Case Selection

For the theory-testing stage, four product development projects are selected. By care-fully selecting slightly structurally dissimilar situations, generalizability of the find-ings increases. This can be compared to an experimental researcher that performs a similar experiment under four slightly dissimilar sets of conditions, as replications of each other. As in the theory-building cases, two sets of selection criteria are used; one set of unifying criteria and one set of differentiating criteria. The set of unifying crite-ria contains the same set of critecrite-ria used in the theory-building cases: a case has to involve a physical product, the focal organization has to be within the geographical reach, the project has to have been completed and the product introduced, and finally, enough informants have to be accessible. As an extra selection criteria all cases have to involve green products, i.e. products whose environmental performance is signifi-cantly better than conventional or competitive product offerings (Peattie 1995, see Chapter 1).

The set of differentiating criteria is different for the theory-testing cases. The retical model, developed in Chapter 3, is used to guide the case selection. The theo-retical model identified a set of antecedents and a moderating construct, that both de-termine various aspects of GPI strategy. The antecedents are top management commitment, scope, and scrutiny of stakeholder orientation, and the moderating con-struct is industry type. Ideally, all antecedents and the moderating concon-struct should serve as selection criterions. Using all antecedents and moderator, however, is not feasible, for two reasons. First, scope and scrutiny are not readily observable, and ex-tensive field work should be undertaken to determine the constructs. Therefore, scope

and scrutiny of stakeholder orientation are determined a posteriori. Second, if all an-tecedents and the moderator construct were to have two levels in the design, e.g.

‘high’ and ‘low’, a full-factorial design implies 2 x 2 x 2 x 2 = 16 case studies to be undertaken. Such a number of cases far exceeds the time and resource constraints of this study. Therefore, industry characteristics and top management commitment to green issues are used as selection criterions. For both constructs it is a priori possible to assess the level with sufficient reliability, as will be outlined below.

Based on the sets of unifying and differentiating criterions, four product innovations are selected, as depicted in Table 2.1. One case involves a longitudinal case study, as the opportunity arose to conduct such a study that fit well in the case study design.

During the data collection of the theory-building case studies in 1998, data were also collected on an embryonic product innovation within ChemCorp CR. This was done primarily upon request of the business unit. The collected data about the product in-novation project were not used in the theory-building stage in Chapter 2, because the case did not meet the criterions for inclusion as the product had not yet been intro-duced to the market. As the opportunity arose to collect additional data after the product innovation had been introduced to the market, including the case offered sev-eral advantages. The first advantage is that the information needed for the selection criteria can be more reliably assessed from the previously collected data. The second advantage is that the risk of hindsight bias is reduced, because informants were inter-viewed both during the product development stage of the project, as well as after the introduction. The third advantage relates to the condition of temporal sequentiality for establishing causal relationships, as outlined in the previous section. Temporal quentiality can be assessed without bias by observing the events in temporal se-quence. Further rationale and procedure for the selection of the four cases is discussed in the remainder of this section.

Table 4.1: Case Studies for the Theory-testing Stage

Industry Green Commitment of Top Management

Moderate High

Food

(moderate environmental impact) Prins & Dingemanse^a

Mussel Bag Gulpener

Limburgs Land Chemical

(high environmental impact)

ChemCorp CR Hardcoat

Ecover SquirtEco

a Focal organizations are printed first, followed by case study product in italics.

Selection on Industry Characteristics

For the theory-building cases, two industries were selected on a general notion that environmental issues played a different role in each of the two industries. One of the results of the theory-building cases was that market environment was likely to have a moderating impact on relationships in the theoretical model. More specifically, two aspects of market environment, being the existence or emergence of green demand in a market and the existence or emergence of green regulation, emerged as potentially

important. Therefore, selection of industries in the theory-testing stage is done with more scrutiny, based on the former two aspects of market environment.

Both the food and the chemical industry are suitable industries in this stage of the re-search. At the time of data collection, 2004, green demand in both the food market and chemical market is present. In the Dutch food market, a niche for organic prod-ucts is well-established with a market value of € 395 million, representing 1.6 per cent of total food market sales in 2003 (Biologica 2004). In the Dutch chemical in-dustry, the size of green market demand is more difficult to assess a priori. During the data collection for the theory-building case studies in the car refinish market in 1998, stringent regulation was announced for that particular market that would create demand for green products. In consumer markets for chemical products, inventories of green products in the Netherlands show that several companies are marketing green products in product categories as paint, detergents, and household cleaners (NIDO 2002; Stichting Milieukeur 2004). The latter suggests that there is some de-gree of de-green market demand in consumer markets in the chemical industry.

Table 4.2: PACE of Manufacturing Industries in the Netherlands 2001

SIC^a Industry^b PACE

(K€) Average PACE per

firm (K€) PACE as % of Added Value

DA Food, beverages, and tobacco 291,000 198 2.22

DB/DC Textile and leather N/A N/A 2.99

DE Paper production, printing, & publishing 102,000 74 3.61

23 Petrol and coal processing 237,000^c 11,850^c 3.81

24 Chemical products 570,000 1,425 6.84

26 Glass, ceramics, and cement 70,000 157 N/A

DJ Basic metal and metal products - Basic metal

- Other metal

189,000 90

8.14 1.13

29 Machinery and equipment 45,000 29 N/A

DL Electrical and optical products 51,000^c 72^c N/A

Miscellaneous N/A N/A 1.07

D Total manufacturing 1,703,000^d 157 2.42

a SIC = Standard Industry Code 1993 of CBS/Statistics Netherlands

b All figures apply to firms with 10 or more employees.

c Year 2000 data

d Column figures do not add up to total because CBS/Statistics Netherlands does not report data for all manufacturing sectors for reasons of data protection.

