Frame of Reference
This section presents the frame of reference for the thesis. The frame of reference includes existing research within the fields of green management, green supply chain management, environmental management systems, and corporate green sustainability.
Small and Medium Sized Enterprises
To guide the understanding of what companies this paper will pursue so that the result from the empirical findings will align with this thesis purpose, a definition of SME is necessary. In 2009, around 99 percent of the trading industry in Sweden consisted of SMEs (Svenskt Näringsliv, 2009). The commission of European communities define SMEs as “made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding EUR 50 million, and/or an annual balance sheet total not exceeding EUR 43 million” (Official Journal L 124, 20/05/2003 P. 0036-0041, 2017). This is a generalization which covers many different types of companies under the definition of SME. Under SMEs, three different types of companies exist; micro companies, small companies, and medium sized companies.
If a company has below 10 employees and has a turnover that does not exceed EUR 2 million than it is what is called a micro company (“Official Journal L 124, 20/05/2003 P. 0036-0041”, 2017). Micro companies will not be used in this thesis since the size of the company is to small and will not generate as good information as bigger companies would. It is the belief of the researchers that a company of this size would not have implemented green management to the same extent as a bigger company would have as the systems and procedures are better developed for a bigger company who has been in business for a longer period.
Defines a company/enterprise with between 50 and 10 employees and has a turnover that is below EUR 10 million (“Official Journal L 124, 20/05/2003 P. 0036-0041”, 2017). Similarly, to the micro companies, a small company will not be considered due to its small size. In short, these two types will not generate as much relevant information as bigger companies will.
Small and Medium-Sized Company
Is our main target group and is defined as a company/enterprise with under 250 employees with a turnover below EUR 50 million (“Official Journal L 124, 20/05/2003 P. 0036-0041”, 2017) The chosen category will be small and medium sized companies and will provide a larger group of companies to choose from, which is one of the reason as to why it has been chosen. The second reason is related to the organizational structure and its processes. A small and medium sized company has already established systems and procedures in how it works, which creates a more suitable environment for the implementation of green managemen
The concept of green management is a new organizational strategy which aims to achieve green and sustainable practices throughout an organization with visible result, both financially and in the impact towards the environment (Skibinska & Kott, 2015). Shu, Zhou, Xiao, & Gao (2014) defines green management as:
“a firm’s systematic managerial practices for addressing environmental issues through environmental protection and minimizing the negative environmental impact of the firm’s products throughout their life cycle”.
They also present two major practices that green management include. These are: (1) environmental management, which refers to the protection of the environment as well as its resources. (2) operational effectiveness in a company’s energy consumption and other activities related to its processes. Alfred and Adam (2009) further builds on this definition and goes into more depth on how different companies have adopted green management. They argue that it can be through new products and services, developing control systems to monitor and measure performance, or meeting and maintaining government regulations.
The involvement of managers is another essential part of the implementation of green management and they need to, in an early stage, establish core values (Kurland & Zell, 2011) and green competencies (Alfred & Adam, 2009) to best succeed. The core values should be clear and communicated in such a manner that it is comprehensible to all stakeholders of the organization. It is important that all stakeholders believe and follow these values, otherwise it would prove difficult to create green competencies, which is the next step according to Alfred and Adam (2009). Green competencies are essentially a knowledgeable and flexible workforce who understands and work actively to follow the company’s code of conduct (Alfred & Adam, 2009; Kurland, & Zell, 2011). This is the core of what research has defined green management as and represents the essential practices that need to be in place for it to work effectively.
Motivations for pursuing green management differ. Bansal and Roth (2000) present 3 major motivators for companies to go green: competitiveness, legitimation, and social responsibility. Competitiveness is the goal to create a competitive advantage through a company’s environmental initiatives. Green management is in this sense seen as a business opportunity. They argue that the goal is to increase profits and market share from the value created when the company reduces its environmental impact. Legitimation regards acceptance and compliance. A company is motivated by survival and to follow the general norms and legislations from company stakeholders and governmental agencies. A lot of its efforts is aimed to satisfy major stakeholders in order prove legitimacy, so there is no tendency for these companies to go the extra mile but rather to do what is needed. The more ethical motivational factor is social responsibility which is described as companies pursuing green management because it is the right thing to do. Companies can of course be motivated by one, two, or all factors depending on what their values are.
Green Management Principles
Kurland and Zell (2011) developed 10 managerial principles by interviewing 30 different sustainable managers from 20 different industries. From this they developed 10 principles that in their mind, a sustainable manager must undertake to reach the environmental goals of the company. While all the principles are important to possess as a sustainable manager the research paper will only focus on, and further explain three of these: (1) Managers should establish their company’s green values (2) Managers should formulate and execute green goals (3) Managers should establish metrics to ensure compliance. These principles were chosen due to them being the most relatable to SMEs and that they are strongly connected to each other. While these principles are directed to a more general audience, it can still be applicable to companies in the logistic industry since they describe what is necessary to have a strong foundation to applying green practices and setting green goals.
Principle one: Managers Should Establish their Company’s Green Values
This principle regards the implementation of green values in the company’s core values. Kurland and Zell (2011) highlight the importance of not only having green core company values, but also green personal values. They mentioned that this can be achieved through having a mental model that has environment and sustainability as a focus. Through setting personal values regarding environmental friendly practices they argue that managers can more easily implement it further into the corporation if they stand with these values. This can make the company’s green goals become clearer and therefore be easily transmitted through the entire organization.
