wastes from
1987to 1995
Northrop, B-2 Division zero Primary focus an hazardous- Eliminate the generation and Over 50% reduction in
discharge pollution prevention waste minimization; goals have disposal ofhazardous waste by hazardous-waste generation in
been set for other solid-waste 1995; reduce solid waste last 18 months; reduced ODC
reduction; program includes disposal by 25% by 1993 and emissions by 50% in the last 12
29
projects to reduce water usage, by 50% b y 2000; reduce w ater months through substitution;
stationary air pollutants, and usage by 20%; reduce mobile reduced mobile air pollution by
water pollution; targeted areas air pollution by 23% by 1992; approx. 280 tons/year, reduced
include elimination o f ozone- eliminate ozone-depleting waste usagp by an average o f
depleting dtenticals and toxic chemical (ODC) use by 1993; 28% in eadi o f the last 6
chemicals eliminate toxic chemical use months; reduced solid-waste
and risk by 1993 disposal by 70% in 30 months
Occidental Toxic air emissions reduction Decrease toxic air emissions
(lb/year) by 78% by December
1988)
Polaroid toxic use and wasto- Industrial source reduction and Reduoe toxic use at the source Using 1988 as the base year,
reduction program (TUWR, toxic chemical use substitution and waste per unit of Polaroid's Environmaital
19*7) are priorities, followed by production by 10% per year in Accounting and Reporting
recycling and reuse each o f the 3 years ending in System (EARS) reported an
1993 and, as a corollary, 11% reduction in toxic use and
en^rhasize increased recycling waste during 1989
o f waste materials within the
company
Scott Paper Integrated and multifaceted Design products and packaging By the end o f 1989, about 20%
approach, including source to reduce volume o f waste o f the pulp used for sanitary
reduction, recycling and reuse material, whidi Scott terms tissue products was made from
o f materials, and landfilling of “source reduction” recycled fiber, and Scott plans
unusable residual waste to approximately double its
Decrease dioxin levels at paper recycled capacity
mills by reducing dilorine
usage ° r altering its method o f The Duffel, Belgium, m ill uses
application, or by adapting new a process that uses less water
technologies or replacements and less fiber
for chlorine bleaching
Developed a system for source
reduction known as
“precycling” m w hidi paper
products are packaged in larger
quantities, thus saving materials
which would otherwise have
been wasted
Sheldahl (Northfield, Minn.) Industrial source reduction and Pledged for methylene chloride:
toxic chemical use substitution 90% emissions reduction by
for hazardous air pollutants 1993, and 64% use reduction
by 1992
Texaco Toxic air emissions reduction Decrease toxic air emissions
(lb/year) by 92% by February
1991 (base year July 1990)
Xerox Toxic chemical use Reduce hazardous waste Substituting d-Limoncne for
substitution, materials recovery, generation by 30% from 1990 chlorinated solvods allowed
and recycling to 1995 Xerox to reduce the amount o f
solvents emitted to the
atmosphere from about
200,000 lb it 17,000 lb in
1990
Ahigi-prcssure water strip

operation has enabled Xerox to
recycle 800,000 lb nickel and 2
million lb o f aluminum tubes
per year, and to return 160,000
lb o f selenium to suppliers for
reuse
30
Seven o f the nine studies indicate a positive relationship between CSR and
economic performance (Bragdon & Marlin, 1972, Spicer, 1978, Chen & Metcalf 1980,
Spencer & Taylor, 1978, McGuire, Sundgren & Schneeweis, 1988, Johnson, 1995, and
Klassen, 1995). One study shows a curvilinear relationship (Bowman & Haire, 1975), and
another shows no relationship at all (Floger & Nutt, 1975). Because these studies are
based on small sample sizes and subjective performance data, mixed results were no
surprise.
The methodology used by the two recent studies (Klassen, 1995; Johnson, 1995) is
an improvement over the previous studies in terms of bigger sample sizes and controlled
independent variables. Johnson’s (1995) study indicates a positive relationship
betweenenvironmental performance measured as Council on Economic Priorities (CEP)
rankings, number of chemical spills, number of superfund sites and economic performance
measured as Return on Asset (ROA). Even though Klassen’s study (1995) is based only
on the furniture industry, results suggest that there is a positive relationship between
environmental performance using EPA’s Toxics Release Inventory data and manufacturing
performance measures of cost and quality.
2.2.2.1 Seven Previous Studies
While there have been many studies on the relationship between CSR and
economic/financial performance, this literature survey focuses on the studies o f the
relationship between corporate environmental performance and economic performance
because the relationship between a proactive environmental strategy and economic
performance is one o f the main research questions in this study (see Table 2.3). The
Bragdon and Marlin (1972) study was based on the environmental ratings from CEP and
31
economic/financial performance. While the sample size consisted of only 24 firms from
the pulp and paper industry. Only 17 out of 24 firms were utilized for the study based on
the CEP rating data availability. The results suggested a positive relationship between the
CEP evaluation and economic performance. The economic performance measures used
were 1-year earnings per share (EPS) growth, 5-year ROE, 1-year ROE, 5-year return on
capital, and 5-year earnings growth.
Bowman and Hair (1975) conducted a follow-up study to the one done by
Bragdon and Marlin (1972), using the same 24 firm sample. They categorized the firms as
“low,” “medium,” and “high” groups based on environmental performance (CEP ratings).
The economic measure used was ROE. The findings of the study was interesting because
ROE of the high environmental performance group was lower than that of the medium and
the low groups. Thus, Bowman and Hair contended that there might be an inverted U-
shaped relationship between environmental performance and ROE. The results of this
study were limited by small sample size, and no statistical basis for categorization of the
groups (Johnson, 1995).
Folger and Nutt (1975) also used the same firm sample as Bragdon and Marlin
(1972) used. They reduced the sample size to nine firms based on “significant merge
activity,” the record of ‘low earnings,” and short history of the firms. The findings o f
their study suggested no relationship between economic performance and environmental
performance. Small sample size may have influenced these results.
Spicer (1978) used the same data set as Bragdon and Marlin (1972) and Folgers
and Nutt’s (1975) CEP environmental performance categorization of low, medium, high
groups. However, he labeled groups as “best,” ‘Intermediate,” and “worst” based on
32
CEP rankings. He analyzed the data using different time periods: 1969-1971; 1971-1973;
and 1968-1973. While the sample size o f the original CEP data set included 24
companies, he removed several firms from the sample due to financial data availability and
the difficulty in defining the characteristics of companies in the pulp and paper industry.
ROE, total assets, price-to-eamings ratio, and the measure of firm risk which is “beta”
were used for the measures o f economic performance. The findings of the study showed a
positive relationship, but only for the 1968-1973 time period.
Chen and Metcalf (1980) replicated Spicer’s study with an improved methodology.
While Spicer (1978) considered firm size as a dependent variable, Chen and Metcalf
argued that firm size is not a dependent variable, but rather a control variable. After
controlling the firm size, they found that there was no relationship between economic
performance and environmental performance.
Spencer and Taylor (1987) conducted a study based on the Fortune magazine’s
annual survey ratings on “community and environmental responsibility.” The measures of
environmental/financial performance were ROA and Return on Sales (ROS). The time
period covered for these measures was a 5 year span ending in 1982. The study found a
positive relationship between community and environmental ratings and financial data.
While this study used a larger sample (120 firms in 13 manufacturing industry) than the
previous studies, this study was based on qualitative or perceptual environmental
performance.
In 1988, using the same Fortune magazine’s annual survey rating data of
environmental performance for their study, McGuire et al. extended their measures of
economic performance. The measures of economic performance included ROA, total
33
assets, asset growth, and sales growth and other financial data, including total return and
sales risk-adjusted return. In addition, they divided their financial data into two periods,
1977-1981, and 1982-1984. They found a positive correlation between ROA and
environmental performance for both periods and a negative relationship between risk and
environmental performance. There was no relationship between stock market measures
and environmental performance. They observed slightly a stronger relationship between
environmental performance and 1977-1981 ROA than 1982-1984 ROA and concluded
that economic performance lead to better environmental performance.
2.2.2.2 Recent Studies
In a recent study, Johnson (1995) extensively examined the relationship between
several economic performance and objective environmental data of Fortune 500
companies. This study included a broad sample size, a rigorous methodology, and a
quantitative economic and environmental performance data. The environmental measures
of the study included both broad and objective measures such as TRI data from EPA,
environmental fines and violations, superfund sites, Resource Conservation and Recovery
Act (RCRA) corrective actions, oil and chemical spills obtained from Investors
Responsibility Research Center (IRRC) as well as qualitative data such as environmental
ratings of the (CEP). The economic measures used were Total Return, Return on
Investment (ROI), Return on Equity (ROE), ROA, Sales Growth, and Net Income
Growth.
This study controlled for firm size, industry type, and firm risk level.
According to the result of the study, some environmental performance, such as CEP
ratings, number of chemical spills, pounds of chemical spills, number o f oil spills, number
34
of superfund sites (1987-1989 period), affected financial performance. Among economic
performance, only ROA was affected by these environmental performance indicators.
In Johnson’s study, no strong relationship existed between toxic chemical
emissions and federal regulatory violations. A relationship between poor environmental
performance and better economic performance was found in several industry sectors. This
finding implies that environmental policy or regulation should be adjusted to provide a
strong economic incentives for corporations to improve environmental performance.
The causality o f aggregate financial measures of firm level and environmental
performance in Johnson’s study was obscure due to lack of sound theoretical foundations.
Thus, demanding more detailed measures of economic performance in future studies is
required. Klassen (1995) constructed an integrative conceptual model of environmental
management and conducted the study of the relationship between manufacturing
performance in terms o f cost, quality, flexibility, and delivery and environmental
performance measured by EPA’s TRI data. He constructed an integrative conceptual
model of environmental management.
According to the result, a company that implemented a proactive environmental
strategy was better than a company with a reactive strategy in terms of manufacturing
performance (cost and quality) and environmental performance (EPA’s TRI data). Even
though his study was based solely on the furniture industry, Klassen synthesized the
conceptual model from operations management strategy, environmental management, and
corporate social performance literature. The important contribution o f Klassen’s work is
that it represents the first attempt to examine environmental management strategy,
35
economic performance, and environmental performance based on an integrative
conceptual model of environmental management approaches.
Improved theoretical development and research methodology in recent studies
provides some solid evidence of the relationship between environmental management
strategy and economic performance at the firm level, as well as the potential influence of
environmental management strategy. Even though many researchers have conducted
studies to analyze the relationships between social performance and economic/financial
performance, findings have been inconsistent. The methodological drawbacks of previous
studies have been founded in the literature survey. Results o f a recent study (Johnson,
1995) suggested that present environmental regulations of the U. S. government do not
provide economic motives for companies to improve negative environmental activities.
Klassen (1995) conducted an environmental management strategy study based on the
theoretical framework and manufacturing performance. Although his study focused only
on furniture industry, methodology and the conceptual model of environmental
management were much improved from the previous studies.
Considering results of the previous studies which examined the linkage between
environmental and economic performance, there appears to be a positive relationship
between environmental and financial performance as shown in Table 2.3.
36
Table 2.3 The Relationship Between Environmental Performance and Economic
Performance (Modified from Johnson, 1995)
Study Environmental Economic Control for Sample Result

performance Performance other variables
Bragdon & Council on Average ROE None (single 17 linns from Positive
Marlin, 1972 Economic 1965-1970, industry) the paper and correlation
Performance Average pulp industry
(CEP) Return on included in CEP
Pollution Capital 1965- survey
Performance 1970, EPS
Index growth 1965-
1970
Bowman & CEP pollution Median ROE None (single 15 firms from U-shaped
Haire, 1975 performance 1969-1973 industry) the paper and correlation
index pulp industry middle
included in CEP polluters
survey outperform
best and worst
Floger & Nutt, CEP pollution Normalized None 9 firms from the No correlation
1975 performance P/E ratios paper and pulp
index 1971-1972, industry
stock price included in CEP
1971-1972 survey
Spicer, 1978 CEP pollution ROE, P/E None (single 18 firms from Moderate
performance ratio, total industry) the paper and positive
index risk, beta pulp industry correlation for
1968-1973, included in CEP 1968-1973,
1969-1971, survey less for
1971-1973 1971-1973
Chen& CEP pollution ROE, P/E ratio Size (single 18 firms from spurious
Metcalf, 1980 performance total risk, beta industry) the paper and positive
index 1968-1973, pulp industry correlation,
1969-1971, included in CEP explanatory
1971-1973 survey variable
37
Spencer & Fortune ROA and ROS Industry 120 firms in 13 Positive
Taylor, 1978 magazine for 1,2,3,4 and manufacturing correlation
annual survey 5 years ended industry with financial
ratings on in 1982 data for the
community and longer periods
environmental
responsibility
McGuire, Fortune ROA, total Risk (as 88-131 firms found prior
Sundgren & magazine assets, operating several economic/
Schneeweis, annual survey sales growth, leverage, industries financial
1988 ratings on asset growth, standard (industries were performance
community and operating deviation of no control) correlated
environmental income operating with
responsibility growth, income, or subsequent
total return debt/asset community
(market) and ratio) and
risk-adjusted environmental
return responsibility
(market)
Johnson, 1995 EPA’sTRI Total Return, Industry, Size, Fortune 500 Positive
data, ratings of ROI, Risk level of companies relationship
Council Return on firm, Period with CEP
Economic Equity (ROE), rankings,
Priorities (CEP) Return on number of
Assets (ROA), chemical
Sales Growth, spills, pounds
Net Income of chemical
Growth spills, number
of superfund
sites and ROA
Klassen, 1995 EPA’s TRI data Manufacturing none (single 83 plants positive
and Raw performance industry) relationship
Material (cost, quality, with cost and
Consumption flexibility, and quality and
delivery) TRI data
38
2.3 Environmental Strategy

An increasing amount o f literature is concerned with environmental management
strategies. The theoretical foundation o f environmental management and financial
performance stems from social responsibility theory. The strategies o f social
responsiveness will be used as a basis for defining environmental management strategy in
this study. Wilson (1974) contended that four possible strategies responding to social
issues: (1) reaction; (2) defense; (3) accommodation; and (4) proaction. McAdam (1973)
described four managerial issues slightly differently: (1) fight all the way; (2) do only what
is required; (3) be progressive; (4) lead the industry. With social responsibility strategies
range from very passive or reactive to very aggressive or proactive supporting, this studies
simply distinguishes between reactive and proactive environmental management strategy.
Literature review on environmental strategies is the basis of better research design
of the study. There are two main approaches o f environmental management strategy: (1)
strategic choices; and (2) continuum o f a strategy development (Klassen, 1995).
2.3.1 Strategy Development Continuum
The main stream of environmental management literature focuses on strategy
development, with a range of strategy of social responsiveness from proactive to reactive.
A proactive strategy is one in which the firm’s environmental issues are usually far ahead
of competitors’ environmental strategies. Firms implementing proactive environmental
strategies take action before the enactment of official environmental regulation and
anticipate new environment regulation. Proactive companies work to move beyond
compliance toward preventing pollution at the source and reducing waste in all processes
39
(Mastandonas and Strife, 1992). As a result o f a proactive strategy, firms can lead the
industry in terms of environmental technology.
In contrast to a proactive environmental strategy, firms that implement a reactive
strategy are inclined to simply passively react to environmental regulations and use end-of-
pipe pollution control technology. Using this technology, air and water are purified after
they have been polluted but before they leave the plant. These firms are primarily
interested in meeting the minimum compliance in environmental regulation, instead of
innovating new environment technology. They watch the environmental leader’s actions
and monitor competitor’s environmental policy.
Based on the above descriptions o f reactive and proactive strategies, various
studies posit a strategic development of responsiveness along which a firm can choose its
approach. The study of the first environmental strategy development was done by Hunt
and Auster (1991). They identified a continuum of five developmental stages of
environmental management programs based on their survey; (1) beginner, (2) firefighter,
(3) concerned citizen; (4) pragmatist; and (5) proactivist based. Table 2.4 summarizes a
number of important characteristics o f the five distinct stages. In Table 2.4, at the
beginner phase the firm is more reactive, but responsiveness increases as a firm develops
to higher stages. Hunter and Auster argued that industries vary with respect to their stages
of environmental management programs. The chemical industry, for example, would be at
higher stages than the banking industry because environmental regulations o f the chemical
industry are much stricter than those in the banking industry. In addition, one stage of
environmental management development can not, however, be generalized across
industries or even within the same industry. The needs and environmental programs of
40
corporations within the furniture industry, for example, are different for small companies
producing a single product than large and more diverse companies.
Table 2.4 Five Distinctive Stages of Environmental Management Programs

(Modified from Hunter and Auster, 1991)
Stage Characteristics of Environmental Management
Stage one: Beginner EM programs provide no protection.

Corporate managers think that EM is unnecessary.
Minimum resource commitment.
No commitment of top management.
No performance objective.
Stage two: Fire Fighter EM programs provide minimal protection.

Environmental issues are addressed only as
necessary.
Budgets are assigned for problems they occur.
Piecemeal involvement of top management.
Environmental problems are resolved as they occur.
Stage three: Concerned Citizen EM programs provide moderate protection.

Corporate managers think that EM is a worthwhile
function.
Consistent, yet minimal budge is provided.
Commitment in theory of top management.
Performance objective is to satisfy corporate
responsibility.
Stage four: Programatist EM programs provide comprehensive protection.

EM is an important business function.
Generally sufficient funding is provided.
Awareness and moderate involvement of top
management
Performance objective is to minimize negative
environmental impacts.
Stage five: Proactivist EM programs provide maximum protection.

