Iso-14000 In Small Industries

ISO 14000 TOTAL QUALITY ENVIRONMENTAL MANAGEMENT: THE INTEGRATION OF ENVIRONMENTAL MARKETING, TOTAL QUALITY MANAGEMENT, AND CORPORATE ENVIRONMENTAL POLICY

Contents Table 1. Environmental/Sustainable Marketing Perspectives Compared to Traditional Marketing

This exploratory study attempts to assess the implications of the emerging ISO 14000 standards, as an integrator of environmental marketing, Total Quality Management, and corporate environmental codes of conduct such the CERES Principles or the GEMI Principles.

Table 2. Environmental/Sustainable Marketing Adapted to the Van Waterschoot and Van Den Bulte Improved Marketing mix Classification Framework

Anheuser-Busch does not subscribe to the theory that deterioration of air or land or water is necessarily the price of progress.

Table 3. Selected Environmental Product Certification and/or Labeling Systems

We don't need environmentalists, we need responsible business entrepreneurs. Screw the environmentalists.

Table 4. Total Quality Management (TQM) Compared to Total Quality Environmental Management (TQEM) Table 5. Motives for Environmental Standards Adoption Table 6. Potential Implementation Barriers and Solutions for ISO 14000 Registration Table 7. ISO 14000 Total Quality Environmental Management: The Integration of Environmental Marketing, Corporate Environmental Policy, and Total Quality Management

--August A. Busch Jr. (1970)

--Horst Rechelback, the first signer of the Valdez Principles (Kelly, 1993) INTRODUCTION Publicly traded corporations often adopt agency theory as a foundation for business decision making. Agency theory suggests that the paramount goal of management is to create wealth for the owners (Jensen & Meckling, 1976). A corporation that adamantly follows agency theory will relentlessly pursue activities that maximize stockholder value, moderated only by externally imposed law and regulation. However, Quinn and Jones (1995) propose in the current social climate that shareholder wealth maximinization must also be tempered by the social and moral obligations of the firm. Quinn and Jones (1995) suggest that this broader perspective, termed "agent morality theory," results in enhanced long term performance derived from the "invisible asset" of ethical and socially responsible behavior.

These social and moral obligations are made with the various "stakeholders" of the corporation including (Donaldson & Preston, 1995): (1) customers, (2) Notes: communities, (3) employees, (4) trade associations, (5) suppliers, (6) governments, (7) investors, and (8) political Notes: groups. Donaldson and Preston (1995) suggest that corporations must move from the "morally untenable" Notes: agency theory to a broader stakeholder perspective, explicitly considering the effect on all stakeholders in the Notes: development and implementation of strategy. Polonsky Notes: (1995) proposes that stake-holder theory allows the integration of environmental issues into overall corporate strategy. However, in an appraisal of modern business practices Hawken (1993) states that "not one wildlife reserve, wilderness, or indigenous culture will survive the global market economy." Similarly, Shrivastava (1995) suggests Notes:

