Abstract Number: 003-0262

Abstract Number: ?

Implementing Environmental Metrics: A Field Study

Sixteenth Annual Conference of POMS, Chicago, IL, April 29 - May 2, 2005.

Frank Montabon
Iowa State University
College of Business
2340 Gerdin Business Building
Ames, IA 50011-1350

(515) 294-1208
Fax: (515) 294-2534 / Robert Sroufe
Boston College
Wallace E. Carroll School of Management
Fulton Hall, 140 Commonwealth Ave.
Chestnut Hills, MA 02167-0433

(617) 552-0469
Fax: (617) 552-0433 / Steve Melnyk
Michigan State University
Eli Broad Graduate School of Management
Department of Marketing and Supply Chain Management
East Lansing, MI 48824

(517) 353-6381
Fax: (517) 432-1112

Authors:

Frank Montabon

Iowa State University

College of Business

2340 Gerdin Business Building

Ames, IA 50011-1350

(515) 294-1208

Robert Sroufe

Boston College

Wallace E. Carroll School of Management

Fulton Hall, 140 Commonwealth Ave.

Chestnut Hills, MA 02167-0433

(617) 552-0469

Steve Melnyk

Michigan State University

Eli Broad Graduate School of Management

Dpt of Marketing and Supply Chain Management

East Lansing, MI 48824

(517) 353-6381

AbstractImplementing Environmental Metrics: A Field Study

This paper describes a research project involving embedded environmental metrics. The primary research questions addressed by this project include: 1) what metrics-related strategies and tactics can be identified that facilitate the adoption, acceptance, and use of environmental management practices; and 2) how do these strategies and tactics vary according to the specific type of firm, or management level in which the activities are taking place? This project is currently in-process. This paper will describe the theoretical background of the project, the field study methodology being employed and results from the qualitative analysis. The preliminary results of a large scale survey will also be reviewed in order to compare them to the qualitative results.

Outline of paper using Management Decision paper as foundation:

·  Introduction

·  Lit review

-  Research questions (based on abstract submission)

1) what metrics-related strategies and tactics can be identified that facilitate the adoption, acceptance, and use of environmental management practices; and

2) how do these strategies and tactics vary according to the specific type of firm, or management level in which the activities are taking place?

·  Model

·  Methods

·  Firms

·  Findings

***FM: How much about the web survey do you want to discuss?

Good question as I do not want to fully let the cat out of the bag regarding our low response rate. We can set up a methodology paragraph or two regarding what happened on the outbound side (mailings) without fully disclosing the number of responses (still in process).

Implementing Environmental Metrics: A Field StudyManagement’s Attitudes and Effects regarding Environmental Metrics Systems

Abstract ***FM probably replace this with abstract we submitted or slight variation therof

This paper uses a series of applied qualitative interviews with multiple managers at major firms to investigate their environmental metrics systems. In particular, we focus on the effects management has on the implementation and use of environmental metrics. The idea that top management support is necessary for any project or program to succeed is very well established in the literature. This paper looks to see if this phenomenon holds for environmental metrics, which are clearly infused with corporate social responsibility and will impact both internal and external reporting. The results of this study show a difference between top management and lower level employee perceptions of metrics. The results also support the need for management support when establishing and using environmental metrics and provide some insight into what is needed to close the gap between different management levels.

Keywords:

Environmental metrics

Environmental management system

Expectancy theory

Program implementation


Introduction

Improved environmental performance is becoming increasingly important, yet simultaneously difficult to research since access to internal systems and data is hard to obtain. Managers are becoming aware of the potential offered by improved environmental performance beyond reducing pollution, and of the “win-win” model presented by Porter and van der Linde (1995). Stakeholders such as corporate investors, creditors, customers, regulators, and environmental interest groups are also becoming interested in corporate environmental performance since the level of pollution produced by the firm affects these groups either directly or indirectly. Researchers interested in the growing field of environmental performance find theory development and the ability to explain or predict phenomena is difficult without access to reliable data. As this interest in environmental performance increases, there is a commensurate increase in the need for performance measurement as delivered by environmental metrics systems. The functions provided by performance measurement include not only measurement (how well are we doing), but also clarification and direction (what is meant by environmental performance, goals), and identification of opportunities for improvement (by identifying those areas where there is a gap between the actual and targeted performance).