EM is a priority item.
Open-ended funding is provided.
Active involvement of top management
Performance objective is to actively manage
environmental matters.
41
Newman and Breeden (1992) also examined environmental strategy development
by classifying firms based on a continuum from defense-driven companies to
environmental management leaders. According to their theory, environmental
management leaders are more active and opportunity-driven companies than defense-
driven companies. Leading firms have integrated environmental management in all aspects
of business, integration of environmental management with corporate strategy, centralized
environment policy, and senior management’s commitment of environment management.
Newman and Breeden(1992) selected and interviewed eight large companies that
considered environmental leaders under this classification system: AT&T, Chevron, The
Los Angels Times, McDonalds, Pacific Gas & Electric Company, 3M, Rohm and Haas,
and IBM. These leaders shared three characteristics regarding the processes of
environment management implementation:
1. Setting the vision;
2. Designing the blueprint for organizational excellence; and
3. Creating the processes for achieving continuous improvement.
Azzone and Bertele (1994) studied environmental strategy with a slightly different
approach. They described the environment strategy in terms of five different
environmental contexts: (l)stable; (2)reactive; (3)anticipative; (4)proactive, and
(5)creative. The characteristics of the five context were described in terms of the roles o f
industry norms, public opinion, and technology. For example, in the stable context
environmental legislation does not exist or is stable. Public interest in environmental
problems are very low and the pace of environmental technology is low. The public is
extremely aware o f environmental issues, but technology solutions need to be developed in
42
the creative context. Based on this theoretical framework, firms can be successful if they
understand the environmental context and align the environmental strategy with
characteristics of the environmental context.
Zetlin (1990) mentioned three stages in meeting environment challenges. In stage
1, companies attempt to solve the current environmental problems. In stage 2, companies
try to comply with environmental laws. During stage 3, companies go beyond the present
environmental laws and “work to reduce their potential liability for environmental
damage” (Zetlin, 1990, p. 12). According to the results of the study, about 15 percent o f
the chemical manufacturers studied were at stage 3. However, most of the companies
seemed to be moving through stage 2 toward stage 3.
Elkington (1994) illustrated several stages of sustainable corporations. Integration
of environmental management into every aspect o f social, political, and economic activity
characterizes sustainable corporation. This strategy benefits the company, its customers,
and the environment. Ignorance, awakening, denial, guilt reduction, conversion, and
integration are the six stages he describes as those which firms go through toward
sustainable corporations.
Hutchinson (1996) examined the policy difference among industries in developing
environmental strategies. He stated that environment policies are different between the
sectors of industry and commerce. High penetration industries adopt environmental
management principles heavily. Moderate penetration companies are moderately involved
with the environment. Low penetration companies ignored environmental principles.
High penetration industries are dirty and dangerous, such as metals & mining, chemicals &
plastics, forestry & timber, etc. Moderate penetration industries are wasteful and polluting,
43
such as computers, cosmetics and electronics. Low penetration industries are silent
environment destroyers including accounting, advertising, and banking.
These studies o f environmental management strategy development suggest
numerous classification systems o f strategies. While these studies disagreed in some
particular areas, they suggest developmental steps that firms can advance through to
become more progressive in their environmental management strategy. Many firms have
already passed the lowest step o f the stages and are trying to move toward highest levels
primarily due to pressure to be more socially responsive.
2.3.2 Strategic Choice
The second approach to environmental management strategy is labeled generically
as strategic choice. This choice includes Porter’s business-level generic strategies: (1)
cost leadership; (2) differentiation; and (3) focus (Porter, 1980). Steger (1993) , more
pointedly, describes four possible generic environmental management strategies: (1)
indifferent; (2) defensive; (3) offensive; and (4) innovative. These strategies are based on
two conditions: (1) market opportunities through environmental protection; and (2)
corporate environmental risks.
In the indifferent strategy (small opportunity of market and small environmental
risks), there is no strategic importance for environmental protection. A defensive strategy
(small opportunity o f market and large environmental risks) implies a market opportunity
for end-of-pipe environmental technology. An offensive strategy (large opportunity of
market and small environmental risks) describes the development of environmentally
friendly products and modification o f products and processes for the market. An
44
innovative strategy (large market opportunity and large environmental risks) implies that
there is a market for new products and process design.
As it was mentioned earlier, Hart (1995) classified environmental management
strategies based on a resource-based view, proposing environmental factors to be
considered as a strategic choice. Pollution prevention, product stewardship, and
sustainable development are three strategic capabilities that could help achieve a
competitive advantage through lower cost, preempting competitors, and the future
position.
Stead and Stead (1995) identified two comprehensive sets of environmental
strategies: (1) benefit-enhancing; and (2) cost-reducing environmental. A competitive
advantage gained through environmentally differentiating products and markets can be
achieved by the “market-driven sustainability strategy.” Redesigning the production
system, developing new environment friendly products, and redesigning products are
examples of the benefit-enhancing strategy. The “process-driven sustainability strategy” is
designed to achieve a competitive advantage by reducing costs. Redesigning the pollution
control system and improvement of the environmental efficiency of production are
examples of the cost-reducing strategy.
The concept of strategies for sustainability or sustainable development have been
major issues in environmental management strategy literature since the 1987 report of the
World Commission on Environment and Development (WCED) (Welford, 1995,
Elkington, 1994, Throop, Starik, & Rands, 1993, Hart, 1996, Williams, Medhurst, &
Drew, 1993, and Shrivastava, 1995). Sustainable development is defined as that which
meets the needs of the present generation without compromising the ability o f future
45
generations to meet their own needs (WCED, 1987). The characteristics which
distinguish this literature from others is that environmental issues are integrated into
corporate strategic decisions. Environmental management and environmental technology
represent potential strategic weapons because environmental excellence can affect the
value chain at multiple points.
In summary, two major approaches of environmental management strategy was
discussed in this section. Strategic choice suggests that firms can choose a strategy
among several alternatives, while strategic development implies that firms can make
choices based on their capabilities. In the literature survey, most environmental
management studies were focused on the study of strategic development.
2.4 Determinants of Prevention Strategy
Several studies have been conducted regarding determinants influencing
environmental management strategies for better understanding of adoption of proactive
environmental strategies. The conceptual framework for these studies uses the social
corporate performance model that corporate social responsibility based on three
principles: (1) institutional; (2) organizational; and (3) individual (Wood, 1991). An
environmentally responsible firm “has formulated an official plan for dealing with
environmental issues” (Henriques & Sadorsky, 199S, p.69). Based on this definition, their
study was the first integrative empirical attempt to apply Wood’s principles to
environmental management studies. The conceptual framework focuses on three
principles: (1) legitimacy; (2) discretionary; and (3) public responsibility (Henriques &
Sadorsky, 1995).
46
Legitimacy principle consists of environmental pressure, firm size, and regulatory
environment. Discretionary principle consists of investment in human resources. Public
responsibility principle consists of attitude vis-a-vis the environment. This study was
conducted on a large sample (400 large firms) representing various industries from the
highly regulated industries o f oil and gas to retail service, a less regulated industry.
However, this study is somewhat limited in view o f the fact that environmentally
responsive firms are defined as these firms that merely have an environment plan.
Lawrence and Morell (1995) studied factors that motivate firms to implement
more environment friendly practices based on several case studies. They proposed the
MORP (motivation, opportunity, resources, and process) model that specifies factors
leading to environment performance excellence. Their sample consisted o f eight Santa
Clara County manufacturing facilities. Their environment performance data were based
on the objective EPA TRI data. Results indicated that regulations, competitive advantage,
stakeholder pressure, critical events, and top-management pressure were major dimensions
of the motivation factor. The opportunity factor consisted o f new facilities, new products,
and new processes. The resource factors included financial, technical skill, and
information. The process factors consisted of cross-functional teams, line manager
involvement, TQM process, environmental audits, and rewards for achievement. As this
study was only on eight firms, it is required to test the MORP model empirically to
validate its generalizability.
Marcus and Goodman (1986) conducted a study based on their contingency
model, arguing that environmental compliance is a function of firm size, financial
performance, extent o f the problem, and epsilon. The dependent variable o f their study
47
was compliance. Results indicated that firm size and extent o f the problem were
determinants of compliance of regulation.
Corbett and Wassenhove (1993) suggested a set of determinants o f internalizing
environmental issues based on Wood’s (1991) framework. “The processes of corporate
environmental response (p. 117)” are derived from the principles o f corporate
environmental responsibility including institutional level, organizational level, and the
individual level. Social legitimacy was the main driving force at the institutional level,
public responsibility the organizational level, and managerial discretion the individual level.
The company’s environmental policies and programs came from these principles.
Klassen (1995) also described determinants influencing the adoption of an
environmental management strategy. According to him, determinants consists of two
parts: (1) management view; and (2) plant-specific characteristics. The factors comprising
management views include social orientation, estimates o f plant future, and
environmentalism. Plant and parent firm size, capital reinvestment rate, plant equipment
age, and historical crisis are the components o f the plant-specific factor. This study is
based only on furniture industry. Regulation, which was shown in other studies, was not
included as a determinant of environmental strategy.
The determinants influencing environmental management strategy relevant to this
study were selected based on Henriques and Sadorsky’s (1995) theoretical model: (1)
legitimacy principles; (2) discretionary principles; and (3) public responsibility principles.
These empirically tested predictors formulating environmental plans can be applied to
determinants o f proactive environmental strategies because both plans and strategies are
outcomes of corporate behavior. These principles include firm size, the environmental
48
pressure, industry, competitive advantage, financial position, investment in human
resources, and attitude toward environmental issues. More details of the determinants of
environmental management will be discussed in Chapter 3.
2.5 Conceptual Model of Environmental Strategy
In this study, the environmental management strategy perspective is based on two
strategic choices: (l)reactive (control); and (2) proactive (preventive) strategies. The
motives o f environmental management strategy are constructed based on Henriques and
Sadorsky (1995) study of the determinants of firms that formulate environmental plans.
Their results indicate that stakeholder pressure, regulatory environment,
managerial concern with environmental issues, firm size, and investment in human
resources are positively related with a firm’s formulation of an environmental plan. The
literature review and selection o f specific environmental and business performance
measures will be proposed and discussed in Chapter 3. A conceptual environmental
management strategy model will also be constructed for the study in Chapter 3.
Figure 2.2 shows a preventive environmental model, modified from Klassen’s
integrative environmental management model (1995) and used in this study. The model
consists of three parts: (1) determinants o f environmental strategy; (2) implementation of
environmental strategy; and (3) organizational and environmental performance.
First, the three sets of determinants influencing environmental strategy were
identified based on Henriques and Sadorsky (1995). Second, the determinants afreet the
implementation of environmental strategy (a reactive or proactive strategy).
49
Klassen (199S) defined implementation o f environmental strategy as “the pattern
of decisions to invest in technologies that provide some benefit to the natural environment
collectively termed an environmental investment portfolio” (p. 44). Prevention strategy
and control technologies are used as a classification of a reactive and proactive
environmental strategy in this study. Moreover, implementation of environmental
management strategy includes specific decisions about all aspects o f environmental
management from design o f environmentally friendly production and processes to human
resource management and training.
Finally, as a result of implementation of an environmental strategy, organizational
and environmental performance are defined in this model. In previous empirical studies,
the relationship between environmental performance and business performance was mixed.
Some new organizational performance measures unlike those of the previous empirical
studies will be used for hypotheses testing and will be discussed in greater detail in
Chapter 3.
The environmental management strategy provides a strong theoretical foundation
between environmental management strategy and organizational performance. More
details and clarifications for empirical testing will be depicted in Chapter 3.
2.6 Summary
In this chapter, a theoretical foundation of environmental excellence and economic
performance was discussed. This literature review mainly described that environmentally
responsible firms can enjoy improved economic performance because of reduced cost,
improved productivity, and new development of green products. Empirical studies that
50
examined the links between environmental performance and economic performance were
described.
The results of these studies were not consistent primarily due to lack of well
developed theoretical models and weak methodology. The literature on environmental
strategy was categorized into two trends: 1) a strategic choice; and 2) strategy
developmental environment management. In the strategy literature review, control and
prevention strategy were selected for hypotheses testing. Determinants of environmental
management strategies were examined and integrated into a modified conceptual
framework of the determinants, strategies, and performance as shown in Figure 2.2.
51
Figure 2.2 The Conceptual Framework of Prevention Strategy
Legitimacy:
Environmental
pressure
Firm size
Regulatoiy
environment
Discretionary: Implementation of Environmental

Environmental Performance
Strategy:
Investment in
human resources
Preventive or Control
Business
Performance
Public
Responsibility:
Attitude toward the

environment
52
CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
In the previous chapter, the theoretical framework of this study was developed
based on a review of literature. The framework integrates previous studies on
environmental and economic performance, environmental management strategy, and
determinants of environmental strategies. In this chapter, hypotheses regarding
determinants of environmental strategies, and the impact o f two major environmental
management strategies (a reactive and proactive strategy) on environmental and economic
performance will be proposed and discussed. This chapter consists of two major parts.
The first part begins with a detailed discussion of the determinant variables of
environmental management, two environmental management variables, and research
hypotheses. The second part briefly describes the research methodology, including the
data collection and hypotheses testing procedures.
The six step research procedures used in this study consist of literature review,
conceptual model, hypotheses development, development of the questionnaire, data
analysis, and presentation of results (see Figure 3.1). The first step is concerned with
collecting information and classifying two major environmental strategies as proactive and
reactive strategies. In the second step, the conceptual model is discussed. Environmental
management studies, case studies, and empirically tested studies helped to build arguments
within this conceptual framework in the third step. The fourth step involves constructing
Figure 3.1 Research Procedure
Step 1: Literature Review
Step 2: Conceptual Model
Step 3: Hypotheses Development
Step 4: Questionnaire
Step 5: Step S:
Questionnaire Data Analysis
Data Analysis o f Objective
Data
Step 6:
Presentation of Results
Step 7:
Conclusion
54
a structured questionnaire for a mail survey in the chemical industry in the US, including in
SIC codes 2812 to 2869. The fifth step includes analysis o f both questionnaire and
objective data (i.e., EPA’s TRI data). The final step of the research procedure is the
presentation o f the results of statistical analysis and discussion o f the contributions and
limitations of the study. This chapter begins with step three-hypotheses development
based on the conceptual model.
3.2 Development of Hypotheses
In this section, firms’ choice of reactive or prevention environmental strategies will
be introduced. Based on a literature survey, the criteria for classifying control and
prevention strategy will also be explained. Hypotheses will be offered on the relationship
between environmental strategy and performance of the organization.
3.2.1 Environmental Management Strategy
As presented in Chapter 2, there are two main classification of environmental
management strategy: (1) strategic choices; and (2) environmental strategy development.
Most empirical environmental studies have focused primarily on environmental strategy
development using case studies. The classification of environmental management
strategies based on both environmental strategy development and strategic choice is bound
to remain unclear because it is underdeveloped in terms of theory and rigorous empirical
testing.
While prior studies have defined environment strategy in terms o f theory, it is
difficult to determine the classification of environment strategy for empirical study.
Henriques and Sadorsky (1995) defined an environmentally responsible firm as “a firm that
has formulated an official plan for dealing with environmental issues (p.68).” For
empirical study it is difficult to classify firms with an official environmental plans as those
having proactive environmental strategies rather than control programs. Thus, more
precise methods o f classification for environmental strategy are introduced in this study.
More specifically, two classifications of environmental management strategy are used in
hypotheses testing: (1) a reactive strategy (end-of-pipe technology); and (2) a proactive
strategy (prevention programs).
Klassen (1995) defined reactive technology as additional equipment and
technology of the end of process, discharge stack or effluent pipe to reduce the emissions
of pollutants and wastes usually by treatment or capture. In addition, adding an air
scrubber to a utility or industrial smokestack or a catalytic converter to an automobile or
treating water at a municipal treatment facility are examples of other control technologies.
Thus, because these technologies are implemented at the end o f a process (end-of-pipe),
they will be referred to as reactive or control technology in this study.
Contrary to control technology, prevention focuses on the origin of pollution and
waste. Prevention actions mainly deal with identification and reduction of harmful
materials. Firms that implement prevention strategies enjoy several benefits: 1) reducing
potential environmental risks; 2) becoming actively involved in environmental protection;
and 3) saving money by reducing the cost of treating and/or removing waste and
emissions, as well as raw material and overall operating cost (Dieleman and Hoo, 1993).
In this study, a proactive firm implements prevention strategy and a reactive firm
implements control strategy. More environmentally proactive firms tend to implement
preventive strategy because this strategy requires “new production processes, product
56
cycles, and consumption patterns which allow for human development and the provision
of basic human needs without disrupting and degrading the ecosystems within which
development must occur”(Jackson, 1993, p. 143). In the next section, prevention
programs are classified for hypotheses development.
3.2.2 Prevention Strategy Programs
When the concept of quality was introduced in 1970, nobody believed that cost
and quality were compatible. The objective o f reduced cost was thought to be achieved
only by sacrificing the objective of quality. High quality meant premium prices. Now, no
one argues that it is possible to simultaneously achieve the objective of low cost and high
quality. Like the evolution of quality, the goal of new environmental management is
basically different from that of traditional environmental technology. Currently,
environmental management strives to eliminate pollutants entirely in operations processes
rather than simply filter or capture them downstream. The traditional end-of-pipe
technology is based on an assimilative capacity in which environment possesses a certain
capacity to assimilate environmental wastes and consumption. This environmental impacts
can be avoided by controlling the manner at which pollutants enter environment
(Hirschhom et al. 1993).
Hirschhom et al.(1993) describe several differences between the prevention
paradigm of modem environmental management and the control approach of traditional
environmental technology. The prevention paradigm is not to reduce risk but to identify
and take action on potential harm and hazard. Prevention uses human knowledge and
behavior to achieve goals, whereas the control paradigm focuses on explicit use of
environmental technology to reduce negative environmental impact. Prevention is more
57
comprehensive than the control paradigm because prevention involves anything from new
design of environmentally friendly product and processes to human knowledge and
knowhow for the same purpose. In the prevention paradigm, pollution is regarded as the
result of faulty processes, whereas the control paradigm regards pollution as a byproduct
o f product processes. Therefore, the ultimate goal of the prevention paradigm is to
achieve zero discharge, similar to the zero defects concepts in TQM (Jackson, 1993).
There are so many process-oriented prevention programs across industries that it is
difficult to identify exact source reduction techniques. In the chemical industry, for
example, there are 181 prevention activities (Dorfinan et al., 1992). Thus, due to the large
number of techniques, classification systems help understand and simplify different
approaches. Prevention approaches usually include two choices: (1) program; and (2)
hierarchy. The program approach implies that source reduction activities are classified
into several parallel categories or programs. The hierarchy approach means that the
direction of prevention programs point towards the upstream elements in the system of
production and consumption (Hirschhom, et al., 1993). Thus, due to the large number of
techniques, this classification system is used in designing the structured questionnaire for
this study.
3.2.2.1 Hierarchy Category
In one approach, Hirschhom et al. (1993) categorized preventive options based on
the hierarchy of prevention programs (See Figure 3.2). Prevention paradigm can be
implemented at any level in the hierarchy from activities to processes.
At the highest level in the hierarchy activities are “the most effective way to reduce
negative environmental impact because these activities are directed more towards prime
58
movers in the causal network( Hirschhom, et al. p. 135).” At the top o f the hierarchy are
prevention activities such as reducing material consumption and change to less polluting
activities. At this level, pollution is regarded as a byproduct of human needs and desires.
Thus, people interfacing with technology and human activities can prevent
'Activities
reduce material
'consumption,change^
to less polluting
activities
Products
change compositions,
improve durability, etc.
Materials
reduce material inputs
change to less toxic materials
Processes
improved efficiency, better control, improved materials handling
Figure 3.2 Hierarchy of Prevention Options (Adapted from

Hirschhom et a l., 1993)
environmentally negative impacts. At second highest level, production represents an
important environmental prevention strategy. By changing the demand for products,
pollution prevention provides the opportunity for environmental protection. At this level,
the prevention strategy is implemented with green consumers' demand and desires of
59
environmentalism in mind. If the firm can identify the consumer’s needs and desires, it can
use the prevention strategy not as a threat but a market opportunity. At the next level,
materials are important for pollution prevention because the production o f goods and
services are dependent on materials. Changing from harmful materials to non-harmful
materials can resolve harmful substances problems such as the use of chlorinated solvents
and chlorofluorocarbons (CFCs) in industries.
The last or lowest level considers the actual manufacturing of goods. Reducing of
process wastes and changing production processes within the industrial facility is a
preventive options at this level. Clean technology or production is adopted to reduce
environmental emissions, use less energy, and lower materials. Clean technologies, best
available technology, and process-integrated prevention technology are examples of the
lowest level o f prevention options.
3.2.2.2 Program Category
In contrast to the hierarchy approach, which is based on effectiveness in reducing
environmental burdens, the program approach simply groups various source reduction
activities. As an example o f the program approach, Dieleman and Hoo (1993) grouped
prevention techniques into two categories: (1) source reduction which includes product
change and production process changes (input material change, technology change, and
good housekeeping); and (2) on-site recycling (use of raw material and material recovery).
One comprehensive case study (Dorfinan et al., 1992) identified 181 source
reduction activities in the chemical industry. The chemical plants studied varied in size
(from a small plant which has only four employees to a large plant which has 3500
employees), age, type o f products, and type of process. Table 3.1 illustrates 5 categories
60
used to group the 181 source reduction activities: (1) process changes; (2) operational
changes; (3) chemical substitutions; (4) equipment changes; and (5)product changes.
Based on Table 3.1, it is clear that chemical companies use process changes the most
frequently, followed by operation changes, equipment changes, chemical substitutions, and
product changes.
Table 3.1 Prevention Activities in the INFORM Study
181 prevention activities in chemical industry
78 Process modification
60 Operational changes
32 Equipment changes
18 Chemical substitution
8 Product changes
Figure 3.3, modified from Dieleman and Hoo (1993), illustrates yet another
classification of the techniques used to achieve pollution prevention. This study is based
on these techniques because they are the most comprehensive in the chemical industry.
Programs used to classify firms as reactive and proactive will include the following
categories: (1) design of clean production process technology; (2) substitution of toxic
materials with less toxic ones; (3) development of appropriate materials; (4) design of
environmentally friendly products; (5) development of systems o f production and
consumption with low material intensities; (6) equipment redesign for prevention; and (7)
production of environmentally friendly products.
61
Figure 3.3 Prevention Techniques
Pollution Prevention Programs
Reduction at Source:
-Change of process and Production:
On-Site Recycling
products
-Production of
environmentally
friendly products
Product Change
-Design of
environmentally friendly
products
Raw Material Change:
-Substitution of toxic
materials with less toxic ones
-Development of appropriate
materials Production Process
Changes
-Design of clean
production process
technology
-Equipment redesign
-Development of systems
of production and
consumption with low
material intensities
62
3.2.3 Organizational Performance
Objective data for organizational performance have been used in studying
environmental management and economic performance (Bragdon & Marlin, 1972;
Bowman & Haire, 1975; Folger & Nutt, 1975; Spicer, 1978; Chen & Metcalf, 1980;
Spencer & Taylor, 1978; McGuire et al. 1988; Johnson, 1995; and Klassen, 1995). At the
plant level, Klassen (1995) used manufacturing performance (cost, quality, delivery, and
flexibility) to capture environmental performance based on the manufacturing strategy
literature survey. In one extensive case study, researchers (Dorfman, et. al, 1992) used
total dollars saved and product yields changes, average dollars saved annually for each
dollar spent, average dollars saved per pound reduced, and average payback period for
performance variables. Stead and Stead (1995) defined organizational performance as
impact on revenue and cost for their study. Porter and Linde (1995) argue that process
and product benefits result from better environmental management and environmental
regulation.
Among those studies, only one case study (Dorfman et al. 1992) used objective
organizational performance data. The other studies relied on perceptive organizational
performance data due to the difficulty in obtaining comparable objective data. Consistent
with past research, this study will use a multi-item, Likert-type scale to gather subjective
organizational performance data (Klassen 1995; Dorfman et al. 1992; and Porter & Linde
1995). Survey questions will address: (I) reduction in manufacturing cost; (2) improved
competition position, (3) improved plant efficiency; (4) improved public image; (5)
improved product image; (6) increased product yield; (7) increased process yield; (8)
63
increased product resale and scrap value; (9) improved product quality; and (10) improved
productivity.
The results of implementing a preventive strategy and programs usually require
several years to achieve a visibly impact on organizational performance. Thus, this study
will include questions about 1) programs implemented; and 2) improvements of
organizational performance from 1990 to 1995.
3.2.4 Environmental Performance
Most empirical studies have been based on perceptual data o f firms' environmental
performance. The evaluation o f the CEP, based on government investigation and site
visits, has been the primary measure used as environmental performance data supported by
Johnson’s conclusions that these data were consistent with objective environmental
performance data. However, these data came from large firms with a limited sample size.
Other subjective data o f environmental performance include the environmental
self-assessment program of the Global Environmental Management Initiative(GEMI). The
purpose of GEMI was to provide practical measurement tools for assessing progress in
implementing the ICC Business Charter (Fitzgerald , 1995).
Another objective measure o f environmental performance is environment data
collected from the Investors Responsibility Research Center (IRRC), which is a non-profit
think tank type group. ISO 9000 is an international standard for quality management.
ISO 14000, derived from British Standard 7750 series, represents the international
environmental management standard. The basis of this standard is to establish, document,
implement, and maintain effective and efficient environmental management.
64
Since 1987, SARA (Superfund Amendments and Reauthorization Act) o f EPA has
required the facilities that manufacture or process more than 25,000 pounds or use more
than 10,000 pounds of any of the reportable chemicals submit a TRI report.
Manufacturers of Standard Industrial Classification (SIC) from 20 to 39 should report the
release and transfers o f 320 different chemicals. Johnson (1995) and Klassen (1995) used
data from these TRI reports to measure environmental performance of organization. Even
though these data were reported by the responding manufacturers, they are also objective
and public information.
Based on the literature on environmental performance o f the organization, this
study will use both objective and subjective environmental performance data. First o f all,
this study will use the objective environmental performance measure o f EPA’s TRI data.
Additionally, subjective environmental performance measures will be used for the firms
that do not report their TRI data to EPA. The perception questions from the literature on
environmental performance of the firm will address: (1) reduction in waste consumption
per unit produced; (2) increase in consumption of recycled materials per unit produced;
(3) reduction in consumption of hazardous materials per unit produced; (4) reduction in
the amount o f chemical spills; (5) reduction in total number o f regulatory violations; and
(6) reduction in the amount of total emissions. The questions are designed to be answered
on a Likert-scale. The results o f EPA’s TRI data and subjective reduction in the amount
of total emissions will be compared. Based on the measures discussed above and the
literature review presented in Chapter 2, the following hypotheses will be tested in this
study.
65
Hypothesis 1: There is a positive relationship between the degree of pollution
prevention strategy and a firm's organizational and environmental
performance.
3.2.5 Implementation of Environmental Management
Dillon and Fischer (1992) and ISO 14000 (Sayre, 1996) classified environmental
management systems associated with better environmental performance into three areas:
(1) environmental planning and systems analysis; (2) organizational structure; and (3)
management controls (see Figure 3.2). In this study, these three areas will be used for
validation of the implementation o f a preventive environmental strategy. Planning and
system analysis include training and education of environmental management, a written
environmental policy, and analysis of the environmental Life Cycle Assessment (LCA),
etc. Organizational structure includes appointment o f an environment manager,
establishing a structured process to implement policy, and soliciting employee suggestions,
etc. Management control, the third area, includes an audit program of environmental
management, environmental self-assessment program (ESAP), maintaining environmental
records, audit of waste reduction programs, etc. Table 3.2 summarizes factors of
environmental management used to validate implementation of a proactive environmental
strategy in this study. As mentioned in Chapter 1, the definitions of environmental
management and preventive strategy include a systematic approach for managing and
improving environmental issues. As a result, the firms that implement a prevention
66
strategy may more likely implement activities in these three areas of environmental
management than those that implement a control strategy.
Hypothesis 2: There is a positive relationship between the level of pollution
prevention strategy and the degree of environmental management
implementation.
3.2.6 Determinants of Environmental Management Strategy
As discussed in Chapter 2, several studies (Henriques and Sadorsky, 1995,
Lawrence and Morell, 1995, Marcus and Goodman, 1986, Klassen, 1995, and Corbett and
Wassenhove, 1993) focused on the determinants o f environmental management strategies.
However, most studies were based on Wood’s (1991) social corporate conceptual
performance model. Henriques and Sadorsky (1995) conducted the study of determinants
of environmental excellence using the degree o f formulation of environmental issues as
the dependent variable. Based on this study, it was difficult to conclude that the firms that
have environmental policies are better environmental performers because objective data
were not compared. Another study, conducted by Lawrence and Morell (1995), used
objective EPA’s TRI ( the Toxics Release Inventory) data as the dependent variable for
environmental performance. They concluded that leading-edge environmental
management was the results of the complex interaction of four factors: (1) motivation; (2)
opportunity; (3) resources; and (4) processes. However, this study was based on a case
study of eight firms.
67
Table 3.2 Environment Management Implementation Factors
Environmental Planning and Systems Analysis