environmental management "risks have proliferated through population explosion, industrial pollution, environmental degradation, and the lack of institutional capacity for risk management." Corporate managers are faced with many salient issues in their attempt to maximize value for the different and sometimes conflicting interests of stakeholders. One of the most salient issues pertaining to value creation with multiple stakeholder groups is the relationship of the organization to its natural environment. The increased population pressures, urbanization, environmental education, and changes in underlying social values have stimulated the recent renewal of interest in environmental issues, both by individual citizens and corporations. For example, the Roper Organization (1993) in a study of US households found that over fifty percent of households perceive that they are "sympathetic" environmentalists. Shrivastava (1996) suggests that there is a "ground swell of public awareness and support for environmental protection" due to the "seriousness of environmental problems." The Interrelationship Between Commerce and the Environment Corporate involvement with environmental issues appears to "parallel trends in public concern" (Hoffman, 1996). Hoffman (1996) in a content analysis study of trade journals in the chemical and petroleum industries, found that corporate commitment to the environment has tended to follow a sequence of philosophical perspectives that include: (1) techno-optimism and self regulating (1960-1970); (2) defensive orientation as the public will confront industry as the cause of all problems (1970-1982); (3) cooperation between industry and government (1982-1988); (4) pro-active industry based solutions (1988-Present); and (5) confrontation revisited (1990-Present). Progressive corporations tend to take a more pro-active posture toward the environment. Businesses supporting Hoffman's (1996) pro-active perspective are gaining competitive advantage by segmenting markets based on the consumer's level of environmental involvement (Roper, 1992). This process, termed environmental marketing (Coddington, 1993), attempts to create competitive advantages as a strategic response to public environmental concern. For example, the Body Shop, a U.K. based cosmetics retailer, has created a sustainable competitive advantage based on manifest concerns for nature and the cultural adoption of environmental values. The Body Shop has achieved superior sustained business performance by marketing environmentally congruent cosmetic products and utilizing eco-sensitive promotion and packaging (Ottman, 1993). Pedro's Inc., a U.S. based firm specializing in the development and marketing of eco-friendly bike equipment, has also developed its competitive advantage based on environmental issues. Pedro's makes bicycle tire tools out of recycled milk bottles and bike solvents and lubricants from environmentally friendly, non-toxic chemicals. Other firms have adopted environmental / eco-labeling to attract the "educated, affluent, and mainstream" green, or environmentally sensitive, consumer (Ottman, 1993). Even the global fast food giant McDonald's has made great strides in becoming more eco-friendly. McDonald's has cooperated with the Environmental Defense Fund to develop a waste reduction action plan along with other initiatives such as a corporate level environmental affairs officer and a design team whose goal is to reduce packaging (Frause & Colehour, 1994). Individual business, inter-industry sponsored associations, and intra-industry sponsored associations are developing and implementing their own policies, environmental standards, and codes of environmentally responsible conduct as a "pro-active" response to environmental issues. For example, the Paris based International Chamber of Commerce has developed "The Business Charter for Sustainable Development," or GEMI Principles, that

provides a comprehensive framework describing how socially responsible organizations should relate to the natural environment (International Chamber of Commerce, 1990; Coddington, 1993; Frause & Colehour, 1994). PURPOSE The purpose of the present study is to explore the implications of the emerging ISO 14000 environmental standards. ISO 14000 is a new set of formal inter-industry, international standards for environmental management being developed by the British Standards Institute and the International Organization for Standardization (ISO) (Johnannson, 1994/95). ISO 14000 will be a comprehensive environmental system involving a set of fourteen standards which will approach environmental management in a similar manner as the ISO 9000 standards approached quality management (Fredericks & McCallum, 1995). This study will discuss the foundation areas for each of the standards comprising the ISO 14000 system and demonstrate that ISO 14000 is a Total Quality Environmental system which integrates environmental marketing, corporate environmental policy, and Total Quality Management (TQM). A discussion of each of these concepts is presented next. The ISO 14000 environmental management standards are then discussed, including value of ISO 14000 certification, components in the ISO 14000 series, and ISO 14000 implementation issues. Finally, ISO 14000 is shown to be the integrator of environmental marketing, corporate environmental policy, and Total Quality Management. ENVIRONMENTAL MARKETING Why are global businesses concerned with the environment? The adoption of more environmentally congruent practices and policies by business is derived from the increasing concern for the natural environment by consumers. This increased level of sympathy toward the environment is manifested by the finding that a majority of US households are willing to pay price premiums for environmentally sensitive products (Roper Organization, 1992). "Marketing activities that recognize environmental stewardship as a business development responsibility and business growth opportunity" is how Coddington (1993) defines the emerging practice of environmental marketing. Ottman (1993) defines environmental marketing as having two objectives: (1) to develop and offer environmentally compatible products, and (2) to create a quality based image that suggests to all stakeholders that the firm is environmentally sensitive. Miles and Munilla (1993) in defining the eco-marketing concept suggest that "consumers are ... concerned with a holistic view of corporate image, particularly with regard to social concern and (environmental) responsibility." Sheth and Parvatiyar (1995) suggest that corporations' internal environmental marketing efforts should be augmented by government policy, resulting in the two dimensional construct of "sustainable marketing" which includes: (1) "proactive corporate strategies that would benefit both corporations and society;" and (2) "government intervention for sustainable development." Environmental marketing, green marketing, ecomarketing, and sustainable marketing are all different perspectives of the attempt by businesses to adapt to the growing environmental concerns of various stakeholders. The U.S. Federal Trade Commission's 1992 guidelines on environmental marketing focus on advertising and define the parameters that are acceptable when making environmental claims (Coddington, 1993). Table one summarizes the differences between the sustainable/green/environmental marketing perspective and traditional marketing. Table two provides an adaptation of Van Waterschoot and Van den Bulte (1992) revised 4P marketing

