What Makes Companies Green? Organizational and Geographic Factors in the Adoption of Environmental Practices*

Abstract In this paper we advance the hypothesis that organizational factors play a key role in the adoption of environmental innovations, referred to as environmentally conscious manufacturing (ECM) practices. We distinguish among three classes of organizational factors: organizational resources, organizational innovativeness, and performance monitoring systems. The research also explores the interplay of organizational factors and spatial or geographic factors (such as proximity to customers and suppliers) in the adoption of ECM practices. We employ a structured field research design, involving “matched pairs” of plants, to address these issues. The findings confirm the hypothesis. Organizational factors matter significantly in the process of ECM adoption. Furthermore, two classes of organizational factors are particularly significant to ECM adoption: organizational resources and performance monitoring systems. Performance monitoring systems composed of quantitative goals and related metrics are a particularly key factor. The research finds that geographic or spatial factors have little effect on the adoption of ECM practices, reflecting the significant geographic distance between customers and suppliers in the sample. There may be reason to expect that geographic factors play a more significant role, but this is a subject for future research.

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