• Training and education about environmental management
• Long-term environmental m a n a g e m e n t training and education program
• Training every worker on environmental issues
• Formal, well defined, written environmental policies
• Integration o f environmental issues into all planning processes
• Maintaining a record of legislative, regulatory, and policy requirements
• Specifying environmental objectives and consequent targets
• Program to achieve the environmental objectives and targets
• Written, environmental emergency response plans
• Providing suppliers with detailed, written environmental requirements
• Analysis o f environmental Life Cycle Assessment (LCA) on major products
• Analysis o f environmental Life Cycle Assessment (LCA) for redesigning the product or
manufacturing process
Organizational Structure
• A central role o f the production manager in determining the environmental policy
• Establishing a structured process to implement policy, achieve objectives and meet goals
• Appointment of a manager to be directly responsible for environmental issues
• Responsibility o f everyone in the company for environmental performance
• Employee suggestions for improving environmental performance
• Formal teams for identifying environmental problems and opportunities and to develop solutions
• Procedure to ensure effective communication to employees and interested parties
Management Control
• Controlling environmental documents and operations
• Investigating and correcting noncompliance with requirements
• Maintaining environmental records
• Consideration of long-term f in a n c ia l benefits o f pollution, prevention effects arising from short
term capital expenditure
• A formal audit program for environmental management system
• Audit of environmental risks for the existing production equipment
• Audit of waste reduction programs
• Review o f operating practices for their impact on the environment
• Evaluation o f employees against environmental performance objectives
• Environmental self-assessment program (ESAP)
68
None of the above studies examined the determinants o f environmental
management strategy, rather they looked at the results o f environmental management
strategy. The only study in which the choice of environmental strategies was considered
as a dependent variable was Klassen’s study (1995). He examined the impact of
management views and plant-specific characteristics on plant’s performance.
In order to examine what factors are important for implementing a prevention
strategy, this study is based on several previous studies that examined the determinants of
environmental excellence in social responsibility (Henriques and Sadorsky, 1995,
Lawrence and Morell, 1995, Marcus and Goodman, 1986, Klassen, 1995, and Corbett and
Wassenhove, 1993). Carroll (1979) illustrated four social responsibility categories for the
social performance model: (1) economic responsibility; (2) legal responsibility; (3) ethical
responsibility; and (4) discretionary responsibility. Carroll (1979) contended that all
business organizations simultaneously accomplished these four responsibilities.
However, business organizations usually emphasize the economic and legal
responsibility first. Social performance should instead be viewed as “a business
organization’s configuration of principles of social responsibility, processes of social
responsiveness, and policies, programs, and observable outcomes as they relate to the
firm’s societal relationships” (Wood 1991, p. 693).
Based on Wood’s definition, the corporate social performance includes the
following: (1) principles o f corporate social responsibility; (2) processes o f corporate
social responsiveness; and (3) outcomes of corporate behavior. As principles of corporate
social responsibility, Wood defined institutional principle; legitimacy, organizational
principle, and public responsibility; individual principle; and managerial discretion. He
69
explained that these principles emphasize “business and society are interwoven rather than
distinct entities” (Wood, 1991, p.695). Each firm has expectations about: (1) its role as a
economic institution; (2) what it is and what it is doing; and (3) managers as moral actors
within the firm. His conceptual model provides a framework for implementing
environmental management which has been used in other studies (Henriques and
Sadorsky, 1993, Klassen, 1995, and Corbett and Wassenhove, 1993). For example,
Henriques and Sadorsky’s study examined the impact o f three determinant principles: (1)
legitimacy principle; (2) public responsibility principle; (3) discretionary principle for
motivating environmental plan. These studies used Wood’s conceptual social performance
model as the determinants o f corporate environmentalism, even though the dependent
variables of these studies varied.
The variables used in Henriques and Sadorsky’s study are the basis of the study.
Next section will address their three principles. Henriques and Sadorsky (1993) argued
that the legitimacy principle gives society legitimacy and power to business organizations,
as long as they abide by the responsibility of business. The empirical examination o f this
legitimacy principle can be based on the obligation and sanctions of business organizations
by their stakeholders. They examined institutional principles defined as environmental
pressure and regulatory environment and firm size. This study is only based on chemical
industry in which regulatory environment is considered the same. Thus, regulatory
environment variables are eliminated from the study.
Henriques and Sadorsky (1993) described that public responsibility outcomes
related to primary and secondary areas of involvement with society. They argued that this
principle should be examined by behavioral parameters concerning the firm's attitude of
70
environmental issues. They considered public responsibilities as attitude vis-a-vis
environment. Thus, the public responsibility dimension will be used in the study.
They argued the last principle, managerial discretion, could be defined in terms of
managers as moral actors. Socially responsible outcomes are dependent on managerial
discretion. Financial position of the company, investment in human resources, and
environmental information source were examples o f determinant variables for
environmental plan. Financial position of the company did influence the firm’s
environmental plan. Thus, this dimension will be eliminated in the study. In addition,
Lawrence and Morell (1995) found that perception o f effective environmental
management was a motivator to become environmentally excellent companies. This
variable will be included in the study. Each determinant of social responsibility will be
hypothesized to be related to environmental prevention strategy in the next section.
3.2.6.1 Legitimacy Principle
Henriques and Sadorsky (1993) categorized stakeholders of a company into
external and internal groups. External stakeholders include regulators, public/community,
and contractors/suppliers, while internal stakerholders consist of shareholders,
management, and employees. They contended that if a firm had more pressure from an
individual group, then the firm would be more likely to formulate an environmental plan.
In general, the greater environmental pressure a firm is under, the more likely the firm will
implement a prevention strategy.
71
Hypothesis 3: As a firm faces an increasing amount of pressure from
individual groups, it is more likely to implement more pollution prevention
strategy programs.
In distinguishing between the formulation of an environmental plan based on firm
size, Henriques and Sadorsky (1993) argued that larger firms were more likely to
formulate an environmental plan. Marcus and Goodman (1986) constructed a contingency
model of compliance, with firm size as an independent variable for compliance. Arora and
Cason (1995) examined the relationship between participation in EPA’s 33/50 program
and firm size. Within an industry, large firms tend to have a greater ability to implement
preventive strategy than smaller firms. Hence, larger firms may be more likely to
implement a prevention strategy.
Hypothesis 4: There is a positive relationship between the degree of pollution
prevention strategy and the firm size.
The perception o f government regulation on domestic and global competitiveness
is important for implementing a preventive environmental strategy (Henriques and
Sadorsky, 1993). Attitude toward environmental regulations is a major decision criterion
for a preventive environmental strategy. Thus, if a firm perceives environmental
regulation as a positive effect on domestic and global competitiveness, the firm will
implement more preventive environmental strategy than the firm that perceives
environmental regulation as a negative effect.
72
Hypothesis 5: The perceived impact of environmental regulation on domestic
and global competitiveness is positively related to implementation of
preventive environmental programs.
3.2.6.2 Discretionary Principle
The perception of environmental management as a competitive advantage is
important for implementing a preventive environmental strategy, because reducing
pollution and preventing pollution can cut cost and improve plant efficiencies (Lawrence
and Morell, 1995). The firms that view environmental investment as an opportunity may
be more likely to implement a proactive environmental strategy than firms that perceive
environmental management as a competitive disadvantage.
Hypothesis 6: The firms that perceive environmental management as a
competitive advantage will more likely implement preventive environmental
programs.
If firms implement a preventive environmental strategy, they must have human
resources that can help them implement such a strategy. Human resources are a key
element in many o f these firms’ respective environmental improvement efforts (Lawrence
& Morell 1995 and Henriques & Sadorsky, 1995). Thus, the more a firm invests in human
resources, the more likely the firm will implement a prevention strategy.
73
Hypothesis 7: There is a positive relationship between investment in human
resources and preventive environmental programs.
3.2.6.3 Public responsibility principle
The third principle in Henriques and Sardorsky’s study was public responsibility.
This term refers to firms that are responsible for “solving problems that they caused, and
they are responsible for helping solve problems and social issues (Wood, 1991, p. 697).”
Both Klassen (1995) and Henriques and Sardorsky (1993) proved that a firm’s attitude
toward environmental issues explained the reason why firms formulate an environmental
plan and implement a proactive strategy.
Hypothesis 8: There is a positive relationship between a firm's view that
environmental issues are important and implementation of preventive
environmental programs.
The data of Henriques and Sadorsky's study were taken from the largest 750
Canadian firms. Financial position of the firm was found as not a significant variable for
motivating an environmental plan. Thus, this variable will be eliminated from hypotheses
testing. The other independent variables used by Henriques and Sadorsky’s study for
implementing a proactive environmental strategy will be used. The difference between
their framework and this study for motivating environmental excellence is that this study is
based on the US chemical industry. The environmentally responsible firm is defined as a
74
firm that implements a prevention strategy, while Henriques and Sadorsky defined the
environmentally responsible firm as a firm that has an environmental plan.
In addition, Lawrence and Morell (1995) found that competitive advantage was an
important motivating factor for adopting an environmentally proactive stance. The
perception that a proactive environmental management yields a competitive advantage will
be considered as an independent variable for motivating implementation of a preventive
environmental strategy.
3.2.7 Summary
In this chapter, research methodology and procedures have been discussed. For
hypotheses development o f the study, environmental management strategies were
introduced to categorize the firms that participate in this study. Control and prevention
strategies were selected as important factors for hypotheses testing. In the chemical
industry, many prevention activities were identified in a case study (Dorfman et al., 1992).
These prevention activities are categorized in seven prevention programs in this study.
For hypotheses testing, organizational and environmental performance variables were
selected based on literature review. The last part of this section was debated to the
discussion of determinant variables of the environmental management strategy based
mainly on Henriques and Sadorsky’s framework. The hypotheses regarding the
motivating factors for the environmental management strategy were introduced and
discussed. Table 3.3 summarizes the hypotheses developed based on the literature review.
75
Table 3.3
Hypotheses
Hypotheses
There is a positive relationship between preventive environmental

programs and a firm’s organizational performance.
HI
There is a positive relationship between preventive environmental
programs and a firm’s environmental performance.
H2 There is a positive relationship between the level of preventive

environmental strategy and environmental management
programs.
As a firm faces an increasing amount of pressure from individual

H3 groups, it is more likely to implement pollution prevention
strategy programs.
H4 There is a positive relationship between the firm size and

preventive environmental strategy.
The perceived impact of environmental regulation on domestic

H5 and global competitiveness is positively related to
implementation of preventive environmental programs.
76
The firms that perceive environmental management as a

H6 competitive advantage will more likely implement preventive
H7 There is a positive relationship between investment in human

resources and preventive environmental programs.
There is a positive relationship between a firm’s view that

H8 environmental issues are important and implementation of
preventive environmental programs.
77
3.3 Description of Data Collection
3.3.1 Sample Selection
The chemical industry has been subjected to environmental regulation for many
years. It is assumed that environmental regulation has already been standardized. As the
INFORM study (Dorfman et al., 1992) implies, the programs of preventive environmental
strategy were categorized based on case studies. Thus, the development of environmental
management strategy in the chemical industry is at an advanced level of implementation
compared to other industries. The population for this study is the US chemical
manufacturing industry. The sample was chosen from Standard Industry Code (SIC)
between 2813 to 2869 classified as chemical industry based on the 1997 Million Dollar
Directory.
Structured questionnaires were sent to 1250 randomly selected chemical. The list
of 1250 companies includes from small firms to very large firms. Structured
questionnaires were sent directly to presidents of small firms with an employees of
less than 100 employees because it is assumed that small firms do not have environmental
managers, to operations managers of medium size firms with employees of more than 100
but less than 150, and to environmental managers of large firms with more than 150
employees. If the directory has a specific name of president, vice president, or operations
manager, the questionnaire was sent to the specific person.
3.3.2 Development of the Structured Questionnaire
As mentioned earlier, this study developed the hypotheses for an empirical study
based on an extensive literature review. The questionnaire was divided into nine main
parts. The first part was designed to obtain general information about the firm, e.g.,
78
company’s name, annual sales volume, company’s number of employees, types of
manufacturing process in use, SIC code, number of plants in the company, and questions
about TRI report to EPA.
The second part o f the questions was designed to ask environmental management
issues. It identified the environment related issues and the degree of preventive program
implementation. It included questions about human resources investment, perception of
the impact of environmental regulation, sources o f environmental management
information, and perceived strategic advantages for environmentally responsive firms.
The third part of the questionnaire identified pressure sources regarding
environmental issues. Customers, suppliers, shareholders, government regulation, cost of
environment controls, employees, and environmental organizations were included in this
part.
The fourth part of the questionnaire was designed to measure organizational and
environmental performance. In this section, ten organizational performance variables and
six environmental performance variables are included for measurement based on a seven-
point Likert-type scale.
The fifth and sixth part of the questionnaire include manufacturing programs and
perception of the status of world class organization. The seventh part of the questionnaire
was designed to measure the status of each company’s environmental management
strategy. If the company implemented a preventive environmental management strategy,
the type implementation programs and the order of implementation were asked.
The eighth part o f the questionnaire consists of environmental management which
includes planning and systems analysis, organizational structure, and management control.
79
The questions for this part were based on a six-point Likert-type scale with the following
choices: (1) not at all implemented; (2) considered, but not yet implemented; (3) started to
implemented; (4) partially implemented; (5) implementation underway; (6) completely
implemented.
The last part of the questionnaire was designed to ask about implementation
problems if the firm implemented a preventive environmental strategy. A seven-point
Likert-type scale was used for the measurement. Appendix A at the end of this
dissertation presents the letter o f introduction and the structured questionnaire employed
in this research.
3.3.3 Development of Survey Response
O f the 12S0 questionnaires mailed, 52 were returned because of insufficient
address or no forwarding addresses, etc. One hundred and two firms responded
(approximately 8.5 percent of response rate), of which 16 were eliminated as unusable,
resulting in 86 firms in the analysis o f the study. Compared to other empirical studies,
response rate of this study is relatively low. Environmental management and regulation
issues are sensitive issues for the chemical companies and this may have caused the firms
to be hesitant in responding to the survey. However, of 86 usable responses,
approximately 72 percent (61 responses) of the total respondents were eager to know the
results of this study.
3.3.4 Data Analysis Procedures and Statistical Methods
To analyze the data of all returned questionnaires, statistical analysis was done by
the Statistical Package for the Social Science (SPSS/x) at the University o f Nebraska-
Lincoln. Tables of frequencies and means are presented for descriptive analysis o f the
80
data. For statistical analysis o f the data, t-test and multiple regression methods are the
main statistical tools used for the study. The results o f structured questionnaire were
utilized to identify the relationships between determinants and preventive environmental
strategy, and also the relationship between preventive environmental strategy and
environmental and financial performance.
81
CHAPTER FOUR
RESULTS AND ANALYSIS
4.1 Introduction
This chapter first presents descriptive statistics based on the data collected from
EPA’s TRI data, sales data from Million Dollar Directory (1992-1997), and the returned
questionnaire. The responding companies’ background information of the survey will be
first analyzed, followed by statistical analysis o f the data and discussion of the results with
respect to the research hypotheses. Based on the results of statistical analyses,
considerations of future environmental management and research will be proposed. The
specific issues addressed in this chapter are as follows:
1) Descriptive analysis of the responding firms;
2) Determinants o f a preventive environmental management strategy;
3) Impact of a preventive environmental management strategy on organizational
performance;
4) Impact of a preventive environmental management strategy on environmental
performance;
5) Positive relationship between the degree of preventive strategy implementation
and environmental management; and
6) Analysis of implementation problems with a preventive environmental
management strategy.
82
4.2 Description of Survey Respondent
For this study, one thousand two hundred fifty firms were randomly selected from
the 1997 Million Dollar Directory. A total of 86 chemical manufacturing firms
participated in this study by responding to the survey. A descriptive analysis provides a
better understanding of the responding firms, including information regarding: (1)
company’s backgrounds; (2) job titles o f respondents; (3) implementation status of
preventive environmental management strategies; (4) determinants and results of
environmental strategies; and (5) the degree of a preventive strategy implementation.
4.2.1 Responding Companies* Information
Twenty-four (28%) of the 86 respondent firms were classified as small firms with
less than 100 employees, thirty five firms (41%) medium firms with more than 100 but less
than 500 employees, and twenty seven firms (31%) as large firms with the number of
employees greater than 500. The firms ranged in size from 88,000 to 8 employees with
the distribution of company size of data evenly distributed (see Table 4.1). Interestingly,
more small firms took part in this study than expected. In prior research, response rates of
small firms have been more limited than that from medium and large firms.
Sales can also be used to classify firms for size. Table 4.2 represents the
distribution of responding firm size based on sales volume. Without a generally accepted
theoretical basis to classify firms based on sales, thirty million in sales was used to
distinguish small from medium size firms which have between thirty million and two
hundred eighty million in sales. Among 86 respondents, 26 firms (30.23%) are classified
as small firms, 27 firms (31.40%) as medium, and 17 firms (19.77%) as large firms. While
companies were requested to state
83
Table 4.1 Profile of Respondent Companies Based on the Number of Employees
(1996)
Organization size Frequency
Small (less than 100) 24(28%)
Medium (more than 100 and less than 500) 35(41%)
Large (more than 500) 27(31%)
Total 86(100 %)
Table 4.2 Profile of Respondent Companies Based on Sales Volume (1996)
Company Size Number of Company
Small (less than 30 million) 26(30.23%)
Medium ( more than 30 less than 280) 27(31.40%)
Large (more than 280 million) 17(19.77%)
Missing value 16(18.60)
Total 86(100%)
84
their sales amount on the survey, 16 companies did not comply to the request.
Table 4.3 profiles the number of companies that report TRI data annually to the
EPA. Seventy two firms (83.72%) answered they reported TRI to EPA, while 13 firms
(15.12%) did not. Most firms that did not report to EPA were small firms. As mentioned
earlier in Chapter 3, facilities required to report to EPA are those with both more than 100
employees and manufacture more than 25,000 pounds or use more than 10,000 pounds of
any o f the reportable chemicals under Title in o f the Superfund Amendments and
Reauthorization Act (SARA). Thus, many small firms with small facilities are excluded by
SARA from reporting TRI to EPA. The 72 chemical firms that reported TRI data provide
the basis for the analysis of relationship between the firms that implemented preventive
environmental programs and environmental performance such as total release of chemical
substances.
Table 4.3 The Status of Report to EPA
Status The Number of Firms
Yes 72(83.72%)
No 13(15.12%)
Missing 1(1.16%)
Total 86(100%)
85
4.2.2 Job Title
Respondents’ job titles ranged from manager to president (see Table 4.4) The most
frequently reported job title was at the senior manager level (about 50%), with 41.86
percent reporting to be environmental managers. These results are not surprising because
the survey was sent to presidents of small companies, vice presidents o f medium size
companies, and environmental manager or operations manager of large companies.
Approximate 45 percent of the respondents are at the top management level (e.g.,
president, vice president, and director). The specific job titles of every respondents are
summarized in Table 4.5. Because companies use different titles for jobs with similar
responsibility, “Environmental Manager” was used as the grouping name for respondents’
titles implying responsibility for environmental issues and affairs (e.g., environmental
specialist).
4.2.3 Implementation Status of a Preventive Environmental Management Strategy
Table 4.6 represents the results of the survey regarding implementation of
environmental management strategy. Among 86 firms being analyzed, 76 firms responded
that they have an environmental management strategy. Sixty nine firms indicated they
implement a control strategy, while seventy two firms reported implementation of a
preventive environmental strategy. The high percent of firms reporting implementation of
an environmental strategy clearly indicates the continued importance o f environmental
issues. This high response rate could also explained by the fact that EPA requires the
chemical firms to have preventive environmental programs in place. Firms that did not
respond might have felt that they were uncomfortable responding to an environmental
86
Table 4.4 Job Title of the Respondents
Level of Job Title Number of Companies

