Benefits Organizations Pursue when Seeking Competitive Advantage by Improving Environmental Performance

Abstract

SummaryOrganizations cognitive of the strategic risk and opportunities associated with environmental challenges may employ industrial ecology (IE) concepts, methods, and tools to develop capabilities that both enhance environmental performance and provide competitive benefits. We introduce a typology of strategic benefits related to competitive advantage that are enabled by improved environmental performance. Industry examples illustrate how organizations embed IE concepts and methods into systems to generate capabilities that deliver these benefits and configure them for competitive advantage. The examples demonstrate the idiosyncratic, path-dependent nature of capability development that helps sustain advantage, especially when competitors lack cognition of the global scope of the challenge, and the risks and benefits involved.

Ecological Consciousness, Moral Imagination, and the Framework for Strategic Sustainable Development

“…A central barrier to sustainable development in the United States is a particular construction of "freedom" premised upon an atomistic, individualistic, and competitive construction of the human and an absolutist faith in the morality of market forces (McCright & Dunlap, 2010). Such fundamentalism notwithstanding, we see no inherent contradiction between acknowledging the value of market principles and living into the sustainability principles outlined above, and in fact, many have argued the "business-case" of improving environmental performance (see, e.g., Finster & Hernke, 2014). From this perspective, and in contrast to the short-term and non-systems thinking view of self-interest, cooperation across value chains and with other stakeholder groups to arrive at dignified goals for the common good could be described as "enlightened self-interest."…”

Environmentally Responsible Supply Chains

“…The management literature suggests that a company can gain various benefits by taking voluntary actions to reduce its greenhouse gas emissions and improve its environmental performance. According to Finster and Hernke (2014), as a result of voluntary environmental commitment, a company can gain competitive advantage by product innovation, enhancing corporate reputation, and increasing market share. Finster and Hernke (2014) further suggest that such a company might have better access to capital, and benefit from a positive impact on investors' valuations.…”

“…According to Finster and Hernke (2014), as a result of voluntary environmental commitment, a company can gain competitive advantage by product innovation, enhancing corporate reputation, and increasing market share. Finster and Hernke (2014) further suggest that such a company might have better access to capital, and benefit from a positive impact on investors' valuations. Moreover, Finster and Hernke (2014) argue that a company's voluntary commitment to improve environmental impact might be beneficial to its human resources since the company's commitment for improved environmental performance might increase the motivation and involvement of the employees, and enable better access to human resources at various other institutions.…”

Industrial ecology and the boundaries of the manufacturing firm

“…Esty and Porter () conclude that although industrial ecology may result in competitive advantages due to enhanced productivity, in some cases the cost will exceed the benefits. Elaborating on this, Finster and Hernke () claim that firm‐level benefits of industrial ecology are not limited to cost reductions. On the contrary, industrial ecology is associated with several benefits, such as competence development, risk mitigation, access to new markets, corporate reputation, and brand image.…”