mix classification framework. Three indicators of a firm's commitment to environmental marketing are eco-labeling, lifecycle analysis, and environmental design. A discussion of each of these concepts follows. Eco-Labeling Consumers are looking for indicators of a business's commitment to the environment with environmental labeling standards. Eco-labeling identifies a product as complying with one of several environmental certification programs. Likewise, manufacturers and marketers are attempting to differentiate their products by ecological labeling, with the objective of enhancing market share or profitability. Coddington (1993) reports that environmental labeling programs have developed on a global scale, beginning with the German Blue Angel program in 1978, followed by the Canadian Environmental Choice program in 1988, and the Japanese Eco-Markprogram in 1989 among others. Table 3 summarizes selected international environmental labeling standards. Lifecycle Analysis Lifecycle analysis, another indicator of environmental commitment, explicitly integrates externalities from both the production and consumption of the product into the systems that produce a firm's products or services (Tibor & Feldman, 1996). All stages of the lifecycle, including raw material acquisition, production of the good or service, distribution, waste management, energy supply, product use, product disposal, and recycling are analyzed from an environmental cost perspective. As shown in Figure 1, lifecycle analysis can be assessed by augmenting the traditional operations management transformation process diagram. This model contains many environmentally-sensitive systems. Inputs (such as raw materials, transportation systems for raw materials, and energy supply systems) are converted to outputs (including products/services, transportation systems for outputs, recycling, and product disposal) through a transformation process (which includes maintenance, byproducts, toxic emissions, waste disposal). Although not currently practiced widely, lifecycle analysis has the potential to reduce energy and material usage (Tibor & Feldman, 1996). Environmental Design An important component of lifecycle analysis is environmental design. Using an environmental design approach, products and processes are designed such that emissions and wastes are either minimized or completely removed (Tibor & Feldman, 1996), thereby diminishing the environmental impact of producing the good or service. Environmental design attempts to minimize the externalities associated with the production, consumption, and ultimate disposition of a product. A measure of a product's total impact on the environment can be captured using full cost accounting. Full cost accounting attempts to quantify the environmental impact of product/process designs by allocating traditional costs to the product as well as environmental costs, including direct costs, hidden costs, contingent liability costs, and costs associated with invisible assets (GEMI, 1994b). In this way, managers can accurately assess the costs associated with any product or process modification. CORPORATE ENVIRONMENTAL POLICY Many organizations with a pro-active perspective towards environmental issues have adopted (or are in the process of adopting) formal intra-organizational environmental codes of conduct or industry-specific codes. In addition, many firms are developing their own corporate