President (CEO) 9 (10.47%)
Vice president 9 (10.47%)
Director 20 (23.26%)
Manager 36 (41.86%)
Other 8 (9.3%)
Missing 4 (4.65%)
Total 86 (100%)
Table 4.5 Profile of Detailed Job Title
President
Vice president of Health,
Vice President Service
Vice President Research & Development
Executive Vice President
Director of environmental affairs
Director of Operations
Director of Corporate Sales
Environment, Health & Safety Services Consultant
Technical Director
Plant Manager
Project Manager
Environmental Manager
Manager of Environmental Affairs
Quality Assurance Technician
Pollution Prevention Specialist
Administrator of Operations
General Manager
Regulatory Affairs Specialist
87
study. The distribution of specific implementation programs that implement a preventive
environmental strategy will be discussed later in this chapter.
4.2.4 Summary Results of Determinants of Environmental Strategy
Six determinant variables of preventive environmental strategy were examined, as
discussed in Chapter 3: (1) firm size; (2) environmental pressure source; (3) attitude
toward environmental issues; (4) environmental regulation; (5) human resource
investments; and (6) perception of environmentally responsible behavior. This section
summarizes the responses to five variables because the variable, firm size, was already
explained in this chapter.
Attitude Toward Environmental Issues
These are two major questions about environmental issues: (1) importance of
environmental issues; and (2) protection issues (Klassen, 1995; Henriques and Sadorsky,
1995). The questions of importance of environmental issues were examined for present
and five years later. These questions were asked on a 7-point Likert scale with 1 denoting
“not at all important,” 4 “neutral,” and 7 “extremely important” (question of
environmental issues); and also denoting “strongly disagree,” 4 “neutral,” and 7 “strongly
agree” (for questions of protection issues). The mean value of the question about the
importance of environmental issues today is 5.965 and the mean value of the question
concerned the importance of environmental issues for five years later is 6.094.
The respondents felt that environmental issues are important for both present and five
years later while they felt that environmental issues for the next five years would become
much important than environmental issues at present. The companies surveyed indicated
that an average 2.893 degree of agreement with the statement that they should protect the
88
Table 4.6 The Status of Environmental Management Strategy
Strategy Type Yes No Missing Total
Environmental 76 10 86
Management
Strategy
Control 69 16 1 86
Strategy
Preventive 72 14 86
Strategy
Table 4.7 The Results of Environmental Issues
Questions Mean Standard Deviation
The importance of 5.965 1.040

environmental issues
today
The importance of 6.094 .971
environmental issues five
years later
Protecting environment 2.893 1.672
irregardless of cost and
investment
89
environment regardless of cost and investment. Even though most firms felt that
environmental issues were important, they were hesitant to protecting environment due to
cost. Table 4.7 summarizes the results o f these questions regarding attitudes toward
environmental issues.
Human Resource Investment
Eighty six percent of respondents (72 companies, 2 missing cases) had a
group/department dedicated to dealing with environmental issues. Ninety two percent of
respondents (76 firms) had a person dedicated to dealing with environmental issues. Fifty
three percent o f respondents (44 companies) answered that they had a committee for
environmental issues. Due to the nature of the chemical industry, most respondents had
already a department and a person dealing with environmental issues regardless of firm
size. As the survey result indicates, the importance of environmental issues was evident by
the amount of human resource invested to this area (see Table 4.8).
Effect of Environmental Regulation on Competitive Position
Beliefs about the effect of environmental regulation on competitive position were
evenly distributed among firms (see Table 4.9). Thirty percent of companies (25 firms)
believed that current environmental regulations had a positive effect on domestic
competitive position, 36 percent (30 firms) reported no effect, and 35 percent of
respondents believed that they had a negative effect (29 firms). At the global level of
competitive position, the percentage o f respondents answering to a positive effect from 30
percent for the domestic level to 18 percentage (15 firms), while 37 percent of
respondents (31 firms) believed that current environmental regulations had a negative
90
Table 4.8 Human Resource Investment
Yes No Mean Std. Dev.
Department 72(86%) 12(14%) 1.143 .352
A Person 76(92%) 7(8%) 1.084 .280
Committee 44(53%) 39(47%) 1.470 .502
Table 4.9 Effect of Environmental Regulation on Competitive Position
Effect Domestic Position Global Position
Positive 25 firms 15 firms
Negative 29 firms 37 firms
No Effect 30 firms 31 firms
Other(missing cases) 2 firms 3 firms
91
effect on global competition, and forty five percent (37 firms) o f respondents had no
effect. Even amongst the firms that felt environmental regulation of the U.S. is stricter
that that of the other countries, the belief in a positive effect dropped from 25 firms for the
domestic level to 15 firms for the global level.
Competitive Advantage
Seventy one percent of respondents believed that environmentally responsible
actions could provide some level o f a competitive advantage in the industry. Twenty five
percent o f companies believed that environmentally responsible manner had no effect on
either a competitive advantage or disadvantage. This results are interesting because a
majority of firms believe that environmental regulations have no or negative effect on
competitive position (59 firms) in domestic position as shown in Table 4.9. However, a
majority o f firms believed that a proactive environmental manner could offer a competitive
advantage (59 firms) in the industry. A majority of chemical firms in the survey felt that
going beyond compliance o f environmental issues can be a strategic weapon. Table 4.10
summarizes the results of competitive position of a proactive environmental action.
Environmental Pressure Source
Table 4.11 presents and ranks the source of pressure on the company regarding
environmental issues. As most people imagine, government regulation was reported to
put the most environmental pressure on chemical companies. In the order o f rankings,
based on mean values, government is followed by cost of environmental control,
customers, employees, shareholders, suppliers, and environmental organizations. In order
to identify which of the individual sources is the most important, firms were asked to
answer one of the sources. Sixty one percent o f respondents answered that government
92
Table 4.10 Competitive Position of a Proactive Environmental Action
Competitive Position Frequency
A Major Competitive Advantage 10 (12%)
A Competitive Advantage 21 (25%)
A Minor Competitive Advantage 28 (34%)
Neither A Competitive Advantage Nor 21 (25 %)

Disadvantage
A Minor Competitive Disadvantage 2 (2%)
A Competitive Disadvantage 1 d%)
A Major Competitive Disadvantage 0
93
Table 4.11 The Results of Environmental Pressure Sources
Pressure Source Mean Standard Ranking

Error
Government Regulation 6.4045 .091 1
Cost of Environmental Controls 5.226 .147 2
Customers 5.012 .182 3
Employees 4.824 .151 4
Shareholders 4.582 .234 5
Suppliers 3.687 .181 6
Environmental Organizations 3.643 .188 7
Note: Mean score on a scale of 1 (not at all used) to 7 (highly used)
94
regulation is the most important pressure source. Eighteen percent o f respondents
reported that the customer is the most important pressure source to manage.
4.2.5 Descriptive Analysis of Survey Responses
Appendix A presents a cover letter and a structured questionnaire. Appendix B
summarizes the correlation matrix of all independent variables for degree of preventive
implementation programs. Because o f the large number o f independent variable items for
preventive environmental programs used for the study, the correlation matrix moves to the
Appendix. In the correlation matrix table, bolds numbers represent those relationships
that are significant at alpha level .05. Independent variables include determinants of
preventive environmental strategy: (1) attitude toward environmental issues (items
BACKA, BACKB, BACKF in Appendix B); (2) investment in human resources
(BACKHA, BACKHB, BACKHC); (3) firms size (SALES, EMPA, EMPB); (4)
environmental pressure group (PRESA, PRESB, PRESC, PRESD, PRESE, PRESF,
PRESG); (5) effects of environmental regulation (BACKI, BACKJ); and (6) perception of
environmental management (Q12).
As Gravetter and Wallnau (1992) pointed out, the absolute value of correlation
shows the strength of the relationship between variables while the sign shows the direction
of the relationship. For example from Appendix B, .9519 between the number of
employees and sales amount (EMPB and SALES) existed. This strong correlation
between the two items makes sure as both items represent the firm size independent
variable. A negative correlation coefficient of -.2809 between sales and whether a
company has a committee dealing with environmental issues (SALES and BACKHC)
means that the bigger firms in sales amount tend to have a committee because 1 denotes
95
assigning an environmental committee. Most correlation coefficients are lower than .5.
However, several coefficients are higher than .5. For example, sales values and the
number o f employees (.5701) and hiring a person and department for environmental
management are strongly related (.6867). For further multiple regression analysis, it is
desirable to have lower than .5 (the value of correlation between variables) not causing
multicolinearity.
4.3 Statistical Analysis of Determinants of Preventive Environmental Strategy
In this section, a descriptive analysis of preventive programs (dependent variables)
and statistical analysis of determinants of degree of preventive programs (independent
variables) will be presented. First, an analysis of degree of implementation programs and
specific types of preventive programs implemented will be disucussed. For example,
determinants of preventive environmental strategy, the results o f multiple regression will
be described.
4.3.1 The Degree of Implementation of Preventive Programs
According to Table 4.12, zero (0) response means that the firm did not implement
any preventive programs. Fourteen firms did not implement a preventive strategy. A one
(1) response means that the firm implements only one o f the seven preventive programs,
and so on. The largest number of firms (23.26%) implemented four preventive programs,
and most firms (33 firms) responded that they implemented 3 or 4 preventive programs.
Chemical substitution was the most frequently used preventive program (61
companies), followed by process change technology (43 companies), equipment design
(42 companies), environmentally friendly product design (39 companies), production of
96
Table 4.12 The Degree of Implementation Programs
Number of Implementation Frequency

Programs
0 Program 14
1 Program 1
2 Programs 9
3 Programs 13
4 Programs 20
S Programs 7
6 Programs 8
7 Programs 9
Missing Cases 5
Table 4.13 Types o f Preventive Programs Implemented
Preventive Programs Implemented

Frequency
The design of clean production process 43
technology
The substitution of toxic materials with less 61
toxic ones
The development of appropriate materials 30
The design of environmentally friendly 39
products
The development of systems of production 29
and consumption with low material intensities
Equipment redesign 42
Production of environmentally friendly 37
products
Other 3
97
environmentally friendly products (37 companies), development of appropriate materials
(30 companies), and development o f systems of production and consumption with low
material intensities (29 companies). An additional preventive programs reported in one
questionnaire was “facility design and operating procedures.” Table 4.13 presents
preventive programs that firms reported implementing in their companies.
Statistical analyses were performed to examine the relationships between
determinant variables and the degree o f implementation programs o f a preventive
environmental management strategy. Firms were coded based on the number o f programs
implemented, as the degree o f implementation programs represents proactive behaviors
undertaken toward a proacitve environmental strategy. The firms that did not implement
any preventive programs were coded 0 in the analysis, the firms that implemented program
of one preventiv program were coded 1, and firms that implemented 2 programs as 2, etc.
Thus, the highest level o f a preventive environmental management strategy is 8. As shown
in Table 4.12, there are no firms that reported implementation o f 8 programs.
The six independent variables were combined to create an index of determinants of
preventive programs. To examine determinants of preventive programs, an empirical
model was modified from Henriques and Sadorsky’s model (1995). An empirical model
of the determinants o f firms that implement a preventive environmental strategy is
represented by:
Degree o f a preventive strategy = f (Size, Pres, Att, Reg, Inv,Com)
Some of the relevant literature that discusses the relationship between these independent
variables and degree of a preventive programs as a dependent variable was discussed in
Chapter 3. “Size” denotes the size of the firms based on the number o f employees. “Pres”
98
is the average value reflecting environmental pressure source. “Att” is the average value
reflecting attitude toward environmental issues. “Reg” is the average value reflecting
environmental regulation. “Inv” is the average value reflecting human resources
investment dealing with environmental issues. “Com” denotes the firm’s perception of
environmentally responsible manner. Multiple regression analysis will be used predict
whether a proactive environmental management strategy will or will not occur (continuous
dependent variable) from a set of independent variables.
4.3.2 Reliability Analysis
Reliability tests were performed for each independent variables with multiple
measuers, such as pressure group, attitude toward environmental issues, and
environmental regulation. Reliability tests for independent variables are required because
the average value o f several independent variables are used for hypotheses testing. The
most used internal reliability which refers to the degree of homogeneous set of
measurement is Cronbach’s alpha (Cronbach, 1951). Cronbach’s alpha is used as the
measurement of internal consistency in the study. While there is no standard value to
accept as the value of alpha for reliability in the research, Nunnally (1978) suggested 0.8
for validity of reliability value and Fink (1995) suggested that a value of above .51 is
acceptable as a moderate to good relationship.
The Cronbach’s alpha value for the environmental background variables is .8131,
.6691 for the environmental pressure group, and .7619 for the regulation effect question.
When the question of environmental protection is included in the reliability test, the alpha
value is lower that .5. As a result of the alpha level, this question is eliminated in the
analysis. Based on the test results, alpha values required for grouping are higher than the
99
Table 4.14 The Results of Reliability Test for Independent Variables
Meaurement Items Alpha Value
Attitude Toward Environmental Issues: .8131
Importance of Environmental Issues Today
Importance of Environmental Issues in Next Five Years
Environmental Pressure Group: .6691
Customers
Suppliers
Shareholders
Employees
Environmental Regulation: .7619
Effecf on Regulation on Domestic Competitiveness
Effect on Regulation on Global Competitiveness
100
minimum value for reliability. Thus, this group of variables will be used for multiple
regression analysis.
4.3.3 Correlation Analysis
To examine the relationships between the dependent and independent variables and
among independent variables, correlation analysis was performed. Table 4. IS presents the
correlation matrix. Most correlation coefficients among independent variables are not
high, implying divergent validity among them. The relationships between independent
variables and the dependent variable do not consider multicolinearity among independent
variables. The negative correlation (-.3400) between the degree o f implementation and
assigning a committee for environmental issues suggests that the firms that implement
more environmental programs tend to have a committee established for dealing with
environmental issues. The second number shown in the table presents the number of
respondent. For example, the number of available cases between dependent variable
(sumimp) and one of independent variables (Q12) was 79. The third number shown in the
table explains p-value of correlation variables between them. For example, there is a
positive relationship between the firm’s perception of environmentally responsible manner
(Q12) and the degree of preventive program implementation (sumimp) (p < .05) because a
major competitive advantage was coed as I . Based on the results shown in Table 4.15,
firm size, competitive advantage, human resource investment, and attitude toward
environmental issues are strongly related with the degree of preventive program
implementation (p < .05).
101
Table 4.15 Correlation Matrix among Independent and Dependent Variables
Q12 Meanpres Backhc Meanbac Emp Meanbao
Sumimp -.2098 .1694 -.3400 .2863 .1950 -.1578

(79) (81) (79) (81) (71) (80)
.032(*) .065 .001(*) .005(*) .052(*) .081
Q12 -.2585 .0792 -.2694 -.1413 .3322

(83) (81) (83) (72) (82)
,009(*) .241 ,007(*) .118 .001(*)
Meanpres -.2103 .1746 .0918 -.1604

(83) (85) (74) (84)
,028(*) .055 .218 .072
Meanbah -.1477 -.2265 .0993

(83) (72) (82)
.091 ,028(*) .187
Meanbac .0374 -.1787

(74) (84)
.376 .052(*)
Emp .0242
(73)
.420
Notes: (Coefficient /(Cases)/1-Tailed Significance)

* = p < .05
102
The abbreviations used in the correlation matrix are as follows:
Sumimp: Degree o f preventive program implementation
Q12: Firm’s perception of environmentally responsible manner
Meanpres: Average value of environmental pressure group
Backhc: A committee dealing with environmental issues
Meanbao: Average value reflecting reflecting environmental regulation
Meanbac: The average value reflecting attitude toward environmental
issues
Emp: The number of employees in the company
4.3.4 Analysis of Multiple Regression
The dependent variable (the degree of a preventive environmental strategy) is
continuous and most independent variables are continuous as well; however,
environmental regulation is a categorical variable. According to Pedhazur (1982),
multiple regression can be used for continuous, categorical, and combination of
continuous and categorical independent variables and one continuous dependent variable.
Thus, multiple regression is appropriate for this analysis. Specifically, a stepwise multiple
regression was used to determine which set of independent variables best predicts the
dependent variable. Table 4.16 summarizes the results of the stepwise multiple regression
procedure. A discussion o f the results follows in section 4.3.S.
4.3.3 Results of the Regression Model
Using stepwise multiple regression model, the following research question was
addressed: What are the important determinants of firms for implementing more proactive
environmental programs? In general, the results revealed that only environmental
103
Table 4.16 The Results o f Stepwise Multiple Regression Model
Multiple R .39390
R Square .15452
Adjusted R Square . 12724
Standard Error 2.08324
Analysis of Variance
D.F Sum of Squares Mean Square
Regression 2 49.17384 24.58692

Residual 62 269.07231 4.33988
Variable in the Equation
Variable B SEB BETA T Sig. T

Mean Bac .664809 .292165 .267695 2.275 .0263
Committee -.141672 .522174 -.257216 -2.186 .0326
(Constant) 1.105571 2.03844 .542 .5895
Variables not in the Equation
Variable Beta In Partial Min Toler T Sig. T
Competitive -.193960 -.206096 .942504 -1.645 .1051

Mean Pres .062741 .066636 .953725 .522 .6038
Employee .142042 .150586 .937042 1.190 .2388
Mean Effect -.044739 -.047778 .964255 -.375 .7100
104
background and having a committee for environmental issue are significant predictors of
preventive program implementations. These two independent variables were significantly
related with preventive environmental programs, but explained less than 20% (15.45%) of
the variance in the dependent variable.
Hypothesis 3: Environmental Pressure Source
Hypothesis 3 posited that higher perceived environmental pressure would result in
a higher degree o f a preventive environmental management strategy. The four major
dimensions o f environmental pressure sources examined in this study were government
regulation, cost of environmental controls, customers, and employees among seven
possible pressure sources. Two of the initial seven pressure sources, government
regulation and cost of environmental controls, were excluded due to unacceptable internal
reliability. To extract a composit measure as a grouping variable, factor analysis was
performed. Customers, supplier, shareholders, and employees were selected even though
some items were almost as important as pressure sources. Using the mean value o f the
environmental pressure sources, hypothesis 3 was not supported (p > .05). In other
words, higher pressure did not lead to a higher degree of a preventive environmental
strategy.
Hypothesis 4: Firm Size
Three items were used to measure firm size: (1) number o f employees; (2)
categorical item for employee number, and (3) sales. Number of employees written down
by the respondent was used in the analysis because the number of this item’s respondent
105
companies was higher than the number o f companies reporting sales. Hypothesis 4 was
not supported (p > .05). In other words, there is no significant relationship between a
higher preventive environmental strategy and firm size. Since chemical manufacturing
firms are required to report about their prevention programs to EPA, prevention programs
have become somewhat standard in the chemical industry regardless of the firm size.
Hypothesis 5: Effect of Environmental Regulation
Hypothesis 5 suggested that environmental regulation and a firm’s domestic and
global competitive positions have a positive relationship. Using stepwise regression to test
this hypothesis, the mean value o f effect o f environmental regulation was used to predict
the degree of preventive program implementation. This hypothesis was not supported (p
> .05), suggesting that there is no significant relationship between current environmental
regulations in the chemical industry and the degree of preventive program implementation.
Hypothesis 6: Competitive Advantage
The firms that perceive environmental management as a competitive advantage will
more likely implement preventive environmental programs. This hypothesis was not
supported (p > .05). While the correlation between the degree o f preventive program
implementation and the perception is significant, in the stepwise multiple regression test,
the relationship was not found to be significant.
106
Hypothesis 7: Human Resources Investment
Hypothesis 7 suggested that investment in human resources is positively related to
preventive environmental programs. Due to low reliability for the three item scales for
human resource investment, only the last item (committee dealing with environmental
issues) was retained in the analysis. Individual t-tests were performed to test the
significance of each factor in predicting the degree o f preventive environmental programs.
The third item (committee dealing with environmental issues) was the only significant
predictor for the degree of preventive environmental programs. Based on the result of the
regression analysis, this hypothesis is supported (p < .05). This suggests that firms with a
committee dealing with environmental issues tend to implement more preventive programs
than those without having such a committee.
Hypothesis 8: Attitude Toward Environmental Issues
The eighth hypothesis was concerned with the relationship between attitudes
toward environmental issues and preventive environmental strategy. Two related
questions to measure attitude toward environmental issues was asked: (1) How do you
rate the importance of environmental issues today?; and (2) How would you rate the
importance of environmental issues five years from now?. The mean of two items created
a new independent variable used to test the hypothesis. The value of reliability test for the
two items was high enough to continue the analysis ( a > .5). Based on the stepwise
multiple regression, this hypothesis was supported (p < .05). Thus, there is a significant
relationship between attitude toward environmental issues and the degree o f preventive
107
4.3.4 Summary of Determinants of Preventive Environmental Programs
In this study, six independent variables were tested as determinants o f preventive
environmental management programs. Figure 4.1 models the results of hypotheses
testing. Based on the results of the stepwise multiple regression analyses, only two
variables, attitude toward environmental issues and human resource investment were
significant determinants for the degree of preventive programs. The result implies that
size of firms, environmental regulations, and perception o f environmental management for
a competitive advantage are not significant indicators o f more preventive environmental
programs. While firms do feel environmental pressure from different sources, a composit
pressure measure from several sources was not found to be a significant factor in
determining more proactive environmental programs.
Firm size based on the number of employees was a significant predictor in the t-
test (see Table 4.15). However, in the multiple regression analysis, firm size is not a
significant predictor of preventive environmental programs. Even though perception
about environmental management was a significant predictor of preventive environmental
programs in the t-test, this variable is also not a significant predictor of preventive
environmental programs in the multiple regression analysis. These result might come
from a weak relationship between the dependent variable and independent variables (firm
size and perception about environmental management, respectively, p=.052, p=.032).
108
Figure 4.1 Summary of Results of Determinants
■■■■» : Significance
►:Non Significance
Environmental
Pressure Sources
EfTect of
Environmental
Regulatin
Attitude Toward The degree of

