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"Environmental Technology, Dynamic Enviromental Capabilities and Competitiveness"

This project is funded by the Environmental Protection Agency of Ireland, under the ERTDI Programme 2000 � 2006, Sub-Measure 2: Sustainable Development. Noting that �the integration of economic, social and environmental policies is a formidable task,� the programme �seeks to support government policy by identifying barriers to implementation of sustainable development in Ireland.� ENVIRONTECH is an eighteen month project designed to develop new analytical tools for modeling the environmental and economic performance of companies in Irish industry, test those statistical and case study tools on firms in two industry sectors, and infer policy measures with potential for encouraging business development along a sustainable path.

Project Leader:

Dr Rachel Hilliard


Professor Don Goldstein

Dr Rachel Hilliard

Valerie Parker


The business decision making underlying cleaner production is embedded within a broader set of framework conditions. Tax and regulatory policy, capital markets, consumer demand, public expectations, and an array of inter-organisational networks all affect managerial decisions regarding cleaner technologies and practices. In turn, how cleaner production is achieved will determine the severity of the tradeoff between society�s economic and environmental goals, or whether they can be harmonised.

The capabilities that firms exhibit for finding economically promising ways of reducing environmental impacts differ widely in ways that are little understood. Better analytical tools for modeling this process are required in order to determine what kinds of framework condition changes would be most consistent with a sustainable development path.

Research in this area has increasingly utilised the theory of organizational capabilities. Managerial and technological capabilities that evolved during an era of cheap energy and unregulated and/or poorly understood environmental impacts might be seen as retarding the emergence of cleaner but still profitable innovations, and dampening the recognition and diffusion of those that already exist. Variation in firms� environmental performance appears to be driven by differential rates and directions of change in those organizational capabilities. Thus �dynamic capabilities,� which enable firms to adapt effectively to changing competitive conditions, offer a useful framework for studying the nexus between uptake of cleaner techniques and the potential for economic exploitation. We can refer to the set of relevant phenomena as dynamic environmental capabilities.

The ENVIRONTECH project looks at cross-firm heterogeneity in how barriers inherited from the past might be overcome, what makes some firms more capable of this than others, and how changes in the framework conditions that shape business decision making might increase this capability. The ability to infer policy measures that work is thus a key goal of the project.

Project description:

Work package 1 � Industry selection.

The project will focus on two industry sectors to permit attention to the details of sector-specific environmental impacts, impact-reducing practices, and economic factors. To increase applicability across other sectors, we will choose sectors to incorporate significant variation along key environmental and economic dimensions; avoid a high proportion of multi-facility firms and consequent lack of facility level data; minimise transfer pricing bias as may arise with units owned by foreign parent firms; and maximise environmental impact data availability.

Work package 2 � Data construction.

Variables will be defined and a panel of data for firms over time in each sector will be created, quality checked, and made available to the research community through web posting. Data will come from EPA documents, a survey of target sector firms, and the Companies Reports Office. Variables will include environmental technology, using sector-specific categories; environmental management, characterising work processes and/or information flows; organizational capabilities, measuring firms� competitively valuable know-how; environmental performance in key impact measures; and economic performance measures (profitability or cost-effectiveness) hypothesized as most affected by environmental practices.

Work package 3 � Statistical modeling.

Statistical models will be specified following full literature review and piloting of alternative designs, and results also posted to the web. Best management and technology practices will be defined by regressing environmental performance on the environmental management and technology variables. Economic performance as a function of environmental best practices will be modeled: conditional on the level of observable organisational capabilities, via multiplicative environmental practices-organisational capabilities interaction terms; controlled for other measurable influences on business performance; and controlled for unobservable firm level heterogeneity by means of fixed effects.

Work package 4 � Case studies.

Detailed studies of 3-5 firms in each industry sector will be employed to help sharpen our explanations of the how and why underlying the statistical results. Steps will include choosing case companies, for variation in outcomes and willingness to cooperate; development and testing of the case protocol, through preliminary meetings with experts, pilot implementation, and modification; protocol implementation, via interviews and study of company materials; and qualitative analysis of the statistical and case results as an integral whole.

Work package 5 � Guidelines and recommendations.

A full set will depend on implementation of the analytical tools developed in this project across a broad spectrum of industry sectors. Nevertheless, preliminary conclusions will be vetted against state-of-the-art thinking, circulated in draft form, discussed at stakeholders� workshops, and posted to participant web sites when finalized. Outputs will include preliminary policy recommendations regarding measures with promise for enhancing the development of companies� dynamic environmental capabilities, as well as questions for future research; and practitioner guidelines, drawing out the findings� managerial implications for economically competitive improvement of companies� environmental performance.

A link to the funding scheme at the EPA is below

Publications, presentations etc, for this project:

Journal articles:

Goldstein, D., Theoretical Perspectives on Strategic Environmental Management, Journal of Evolutionary Economics, 2002. Details >>

Reports, monographs, working papers etc:

Goldstein, D., Empirical Literature Review. Dynamic Environmental Capabilities Project, CISC, NUI-Galway, 2005. Details >>

Conference papers/presentations:

Parker, V., & Hilliard, R., Do Greener Production Projects Drive Innovation? An Examination of Environmental Improvement Projects on Strategy, Technology and Change in Companies, Irish Academy of Management Conference, Galway-Mayo Institute of Technology, 7-9 September, 2005

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