environmental statements (see for example Anheuser-Busch, 1970). Formal non-industry specific intra-organizational statements of environmental principles include: (1) the Coalition for Environmentally Responsible Economies (CERES) principles, also called the Valdez Principles; (2) the International Chamber of Commerce's Business Charter for Sustainable Development, or the GEMI Principles (International Chamber of Commerce, 1990); and (3) the United States Federal Trade Commission's Guidelines for the Use of Environmental Marketing Claims (Coddington, 1993). Examples of emerging industry-specific environmental codes of conduct include the Chemical Manufacturers Association's Responsible Care Program and the American Forest and Paper Association's Sustainability Guidelines. These formal statements have become models which establish a framework for evaluating an organization's commitment and performance with respect to environmental responsibilities (Sanyal & Neves, 1991). An example of how these environmental codes of conduct affect business practices is demonstrated in the CERES or Valdez Principles. These principles, formulated as a response to the Exxon Valdez oil spill, are designed to "create a voluntary mechanism of corporate selfgovernance that will maintain business practices consistent with the goals of sustaining our fragile environment" (CERES, 1990). Ten dimensions are included to assess a company's involvement in environmentally responsible activities including guidelines regarding organizational structure, product design, product manufacture, waste management, and aftersales liabilities. For example, these principles suggest formulation of an environmental affairs committee (reporting to the Board of Directors). It is also recommended that products be designed that "minimize adverse environmental impact" (Sanyal & Neves, 1991) and use recallable material. In addition, processes which manufacture the product should maximize energy efficiency, preferably using renewable natural resources. These processes should also minimize pollution. After manufacture, the Valdez principles suggest firms should take responsibility for damage to the environment caused by their product. TOTAL QUALITY MANAGEMENT AND THE ENVIRONMENT Cardy and Dobbins (1996) suggest that "what exactly constitutes TQM seems to differ across organizations and quality proponents." However, the quality movement has focused organizational resources on improving customer satisfaction and value. Taguchi's (1987) and Taguchi, Elsayed and Hsiang's (1989) social loss function framework suggests that quality is defined by the total costs that a product (or an organization) inflicts upon society. These losses could be either due to: (1) variation in the total product, or (2) negative externalities that result from any stage in the product's lifecycle, from product development to ultimate disposition. Miles, Russell and Arnold (1995) suggest that when firms incorporate quality as the foundation of their corporate culture they should consider: (1) both the production and consumption externalities associated with the product; (2) the satisfaction of both latent and explicit customer needs; and (3) the creation of the highest total value possible for the specific product/market interface. These definitions of quality suggest that organizations consider, if not always explicitly, the environmental effects of the production and consumption of the product. The Global Environmental Management Initiative (GEMI) created the Total Quality and Environmental Management (TQEM) model in an attempt to "marry environmental management and Total Quality Management" (Coddington, 1993; GEMI, 1993). TQEM is the integration of a comprehensive lifecycle approach to TQM and environmental management which includes (GEMI, 1993): (1) customer identification and satisfaction; (2) continuous improvement; (3) a proactive approach to problem solving; and (4) a systems approach to business, explicitly including the natural environment. TQEM even adapts some of the basic