Environmental Issues Preventive
Environmental
Programs
Firm Size
(The Number of
Employee)
Investment in Human
Resources
(Committee)
Perception of
Environmental
Management
109
4.4 The Relationship Between the Degree of Implementation Programs and
Environmental Management
As mentioned in Chapter 3, three areas o f environmental management were
introduced for the analysis o f the degree of implementation programs and environmental
management: (1) planning and system analysis; (2) organizational structure; and
(3)management control. The items for this variable were selected from Dillon and
Fischer’s study (1992) and Inside ISO 14000 (Sayre, 1996). In general, it was predicted
that the degree of proactive environmental programs would impact activities including
planning and systems analysis, organizational structure, and management control.
In this section, Tables 4.17- 4.19 summarize analysis o f the degree of preventive
implementation programs and the three areas o f environmental management. A discussion
o f the hypothesized relationships follows. Almost all planning and systems analysis items
were significantly predicted by preventive environmental programs (p < .05). All but one
management control items and organizational structure items were significantly predicted
(p < 05).
Hypothesis 2: The Relationship Between a Preventive Program Implementation and
Environmental Management
As part of an environmental management strategy, an environmentally proactive
firm should implement environmental management programs. The three dimensions of
environmental management were selected based on sound empirical studies (Sayre, 1996;
Dillon and Fischer, 1992): (1) planning and systems analysis; (2) management control; and
(3) organizational structure. Results of t-tests support a significant positive relationship
no
between the degree o f proactive environmental programs and each dimension of
environmental management (p < .05). (see Table 4.17,4.18, and 4.19) Thus, Hypothesis
2 was supported that there is a positive relationship between preventive environmental
strategy and environmental management activities. This hypothesis suggests that more
environmentally proactive firms tend to implement more environmental programs to
achieve environmental excellence.
4.5. The Impact of Implementation Programs on Organizational Performance
Beyond environmental management, the degree of preventive environmental
strategy can impact organizational performance. Organizational performance was
measured by two sets o f indicators. First, the respondent’s perception of organizational
performance was measured by questions focused on manufacturing performance such as
manufacturing cost, quality, and productivity and other organizational performance.
Secondly, objective data, specifically the change of sales amount, were obtained from the
Million Dollar Directory (1992-1997). Table 4.20 summarizes the result of t-test between
the degree of preventive program implementation and organizational performance
dimensions. Manufacturing cost, plant efficiency, product yield, product quality, and
process yield were all significantly related to the degree of preventive implementation
programs (p < .05). Thus, we can state that the degree of preventive environmental
programs is positively related with manufacturing cost, plant efficiency, product yield,
product quality, and process yield.
Ill
Table 4.17 The Results of T-test Between The Degree of Preventive Implementation
Programs and Planning and Systems Analysis
Planning and Systems No. of Case Mean S.D. Probability

Analysis
Panning Iteml 80 4.442 1.508 .0211(*)
Planning Item2 80 3.860 1.743 .0473(*)
Planning Item3 80 3.919 1.689 .2277
Planning Item4 80 4.384 1.625 .0033(*)
Planning Item5 80 4.221 1.619 ,0002(*)
Planning Item6 80 4.977 1.479 .0103(*)
Planning Item7 80 3.826 1.842 .0004(*)
Planning Item8 80 4.140 1.702 .0006(*)
Planning Item9 80 5.337 1.377 ,0474(*)
Planning Item 10 80 3.256 2.187 .1189
Planning Iteml 1 80 2.453 2.133 .1884
Planning Item 12 80 2.302 2.202 .0977
(*): P< 05
112
Table 4.18 The Results of T-test Between the Degree of Preventive Implementation
Programs and Management Control
Management Control No. of Case Mean S.D. Probability
Management Contrail 80 5.093 1.316 .0100(*)
Management Control2 80 5.116 1.451 ,0009(#)
Management Control3 80 5.395 1.268 .0006(*)
Management Control4 80 3.942 1.900 .ooooo

Management Control5 80 4.093 1.962 .0568
Management Control6 80 4.221 1.918 .0 0 2 7 0
Management ControI9 80 2.849 1.997 .0003(*)
Management Control 10 80 3.291 2.147 .0 0 6 5 0
(*): P< 05
113
Table 4.19 The Results of T-test Between the Degree o f Preventive Implementation
Programs and Organizational Structure
Organizational Structure No. of Case Mean S.D. Probability
Organizational Structure 1 80 3.779 2.026 ,0095(*>
Organizational Structure2 80 4.093 1.938 .0000(*)
Organizational Structure3 80 5.488 1.453 ,0073(*)
Organizational Structures 80 4.221 1.798 .0008(*>
Organizational Structure? 80 3.616 2.087 .0000(*)
(*) : P<.05
114
Table 4.20 The Result of T-test Between the Degree of Preventive Implementation
Programs and Organizational Performance
Organizational No. of Case Mean S.D. Probability

Performance
Manufacturing Cost 81 5.605 .931 .0171(*)
Competitive Position 81 5.296 1.259 .1013
Plant Efficiency 82 5.488 1.091 .0064(*)
Public Image 81 4.951 1.117 .2955
Product Image 82 5.195 1.116 .1141
Product Yield 82 5.256 1.052 .00 2 8 0
Process Yield 82 5.207 1.119 .00 0 5 0
Product Resale and 78 4.487 1.066 .5720

Scrap Value
Product Quality 80 5.425 1.203 .02 3 2 0
Productivity 82 5.378 1.096 .1189
(*):p<05
115
4.6 The Impact of Implementation Programs on Sales Growth
The firms that responded were classified as public and private firms. Only small
portion of public firms participated in this study; thus, the use o f public data of
organization performance such as ComputStat was inappropriate. Participating private
companies were called for publicly available financial data. All private firms requested
rejected release of financial data due to security reasons.
Therefore, sales for each company from the Million Dollar Directory (1992-1996)
were used as a financial performance indicator. Each participating organization was
matched by the written down on the survey to the name listed in the Directory. Ten
companies were eliminated due to unavailability of their names and 34 companies
eliminated for further analysis because data were not listed in the 1992 and 1996 Million
Dollar Directory. As a result, 42 companies were retained for this analysis. Each sales
amount from 1992 to 1996 of 42 firms was divided by number of employees to control
firm size. Thus, Sales Growth rate per employee was calculated by the difference between
sales per employee in 1992 and 1996 (see below):
1992 Sales per employee = (1992 Sales / employees)
1996 Sales per employee = (1996 Sales / employees)
Sales growth rate per employee = (1996 sales per employee-1992 sales per employee)
Table 4.21 summarizes the results o f t-test analyses on the degree of preventive
implementation programs and sales growth rate per employee. Based on tests, the sales
growth rate per employee was not significantly predicted (p > .05) by the degree of
116
Table 4.21 The Results o f the Degree of Implementations Programs and Sales
Financial Performance Number of Cases Mean S.D Prob.
Sales Growth 42 124,920 263,381 .6879

Per Employee
117
preventive program implementation. In other words, there was no significant difference
between the degree of preventive implementation programs and objective organizational
performance (sales growth ). Figure 4.2 presents the results o f hypothesis about the
relationship between the degree of preventive implementation programs and organizational
performance (objective and perceptive data).
4.7 The Impact of Implementation Programs on Environmental Performance
As presented in Chapter 2, performance was measured in terms of organizational
and environmental performance. Like organizational performance, environmental
performance was measured by both perceptual and objective data (TRI data). The
perceptual measures were based on the survey responses, consisting of answers on waste
consumption, consumption of recycled materials, consumption of hazardous materials, the
amount of chemical spills, total number of regulatory violations, and the amount o f total
emissions. To standardize the environmental performance data across companies, the
items were asked on the per unit basis. Table 4.22 summarizes the results o f t-tests
between the degree of implementation programs and environmental performance
indicators, followed by a discussion of the results. Four items o f environmental
performance, excluding reduction in waste consumption per unit produced and increase in
consumption of recycled materials per unit produced, were found to be significantly
related with implementation programs at the alpha level o f 0.05.
The abbreviations used for t-tests are as follows:
WS: Reduction in waste consumption per unit produced
118
Figure 4.2 The Summary of The Degree of Preventive Programs and Organizational
Performance
Objective Data
Sales Growth Per

Employee
The Degree of
Preventive
Programs Perception Data
1. Manufacturing
Cost(*)
2. Competitive
Position
3. Plant
Efliciency(*)
4. Public Image
5. Product Image
6. Product Yield(*)
7. Process Yield(*)
8. Product Resale
and Scrap Value
9. Product
Quality(*)
10. Productivity
P< 05
119
CR: Increase in consumption of recycled materials per unit produced
CH: Reduction in consumption of hazardous materials per unit
produced
CS: Reduction in the amount of chemical spills per unit produced
TN: Total number of regulatory violations
TE: Reduction in the amount of total emissions per unit produced
Hypothesis about the Relationship Between the Degree of Preventive Program
Implementation and Environmental Performance (Perceptual Data)
One part of Hypothesis 1 suggested that there would be a significant relationship
between the degree of preventive program implementation and environmental
performance. Above all, the hypothesis dealing with reduction in the amount o f total
emissions per unit produced is supported (p < .05). This hypothesis will be compared to
the result of objective environmental data (TRI data) analysis. In addition, the hypothesis
of reduction in consumption of hazardous materials per unit produced, reduction in the
amount of chemical spills per unit produced, and total o f regulatory violation are
supported (p < .05). The results suggested that as firms implement more preventive
environmental programs, environmental performance should improve (refer to Figure 4.3).
4.8 The Results of Implementation Programs and Toxics Release Inventory (TRI)
The objective environmental performance data were taken form the Toxics Release
Inventory 1987-1994 CD-ROM, provided by EPA Kansas City office. This data set was
120
Table 4.22 The Results of the t-tests Between the Degree o f Preventive
Implementation Programs and Environmental Performance
Environmental No. of Case Mean S.D. Probability

Performance Items
ws 82 5.305 1.062 .1189

CR 80 4.750 .974 .2950
CH 81 4.864 1.311 .0 0 1 9 0
CS 83 5.289 1.375 ,0102(*)
TN 80 4.913 1.670 .0 3 7 6 0
TE 83 5.470 1.347 .0 0 0 0 0
(*) : P< 05
121
compared to total release. Each participating company was matched to the name listed on
CD-ROM. 28 companies were retained for further analysis out of 86 companies in the
sample. The remaining 58 companies were eliminated because of unavailability of their
names or no TRI data to 1989 or 1994. Each total release (toxic emissions) figure from
1989 to 1994 of 28 firms was divided by number o f employees to standardize the amount
of total release. Each total release for calculation includes the quantity o f the listed toxic
chemicals that are released directly air, water, and land. The number o f employees in 1996
was used for standardization due to the concern about small sample size. Thus, Total
Release was calculated by the difference between per employee total release in 1989 and
1994 (see below).
Total Release Improvement = (1989 Total Release - 1994 Total Lease)
Total Release Improvement Rate per employee =
(Total Release Improvement)/ (Employees)
Table 4.23 summarizes the t-test analysis on the degree of preventive
implementation programs and total toxics release inventory. Based on the result, total
amount of toxics release has a significantly positive relationship with the degree of
preventive implementation programs. In other words, a greater degree o f implementation
programs would lead to a better performance of the company. This result o f objective
data is matched with the result of perceptual environmental data in the last section. Figure
4.3 summarizes the results of hypothesis about the relationship between the degree of
122
preventive implementation programs and both perceptual and objective environmental
performance.
4.9 Implementation Problems
The firms that implement preventive environmental programs face implementation
problems. This section will present the results of these problems. The questions related
focusing on implementation problems were based on Dieleman and Hoo’s study (1993).
Dieleman and Hoo classified implementation problems as four groups: (1) conceptual
obstacles; (2) technical obstacles; (3) organizational obstacles; and (4) economic
obstacles. While questions of this study may replicate their findings from case studies, it
would valuable for American chemical firms to explore these implementation problems.
Dieleman and Hoo’s study was based on European companies, especially Netherland
companies. An analysis of implementation problems in the US chemical industry might
shed new insights and meaningful implications for managerial decisions and policies.
Table 4.24 summarizes findings of implementation problems and descriptive analysis, and
a discussion o f the results will follow.
Overall, it is surprising that none of the means o f question item scores are over 4.0
(neutral). The responding firms might have felt that the implementation problems asked
were not serious problems. For example, the item with the highest score was concerned
with the high cost of protecting environment with a mean score o f 4.0. Even this mean
score translates that the firms generally feel that this is not a problem, based on a 7-point
Likert scale with 1 denoting “not at all problem,” 4 “neutral,” and 7 “ a major problem.”
Another interesting result is that lack of top management support has the lowest
average score (2.43) across all question items, even lower than the mean score for lack of
123
Table 4.23 Analysis of the Degree of Preventive Implementation Programs and

Toxics Release Inventory (TRI)
Environmental Performance No. of Cases Mean S.D Prob.
Total Toxics Release Inventory 28 929,912 3,614,932 .0499

Per Employee (lbs) (lbs)
(*) P < -05
124
Figure 4.3 The Summary of The Degree of Preventive Programs and Environmental
Performance
Objective Data
EPA’s TRI(*)
The Degree of
Preventive
Programs Perception Data
1. Reduction in Waste
Consumption
2. Increase in
Consumption of
Recycled Materials
3. Reduction in
Consumption of
Hazardous Materials!*)
4. Reduction in the
Amount of Chemicals
Spills!*)
5. Total Number of
Regulatory Violations!*)
6. Reduction in the
Amount of Total
Emissions!*)
(*) P< 05
125
employee support (2.63). It appears that top management actively support

implementation
of preventive environmental strategy in US chemical companies.
Comparing overall scores between categories o f obstacles, mean score o f financial
obstacles was the highest among four group, followed by technical obstacles, conceptual
obstacles, and organizational score. The respondent firms felt that lack o f financial
resources, incomplete calculation, and allocation o f insufficient environmental costs are
major problems of preventive implementation programs among four obstacle categories.
Concerning conceptual obstacles, firms felt that cost for environmental protection,
resistance to change for environmental protection, and meeting legal standards were the
primary implementation problems than others. For organizational obstacles, respondents
felt that none of the question items was a major problem. Among organizational
obstacles, lack o f clarity as to departmental tasks and lack o f communication within the
company were more serious problems than others. For technical obstacles, firms felt that
practical demonstration of prevention technology (mean score; 3.48) was needed for
smooth implementation. Compartmentalization and difficulty of information on preventive
technology followed as less important problems. Lack o f technical personnel and
information were not very serious implementation problems.
126
Table 4.24 The Summary of Implementation Problems
not all neutral a major Total Mean S.D.

problems problem
1 2 3 4 5 6 7
A. Conceptual Obstacles
1. Understanding the importance of environment in the company policy

28 13 8 4 12 5 2 72 2.72 2.38
(33%) (15) (9) (5) (14) (6) (2)
2. Confusion as to the definition of prevention

24 15 6 9 17 1 0 72 2.73 2.23
(28%) (17) (7)(10) (20) (1) (0)
3. The idea that prevention is possible only in the long term.

10 18 15 8 24 6 0 71 2.82 2.17
(12%) (21) (17) (9)(28) (7) (0)
4. The idea that protecting the environment is costly.

9 8 4 12 13 16 4 71 4.00 2.47
(10%) (9) (5) (14) (21) (19) (5)
5. Inadequate explanation of factors that determine the scope and composition of waste
stream.
17 16 6 19 10 2 1 71 2.99 2.30
(20%)(19) (7) (22) (12) (2) (1)
6. Resistance to change for environmental protection.

13 6 7 17 17 11 1 72 3.58 2.33
(15%) (7) (8) (20) (20) (13) (1)
7. Meeting legal standards as the only goal.

11 9 4 13 18 11 5 71 3.83 2.49
(13%)(10) (5) (15)(21)(13) (6)
B. Organizational Obstacles
I. Lack of clarity as to division and/or departmental tasks and responsibilities.

24 13 3 9 12 9 2 72 3.01 2.46
(28%)(15) (3) (10)(14) (10) (2)
127
2. Lack of top management commitment.

35 10 7 6 8 6 0 73 2.43 2.22
(41%)(12) (8) (7) (9) (7) (0)
3. Collaboration between companies in the same production column.

28 7 3 20 6 6 0 65 2.99 2.73
(33%) (8) (3)(23) (7) (7) (0)
4. Lack of employee support.

21 17 10 14 8 6 0 73 2.63 2.06
(24%) (20) (12) (16) (9) (7) (0)
5. Lack of supplier cooperation.

24 8 11 21 6 1 0 71 2.77 2.23
(28%) (9) (13) (24) (7) (1) (0)
6. Lack of communication within the company.

13 17 10 15 14 4 0 73 3.00 2.10
(15%) (20) (12) (17) (16) (5) (0)
C. Technical Obstacles
1. Very little technology has been developed from a waste and emissions prevention
perspective.
10 17 13 11 11 7 2 71 3.29 2.35
(12%) (20) (15) (13) (13) (8) (2%)
2. Lack of practical demonstration of prevention technology.

10 16 9 13 10 8 5 71 3.48 2.45
(12%) (19) (10) (15) (12) (9) (6%)
3. Compartmentalization and difficulty of information on preventive technology.

10 17 9 16 9 7 1 69 3.40 2.47
(12%) (20) (10) (19) (10) (8) (1%)
4. Lack of technical personnel.

18 16 8 16 5 5 4 72 2.99 2.34
(21%) (20) (9) (19) (6) (6) (5)
5. Lack of information.
18 16 6 16 10 4 2 72 2.98 2.30
(21%) (19) (7) (19) (12) (5) (2)
128
D. Economic Obstacles
1. Lack of financial resources.

13 6 6 11 15 14 6 71 3.88 2.58
(15%) (7) (7) (13) (17) (16) (7)
2 Incomplete calculation and allocation of environmental costs.