Sources: CBS/Statistics Netherlands Statline Database and RIVM-MNP (2003b)

The main difference between both industries is in stringency of regulation. This is well reflected by data on the Pollution Abatement and Control Expenditures (PACE).

PACE is an indicator used by national statistics offices such as the US Bureau of the Census. For the Netherlands, it is compiled by CBS/Statistics Netherlands (CBS 2003; RIVM-MNP 2003b). The Dutch PACE indicator is defined as the costs of the own environmental activities plus the environmental levies paid, corrected for the en-vironmental subsidies received. PACE is often used as a measure for the stringency of regulation in an industry (Lanjouw and Mody 1996; Jaffe and Palmer 1997; Pickman 1998; Brunnermeier and Cohen 2003; Nameroff et al. 2004). If regulations become more stringent, companies are required to take measures and make investments,

which are reflected in PACE. Table 4.2 shows that the average PACE per firm are more than seven times higher in the chemical industry than in the food industry, and that PACE as a percentage of added value in the chemical industry are more than three times higher than in the food industry (both industries are shown underlined in Table 4.2).

Based on green market demand and stringency of regulation, the food industry is classified as a moderate environmental impact industry, and the chemical industry is classified as a high environmental impact industry. This classification corresponds with the results of other research. Banerjee et al. (2003) used two independent judges that classified the food industry as a moderate environmental impact industry, and the chemical industry as a high environmental impact industry. They subsequently show that moderate environmental impact industries differ significantly from high envi-ronmental impact industries in envienvi-ronmental public concern, regulatory pressure, and opportunity to gain competitive advantage through environmental issues.

Selection on Top Management Commitment to Green Issues

Selection of focal organizations was done based on top management commitment to green issues. Although this construct cannot be reliably observed a priori, there are several reliable indicators of commitment of a firm to green issues. Indicators of high commitment are special recognitions of a firm’s commitment to green issues, or more broadly, corporate social responsibility issues, by the general press, awards, certifica-tions, or academic sources. Low or moderate commitment is more difficult to ob-serve, because organizations will generally not communicate this as such and this as-pect will generally not receive special attention in the general press or otherwise, save incidental situations.

Ecover and Gulpener are selected as focal organizations with high top management commitment to green issues. Ecover is widely quoted as an example of a firm with a

‘green’ mission in the general press, academic textbooks, and academic teaching cases (e.g., Pauli et al. 1995; Reichart et al. 1999). Furthermore, the company was awarded a place on the ‘Global 500 Roll of Honor’ of the United Nations Environ-ment Program in 1993. Gulpener received the national corporate social responsibility award from the Dutch Ministry of Agriculture, Nature, and Food Quality in 2003 and was nominated for the Sustainability prize of the Province of Limburg.

Two companies are selected with moderate top management commitment to green issues, rather than low commitment, because the chances of finding GPIs in focal or-ganizations with low commitment seems minimal. ChemCorp CR and Prins &

Dingemanse are selected as focal organizations with moderate top management commitment to green issues. ChemCorp CR is classified as ‘moderate’, based on data collected for the theory-building stage. A benchmarking study on corporate social re-sponsibility confirmed the assessment: the corporation was reported to be in the mid-dle tier within the Dutch chemical industry (Graafland et al. 2003). Assessment of top management commitment to green issues was more uncertain for Prins & Dinge-manse. Initial desk research revealed no indications of high commitment, but no indi-cations of the opposite either. Therefore, top management commitment to green

is-sues was assessed during the first two interviews, showing that it can be classified as

‘moderate’.

Identifying Green Products

The theory-testing stage involves green products, i.e., product innovations are se-lected whose environmental performance is significantly better than conventional or competitive product offerings. As was learned during the theory-building stage, this is very difficult to observe a priori. Selection therefore relies primarily on the judgment of a third party, being a certification authority, government body, or expert(s).

Evidence of improved environmental performance of Mussel Bag is provided by a special recognition of a Dutch government body, Novem, the Netherlands Agency for Energy and the Environment, on a web site dedicated to energy efficient product de-velopment. The product innovation is included as a showcase project (Novem 2004).

It was estimated that the product is responsible for a 50.4 TeraJoule energy saving through material reduction and a 57 per cent saving in transport mileage. Limburgs Land is selected because it is listed by Stichting Milieukeur, the Dutch ecolabeling authority for its use of ecolabeled barley as a raw material (Stichting Milieukeur 2004).

Hardcoat is the only product innovation for which a lifecycle analysis is available, acquired during the data collection for the theory-building cases. The lifecycle analy-sis was performed by two environmental experts and showed that the product offered considerable green improvement compared to conventional products. SquirtEco is selected because it was awarded an ecolabel by the Vegan Society and based on a taped interview with a senior manager of the focal organization, from an earlier re-search project by two graduate students².