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Tesi etd-10222018-140139

Type of thesis
Perfezionamento
Author
TODARO, NICCOLO MARIA
URN
etd-10222018-140139
Title
What drives corporate environmental proactivity? An institutional, organizational and micro-foundational perspective on environmental strategies and operations.
Scientific disciplinary sector
SECS-P/08
Course
SCIENZE ECONOMICHE E MANAGERIALI - Management
Committee
relatore Dott. DADDI, TIBERIO
Presidente Prof. IRALDO, FABIO
Membro Prof. TURCHETTI, GIUSEPPE
Membro Prof.ssa NUTI, SABINA
Keywords
  • climate change
  • environmental management systems
  • micro-foundations
  • proactive environmental strategy
Exam session start date
;
Availability
parziale
Abstract
1. Modern challenges of corporate environmentalism: corporate engagement with climate change and the substantive adoption of environmental management practices.<br>Despite corporate environmentalism contributed enhancing companies’ environmental proactivity, the relation between business and the natural environment still entails numerous challenges. The recent mainstreaming of corporate environmentalism have revealed the limits and downsides of market-based or “win-win” environmental solutions. The assumption of coupling environmental and financial goals precludes far-reaching environmental investments that have uncertain economic benefits or high upfront costs, while incentivizing initiatives that yield certain economic outcomes in the short term but lesser environmental benefits (Slawinski et al., 2015). Similarly, narrow economic perspectives on sustainability lead to opportunistic behaviours, by incentivizing a symbolic engagement with corporate environmentalism for securing reputational benefits, while overlooking environmental improvements (Bowen &amp; Aragon-Correa, 2014).<br>Similar challenges are evident when companies confront with climate change. Climate change resulting from industrial greenhouse gases (GHG) emissions constitute a threat for society as a whole, as well as for most industries (Winn et al., 2011). Global warming threatens business productivity, it affects consumers’ patterns of consumption and it undermines the legitimacy of current production methods. Following the ratifications of the Kyoto Protocol in 1994 and the Paris Agreement in 2015, business actors have been called to implement strategies for mitigating the detrimental externalities of industrial activities on global climate, while adapting to the irreversible implications of a rapidly changing natural environment (Lash &amp; Wellington, 2007). <br>However, companies’ capacity and willingness to proactively act upon climate risks depends on a wide array of interconnected factors pertaining to the organizational, political, economic and societal spheres. Solutions to climate change often question well-established organizational practices and structures, require developing new knowledge and technologies, and challenge widespread assumptions about the role of organizations within market and institutional environments (Hoffman, 2010). At the same time, managers’ short-term thinking and limited understanding of climate science, widespread regulatory uncertainty, fickle policy support and difficulties in accessing reliable information about future climate scenario hinder climate-resilient investments and often overshadow market and business opportunities inherent in climate action (Lash &amp; Wellington, 2007; Slawinski et al., 2015). The combined effect of similar circumstances enhances the complexity of the climate change issue and hampers more radical and effective solutions from the business sector.<br>Critical views of corporate environmentalism have also highlighted that environmental proactivity driven by reputational improvements and commercial gains often result in decoupling formal organizational practices, which companies adopt for ensuring compliance with external expectations, from the operational practices actually implemented (Furrer et al., 2012). This phenomenon has been denominated symbolic corporate environmentalism and is defined as a more subtle form of greenwashing that rely on signalling misleading environmental information through the adoption of widely recognized symbols (e.g. certifications, eco-labels, visible organizational practices etc.) that are detached from actual environmental improvements (Bowen &amp; Aragon-Correa, 2014). <br>Symbolic corporate environmentalism often occurs when certifiable environmental standards, such as ISO 14001 and the Eco-Management and Audit Scheme (EMAS), are formally adopted but not effectively integrated within daily operational practices. The popularity of similar voluntary management standards has indeed contributed to a widespread diffusion of certified EMS in most industry sectors globally. However, the causal relation between the adoption of certifiable EMS and environmental improvement is often ambiguous or unconvincing (Iraldo et al., 2009; Prajogo et al., 2016). The debate surrounding the effectiveness of certifiable EMS has revealed that companies often superficially adopt management system standards for reputational or commercial purposes, while they do not substantively internalize EMS requirements in their daily management practices (Boiral, 2007). Such symbolic adoption of certifiable EMS prevent environmental improvement, but still allow companies to signal superior environmental performance within their market and institutional contexts to secure reputational and commercial benefits (King et al., 2005). Similar behaviours question the reliability of both self-regulatory environmental management tools, such as standard-based EMS, and third-party verification and certification processes, therefore challenging relevant mechanisms of modern corporate environmentalism (Dogui et al., 2014).<br><br>2. Academic debates on corporate environmentalism.<br>Corporate responses to climate change and the internalization of environmental management practices have attracted considerable scholarly attention in recent years as two distinct research fields. However, despite being apparently thematically distinct, the two phenomenon come together under the common umbrella of proactive environmental practices. The adoption of climate change initiatives and certifiable EMS are, in the majority of cases, voluntary behaviours based on organizational and managerial discretion, dictated by strategic considerations rather than coercive regulations (Aragon-Correa &amp; Rubio-Lopez, 2007). In this perspective, the two research fields can be considered as diverse research settings for a common phenomenon. Indeed, the academic debates on the dynamics and drivers underlying corporate responses to climate change and EMS adoption have been characterized by similar theoretical and empirical approaches.