12 3 3 13 20 11 7 69 3.72 2.28
(15%) (4) (4) (16) (25) (14) (9)
129
CHAPTER FIVE
CONCLUSIONS
This chapter summarizes the research results and major contributions o f this study.
Limitations o f the study and recommendations for future research will also be discussed.
5.1 Summary
The last two decades have been an interesting era for examining the strategic
approaches that firms employ for environmental management. At first, the firms
responded to environmental issues in a reactive way as they just attempted to attain the
minimal legal compliance level. Over time, however, firms began to realize that
environmental management could be used as a competitive weapon. As with 3M,
pollution prevention strategies were used to gain a competitive advantage and achieve the
concept o f sustainable development. Thus, the impact of a preventive environmental
management strategy on a competitive advantage has become an important managerial
issues to study.
This study has examined the effect of preventive environmental programs on
environmental and organizational performance in the US chemical industry. To assess the
impact of preventive environmental programs on environmental and organizational
performance, this study first examined the relationship between the degree o f preventive
programs and organizational and environmental performance. The second research
question sought to examine determinants of the preventive environmental management
strategy. The last objective was to identify the obstacles to implementing preventive
130
programs. After reviewing the literature, survey questionnaires were distributed to 1250
chemical manufacturing firms in the US to gather necessary data to answer the research
questions.
The first part of literature review focused on the theoretical frameworks of both
corporate social responsibility and economic performance. This review revealed that
environmental excellence and competitiveness were not mutually exclusive. Because
pollution represents inefficiency in and ineffectiveness o f manufacturing systems, literature
suggests that improved environmental performance could lead to reduce manufacturing
cost and improved quality.
The next part o f literature review examined the relationship between social
performance and economic performance, a popular research topic since the early 1970s.
The results of several empirical studies were conflicting in that some studies found a
significant positive relationship while others did not. These inconsistent results seemed to
stem primarily from small sample sizes and problems in research methodologies utilized.
The literature review also encompassed studies on environmental strategy. Two
major trends dominated environmental studies research: (1) strategy development; and (2)
strategic choices. After reviewing studies on environmental strategies, the last part of
literature review was focused on empirical studies of determinants o f preventive
environmental strategy. This literature reviews was helpful to developing a conceptual
model o f environmental management strategies. Using the results o f prior studies, a
modified conceptual model was proposed depicting the determinants and performance
results of environmental management strategies (see Figure 2.2).
131
Using a cross-sectional research design to test several hypotheses, a survey
questionnaire was mailed to chemical companies in the US. A total of 1,250
questionnaires were sent to chemical manufacturing firms in the Million Dollar Directory
(1997), of which 86 firms responded. The response rate was 8.5 percent. Pollution
prevention programs included on the survey were based on previous studies. These
programs were classified into seven categories: (1) substitution of toxic materials with less
toxic ones; (2) development o f appropriate materials; (3) design of environmentally
friendly products; (4) design o f clean production process technology; (5) equipment
redesign; (6) development of systems of production and consumption with low material
intensities; and (7) production of environmentally friendly products. In addition to the
questionnaire, the objective data on financial and environmental performance were
collected from the Million Dollar Directory and EPA’s TRI reports.
Simple and multiple regression analyses were used to test predictors or
determinants of preventive environmental strategy and preventive environmental strategy
on environmental and financial performance. Results of the analysis showed that both
attitude toward environmental issues and human resource investment were significant
predictors of the degree o f preventive environmental programs. To examine the impact of
preventive environmental programs on environmental and organizational performance, t-
tests were used. This analysis showed significantly higher organizational performance in
terms of manufacturing cost, plant efficiency, product yield, process yield, and product
quality. The results suggest that the higher preventive implementation programs lead to
better performance improvement than lower preventive or reactive strategies. No
132
significant difference, however, was identified in sales growth (1991-1996) between firms
with higher and lower preventive programs.
A significant difference existed between the higher preventive implementation and
lower preventive implementation companies for self-reported environmental performance
in terms of reduction in consumption of hazardous materials, reduction in the amount of
chemical spills, total number of regulatory violations, and reduction in the amount of total
emissions. These results imply that a higher degree implementation of preventive
environmental strategies leads to better performance improvement than a lower
implementation of preventive environmental strategies in those areas. Using objective
environmental performance measures from the EP A TRI data, the change of total release
of chemical substances was found to be significantly lower for the high prevention
implementation companies than low prevention companies. Figure 5.1 summarizes the
results of the study.
5.2 Contributions of the Study
While increasing in importance, research in the area of environmental management
strategy has been unfocused and unsystematic. In this study, a conceptual model was
developed to explain the antecedents and impact o f environmental strategy. Empirical
tests of this model used not only perceptual but also objective organizational and
environmental data. Previous studies on environmental studies failed to integrated both
types of data. This study revealed the impact o f more preventive environmental strategy
on both environmental performance in terms of total release, reduction in consumption of
with permission of the copyright owner. Further reproduction prohibited without permission.
133
Figure 5.1 The Results of The Study
Legitimacy:
Environmental
Pressure
Firm Size Economic

Performance:
Regulatory 1.Manufacturing
Environment Cost(*)
2.Plant Efficiency!*)
3. Product Yield!*)
4. Process Yield!*)
5. Product Quality!*)
Discretionary: Implementation of
Environmental
Investment in Strategy: Environmental
Human Performance:
Resources!*) Preventive 1. EPATRI (*)
Environmental 2. Reduction in
Competitive Strategy Consumption of
Advantage Hazardous Materials!*)
3. Reduction in the
Amount o f Chemical
Spills!*)
4. Total Number of
Public Regulatory
Responsibility: Violations!*)
5. Reduction in the
Attitude Toward the Amount o f Total
Environment(*) Emissions!*)
(*)p < .05
134
hazardous materials, reduction in the amount of chemicals spills, total number of
regulatory violations, and reduction in the amount o f total emissions, and organizational
performance measured by manufacturing cost, plant efficiency, product yield, process
yield, and product quality. The results o f this study may help convince firms that
implementation of more preventive programs can improve environmental and financial
performance o f their organizations.
This study makes a unique contribution to the environment management field by
analyzing the relationship between the degree of preventive strategy and environment
management. The higher the number of implementation programs being utilized by firms,
the higher the commitment to in environmental management in terms o f planning and
system analysis, organizational structure, and management control. The results clearly
indicate that a preventive environmental strategy should be a systematic rather than a piece
meal approach.
The study also examined the determinants of preventive environmental
management strategy in US chemical firms. The US based sample used in the study and
paying careful attention to operationalization of environmental strategy both added value
to this research stream. Previous studies examined determinants of environmental plans in
Canadian firms across industries. This study utilized more specific and rigorous
classification of reactive and proactive firms of environmental strategy based on preventive
programs the preventive implementation programs. As Hypothesis 2 proves that there is a
significant relationship between the degree of preventive implementation programs and the
higher environmental management, the classification of the preventive implementation
programs included in the study were both representative and more comprehensive.
135
Lastly, the study examined the obstacle factors to implementation o f preventive
programs, representing the first empirical research to examine problems included in the
implementation of preventive programs. The results can help firms avoid implementation
errors o f preventive programs. Unlike the notion expressed in prior research,
implementation obstacles were found to be no major problem for implementation.
5.3 Limitations of the Study
Based on the nature of the research design, response rate and data availability, this
study has some limitations to be considered. The sample size of the study was relatively
small as compared to other empirical studies in the management study field. The sample
size was further reduced by limited availability o f objective accounting data such as return
on investment (ROI) and return on account (ROA). Thus, the sales growth rate was used
as a surrogate measure for financial performance. Furthermore, since many respondent
firms were private companies, the analysis o f the accounting data from the Computstat
database were not available. Only sales data from the Million Dollar Directory was used
for the study.
Like the limited availability of accounting data, the objective environmental
performance data (TRI) were obtained for only 28 firms. One objective of this study was
to use both perceptual environmental performance and objective environmental
performance data. The limited availability and missing values in environmental data also
affected the sample size. Despite the small sample size, study results revealed a significant
difference in objective environmental performance between the firms with lower and
136
higher level of preventive programs. Still, validity o f the result should be considered in
light of the sample size.
This study focused only on the chemical industry in an attempt to examine the
impact of environmental management strategy on financial and environmental
performance. However, there are several different chemical sectors such as industrial
gases, inorganic pigments, and paints & allied products, etc. Because the analyses
encompassed total chemical industry from diverse chemical companies rather than each
sector of the industry, the results may have compounding effects by each sector.
While the unit o f analyses was a business organization, the questionnaire was sent
to only one person. The single respondent of the firms may not represent the opinion o f
the whole firm especially for the measurement o f perceptual data.
5.4 Recommendations for Future Research
This study examined the impact of preventive environmental management strategy
on financial and environmental performance o f US chemical manufacturing companies.
The determinants of preventive environmental programs were investigated. For further
study, the research agenda can be expanded. One o f the research areas for future study is
investigating the preventive environmental management strategy concentrating on different
sectors of the chemical industry or in other manufacturing industries. Preventive
environmental programs may differ across industries in terms o f seven categories. The
study of impact of preventive environmental management in all industries will increase
external validity and help identify the differences in the implementation o f preventive
programs.
137
The limited sample size due to restricted availability o f accounting and objective
environmental data o f public companies should be addressed in future studies. For
example, in comparing accounting and environmental performance, more public
companies or other performance measures should be included in a study.
The philosophies o f Total Quality Management (TQM) include continuous
improvement o f work process, customer satisfaction, and total commitment of employees
of quality improvement. The integration of TQM and pollution prevention approach offer
a way to go beyond strict regulatory compliance o f environmental management to achieve
quality environmental program responsibility. This integration will better enable the firms
to improve financial and environmental performance due to the proven holistic approach
that TQM offers.
In summary, environmental management continues to present a critical business
challenge. No longer is environmental management a choice of luxury. Regulations and
consumer preferences make it a business necessity. Even a small extra step toward
prevention can provide an additional competitive edge to the firm in an aggressive, fast-
paced, dynamic global world o f business.
138
REFERENCES
Arora, S. and Cason, T. N., “An Experiment in Voluntary Environmental Regulation:

Participation in EPA’s 33/50 Program,” Jo u rn al o f Environmental Economics and
Management. Vol. 28, No. 3, 1995, pp. 271-286.
Aupperle, K. E., “An Empirical Measure o f Corporate Social Orientation,” in Preston, L.

(ed.), Research in Corporate Social Performance and Policy (pp. 27-54.), Vol. 6,
JAI Press: Greenwich, CT, 1984.
Azzone, G. and Bertele U., “Exploiting Green Strategies for Competitive Advantage,”
Long Range Planning. Vol. 27, No. 6, 1994, pp. 59-81.
Barrett, S., “Environmental Regulation for Competitive Advantage,” Business Strategy

Review. Vol. 12, No. 1, Spring 1991, pp. 24-42.
Barrett, S., “The Business Logic of Sustainable Development,” Columbia Journal of

World Business. Vol. 27, N o.l, Fall and Winter 1992, pp. 19-24.
Barrett, S., “Strategy and the Environment,” The Columbia Journal of World Business.
Vol. 27, No. 1, Fall & Winter 1992, pp. 202-208.
Beaumont, J., “Managing the Environment: Business Opportunity and Responsibility,”

Futures. Vol. 24, No. 2, April 1992, pp. 187-205.
Bennett, S., Freierman, R., and George, S., Corporate Realities and Environmental
Truths: Strategies for Leading Your Business in the Environmental Era. John
Wiley & Sons, Inc.: New York, 1993.
Bhat, V., The Green Corporation: The Next Competitive Advantage. Quorum Book:
Westport, CT, 1996.
Biddle, D. “Recycling for Profit: The New Green Business Frontier,” Harvard Business
Review. Vol. 71, No. 6, November-December 1993, pp. 145-156.
Bonifant, B. C., Arnold, M. B., and Long, F. J., “Gaining Competitive Advantage
*Through Environmental Investments,” Business Horizons. Vol. 38, No. 4, July-
August 1995, pp. 37-47.
Bringer, R. P. and Benforado, D. M., “Pollution Prevention and Total Quality

Environmental Management: Impact on the Bottom Line and Competitive
Position”, in R. Kolluru (ed.), Environmental Strategies Handbook (pp. 165-188.),
McGraw-Hill: New York, 1994.
139
Burrows, B., “Essay Review-The Greening o f Business and Its Relationship to Business
Ethics,” L o n g R ange Planning Vol. 26, No. 1, 1993, pp. 130-139.
Buzzelli, D., ‘Time to Structure an Environmental Policy Strategy,” The Journal of

Business Strategy. Vol. 12, No. 2, March-April, 1991, pp. 17-20.
Caimcross, F., Costing the Earth. Harvard University Press: Cambridge, MA, 1992.
Capra, F, and Pauli, G.. Steering Business Toward Sustainability. United Nations
University Press: New York, 1995.
Carroll, A B., “A Three-Dimensional Conceptual Model of Corporate Performance,”

Academy o f Management Review. Vol. 4, No. 4,1979, pp. 497-505.
Chen, K. H. and Metcalfj R. W., “The Relationship Between Pollution Control Record
and Financial Indicators Revisited,” The Accounting Review. Vol. 55, No. 1,
January 1980, pp. 168-177.
Clarkson, M. B. E., “Defining, Evaluating, and Managing Corporate Social Performance:

The Stakeholder Management Model,” in Post, J. (ed.), Research in Corporate
Social Performance and Policy (pp. 331-358 ). Vol. 12, JAI Press: Greenwich, CT,
1991.
Cochran, P. L. and Wood, R. A , “Corporate Social Responsibility and Financial

Performance,” Academy o f Management Journal. Vol. 24, No. 1, 1984, pp. 42-56.
Cohen, M. A , Fenn, S. A. and Naimon, J., “Environmental and Financial Performance:

Are They Related?,” Working Papers. 1996, Vanderbilt University.
Corbett, C. J. and Wassenhave, L. N. V., “The Green Fee: Internalizing and

Operationalizing Environmental Issues,” California Management Review. Vol. 36,
No. 1, Fall 1993, pp. 116-135.
Cornell, B. and Shapiro, A , “Corporate Stakeholders and Corporate Finance,” Financial

Management. Vol. 16, No. 1, Spring 1987, pp. 5-14.
Dean, T. J. and Brown, R. L., “Pollution Regulation as a Barrier to New Firm Entry:
Initial Evidence and Implications for Future Research,” Academy o f Management
Journal. Vol. 38, No. 1, 1995, pp. 288-303.
Dechant K. and Altman B., “Environmental Leadership: From Compliance to Competitive

Advantage,” Academy o f Management Executive. Vol. 8, No. 3, 1994, pp. 7-20.
Denton, D. K., Enviro-Management: How Smart Companies Turn Environmental Costs

into Profits. Englewood Cliffs, Prentice Hall: New Jersey, 1994.
140
Dieleman, H. and Hoo, S., ‘Toward a Tailor-made Process o f Pollution Prevention and
Cleamer Production; Results and Implications o f the PRISMA Project,’ in Fisher,
K. and Schot, J. (eds.), Environmental Strategies for Industry; International
Perspectives on Research Needs and Policy Implications (pp. 245-276.), Island
Press; Washington, D.C., 1993.
Dillion, P. S. and Fischer, K., Environmental Management in Corporations: Methods and

Motivations. Center for Environmental Management, Tufts University, Medford,
MA, 1992.
Dorfman, M. H., Muir, W. R., and Miller, C. G., Environmental Dividends: Cutting More
Chemical Wastes. INFORM, Inc.: New York, 1992.
Dorfman, M., White, A., Becker, M, and Jackson, T., “Profiting from Pollution
Prevention: Better Environmental Protection; Improved Economic
Competitiveness,” in Jackson, T. (ed.), Clean Production Strategies: Developing
Production Strategies: Developing Preventive Environmental Management in the
Industrial Economy (pp. 186-206.), Lewis Publisher. Boca Raton, FL, 1993.
Dun & Bradstreet, D & B Million Dollar Directory. Dim & Bradstreet Inc.: Bethelehem,
PA, Series 1990-1997.
Egan, J. T., Regulatory Management: A Guide to Conducting Environmental Affairs and

Minimizing Liability. Lewis Publishers: Chelsea, Michigan, 1991.
Elkington, J., ‘Towards the Sustainable Corporation: Win-Win-Win Business Strategies

for Sustainable Development,” California Management Review. Vol. 36, No. 2,
Winter 1994, pp. 90-100.
Environmental Protection Agency, Environmental Investments: The cost of a clean

environment. U.S. Government Printing Office, Island Press: Washington, D.C.,
1990.
Epstein, M. J., Measuring Corporate Environmental Performance: Best Practices for

Costing and Managing an Effective Environmental Strategy. Irwin: Homewood,
IL,1996.
Fink, A.. The Survey Handbook. SAGE Publication, Newbury Parle CA, 1995.
Fischer, K. and Schot, J.. Environmental Strategies for Industry: International

Perspectives on Research Needs and Policy Implementations. Island Press:
Washington, D. C., 1993.
141
FitzGerald, C., “Selecting Measures for Corporate Environmental Quality: Examples from
TQEM Companies,” in Willig, J. (ed), Auditing for Environmental Quality
Leadership: Beyond Compliance to Environmental Excellence (pp. 137-156.),
John Wiley & Sons, Inc.: New York, 1995.
Freedman, M. and Jaggi, B., “Pollution Disclosures, Pollution Performance and Economic
Performance,” Omega. Vol. 10, No. 2, 1982, pp. 167-176.
Gladwin, T., “The Meaning o f Greening: A Plea for Organizational Theory,” in Fisher, K.
and Schot, J. (ed.), Environmental Strategies for Industry: International
Perspective on Research Needs and Policy Implementations (pp. 37-26.), Island
Press: Washington, D. C., 1993.
Gravetter, F. J. and Wallnau, L. B., Statistics for the Behavioral Sciences: A First Course
for Students o f Psychology and Students. 3rd ed., West Publication Co.: St. Paul,
1992.
Green, P. E. J., “Environmental TQM,” Quality Progress. May 1993, pp. 77-80
Greeno, J. L. and Robinson, N. S., “ Rethinking Corporate Environmental Management,”

The Columbia Journal of World Business. Vol. 27, No. 3, Fall & Winter, 1992, pp.
222-232.
Gricar, B., “A Preliminary Theory of Compliance with OSHA Regulation,” in Preston, L.

Research in Corporate Social Performance and Policy. Vol. 5, JAI Press Inc.:
Greenwich, CT, 1983, pp. 121-141.
Gupta, M., “Environmental Management and Its Impact on the Operations Function,”
International Journal o f Operations & Production Management. Vol. 15, No. 8,
1995, pp. 34-51.
Hart, S., “Beyond Greening: Strategies for a Sustainable World,” Harvard Business
Review. Vol. 75, No. 1, January-February 1997, pp. 67-76.
Hart, S., “A Natural-Resource-Based View o f The Firm,” Academy of Management

Review. Vol. 20, No. 4, 1995, pp. 986-1014.
Hawken, P., The Ecology Commerce: A Declaration o f Sustainability. Haper Collins

Publishers, Inc.: New York, 1993.
Henriques, I. and Sadorsky, P., “The Determinants o f Firms That Formulate

Environmental Plans”, in Post, J. E. (ed.), Research in Corporate Social
Performance (pp. 67-97.), JAI Press Inc.: Greenwich, CT, 1995
142
Hirschhom, J. S., “Business and the Environment”, in Kolluru, R. (ed.), Environmental

Strategies Handbook (pp. 31-42.), McGraw-Hill: New York, 1994.
Hirschhom, J. S., ‘Towards Prevention: The Emerging Environmental Management

Paradigm,” in Jackson, T. (ed.), Clean Production Strategies: Developing
Preventive Environmental Management in the Industrial Economy (pp. 125-142.),
Lewis Publishers: Boca Raton, FL, 1993.
Hunt, C. and Auster, E., “Proactive Environmental Management: Avoiding the Toxic
Trap,” Sloan Management Review. Vol. 31, No. 2, Winter 1990, pp.7-18.
Hutchinson, C., “Integrating Environment Policy with Business Strategy,” Long Range
Planning. Vol. 29, No. I, 1996, pp. 11-23.
Jackson, T., Clean Production Strategies: Developing Preventive Environmental

Management in the Industrial Economy. Lewis Publishers: Boca Raton, FL.,1993.
Jackson, T., “Principles o f Clean Production: Developing an Operational Approach to the

Preventive Paradigm,” in Jackson, T. (ed.), Clean Production Strategies:
Developing Preventive Environmental Management in the Industrial Economy (pp.
143-164.1. Lewis Publishers: Boca Raton, FL, 1993.
JafFe, A. B., Peterson, S., and Portney, P. R., “Environmental Regulation and the
Competitiveness o f U.S. Manufacturing: What Does the Evidence Tell Us?”.
Journal o f Economic Literature. Vol. 33, No. 2, March 1995, pp. 132-163.
Johnson, S. D., An Analysis of the Relationship Between Corporate Environmental and

Economic Performance at the Level o f the Firm, Doctoral Dissertation. University
o f Southern California, 1995.
Kazis, R. and Grossman, R., Fear at Work: Job Blackmail. Labor and the Environment.
New Society Publishers: Philadelphia, P A , 1991.
Kemp, R., “An Economic Analysis o f Cleaner Technology: Theory and Evidence,” in
Fischer, K. and Schot, J. (eds.), Environmental Strategies for Industry:
International Perspectives on Research Needs and Policy Implications (pp. 79-
116.), Island Press: Washington, D. C., 1993.
Kirkpatrick, D., “Environmentalism: The New Crusade,” Fortune. February 12, 1990, pp.
52.
Klassen, R. D., The Implications of Environmental Management Strategy for

Manufacturing Performance. Doctoral Dissertation, University o f North Carolina
at Chapel Hill, 1995.
143
Klassen, R. D. & McLaughlin, C. P., ‘The Impact o f Environmental Management on Firm

Performance.” Unpublished Working Paper. University o f North Carolina at
Chapel Hill, 1994.
Klassen, R. D. ‘T he Integration of Environmental Issues into Manufacturing: Toward an

Interactive Open-Systems Model,” Production and Inventory Management
Journal. Vol. 34, No. 1, First Quarter, 1993, pp. 82-88.
Kleiner, A., “What Does It Mean to Be Green?” Harvard Business Review. Vol. 69, No.
4, July-August 1991, pp.38-47.
Korfiatis, G. P. & Cheremisinoff, P. N., “Environmental Technology and Engineering”, in

Kolluru, R. (ed.), Environmental Strategies Handbook (pp. 119-163.). McGraw-
Hill: New York, 1994.
Lawrence, A. T. and Morell, D., “Leading-Edge Environmental Management: Motivation,