Principle two: Managers Should Establish and Execute Green Goals
This principle ties in well to the first one that has been selected. By clearly stating the company’s green values, the next step would be to create green goals for the company to reach. Here Kurland and Zell (2011) bring up that managers responsible for the sustainable development must be involved in the goal setting. These goals must cover certain areas such as how to make their operations, products and services green. This can be done through the installation of certain energy saving devices through the company’s facility, reducing the waste, and removing the use of certain materials that generate substantial emission (Kurland and Zell, 2011)
Principle three: Managers Should Establish Sustainability Metrics to Ensure Compliance
This principle is in a sense needed for the second principle to be as effective as possible. Kurland and Zell (2011) identified several key points that managers can follow to ensure that they follow this principle. The first one was to think of the product in terms of its life cycle. By considering what exactly goes into their value chain and measure every step of its environmental impact. Through this companies can identify several factors that might have a larger influence and find ways to reduce it. The second point that they bring up is to know what can be measured in the organization to fulfil environmental goals. By looking at actual factors that can be used as metrics gives the company a more realistic goal. The third point is directed to ask the company regarding their appetite. The authors mean that companies need to identify exactly where their environmental impact comes from. By knowing the source, the company can easily set up goals to lower its environmental impact.
Two conceptual models for pursuing green management
Ali Hosseini (2007) created two models that identifies factors which can assist companies in the adoption of green management systems. His theoretical framework is related to two aspects: environmental systems and management systems. One of his research goals was to create a clear framework for companies to follow to implement an environmental management system, not unlike green management. While his empirical findings were mostly based on the transportation industry, he still argued that this framework could be applied to any company within the logistic industry with some minor alterations to fit their business focus. From his empirical findings, he created two different models: the first one was a process model and the second was a goal-oriented model. Both models will be used in this thesis and are thoroughly explained below.
Process Model for Green Management and Productivity
The first model (shown in figure 1) focuses on three major areas: Environment Consideration, Voice of Customer, and Profitability. The environmental consideration brings up factors such as standards, government regulations, and regional and international regulations. These factors are important because these are some of the base rules that the company must follow, but it is also important to know that doing more than what is required can also be beneficial to the company. The second area, which is the voice of the customer, revolves around how the company can be more environmental friendly in the eyes of customers. By having clear information that can be communicated well can reassure externals that the company is doing what is necessary, and even more, to reduce their environmental footprint. The last area displays the importance of also having profit, which is the primary driver for companies. This part ties in with the principles that will be used in this thesis. By looking at the different factors that goes into creating a product or conducting business operations, companies can identify sunk costs or just unnecessary inputs that creates costs and have a heavier impact on the environment.
Goal-Oriented Green Conceptual Model
The second model created by Hosseini (2007), is designed with a focus on reaching goals for green management. The model has four levels with the core focus being optimization and productivity as shown in figure 2 below.
The first level regards the inputs on a basic level for the company. The different inputs are: raw material, energy consumption, information, data, knowledge, manpower, and ergonomic machinery and equipment and tools. The overall theme of the first level regards to how exactly some of the basic properties of a logistic company needs to use effectively. It underlines the importance of proper raw material use to make sure that by handling certain operations efficiently could potentially reduce both waste and costs, which would increase a company’s profits and reduce the environmental footprint that the company has. The second level is regarding processing and operations which includes: designing, material handling, mismatched facilities, safety performances, proper techniques and coordinated work, good utilization of facilities. This level focuses more on a proper utilization of the facilities that the company uses. It highlights the importance of coordinating the work in those facilities and using effective techniques to reach maximum productivity. The third level consists of outputs, which are: planned rendering services, high services quality, information and knowledge, security and healthy for citizens and customers and for line and staff employees. The fourth and final level is about other affected variables. The factors on this level are: green culture, use of green techniques and tools, external and internal recovery, and international regulations, value systems.
From this goal-oriented model, Hosseini (2007) draws on three different dimensions and their factors which are:
- Environmental considerations: Environmental standards, government policies, and international policies
- Productivity (reducing costs): raw material, energy, information, material handling, usage technology and procurement
- Voice of customer: ergonomic (anthropometry and physiology), communication and interaction, aesthetics, securities and healthy, designing.
These dimensions are inspired from the process model for green management and productivity and covers the three areas that are significant to have in consideration when pursuing green management through goals. The focus on goals in relation to these dimension is what separates the conceptual model from the productivity model
1.1 BACKGROUND .
2. FRAME OF REFERENCE
2.1 SMALL AND MEDIUM SIZED ENTERPRISES .
2.2 GREEN MANAGEMENT
2.3 GREEN MANAGEMENT PRINCIPLES
2.4 TWO CONCEPTUAL MODELS FOR PURSUING GREEN MANAGEMENT
2.5 GREEN SUPPLY CHAIN MANAGEMENT
2.6 ENVIRONMENTAL MANAGEMENT SYSTEMS
2.7 CORPORATE GREEN SUSTAINABILITY STRATEGY MATRIX
3.1 RESEARCH PURPOSE
3.2 RESEARCH APPROACH
3.3 DATA COLLECTION
3.5 ANALYSIS OF DATA
4. EMPIRICAL FINDINGS
4.1 FINDINGS FROM CONSULTANT
5.1 INTERNAL FACTORS
5.2 EXTERNAL FACTORS .
7.3 SUGGESTIONS FOR FUTURE RESEARCH
LIST OF REFERENCES
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