<br>Organizational research has mostly approached corporate environmentalism through the lenses of strategic management. This perspective ascribes similar environmental initiatives to proactive environmental strategies driven by institutional and normative pressures and organizational improvements (i.e. efficiency, organizational capabilities, market opportunities etc.) (Sharma &amp; Vredenburg, 1998; Aragon-Correa &amp; Sharma, 2003). Inherent in the strategic management discourse of corporate environmentalism is a competitive advantage argument, which revolves around the question whether “it pays to be green” and, more specifically, “when and how it pays to be green” (Bansal &amp; Hoffman, 2012).<br>Theoretically, this perspective has largely relied on institutional theory and the resource-based view (RBV) of the firm to explain how companies design environmental strategies based on developments of their external environment, both from and institutional and organizational perspective. Neo-institutional perspectives state that corporate environmental behaviour is very much a product of pressures exerted by external constituents, such as clients, competitors, regulatory authorities, trade associations etc. (Bansal &amp; Hoffman, 2012). Companies adapt practices and structures to conform to regulatory, normative or mimetic prescriptions that dictate adequate behaviours in a given field. This implies isomorphism, as more and more organizations endorse “rational myths” and conform to expected behaviour. While institutional theory provides an “outside-in” view on corporate environmentalism, the RBV of the firm provides an “inside-out” organizational perspective on how companies develop environmental strategies by leveraging key organizational capabilities that match demands of the external environment. The RBV has therefore directed attention towards the processes within the “black box” of a firm that underlie companies’ proactive environmental stances (Delmas &amp; Toffel, 2008).<br>In parallel to the strategic management perspectives, another stream of corporate sustainability research has drawn on theories of organizational behaviour and organizational psychology to study individual-level drivers of companies’ environmental behaviour. Despite being more recent and less developed if compared to institutional and organizational perspectives, this stream has contributed understanding how employees, middle and top managers’ behavioural and cognitive traits affect organizational action and contribute to corporate “greening” according to an upper echelon theoretical perspective (Aragón-Correa et al., 2004). Underlying this perspective is the assumption that organizational members’ cognitive and behavioural traits affect decision-making processes at the organizational level, influencing the selection and interpretation of strategically salient issues and, eventually, the elaboration of organizational responses (Sharma et al., 1999).<br>By means of a micro-foundational approach, similar studies have highlighted diverse forms of individual-level drivers of corporate environmentalism, such as instrumental, relational and moral drivers (Gond et al., 2017). Instrumental drivers embody power motives and self-interest or, in other terms, expectations of individual returns from engaging in particular organizational initiatives (Wijen, 2014). Relational drivers refer to individuals’ emotional features such as belongingness and sense of community, while moral drivers embody higher order needs and values that are usually defined as care-based concerns (Bansal &amp; Roth, 2000). Common examples of moral drivers include concerns for the natural environment (Bansal, 2003), prosocial values or person-organization fit (Jones et al., 2009). In addition to these typologies, micro-foundations of corporate environmentalism include sociodemographic characteristics (Galbreath, 2011), knowledge and awareness of environmental issues (Gadenne et al., 2009; Begum &amp; Pereira, 2014), managerial discretion and perceived organizational support (Cordano &amp; Frieze, 2000), and leadership style (Christensen et al., 2014). Besides identifying similar individual drivers, this growing stream of research has also provided useful insights on how to leverage, support and diffuse behavioural and cognitive drivers of proactive environmental practices.<br><br>3. Scope, structure and outline of the thesis.<br>Despite a burgeoning interest on the micro-foundations of corporate environmentalism, attempts to merge institutional, organizational and individual-level approaches to sustainability research have been scarce. However, several scholars have been pointing out that a more sustainable relationship between business and the natural environment requires overcoming both individual-level, organizational-level and contextual barriers that hinder organizational change and perpetuate unsustainable corporate behaviour (Hoffman, 2010). Indeed, according to Hoffman (2010), organizational responses to environmental sustainability issues “must emerge from an alteration of the organizational system, reaching deep into the levels of the core beliefs and values that members hold towards the relationship among the organization, the market and the natural environment”. In this perspective, applying only a single theoretical perspective to corporate environmentalism is likely to provide an incomplete picture of the phenomenon and a limited understanding of its complexities. Therefore, as stated by Bansal &amp; Roth (2000), “applications of organization theory within work on organizations and the natural environment necessitate and facilitate the bridging of theories that are often treated independently”.