Opportunity, Resources, and Process”, in Post, J. E. (ed.), Research in Corporate
Social Performance (pp. 99-126.1. JAI Press Inc.: Greenwich, CT, 1995.
Lee, S. M., World Class Organization in Global Age. MyungJln Publication: Seoul, Korea,
1994.
Logsdon, J., “Organizational Response to Environmental Issues: Oil Refining Companies

and Air Pollution,” in Preston, L. (ed.), Research in Social Performance and Policy
(pp. 47-71.), Vol. 7, JAI Press Inc.: Greenwich, CT, 1985.
Luthans, F., Hodgetts, R. M., and Lee, S. M., “New Paradigm Organizations: From Total
Quality to Learning to World Class,” Organizational Dynamics. Vol. 22, No. 3,
Winter 1994, pp. 5-19.
Magat, W. A. and Viscusi, W. K., “Effectiveness of the EPA’s Regulatory Enforcement:

The Case o f Industrial Effluent Standards,”, The Journal of Law and Economics.
Vol. 23, No. 2, 1991, pp. 331-360.
Mahoney, J., “Clean Firms Successful, Study Shows,” The Austin American-Statement
May 1995.
Makower, J., The E Factor. The Tilden Press: New York, 1993.
Marcus, A. A. and Goodman, R. S., “Compliance and Performance: Toward a

Contingency Theory,” in Post, J. (ed.), Research in Corporate Social Performance
and Policy (pp. 193-221.1. Vol. 8, JAI Press: Greenwich, CT, 1986.
Maloney, M. and McCormick, R., “A Positive Theory o f Environmental Regulation,”

Journal o f Law and Economics. Vol. 25, No. 2, 1982, pp.99-123.
144
Mannion, R., “Enhancing Corporate Performance Through Quality-Driven Pollution

Prevention,” National Productivity Review. Vol. 16, No. 1, Winter 1996, pp. 25-
32.
Marcil, A_ G., “Environmentally Friendly Development: Can the Private Sector Succeed
Where Others Have Failed?” The Columbia Journal o f World Business. Vol. 27,
No. 3, Fall & Winter, 1992, pp. 194-200.
Magretta, J., “Growth Through Global Sustainability,” Harvard Business Review. Vol. 75,
No. 1, January-February 1997, pp. 79-88.
Mastrandonas, A. and Strife, P. T., “Corporate Environmental Communications: Lessons

from Investors, ” The Columbia Journal of World Business. Vol. 27, No. 3, Fall &
Winter 1992, pp.234-240.
McCloskey, J. and Maddock, S., “Environmental Management: Its Role in Corporate

Strategy,” Management Decision. Vol. 32, No. 1, 1991, pp. 27-32.
McGuire, J., Sundgren, A_, and Schneeweis, T., “Corporate Social Responsibility and
Firm Financial Performance,” Academy of Management Journal. Vol. 31, No. 4,
pp. 854-872.
Mclnemey, F. and White S., The Total Quality Corporation: How 10 Major Companies
Turning Quality and Environmental Challenges to Competitive Advantage in the
1990s. Penguin Books: New York, NY, 1995.
Meznar, M. B., Chrisman, J.J., and Carroll, A. B., “Social Responsibility and Strategic
Management: Toward an Enterprise Strategy Classification,” Business &
Professional Ethics Journal. Vol. 10, No. 1, 1991, pp. 47-66.
Mitroff, I., “Crisis Management and Environmentalism: A Natural Fit,” California

Management Review. Vol. 36, No. 2, Winter 1994, pp. 101-113.
Newman, J. C. and Breeden, K. M., “Managing in the Environmental Era: Lessons from
Environmental Leaders,” The Columbia Journal o f World Business. Vol. 27, No.
3, Fall & Winter 1992, pp.210-221.
Norcia, V., “Environmental and Social Performance,” Journal o f Business Ethics. Vol. 15,
No. 8,1996, pp. 773-784.
Nunnally, J., Psychometric Theory. McGraw-Hill: New York, 1967.
Pedhazur, E. J., Multiple Regression in Behavioral Research. 2nd ed., Harcourt Brace
Jovanovich: New York, 1982.
145
Pennel, A. A., Choi, P. E., and Molinaro, L. Jr., Business and the Environment: A
Resource Guide. Island Press: Washington, D.C.,1992.
Perrings, C., “Sustainable Livelihoods and Environmentally Sound Technology,”

International L a b o u r O rganisation Vol. 133, No. 3, 1994, pp. 305-326.
Poduska, R., Forbes, R., and Bober, M., ‘T he Challenge o f Sustainable Development:
Kodak’s Response,” The Columbia Journal of World Business. Vol. 27, No. 3,
Fall & Winter 1992, pp. 286-291.
Porter, M. E., ‘Toward a New Conception o f the Environment-Competitiveness

Relationship.” Journal of Economic Perspective. Vol. 9, No 4, Fall 1995, pp. 97-
118.
Porter, M. E., “Essay : America’s Green Strategy”, Scientific American. April 1991, p.
169.
Porter, M. E. and Linde C. v. d., “Green and Competitive: Ending the Stalemate”,
Harvard Business Review. Vol. 73, No. 3, September- October 1995, pp. 120-134.
Porter, M. E. and Linde C. v. d., ‘Toward a New Conception o f the Environment-

Competitiveness Relationship,” Journal o f Economics Perspectives. Vol. 9, No. 4,
Fall, 1995, pp. 97-118.
Porter, M. E, Competitive Advantage. The Free Press: New York, 1980.
Post, J. E. (ed.), Research in corporate social performance and policy: sustaining the
natural environment- Empirical studies on the interface between nature and
organizations. JAI Press Inc.: Greenwich, CT, 1995.
Post, J. E. and Altman, B., “Models o f Corporate Greening: How Corporate Social Policy
and Organizational Learning Inform Leading-Edge Environmental Management,”
in Post, J. (ed.), Research in Corporate Social Performance and Policy (pp. 3-29J ,
JAI Press Inc.: Greenwich, CT, 1992, pp. 3-29.
Rappaport, A.. Development and Transfer o f Pollution Prevention Technology. Quorum

Books: Westport, CT, 1993.
Reynolds, L., “The Environmental Agenda,” Management Review. April 1993, pp. 25-27.
Rice, F., “Who Scores Best on the Environment?” Fortune. July 26, 1993, pp.l 14-122.
Rocco, V. A., “Environmental Business Strategies”, in Kolluru R. (ed.), Environmental

Strategies Handbook (pp. 719-745.), McGraw-Hill: New York, 1994.
146
Royston, M. G., “Making Pollution Prevention Pay.” Harvard Business Review. Vol. 58,
November-December 1980, p.6.
Sarkis, J. and Rasheed, A., ‘‘Greening the Manufacturing Function,” Business Horizon.
Vol. 38, No. 5, September-October 1995, pp. 17-27.
Sasseville, D. R., Wilson, W. G. and Lawson, R. W., ISO 14000 Answer Book:
Environmental Management for the World Market. John Wiley & Sons Inc.: New
York, 1997.
Saunders, T. and McGovern, L., The Bottom Line of Green is Black: Strategies for
Creating Profitable and Environmentally Sound Business. Harper New York,
1993.
Sayre, D., Inside ISO 14000: The Competitive Advantage o f Environmental Management.
St. Lucie Press: Delray Beach, FL, 1996.
Schmidheiny, S., Changing Course: A Global Business Perspective on Development and

the Environment MIT Press: Cambridge, MA,1992.
Shrivastava, P., “Environmental Technologies and Competitive Advantage,” Strategic

Management JoumaL Vol. 16, N o.2,1995, pp. 183-200.
Shrivastava, P., Greening Business: Profiting the Corporation and the Environment.
Thomson Executive Press: Cincinnati, OH, 1996.
Simon, F. L., “Marketing Green Products in the Triad,” The Columbia Journal of World
Business. Vol. 27, No. 3, Fall & Winter 1992, pp. 269-285.
Smart, B., Bevond Compliance: A New Industry View o f the Environment. World
Resources Institute: Washington, D .C ., 1992.
Special Topic Forum on Ecologically Sustainable Organizations (Special issue), Academy

o f Management Review. Vol. 20, No. 4, 1995.
Spicer, B. H., “Investors, Corporate Social Performance and Information Disclosure: An

Empirical Study,” The Accounting Review. Vol. 53, No. 1, January 1978, pp. 94-
111.
Spicer, B. H., “The relationship Between Pollution Control Record and Financial
Indicators Revisited: Further Comment,” The Accounting Review. Vol. 55, No. 1,
January 1980, pp. 178-185.
147
Starik, M., “Research on Organizations and the Natural Environment: Some Paths We
Have Traveled, the Field Ahead”, in Post J. E. (ed.), Research in Corporate Social
Performance and Policy (pp. 1-41), JAI Press Inc.: Greenwich, CT, 1995.
Stead, E. and Stead J., Management for a Small Planet. Sage: Thousand Oaks, CA, 1992.
Stead, E. and Stead J., “An Empirical Investigation o f Sustainability Strategy

Implementation in Industrial Organizations, in Post, J. E. (ed.), Research in
Corporate Social Performance and Policy fpp. 43-66.1. JAI Press Inc.: Greenwich,
CT., 1995.
Steger, U., “The Greening of the Board Roon: How German Companies Are Dealing with
Environmental Issues,” in Fischer, K. and Schot, J. (eds.), Environmental
Strategies for Industry: International Perspectives on Research Needs and Policy
Implications. Island Press: Washington, D. C., 1993, pp. 147-166.
Taylor, S. R., “Green Management: The Next Competitive Weapon,” Futures. Vol. 24,
No. 7, September 1992, pp.669-680.
The Environmental Resources Management (ERM) Group, Environmental Auditing:

Federal Compliance Guide. SPT: North Vancouver, B. C., Canada, 1995.
Throop, G, Starik, M., and Rands, G., “Sustainable Strategy in a Greening World:
Integrating the Natural Environment into Strategic Management,” Advances in
Strategic Management. Vol. 9, pp. 69-92.
Ullmann, A. A., “Data in Search of a Theory: A Critical Examination of the Relationships

among Social Performance, Social Disclosure, and Economic Performance of U.S.
Firms,” Academy o f Management Review. Vol. 10, No. 3, 1985, pp. 540-557.
U.S. Environmental Protection Agency, Office of Pesticides and Toxic Substances,

Supporting Innovation: A Policy Study. Government Printing Office: Washington,
D C., P. 34, 1980.
Walley, N. and Whitehead, B., “It’s Not Easy Being Green.” Harvard Business Review.
Vol. 72, No. 2, May-June 1994, pp. 145-158.
Welford, R., Environmental Strategy and Sustainable Development: The Corporate

Challenge for the 21st Century. John Wiley: New York, 1995.
Willig, J., Auditing for Environmental Quality Leadership: Bevond Compliance to

Environmental Excellence. John Wiley, New York, 1995.
148
Winn, M. I., “Corporate Leadership and Policies for the Natural Environment,” in Post J.
E. (Ed.), Research in Corporate Social Performance. JAI Press Inc.: Greenwich,
CT, 1995, pp. 127-161.
Winsemius, P. and Hahn, W., “Environmental Option Assessment,” The Columbia Journal
of World Business. Vol. 27, No. 2, Fall & Winter 1992, pp. 248-266.
Wood, D. J., “Corporate Social Performance Revisited,” Academy o f Management

Review. Vol. 16, No. 4, 1991, pp. 691-718.
Wood, R., Everything You Wanted to Know About Environmental Regulations. Region 7
Environmental Protection Agency, September 1993.
Zetlin, M., “The Greening of Corporate America,” Management Review. Vol. 79, No. 6,
June 1990, pp. 10-17.
APPENDIX A
QUESTIONNAIRE
University of Department of Management
P.O. Box 880491
N ebraska Uncoin. NE 68588-0491
Phone (402) 472-3915
Lincoln FAX (402) 472-5855
College of Business Administration
March 28,1997
To Whom It May Concern:
The Management Department at the University of Nebraska-Lincoln is conducting
an extensive research project examining corporate preventive environmental strategies and
their impact on environmental and organizational performance. The main objectives of this
study are: (1) to examine die relationship between a preventive environmental strategy and
environmental and organizational performance; (2) to identify determinants influencing
environmental management strategy; and (3) to identify implementation problems with a
preventive strategy.
This study represents the first attempt to analyze organizational performance in
relation to a control strategy versus a preventive strategy for environment. The attached
questionnaire is being sent to chemical manufacturing Anns that report their Toxic Release
Inventory (TRI) data to EPA. The Standard & Poors Compustat (SIC) code for these firms
range from 2812 to 2869. Your company’s data will be held in strict confidence. No
reference will be made to specific individuals or organizations in report. Only aggregated
results of the study will be used in the study.
Your cooperation will be very helpful to the completion of this study for building
some basis for future environmental management research. Please complete the
questionnaire and send it back to us in the attached self-addressed stamped envelop. It
takes less than 20 minutes to answer the questions. Please, retu rn it to us by April
25,1997. If you would like a copy of the final report of this study, please provide that
information in the questionnaire.
Thank you very much for your valuable time and cooperation. We look forward to
getting your input.
Sincerely,
Sang M. Lee Jong G. Yang

University Eminent Scholar Ph.D. Candidate .
Chair, Management Department
University of Nebraska- Lincoln University of Nebraska Medical Center University of Nebraska at Om aha University of Nebraska at Keamey
151
A Study of Preventive Environmental Management
Please respond to the following questions with a check or an answer. Feel free to write in comments at
any point All your answers will be kept strictly confidential and only the aggregate results of the study
will be reported. Company names will be used only to match with the EPA’s TR1 data.
L Organization Information
1. Your company’s name:__________________________________________________________
2. Yourjob title:__________________________________________________________________
3. What is your company’s approximate annual sales in dollars for 1996?
_______________________________________ dollars
4. About how many employees are there in your entire com pany or firm* that is, what is the total number
of employees including plants, divisions and branches? (include full time and part time employees but not
temporaries or contracted employees)
less than 25 100-249 ____1,000 - 4,999
2 5 -49 ____ 250 - 499 ____ 5,000 - 9,999
50 - 90 ____ 500 - 999 10,000 more
Please write down total the number o f employees?______________________________________
5. How many plants are there in your company?_____________________________________
6. What type of manufacturing process is used most often in your company?

a. Batch Process b. Continuous Process c. Repetitive Process d. Other_________
7. What is the approximate average age of the company’s production equipment?

_________________ years
8. What industry is your company in?____________________________________________
SIC code ( Standard Industry Code) ____________________________________________
9. Does your company report TRI (Toxics Release Inventory) data to EPA?
Yes No
152
IL Environmentalism Background
The following questions or statements deal with your perceptions o f environment related issues. Please
check the appropriate number indicating your degree of perception.
not at all neutral extremely
important important
1. How would you rate the importance of 1 2

environmental issues today?
2. How would you rate the importance of

environmental issues five years from now?
strongly neutral strongly

disagree agree
3. We must protect the environment even if it means 1 2 3 4 5 6 7

that some jobs in our community may be lost because of it
4. There is not much one person can do to help the 1 2 3 4 5 6 7
environment.
5. We must protect the environment even if it means 1 2 3 4 5 6

increased government spending and higher taxes.
6. Protecting the environment is so important that 1 2 3 4 5 6

it must be done regardless of cost and investment
7. People who are actively involved in groups 1 2 3 4 5 6

concerned about environmental issues are reasonable people.
8. a) Does your company have a group/department responsible for environmental issues?

Y es________ N o_________
b) Does your company have a person dedicated to dealing with environmental issues?
Yes________ N o_________
c) Does your company have a committee (board or management) dedicated to dealing with
environmental issues?
Yes________ N o_________
9. What effect do you think the current environmental regulations have had on your company’s domestic
competitive position?
_______Positive Negative No effect
10. What effect do you think the current environmental regulations have had on your company’s global
competitive position?
_______Positive_______ Negative_______ No effect
153
11. Please rale the frequency of use of the following sources in obtaining environment related information
in your company.
Not at all somewhat highly

used used used
1 2 3 4 5 6 7
a. .Newspapers
b. . Television/Radio
c. .Customers
d. . Competitors
. Government
f. . Trade Associations
& Environmental Organizations
b. . Seminars/Courses
i. . Employees
j- .Own Research
k. . Inter-organizational network on environmental issues
D_ Other
12. To what degree do you think that acting in an environmentally responsible manner would impact the
competitive advantage (or disadvantage) in your industry?
A major competitive advantage

A competitive advantage
A minor competitive advantage
Neither a competitive advantage nor disadvantage
A minor competitive disadvantage
A competitive disadvantage
A major competitive disadvantage
IIL Environmental Pressure Sources
Please rate the importance of the following possible sources of pressure on your company regarding
environmental issues. (Circle one number for each source)
not at all neutral extremely

important important
a. Customers 2 3 5 6
b. Suppliers 2 3 5 6
c. Shareholders 2 3 5 6
d. Government regulations 2 3 5 6
e. Cost of environmental controls 2 3 5 6
f. Employees 2 3 5 6
g. Environmental organizations 2 3 5 6
Of the sources of pressures listed above, which would your company rate as being the most important?
154
IV. Organizational Performance Questions
The following items may be related to the overall performance improvement of your organization from
1990 to 1995. Please indicate how well you perceive your company performed in each o f the nine areas
listed below. (Circle one number per area.)
major some minor no minor some major

reduction reduction reduction change improvement improvement improvement
1 2 3 4 5 6 7
a. Reduction in manufacturing cost

b. Improved competitive position
c. Improved plant efficiency
d. Improved public image
e. Improved product image
f. Increased product yield
g. Increased process yield
i. Increased product resale and scrap value
j. Improved product quality
k. improved productivity
V. Environmental Performance
The following items may be related to the improvement of environmental performance of your firm from
1990 to 1995. Please indicate how well you perceive your company performed in each of the areas listed
below, using the following scale.
Major some minor no minor some major

reduction reduction reduction change improvement improvement improvement
1 2 3 4 5 6 7
a. Reduction in waste consumption per unit produced

b. Increase in consumption of recycled materials per unit produced
c. Reduction in consumption of hazardous materials per unit produced
d. Reduction in the amount of chemical spills per unit produced
e. Total number of regulatory violations
f. Reduction in the amount of total emissions per unit produced
VI. Manufacturing Programs
In the last four years, to what extent has your company implemented the following manufacturing
programs?
155
not at all considered,but started to partially implementation completely

implemented not implemented implemented Implemented well underway implemented
1 2 3 4 5 6
1. CIM(computer integrated manufacturing)

2. Just-in-Time (JIT) system
3. Employee participation programs
4. Plant automation
5. Total Quality Management
6. Productivity improvement programs
7. Flexible manufacturing system (FMS)
VTL World Class Organization

Please rate your perception about the following statement
“I believe that my company has reached the level of world-class in its industry.”
strongly disagree strongly agree
1 2 3 4 5 6 7
VOL Preventive Environmental Management Strategy
According to EPA. pollution prevention is defined as source reduction and other practices in order to
achieve pollution prevention. In this study, pollution prevention specifically refers to preventive
environmental management strategy. Please respond to the following questions based on this definition.
1. Does your company have an environmental management strategy?

_________ Yes ____________No
2. Does your company implement an end-of-pipe environmental control strategy?

(For example: adding an air scrubber to a utility or industrial smokestack or a catalytic converter to an
automobile, treat water at a municipal treatment facility, and so forth.)
_________ Yes ___________ No
3. Does your company implement a preventive environmental management strategy?

_________ Yes ____________ No
4. How many plants of your firm are implementing the preventive environmental management strategy?
5. If your company does not currently have a preventive environmental management strategy, does it have
plans to implement such a strategy in the future? Yes No
6. If your answer to 5 is yes, when? 19 or 200
7. If your company has implemented a preventive environmental management strategy, please answer the
following questions. Otherwise, please skip this question and go to Section IX-Environmental
Management
Please marie X next to preventive environmental management practices implemented in your company (a).
Then indicate the sequential order of implementation beginnings with 1 as the first practice implemented,
2 as the second, and so forth (b).
156
a. Implemented b. Order of
(Please check) Implementation
) ( ) The design of clean production process technology

) ( ) The substitution of toxic materials with less toxic ones
) ( ) The development of appropriate materials
) ( ) The design of environmentally friendly products
) ( ) The development of systems of production and
consumption with low material intensities
) ( ) Equipment redesign
) ( ) Production o f Environmentally friendly products
) ( ) fOther, please specify)
DC. Environmental Management
Please indicate the degree of your firm’s implementation of the following environmental management
practices using the scale below.

implemented not implemented implemented implemented well underway implemented
1 2 3 4 5 6
Planning and Systems Analysis

1. Training and education about environmental management
2. Long-term environmental management training and education program
3. Training every worker in environmental issues.
4. Formal, well defined, written environmental policies
5. Integration of environmental issues into all planning processes
6. Maintaining a record of legislative, regulatory, and policy requirements
7. Specifying environmental objectives and consequent targets
8. Program to achieve the environmental objectives and targets
9. Written, environmental emergency response plans
10. Providing suppliers with detailed, written environmental requirements
11. Analysis of environmental Life Cycle Assessment (LCA) on major products
12. Analysis of environmental Life Cycle Assessment (LCA) for redesigning product or
manufacturing process
Organizational Structure
1. A central role of the production manager in determining the environmental policy
2. Establishing a structured process to implement policy, achieve objectives and meet goals
3. Appointment of a manager to be directly responsible for environmental issues
4. Establishing a system for rewarding effective pollution prevention ideas
5. Responsibility of everyone in the company for environmental performance
6. Employee suggestions for improving environmental performance
7. Formal teams for identifying environmental problems and opportunities and to develop
solutions
8. Procedure to ensure effective communication to employees and interested parties
157

implemented not implemented implemented implemented well underway implemented
1 2 3 4 5 6
Management Control
1. Controlling environmental documents and operations
______2. Investigating and correcting noncompliance with requirements
3. M a in ta in in g environment records
4. Consideration of long-term financial benefits of pollution, prevention effects arising from short
term capital expenditure
5. A formal audit program for environmental management system
6. Audit of environmental risks for the existing production equipment
7. Audit of waste reduction programs
8. Review of operating practices for their impact on the environment
9. Evaluation o f employees against environmental performance objectives
10. Environmental self-assessment program(ESAP)
X. Implementation Problems.
The following questions relate to prevention program implementation problems.

