Environmental Engineering Reference
In-Depth Information
gies, innovating in the conception of products and
services to renovate its leadership. Companies
need to influence, to their own advantage, the
competitive environment, adapting their resources
and competences, innovating and catching up
with external influences, to continuously revise
their strategic choices (Serge Edouard, 2007). A
renewed strategy theory described among oth-
ers by Gary Hamel and C.K Prahalad consists
to consider, not only the company position in
the competitive environment but its strategic
intention, leading to “strategic ruptures”, as the
company will not follow the usual rules in force
in the considered sector but rather redefine and
impose the new rules of game.
These approaches question the “top-down”
declination of strategies in firms, based on com-
petitive market environment analysis. It paves the
way for considering the value proposed to buyers
and the intangibles associated with it, but also the
involvement of the bottom of organization, the
new conception in the innovation processes, not
only including innovations in products or services
but also in management and social organizations
(e.g. Jim Collins, 1997). The environmental and
social crisis (like Erika, Enron… etc.), the global
environmental problems (including pollution,
climate change, resources depletion) and the
increased pressure of a large set of stakeholders
are part of the new factors to be considered in the
conception of strategies. According to Martinet
and Reynaud (2001,2004), the predominance of
the “shareholder value” enabling the shareholder
to play a leading role in the definition of corporate
strategy give way to an approach based on “the
stakeholder value”. The expectations of a broader
set of actors lead to reconsider the position of the
firm and its strategic management. Environment
is therefore one of the new motor driving the
renewal of strategies that can lead managers to
impose their views of future, proposing strategic
ruptures that will reshape the factors of success
in the considered sector (Geroski and Markrides
2005).
Environmental concerns are envisaged in many
different manners according to companies, lead-
ing to distinct behaviors or strategies: from pure
compliance to strategic ruptures. These various
approaches are closely linked to the fact that
businesses may or may not consider environment
as a factor of value creation. The fact that green
strategies can provide profitability is indeed an
issue in itself.
Linking Environment
and Private Profit
It seems a prerequisite that “Business is business”
and not a philanthropic activity. We expect busi-
nesses to be profitable, however, it is not opposed
to the deliverance of some public good. How could
both be synergized?
Pigou has introduced the concept of exter-
nality in 1932 to reflect the incapacity of the
market to take in charge the problems linked to
environmental damages. Negative environmental
externalities reflect a situation where private cost
experienced by a producer or a consumer differs
from the social cost derived from its production
or consumption. An agent welfare is affected but
not compensated by a transaction on a market.
Part of these externalities have been endogenised
in business via public regulation by setting an
explicit or implicit price on externalities:
•
through regulatory instruments such as
norms on emissions, deliverance of licens-
es complying organization to compel with
a standard which has direct impact on pro-
duction costs
•
through market-based instruments such as
tax or cap and trade schemes (on CO
2
for
instance in Europe).
Regulation is therefore a first driver to create
relevance of environmental issues to business. The
scope of action of companies will encompass pure