TQM tools into an environmental quality framework including: (1) Plan, Do, Check, Act cycle; (2) fishbone diagrams; (3) pareto charts; (4) control charts; (5) flow charts; and (6) benchmarking (see GEMI, 1993). Hence, TQEM appears to be an extension of TQM, explicitly taking into consideration environmental issues and costs pertaining to the production, consumption, and the ultimate disposition of the product, its packaging, and related byproducts. Table four provides a summary of the similarities between TQM and TQEM. TQEM CERTIFICATION: ISO 14000 One framework available to businesses taking a pro-active perspective towards that environment by adopting a stakeholder or agent morality orientation is to implement the emerging ISO 14000 comprehensive TQEM standards, set to be released during 1996 (Johannson, 1994/95). ISO 14000's approach to TQEM is modeled after ISO 9000's approach to TQM and BS 7750, a TQEM standard previously developed by the British Standards Institute with registration process and management systems similar to ISO 9000 (Fredericks & McCallum, 1995). The widely adopted ISO 9000 series has become virtually a requirement to actively engage in global business. Value of ISO 14000 Certification The value of ISO 14000 certification to business is derived from the relationship between total benefits that arc estimated to accrue to the adopting organizations and total cost. Although ISO 14000 has not yet been fully released (at the time of the present study), an assessment of the costs of ISO 14000 adoption can be estimated using the costs of adopting the BS 7750 standard (on which the ISO 14000 series was modelled). The pecuniary and non pecuniary costs of achieving BS 7750 certification are quite high and could in time cost from "$100,000 to $1 million per plant." (Ouellett, 1995) Then, why is ISO 14000 a rational decision for an organization attempting to maximize shareholder wealth? There are seven potential benefits accruing to business that achieve I$O 14000 certification: (1) internal motives based on a corporate culture that values morality, ethics, and corporate social responsibility; (2) ability to charge more for products due to effect of differentiation (Kotler, 1994); (3) certification as a barrier to entry in some markets resulting in less competition (see for example Porter, 1980, 1985); (4) enhanced corporate image which may allow some special considerations when dealing with public stakeholders; (5) adoption of standards may help insulate the firm against charges of environmental negligence (Rothery, 1995); (6) the adoption of sound environmental practices such as energy conservation and recycling may actually produce cost savings (Chemicals Business News Base, June 9, 1995), including lower insurance rates (Tibor & Feldman, 1996); and (7) voluntary adoption of environmental practices allows commerce to have input on standards and may pre-empt government regulations. Not all firms will realize each of these benefits. However, firms are more likely to achieve ISO 14000 certification, thereby attaining many of these benefits when: (1) the firm is operating in an environment where ISO 9000 is a business requirement, hence ISO documentation procedures are well understood; (2) the firm is ISO 9000 certified (irrespective of business environment pressures) and is familiar with the certification process; (3) the corporation has a documented company-specific environmental policy; (4) the firm operates in an industry where environmental codes of conduct have been adopted; or (5) the firm operates in an industry in which extensive environmental laws and regulations apply. Table 5 summarizes the motives for ISO-14000 adoption.

ISO 14000 Components Stoller (1995) suggests that ISO 14000 will consist of several standards classified into six categories: (1) environment management system; (2) environmental auditing; (3) environmental performance evaluation; (4) lifecycle assessment; (5) environmental labeling; and (6) environmental aspects in product standards. A brief discussion of each of these categories follows. The ISO 14000 Environmental Management System (EMS) standard (ISO standards 14001, 14004) provides basic requirements for firms implementing an environmental management system. The standard defines an environmental management system as "that part of the overall management system which includes organization structure, planning activities, responsibilities, practices, procedures, processes, and resources for developing, implementing, achieving, reviewing, and maintaining the environmental policy" (Tibor & Feldman, 1996). Environmental policy describes a firm's intentions, values, culture, and principles with respect to environmental performance. ISO 14000 parallels the approach TQM takes toward quality management, where a quality management system is seen as a philosophical business orientation. In this way the ISO 14000 standards help define the corporation's environmental policy. ISO 14000 requires that the firm declare in a policy statement a strong commitment to comply with environmental regulations and minimize pollution. The environmental management system standard also requires identifying environmental aspects of the firm's products, services, and activities. One approach which can be used to identify these aspects is the previously discussed lifecycle analysis. After identification, the EMS standard requires objectives and targets be set (for every relevant function and level in the organization) that facilitate continuous improvement with respect to environmental management (parallel to a TQM approach). Additionally, the ISO 14001/14004 standards address the responsibilities and monitoring requirements of the EMS. As proposed, the ISO 14001 and 14004 standards are quite comprehensive. It is anticipated that most companies will first seek certification in one of these standards as an antecedent to certification in the entire ISO 14000 series. After development of the environmental management system, a standard approach must be developed which assesses whether the EMS meets ISO standards and has been correctly implemented. The environmental auditing standard (ISO 14010-14012) addresses this issue. Environmental auditing is the most widely accepted tool in the environmental management system (Tibor & Feldman, 1996). Included in this standard are guidelines for determining evidence of conformance to standards, criteria for the audit, reporting findings, and when corrective action is appropriate. The auditing standards are developed to monitor and control the environmental management system, not the performance of the company with regard to the environment. Hence, ISO 14010-14012 must be implemented concurrent with or after the ISO 14001 and 14004 standards are adopted. The third standard in the ISO 14000 series addresses environmental performance. This standard, ISO 14031 (environmental performance evaluation) generates information which assesses the organization's total performance with respect to the environment. Environmental performance indicators are identified which detail performance in all environmental aspects identified in the EMS. These environmental performance indicators are then used to evaluate and continuously improve environmental performance. Lifecycle assessment/analysis and environmental labeling are also components of the ISO 14000 series, proposed as individual standards 14040-14041 (lifecycle assessment) and ISO