To what extent have you encountered the following problems in the implementation o f preventive
environmental programs? (If your company has implemented preventive strategy, please answer the
following questions. If your company has not implemented a preventive strategy, please stop answering at
this point.
not at all neutral a major

a problem problem
1 2 3 4 5 6 7
Conceptual Obstacles
1. Understanding the importance o f environment in the company policy.
2. Confusion as to the definition of prevention.
3. The idea that prevention is possible only in the long term.
4. The idea that protecting the environment is costly.
5. Inadequate explanation of factors that determine the scope and composition of waste stream
6. Resistance to change for environmental protection.
7. Meeting legal standards as the only goal.
Organizational Obstacles
1. Lack of clarity as to division and/or departmental tasks and responsibilities.
2. Lack of top management commitment.
3. Collaboration between companies in the same production column.
4. Lack of employee support
5. Lack of supplier cooperation.
6. Lack of communication within the company.
158
not at all neutral a major

a problem problem
1 2 3 4 S 6 7
Technical Obstacles
1. Very little technology has been developed from a waste and emissions prevention perspective.
2. Lack of practical demonstration of prevention technology.
3. Compartmentalization and difficulty of information on preventive technology.
4. Lack of technical personnel.
5. Lack of information.
Economic obstacles
1. Lack of financial resources.
2. Incomplete calculation and allocation of environmental costs.
Thank you for your participation. If you like to have a copy of this study results, please fill out the
following.
Name: _________________________________
Address:__________________________________
E-mail: _________________________________
APPENDIX B
CORRELATION MATRIX AMONG INDEPENDENT VARIABLES
160
Correlation Matrix Among Independent Variables
8U I8 EMPA ■KPB BACXA BACXB BACXF
SUES 1.0000 .5701 .9519 .1101 .0534 -.0929

( 70) ( 70) ( 64) C 69) ( 69) ( 68)
P= . .0 0 0 P » .0 0 0 P= .184 P= .332 P= .226
EMPA .5701 1.0000 .4901 .1427 -.0113 -.1677

( 70) ( 86) ( 75) C 85) ( 85) ( 84)
P- .0 0 0 P= . P- .0 0 0 P= .096 P= .459 P= .064
ZMFB .9519 .4 901 1.0000 .0592 .0056 -.0620

( 64) ( 75) ( 75) ( 74) ( 74) ( 73)
P « .0 0 0 P - .0 0 0 P= . P= .308 P= .481 P= .301
BACXA .1101 .1427 .0592 1.0000 .6867 .0322

( 69) ( 85) ( 74) ( 85) ( 85) ( 84)
P= .184 P= .096 P= .308 E*= . F - .0 0 0 P= .386
BACXB .0534 -.0113 .0056 .6867 1.0000 .2054

( 69) ( 85) ( 74) ( 85) ( 85) ( 84)
P= .332 P= .459 P= .481 P> .0 0 0 P= . P> .0 3 0
BACXF -.0929 -.1677 -.0620 .0322 .2054 1.0000

( 68) ( 84) ( 73) ( 84) ( 84) ( 84)
P= .226 P= .064 P= .301 P= .386 P> .0 3 0 P= .
BACXHA -.1448 -.3164 -.1113 -.0514 -.0050 .0209

( 68) ( 84) ( 73) ( 84) ( 84) ( 83)
P= .119 P= .0 0 2 P= .174 E>= .321 9= .482 P= .426
BACXHB -.1002 -.1236 -.0802 -.2012 -.0787 -.0365

( 67) ( 83) ( 72) ( 83) ( 83) ( 82)
P= .210 P= .133 P= .252 F » .0 3 4 P= .240 P= .372
BACKHC -.2809 -.3706 -.2265 -.1869 -.0804 .0194

( 67) ( 83) ( 72) ( 83) ( 83) ( 82)
P= .0 1 1 .0 0 0 P= .0 2 8 P«= . 0 4 5 P= .235 P= .431
BACK! .07 96 .0783 .0746 -.1535 -.1132 -.1026

( 68) ( 84) ( 73) ( 84) ( 84) ( 83)
P= .260 P= .240 P= .265 P= .082 P= .153 P= .178
BACKT -.0895 -.1659 -.0382 -.1627 -.1587 -.1400

( 67) ( 83) ( 72) { 83) ( 83) ( 82)
P= .236 P= .067 P= .375 P= .071 P= .076 P= .105
Notes: (Coefficient / (Cases) / 1-tailed significance)

Bold = p< -05
" . " is printed if a coefficient cannot be computed
161
SALES EMPA BOB BACXA BACXB BACXF
Q12 -.2343 -.1941 -.1413 -.2796 -.2253 -.1083

( 67) ( 83) ( 72) ( 83) ( 83) ( 82)
.0 2 8 V - .0 3 9 P= .118 V - .0 0 5 P - .0 2 0 P= .166
PRXSA .1561 .2097 .0861 -.0278 .0295 -.0819

( 68) ( 83) ( 73) ( 83) ( 83) ( 82)
P= .102 P- .0 2 9 P= .234 P= .401 P= .396 P= .232
FRXSB .0516 .1396 -.0431 .0761 .1000 .0454

( 68) ( 83) ( 73) ( 83) ( 83) ( 82)
P= .338 P= .104 P= .359 P= .247 P= .184 P= .343
PRXSC .1884 .2714 .1367 .1913 .1979 -.0208

( 64) ( 79) ( 69) ( 79) ( 79) ( 78)
P= .068 P - .0 0 8 P= .131 F> .0 4 6 V * .0 4 0 P= .428
FRESD .2084 .2929 .1665 .0992 .0554 -.1331

( 69) ( 84) ( 74) ( 84) ( 84) ( 83)
P- .0 4 3 P » .0 0 3 P= .078 P= .185 .308 P= .115
PRESF .1790 .1842 .0831 .1850 .1094 -.0089

( 69) ( 85) ( 74) ( 85) ( 85) ( 84)
P= .071 P= .0 4 6 P= .241 F - .0 4 5 P= .159 P= .468
PRESS .1292 .1065 .0901 .1737 .1998 .0995

( 69) ( 84) ( 74) ( 84) ( 84) ( 83)
P= .145 P= .167 P= .223 P= .057 P-= . 0 3 4 P= .185
Note: (Coefficient / (Cases) / 1-tailed significance)

Bold = p < .05
162
BACXBA BACXBB BACXHC BACK! BACXJ Q 12
SALBS -.1448 -.1002 -.2809 .0796 -.0895 -.2343

( 68) ( 67) ( 67) ( 68) ( 67) ( 67)
P= .119 P= .210 P » .0 1 1 P= .260 P= .236 P- .0 2 8
ZMPA -.3164 -.1236 -.3706 .0783 -.1659 -.1941

( 84) ( 83) ( 83) ( 84) ( 83) ( 83)
P - .0 0 2 P= .133 P - .0 0 0 P- .240 P= .067 P— . 0 3 9
EMFB -.1113 -.0802 -.2265 .0746 -.0382 -.1413

( 73) ( 72) ( 72) ( 73) ( 72) ( 72)
P= .174 P= .252 P - .0 2 8 P= .265 P= .375 P= .118
BACXA -.0514 -.2012 -.1869 -.1535 -.1627 -.2796

( 84) ( 83) ( 83) ( 84) ( 83) ( 83)
P= .321 P= .0 3 4 P«- . 0 4 5 P= .082 P= .071 .0 0 5
BACXB -.0050 -.0787 -.0804 -.1132 -.1587 -.2253

( 84) ( 83) ( 83) ( 84) ( 83) ( 83)
P= .482 P= .240 P= .235 P= .153 P= .076 P= .0 2 0
BACXF .0209 -.0365 .0194 -.1026 -.1400 -.1083

( 83) ( 82) ( 82) ( 83] ( 82) ( 82]
P= .426 P= .372 P= .431 P= .178 P= .105 P= .166
BACXHA 1.0000 .1205 .2380 .0117 .2223 .1232

( 84) ( 82) ( 82) ( 83) ( 82) ( 82)
P= . P= .141 P » .0 1 6 P= .458 P - .0 2 2 P= .135
BACXHB .1205 1.0000 .0618 .2490 .1555 .1249

( 82) ( 83) ( 83) ( 82) ( 81) ( 81)
P= .141 P= . P= .290 F« .0 1 2 P= .083 P= .133
BACXHC .2380 .0618 1.0000 .0494 .1318 .0792

( 82) ( 83) ( 83) ( 82) ( 81) ( 81)
Vm .0 1 6 P= .290 P= . E>= .330 P= .120 P= .241
BACK! .0117 .2490 .0494 1.0000 .6199 .2583

( 83) ! 82) ( 82) ( 84) ( 83) ( 82)
P= .458 P « .0 1 2 P= .330 P= . P » .0 0 0 P- .0 1 0
BACXJ .2223 .1555 .1318 .6199 1.0000 .3492

( 82) ( 81) ( 81) ( 83) { 83) ( 81)
P= .0 2 2 P= .083 P= .120 P— . 0 0 0 P= . P> .0 0 1
Notes: (Coefficient / (Cases) / 1-tailed significance)

Bold = p < .05
163
BACKHA. BACXHB BACXBC BACKX BACKT Q 12
Q 12 -1232 .1249 .07 92 .2583 .3492 1 .0 0 0 0
( 82) ( 81) ( 81) ( 82) ( 81) ( 83)

P= .135 P= .133 P= .241 P- .0 1 0 P- .0 0 1 P= .
PRXSA -.2677 -.3152 -.0845 -.2086 -.3077 -.1870

( 82) ( 81) ( 81) { 82) ( 81) ( 81)
P- .0 0 8 F- .0 0 2 P= .226 Pb .0 3 0 Vm .0 0 3 P- .0 4 7
F R IS B -.2637 -.0963 -.0888 .0165 -.2079 -.24 97

( 82) ( 81) ( 81) ( 82) ( 81) ( 81)
.0 0 8 P= .196 P= .215 P= .442 P- .0 3 1 Cb .0 1 2
FRXSC -.2380 -.0263 -.1799 -.0540 -.1143 -.2451

t 78) { 77) C 77) ( 78) ( 77) C 78)
P* .0 1 8 P= .410 P= .059 P= .319 P= .161 P- .0 1 5
PRZSD -.0316 .1109 -.0938 -.0176 -.0782 .0010

( 83) ( 82) ( 82) ( 83) ( 82) ( 82)
P= .388 P= .161 P= .201 P= .437 P= .243 P= .4 97
PRXSF -.0699 -.0258 -.2701 .0863 -.0659 -.0991

( 84) ( 83) ( 83) ( 84) ( 83) ( 83)
P= .264 P= .409 P » .0 0 7 P= .218 P= .277 P= .186
PRKSO -.1557 .1081 -.1382 -.0445 -.1709 -.1917

t 83) ( 82) ( 82) ( 83) ( 82) ( 82)
P= .080 P= .167 P= .108 E>= .345 P= .062 .0 4 2
Notes: (Coefficient / (Cases) / 1--tailed significance)

Bold = p < .05
Tt ft
is printed if a coefficient cannot be computed
164
PRXSA PRB8B PRESC PRXSD PRXSF PRESS
SALES .1561 .0516 .1884 .2084 .1790 .1292

( 60) ( 68) ( 64) ( 69) ( 69) ( 69)
P= .102 P= .338 P= .068 P - .0 4 3 P= .071 P= .145
EMPA .2097 .1396 .2714 .2929 .1842 .1065

( 83) ( 83) ( 79) ( 84) ( 85) ( 84)
P- .0 2 9 P= . 1 0 4 P— . 0 0 8 V - .0 0 3 P * .0 4 6 P= .167
EMPB .0861 -.0431 .1367 .1665 .0831 .0901

( 73) ( 73) ( 69) { 74) ( 74) ( 74)
P= .234 P= .359 P= .131 P= .078 P=» .241 P= .223
BACXA -.0278 .0761 .1913 .0992 .1850 .1737

( 83) ( 83) ( 79) ( 84) ( 85) ( 84)
P= .401 P= .247 P- .0 4 6 P= .185 P * .0 4 5 P= .057
BACXB .0295 .1000 .1979 .0554 .1094 .1998

( 83) ( 83) ( 79) ( 84) ( 85) ( 84)
P= .396 P= .184 P«* . 0 4 0 P= .308 P= .159 P * .0 3 4
BACXF -.0819 .0454 -.0208 -.1331 -.0089 .0995

( 82) ( 82) ( 78) ( 83) ( 84) ( 83)
?= .232 P= .343 P= .428 P= .115 P= .468 P= .185
BACXHA -.2677 -.2637 -.2380 -.0316 -.0699 -.1557

( 82) ( 82) ( 78) ( 83) ( 84) ( 83)
P- .0 0 8 P » .0 0 8 P » .0 1 8 P= .388 P= .264 P= .080
BACXHB -.3152 -.0963 -.0263 .1109 -.0258 .1081

( 81) ( 81) ( 77) ( 82) ( 83) ( 82)
.0 0 2 P= .196 P= .410 P= .161 P= .409 P= .167
BACXHC -.0845 -.0888 -.1799 -.0938 -.2701 -.1382

( 81) ( 81) ( 77) ( 82) ( 83) ( 82)
P= .226 P= .215 P= .059 P= .201 P» .0 0 7 P= .108
BACK! -.2086 .0165 -.0540 -.0176 .0863 -.0445

( 82) ( 82) ( 78) ( 83) ( 84) ( 83)
P- .0 3 0 P= .442 P= .319 P= .437 P= .218 P= .345
BACXJ -.3077 -.2079 -.1143 -.0782 -.0659 -.1709

( 81) ( 81) ( 77) ( 82) ( 83) ( 82)
P- .0 0 3 P - .0 3 1 P= .161 P= .243 P= .277 P= .062
Notes:(Coefficient / (Cases) / 1-tailed significance)

Bold = p < .05
165
PRXSA. PRXSB PRXSC PRKSD PR 18F PRXSO
Q 12 1870 -.2497 -.2451 .0010 -.0991 - . 1917

( 81) t 81) ( 78) ( 82) ( 83) ( 82)
P » .0 4 7 P » .0 X 2 P» .0 1 5 P= .497 P« .186 p - .0 4 2
PRXSA. 1. 0000 .5251 .3120 .3558 .2175 1208

c 83) ( 83) ( 78) ( 83) ( 83) ( 83)
p= - P» . 0 0 0 P» .0 0 3 Vm .0 0 0 P » .0 2 4 p= .138
PRBSB 5251 1.0000 .2334 .1795 .3438 3756

( 83) ( 83) ( 78) ( 83) { 83) ( 83)
p-> . 0 0 0 P= . Pb .0 2 0 P= .052 P » .0 0 1 p - .0 0 0
PRESC . 3120 .2334 1.0000 .2334 .4508 3388

( 78) ( 78) ( 79) ( 79) ( 79) ( 79)
p» .0 0 3 P - .0 2 0 P= . P- .0 1 9 P* .0 0 0 p» .0 0 1
PRXSD 3558 .1795 .2334 1.0000 .3045 . 1518

( 83) ( 83) ( 79) ( 84) ( 84) ( 84)
p= .000 P= .052 P- .0 1 9 P= . P> .0 0 2 p= .084
PRXSF 2175 .3438 .4508 .3045 1.0000 . 3286

( 83) ( 83) ( 79) ( 84) ( 85) ( 84)
p - .0 2 4 P> .0 0 1 P— . 0 0 0 P» .0 0 2 P= . p - .0 0 1
PRXSG 1208 .3756 .3388 .1518 .3286 1. 0000

( 83) ( 83) ( 79) ( 84) ( 84) ( 84)
p= .138 P=> . 0 0 0 P> .0 0 1 P= .084 P«* . 0 0 1 p= •
Notes:(Coefficient / (Cases) / 1-tailed significance)

Bold = p < .05
The A b b r e v ia t io n s U sed i n t h e T a b le
SALES: S a l e s Amount
EMPA: C a t e g o r ic a l E m ployee Number Q u e s tio n
EMPB: E m ployee Number
BACKA: E n v iro n m en ta l B ack grou n d Q u e s tio n #1
BACKB: E n v iro n m en ta l B ack grou n d Q u e s tio n #2
BACKF: E n v iro n m en ta l B ack grou n d Q u e s tio n #6
BACKHA: E n v iro n m en ta l B ack grou n d Q u e s tio n 8a)
BACKHB: E n v iro n m en ta l B ack grou n d Q u e s tio n 8b)
BACKHC: E n v iro n m en ta l B ack grou n d Q u e s tio n 8 c)
BACKI: E n v ir o n m e n ta l B ack grou n d Q u e s tio n 9
BACKJ: E n v iro n m en ta l B ack grou n d Q u e s tio n 10
Q 12: C o m p e titiv e A d v a n ta g e
PRESA: P r e s s u r e S o u rce (C u sto m ers)
PRESB: P r e s s u r e S o u rce ( S u p p li e r s )
PRESC: P r e s s u r e S o u rce ( S h a r e h o ld e r s )
PRESD: P r e s s u r e S o u rce (G overnm ent R e g u la t io n s )
PRESE: P r e s s u r e S o u rce (C o s t o f E n v ir o n m e n ta l C o n t r o ls )
PRESF: P r e s s u r e S o u rce ( E m p lo y e e s)
PRESG: P r e s s u r e S o u rce (E n v ir o n m e n ta l O r g a n iz a t io n s )

An Empirical Study of Impact of A Preventive Environmental Strategy On Environmental and Organization Performance in The Chemical Industry PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

An Empirical Study of Impact of A Preventive Environmental Strategy On Environmental and Organization Performance in The Chemical Industry PDF

Uploaded by

Copyright:

Available Formats

INFORMATION TO USERS

The quality of this reproduction is dependent upon the quality of the

Oversize materials (e.g., maps, drawings, charts) are reproduced by

Photographs included in the original manuscript have been reproduced

STRATEGY ON ENVIRONMENTAL AND ORGANIZATION PERFORMANCE

IN THE CHEMICAL INDUSTRY

Jong Gon Yang

Presented to the Faculty of

The Graduate College at the University of Nebraska

In Partial Fulfillment of Requirements

For the Degree of Doctor of Philosophy

Major: Interdepartmental Area of Business

Under the Supervision of Professor Sang M. Lee

UMI Microform 98I59I3

A n E m pirical S tu d y o f Im pact o f a P r e v e n tiv e E n v iro n m en tal S tr a te g y

Jong Gon Y ang

ENVIRONMENTALTAL STRATEGY ON ENVIRONMENTAL AND

ORGANIZATIONAL PERFORMANCE IN THE CHEMCAL INDUSTRY

Jong Gon Yang, Ph.D.

University of Nebraska, 1997

Adviser: Sang M. Lee

Increased environmental legislation and enforcement and customers’ pressure have

prompted many firms to use environmental challenges as a strategic competitive weapon.

Nevertheless, most managers still have reservations about the implementation of a

proactive environmental strategy on a firm’s financial performance. Therefore, this

research examines the impact of preventive environmental strategy on both environmental

and organizational performance of U.S. chemical firms.

of environmental and organizational performance; 2) to examine determinants of the

preventive environmental management strategy; and 3) to identify obstacles to

implementing preventive environmental programs. The major objective is to examine the

impact of a preventive environmental strategy on a strategic advantage.

that have implemented environmental strategies. A structured survey questionnaire was

strategy on environmental and financial performance.

consumption of hazardous materials, reduction in the amount in the amount of chemical

emissions. The other findings provide a strong relationship between preventive

environmental programs and organizational performance in terms of manufacturing cost,

investment were significant determinants of preventive programs.

always encouraged and supported me to continue to study. His academic inspiration,

professor who helped me finish this work.

me to complete my formidable task.

English is often a daunting language for an international student; therefore, I would

dissertation. Without complaint, her creative criticism greatly improved my work.

their responses were vital input for completing this dissertation.

would successfully finish this work.

CHAPTER ONE INTRODUCTION.......................................................................1

1.2 Purpose o f the Study.......................................................................................... 9

1.3 Definition of Environmental Management....................................................... 11

1.4 Definition of Preventive Environmental Strategy.............................................13

1.5 Organization o f the Dissertation.......................................................................14

CHAPTER TWO LITERATURE REVIEW......................................................... 18

2.2 Previous Research.............................................................................................18

2.2.1 Theoretical Framework of CSR (Corporate Social Responsibility)

2.3 Environmental Strategy....................................................................................38

2.4 Determinants of Preventive Strategy...............................................................45

2.5 Conceptual Model of Environmental Strategy................................................ 48

CHAPTER THREE RESEARCH METHODOLOGY......................................... 52

3.2 Development Hypotheses................................................................................ 54

3.3 Description of Data Collection........................................................................ 77

CHAPTER FOUR RESULTS AND ANALYSIS................................................ 81

4.2 Description of Survey Respondent..................................................................82

4.3 Statistical Analysis of Determinants o f a Preventive Environmental

4.4 The Relationship Between the Degree o f Implementation Programs

4.5 The Impact of Implementation Programs to Organizational Performance..... 110