The need for improved environmental performance and the accompanying metrics introduces its own set of problems. The first is that these metrics must meet the needs of several diverse groups. The metrics created by governmental regulations become drivers for business managers, which in turn become drivers for shop floor personnel. Metrics will have different implications for stakeholders at all levels of the firm, both internally and externally. Second, there is the problem of how to introduce new metrics into the existing set of metrics. If the addition of these metrics makes the resulting set of metrics too large, then the result may be confusion, frustration, and a movement towards doing only enough to meet the minimum requirements.

The purpose of this study is to use qualitative data collection methods to identify and examine differences in the perceptions of environmental metrics at different levels of firms and to try and answer two basic research questions:

1) whatWhat metrics-related strategies and tactics can be identified that facilitate the adoption, acceptance, and use of environmental management practices; and

2) howHow do these strategies and tactics vary according to the specific type of firm, or management level in which the activities are taking place?

The use of qualitative data collection helps to describe differences in a firm’s adoption of environmental metrics. Our intention is to investigate whether a gap exist between how different levels of management perceive metrics and what the effects of this gap are upon the efficacy of the environmental metrics system. Because a well developed set of theories regarding perceptions of environmental metrics is lacking, the research includes field studies and qualitative data collection. The research team visited several companies considered leaders in environmental management, and this study uses an applied qualitative approach to our research and findings. The following sections of the paper introduce the theory driven approach to a conceptual model for motivating employees, discuss the qualitative methods for the development of our interview protocol, summarize relevant findings and then discuss implications and future research.

Theoretical Background

Researchers in many fields have considered the role of culture (Wehrmeyer and Parker, 1996), training and education (Dechant and Altman, 1994) and the importance of measurement systems (Brown and Dray, 1996) for encouraging environmental activities in the workforce. However, outside of Chinander (2001) little research has been reported that has studied the role of measurement, monitoring, and managing environmental processes. This gap in the literature provided the opportunity for the development of this research and the examination of contextual variables such as management perceptions of metric systems to determine the relative effectiveness of managing environmental processes, metrics and systems.

For this study, a conceptual model and posited relationships are based on modified models of worker motivation. Previous research by the authors (Sroufe, Curkovic, Montabon and Melnyk, 2000) had indicated that motivation is a result of corporate culture and formal systems for performance measurement. In order for appropriate actions to occur, motivational theory, specifically Vroom’s expectancy theory (1964), claims that workers are motivated to take action based on what they believe the result will be of a certain action, and how they will be rewarded or penalized for the resulting outcome, and finally what value they place on the reward or penalty. Workers will choose those actions in which the resulting outcomes will give them the highest valued reward. In this research, Vroom's expectancy theory and Chinander's (2001) work involving accountability, awareness and performance are applied to modeling the exemplary operational infrastructures for good environmental performance. Additional support for the conceptual model and posited relationships comes from the emerging field of environmental management in operations as described below.

Chinander (2001) applied Vroom’s expectancy theory in a case study of a firm in the steel industry to determine what infrastructural attributes exist in terms of each element of Vroom’s model (expectancy, instrumentality, and valence), and if sufficient motivation was in place to achieve the desired environmental performance. Chinander also investigated whether or not varying levels of the firm (i.e. top management, middle management, and foremen) had consistent beliefs about the infrastructural elements in regards to environmental performance, and found that there was a disconnect between top management beliefs and operating personnel beliefs about the level of accountability for environmental performance. This disconnect between management levels is generally supported by Levinson (2003) and more specifically by Austin (1996), Melnyk, Sroufe, and Montabon (2001) and Argyris (2000) in that top management in firms often believe that certain policies are in place (espoused theories) but in fact what is actually in place is something different (theories in use), resulting in possibly less than optimal outcomes. For this study, we propose that firms who can narrow the gap between what management believes to be in place, and what lower level management believes, will improve their environmental performance, assuming that high levels of each of the motivational elements is also present.