14020-14022, 14024 (environmental labeling). Hence, the ISO 14000 standards also integrate environmental marketing into TQEM. The final component of ISO 14000, proposed as the ISO 14060 standard, addresses environmental aspects in product standards. The purpose of ISO 14060 is to increase awareness among standard developers of the potential impact a new standard could have on the environment. Standards should be developed which achieve the intended performance while reducing pollution, conserving resources, and guarding against "reasonably foreseeable misuses" (Tibor & Feldman, 1996). ISO 14000 Implementation Issues Dramatic organizational change, such as ISO 9000 or ISO 14000 adoption, does not come without costs. Costs will accrue both to the adopting organization and its stakeholders. These costs may be explicit, such as registration fees, training of personnel, or costs incurred to modify current processes; or implicit, such as moral and productivity problems, shifts in supplier chain relationships, or competing organizational objectives. Jump (1995) suggests four major barriers to ISO 14000 registration: (1) cost effectiveness; (2) agency costs; (3) ISO 14000 registration producing trade barriers; and (4) potential conflicts with corporate reengineering. Gloria, Saad, Breville and O'Connell (1995) propose similar impediments in a recent study of 34 Fortune 500 companies involved in life cycle analysis (a component of ISO 14000) implementation, stating that life cycle analysis was impeded by costs (ranging "from $15,000 to $300,000 per product") and data quality/management issues. These barriers and potential solutions are summarized in Table 6. Other authors discuss the importance of human resources in the implementation of ISO 9000/14000. A recent study of 290 ISO 9000-certified companies in Belgium indicated that 81 percent believe that contribution of the human resources department is "absolutely essential in making the quality system work smoothly" and in implementing ISO 9000 (Vloeberghs, 1996). Although many firms in this study utilized the human resource department on an adhoc basis (for training and other specific human resource issues), some firms reported enlisting the human resources department on a strategic level, giving this department "active participation" in management meetings and input on quality policy. Based on the similarities between ISO 9000 and ISO 14000, it is likely that the human resource function will be of critical importance in ISO 14000 implementation. Tibor and Feldman (1996) advocate this position in stating that "teamwork, cooperation, good communication, and extensive training" (all supported by or directly related to the human resources department) are "critical" aspects of effective ISO 14000 implementation. An ISO 14000 Implementation Framework A step-by-step approach will likely enhance the success of ISO 14000 implementation. First, it is typically beneficial to perform an initial environmental SWOT analysis (Tibor & Feldman, 1996). Here, current environmental management practices/policies are analyzed and data collected regarding measurement/ monitoring of the environmental system. In looking at its environmental strengths/ weaknesses and opportunities/threats, a firm can determine how ISO 14000 implementation efforts should be focused. If the SWOT analysis demonstrates that environmental concern has not become part of the "corporate culture" of the organization, firms should focus on "identifying those objectives that can be achieved with available resources and those that result in clear business benefits" (Tibor & Feldman, 1996). This includes reduction of regulatory violations, recycling, and waste reductions. In this case, using the basic elements of the ISO 14001 standard may be appropriate.

