Competitive environmental strategies: when does it pay to be green?

Citation

Orsato, R.J. (2006), "Competitive environmental strategies: when does it pay to be green?", Strategic Direction, Vol. 22 No. 8. https://doi.org/10.1108/sd.2006.05622had.003

Competitive environmental strategies: when does it pay to be green?

Competitive environmental strategies: when does it pay to be green?

Orsato R.J.California Management Review, Winter 2006, Vol 48 No 2, Start page: 127, No of pages: 17

Purpose – To develop a framework to help managers identify the circumstances that favour both public benefits and corporate profits from sustainability initiatives. Design/methodology/approach – Argues that the debate over “whether it pays to be green” must move on to consideration of when it is possible to offset the costs of environmental investments. Discusses whether firm positioning or capabilities represent sources of competitive advantage, outlining some implications of Porter’s work in this area. Identifies some generic types of competitive environmental strategies, using a quadrant diagram based on whether the competitive focus is on organizational processes or on products and services and whether competitive advantage is based on differentiation or lower costs. Findings – Discusses four resulting strategies. Labels these as eco-efficiency; “beyond compliance leadership”; eco-branding; and environmental cost leadership. Gives examples illustrating the use of each strategy and comments on the requirements for each to be successful. Points out that in practice, the clear boundaries between these approaches do not exist and subtle trade-offs are likely to be required. Practical implications – Notes that Porter argues that a sustainable strategic position requires managers to identify the trade-offs between strategic choices, describing this choice between trade-offs as a fundamental condition for strategy. Originality/value – Highlights the need to prioritize environmental investments and align them with the generic strategy of the company if they are to act as a source of competitive advantage.ISSN: 0008-1256Reference: 35AH151

Keywords: Competitive advantage, Environmental management, Strategic choices