A Quantitative Decision Model Towards Maximizing Organizational Sustainability

Abstract

iv In today's rapidly changing global world, the sustainability of an organization depends not only upon its financial performance, but also upon its environmental and social performance. It is suggested that policy makers, and corporate and engineering managers integrate economic, environmental and social objectives i.e., the triple bottom line (TBL) into their overall strategic plan and consider these objectives in their decision making. Investment planning and capital budgeting decisions play a critical role in aligning an organization with its economic, environmental and social strategic objectives. This research introduces a new decision making tool that integrates both financial and non-financial performance measures into the process of investment planning and capital budgeting via the TBL. It makes use of stakeholder theory for group decision making, analytic network process (ANP) as a decision support tool and stochastic linear programming to create an optimal investment portfolio. This new tool evaluates and prioritizes a set of projects and creates a long-term balanced investment portfolio based upon the perspectives and priorities of the stakeholder groups and decision makers. It can assist decision makers with developing and making proactive decisions which support the strategy of their organization with respect to economic, environmental and social issues, ensuring the sustainability of their organization in the future. To create a sustainability culture both in academia and business environment, and to encourage communities for sustainable development, a real life application of the developed tool is provided through coordination with Sustainable Pittsburgh and Cranberry Township business leaders. Table 3: Internal rate of returns (IRRs) of project alternatives during recession and boom times 48 Table 5: SRR values of the project alternatives (calculated by using the overall weights shown in Table 4 Conventional management tools and performance measures driven by economic rationality and profit maximization are relatively inadequate and poor in today's global conditions since they not only isolate or ignore the environmental and social impacts of organizational activities, but also consider only the local concerns and lack a global thinking perspective. In today's business environment, it is relatively easy to identify companies which are considered to be "big polluters." For instance, during the last three years, serious This dissertation is organized in the following way. First, the problem and related major research questions are presented. Second, background information is given about management and organizational sustainability, stakeholder theory, the TBL sustainability index system, analytic hierarchy process (AHP) and ANP, and stochastic linear programming. The proposed management tool and its assumptions are then discussed, followed by an illustration using the U.S. electric utility industry. A real life application of the tool is provided by working with Sustainable Pitts...

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