<br>The present thesis aims at answering previous calls for more integrative theoretical approaches to corporate sustainability research. To this aim, the thesis contributes to a more systematic understanding of the theoretical underpinnings of some of the most relevant challenges in modern corporate environmentalism, namely corporate engagement with climate change and the substantive internalization of certifiable EMS. Furthermore, the thesis contributes advancing organizational research on the drivers of corporate responses to climate change and certifiable EMS internalization by merging the strategic management perspective with insights from behavioural and cognitive research on proactive environmental corporate behaviour. <br>Accordingly, the thesis tackles two distinct corporate sustainability issues to fulfil a dual objective:<br>1. Providing a comprehensive and systematic understanding of the theoretical perspectives that have characterized organizational research on corporate responses to climate change and certifiable EMS adoption, in order to identify dominant research approaches and highlight theoretical gaps;<br>2. Investigating drivers of organizational responses to climate change and certifiable EMS internalization, by merging institutional and organizational approaches with a micro-foundational perspective on the individual-level drivers of corporate environmental behaviour.<br>To achieve such objectives, two thematic sections compose the thesis. The first section, i.e. Chapter 2 and Chapter 3, tackles the topic of organizational responses to climate change, while the second section, i.e. Chapter 4 and Chapter 5, focuses on certifiable EMS and the substantive internalization of EMS requirements. In each section, the first chapter is dedicated to a systematic theoretical literature review, while the second chapter is an empirical study based on a quantitative methodology. <br>The two theoretical literature reviews aim at introducing the topics of the thesis, by outlining extant literature on corporate responses to climate change and EMS, while mapping the most prominent theoretical frameworks and perspectives on such phenomenon. In particular, each theoretical review provides a classification of management theories and perspectives / units of analysis that have been applied to research in these fields in order to highlight theoretical gaps, avenues for further research and unprecedented opportunities for combining different theoretical frameworks. Consequently, the empirical studies contribute filling the research gaps previously identified, by investigating drivers of corporate responses to climate change and EMS internalization both from an institutional and organizational-level perspective, as well as from an individual-level perspective on the cognitive and behavioural drivers of pro-environmental behaviour in the organizational context.<br>In the first section of the thesis, Chapter 2 is titled “A systematic review of the use of organization and management theories in climate change studies”. The chapter reviews climate change literature in order to classify, describe and discuss the most prominent theoretical contributions of climate change studies in the business management field. The theoretical review highlights the strategic management perspective as the dominant approach to corporate responses to climate change and confirms the dominant role of neo-institutional and stakeholder theories in this research field. On the other hand, behavioural and cognitive approaches to organizational responses to climate change are almost non-existing, despite psychological and behavioural theories (such as theory of planned behaviour and prospect theory) are diffused among consumer studies. Drawing on such observations, Chapter 3 develops and test a model of organizational responses to climate change that merge the neo-institutional and strategic perspective with insights from behavioural theories, such as sense-making theory and theory of planned behaviour. This chapter is indeed titled “Merging strategic and behavioural perspectives on corporate responses to climate change: institutional, organizational and individual drivers of climate action in the Italian manufacturing industry”. Drawing on data from a sample of Italian manufacturing companies, the chapter sheds light on the individual-level dynamics through which regulatory and market pressures, as well as climate risk exposure, drive proactive corporate responses to climate change. The study points out organizational factors as managers’ discretion and availability of resources as important antecedents of corporate engagement with climate change in contexts characterized by institutional and market pressures. On the other hand, individual-level variables do not emerge as relevant antecedents.<br>The second section of the thesis shifts the focus on certifiable standard-based EMS, with a particular attention on ISO 14001 and EMAS. In particular, Chapter 4 – titled “Organization and management theories in environmental management systems research: a systematic literature review” – provides a theoretical review of the literature on certifiable EMS. The study highlights that despite the extensive empirical literature, academic research on ISO 14001 and EMAS remains characterized by a technical and pragmatic connotation. As in the case of climate change studies, strategic management theory emerges as the dominant outlook on standard-based environmental management. Accordingly, institutional and organizational-level perspectives are most common in this research field, therefore the individual-level dynamics underlying the adoption and effectiveness of certifiable EMS in the organizational context are widely overlooked. To contribute filling this gap, Chapter 5 advances a multi-level perspective on the contextual antecedents of substantive or symbolic internalization of certifiable EMS. This study – titled “Endogenous and exogenous contextual determinants of environmental management system internalization” – investigates data from an extensive survey of European ISO 14001-certified and EMAS-registered companies, to test the influence of exogenous and endogenous contextual factors on internalization. Drawing on Bansal &amp; Roth (2010) model of ecological responsiveness and Ocasio’ attention-based view of the firm (Ocasio, 1997), the model combines factors pertaining to companies’ institutional environment, such as stakeholders’ environmental concern and governmental regulatory incentives for certifiable EMS adoption, with individual-level variables pertaining to environmental managers’ cognitive traits and mental models. The results suggest that cognitive and behavioural approaches to the research in the environmental management field are promising, highlighting managers’ cognitive traits as influential in EMS internalization processes.<br>Lastly, Chapter 6 discusses some conclusive remarks, highlighting the contributions of the present thesis to organizational research on corporate sustainability, to managerial practice and to policy-making on voluntary environmental management.<br>
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