Conceptual Model

This paper is part of a larger research project on embedded environmental metrics. The conceptual model guiding the research project is shown below and based on previous research projects (Sroufe, Chinander, Montabon, Jayaraman, and Melnyk, 2005). This new conceptual model maps into previous models regarding environmental technology strategies and competitive advantage by Shrivastava (1995) and Klassen and Whybark (1999). The proposed model is similar to Shrivastava’s in that vision and expectancy both acknowledge environmental responsibilities, inputs and monitoring involve controlling and reporting, throughputs and consequences involve accountability, and finally outputs and performance both involve better environmental performance. Additional support for our model can be found in Klassen and Whybark’s (1999) conceptual model of environmental management in operations management. Parallels to the new conceptual model can be drawn between Klassen and Whybark’s (1999) environmental orientation and environmental management systems (Sroufe, 2003) and the use of these systems to measure and monitor workforce performance. For those firms involved in these types of measuring, monitoring, and management activities, the rewards for such efforts should be found in improved total quality management, industrial ecology, manufacturing for the environment, and environmental performance.

A key element of our model is the relationship of communication and top management’s importance of environmental performance to monitoring. Expectancy helps to drive monitoring, which drives consequences and environmental performance. Therefore, expectancy, monitoring, and consequence are important to the success of firms engaged in environmental business practices. Expectancy theory is but one foundation for measuring, monitoring, and managing environmental management systems to motivate employees to take the best action that will positively impact a firm’s environmental performance. This paper is primarily concerned with the “Top Management Importance of Environmental Performance” construct. The effect of top management’s attitudes and actions towards metrics and environmental issues will be the focus on this investigation.

Research Methodology

Currently, there is a dearth of information regarding the implications of management perceptions of environmental metricsthe strategies and tactics used to adopt environmental management practices. Because a well-developed set of theories regarding this particular branch of knowledge does not exist, Eisenhardt (1989) and McCutcheon and Meredith (1993) suggest that theory-building can best be done through case study research. The method followed was similar to the grounded theory development methodology suggested by Glaser and Strauss (1967), Miles and Huberman (1994), and Yin (2003). While causality can not be shown in case studies, analysis of data collected from field research can help support the development of theory and the generalizability of results (Miles and Huberman, 1994).

The researchers in this project relied primarily on the methods of qualitative data analysis developed by Miles and Huberman (1994), which consists of anticipatory conceptual model development and simultaneous data collection, reduction, display, and conclusions testing. Based on the conceptual model, an interview protocol was designed. This protocol included questions that were mapped to the constructs in the model. The interview protocol was developed based on the researchers’ understanding of environmental issues facing industry in general and environmental metric systems specifically. The protocol was pre-tested both with environmental managers from previous studies and academic colleagues. The pretest consisted of first sending the protocol and then interviewing the respondents regarding the appropriateness and clarity of the questions. Respondents provided verbal comments that helped to validate the appropriateness of the protocol. When necessary, grammatical or structural changes were made to the protocol after the pre-test. The resulting protocol was eight pages long and contained thirty multi-part questions.

Next, a list of potential interview candidates was constructed. Environmental management systems can be described as being a relatively new phenomenon for firms in the United States. This early stage of development has several important implications when viewed from the innovation adoption framework developed by Moore (1991). In this generalizable framework, Moore identified five major groups of new technology adopters: innovators, early adopters, early majority, late majority, and laggards. Applying this framework to the current study, One can our a priori belief was argue that the first three categories of adopters are the most likely to adopt an environmental management system and formal environmental metrics. The Thus, we firms targeted for our field studies are examples of the three types of firms lying on one side of the chasm (Innovators, Early Adopters, and Early Majority)wanted to targeted firms we believed to bethat we believed were in innovators, early adopters, and early majorityone of these categories..