After implementing a "simple" environmental system (evidenced in the basic elements of the ISO 14001 standard) designed to increase company-wide environmental awareness, top management would likely invoke training of employees. It is critical that management provide both time and resources in support of ISO 14000 certification. It is likewise crucial that personnel be trained on the systems-based approach ISO 14000 requires. Teamwork and good communication are essential in the certification effort (Tibor & Feldman, 1996). As has been evidenced by ISO 9000-certified companies, the final phase in ISO 14000 implementation/certification is a change in company culture. The ultimate goal is to have a firm where employees own "the environmental issues and the environmental aspects of their jobs" (Tibor & Feldman, 1996). ISO 14000: Integrator of Environmental Marketing, Corporate Environmental Policy, and Total Quality Management ISO 14000 is a comprehensive Total Quality Environmental Management (TQEM) system which integrates the basic components of environmental marketing (environmental labeling, lifecycle assessment, and environmental design) with Total Quality Management. In addition, ISO 14000 addresses the emerging environmental concerns by both consumers and commerce which stimulated the development of environmental codes of conduct. Table 7 provides a framework of how ISO 14000 integrates environmental marketing, total quality management, and corporate environmental policy into a comprehensive total quality environmental management system. CONCLUSIONS AND IMPLICATIONS With the ISO 9000 quality management series and the pending adoption of the ISO 14000 TQEM standards, the ability to engage in global marketing is dependent on an organization's willingness to adopt international quality and environmental management practices. ISO 14000 provides a formal set of consistent international standards which integrate many of the emerging environmental and quality issues. In summary, the ISO 14000 standards formally integrate and codify many of the TQM, environmental marketing, and environmental policy concepts which have been previously developed. Given the widespread, global adoption of the ISO 9000 quality standards, it is reasonable to assume ISO 14000 will be likewise embraced. ISO 14000 certification will allow firms to market globally without constraints due to environmental concerns and to promote its products as being eco-friendly to an increasing environmentally oriented international markets. Subsequent research should address the impact of ISO 14000 adoption on all the organization's salient stakeholders, including: (1) customers, (2) communities, (3) employees, (4) government, and (5) owners. One area or focus should be pertaining to the human resource management implications of ISO 14000. For example, Ocean Spray cooperative has considered paying its member/producers not only on the traditional attributes of the quality and quality of the cranberries delivered, but also on the grower's environmental performance (Murray, 1996). Companies may also wish to reconsider the manner in which employees are hired, compensated and promoted under the ISO 14000 umbrella. It is possible that environmental concern may be incorporated into hiring procedures. Performance evaluations could include environmental concern as well as recycling and waste reduction initiatives. Additionally, attitudes toward teamwork and cooperation with other employees (important employee attributes in the system-based ISO 14000 approach) could be used in determining salary

increases. Further research should also consider the implications of ISO 14000 adoption in gaining competitive advantage in specific domestic and global markets.

Table 1. Environmental/Sustainable Marketing Perspectives Compared to Traditional Marketing The following chart reads as follows Row 1: Objective/Perspective Row 2: Environmental/green/Sustainable Marketing Row 3: Traditional Marketing Objective Satisfy customer needs in an environmentally sustainable way, while earning a profit.[1] Satisfy customer needs at profit.[2] Perspective of Customer The buyer of the product, and the victim of all externalities; or all stakeholders.[1] The reason for existence. Perspective of Government An ally in the creation of a sustainable economy to work and manage.[1] A regulator and limiter. To be managed. Perspective of Demand The redirection of demand towards products with low levels of externatility production. The stimulation of for any and all products. Most efforts placed on highest margin products.

Notes: 1 Sheth and Parvatiyar (1995) 2 McCarthy and Perreault (1993)

Table 2. Environmental/Sustainable Marketing Adapted to the Van Waterschoot and Van Den Bulte Improved Marketing mix

Classification Framework The following chart reads as follows Row 1: Marketing Mix Function[1] Row 2: Environmental/green/sustainable Marketing Row 3: Traditional Marketing PRODUCT Need satisfying instruments in an exchange. Environmental design of product;[4] Products designed to facilitate long term use, energy efficient, efficient recycling, "life-cycle recyclibility responsibility" & consider both the total cost of production and consumption.[2] Planned obsolescence, designing products to have shorter lives, disposable products, no concern about externalities from the production or consumption of product. MASS COMMUNICATION Non-personal message with goals of creating awareness, interest, and desire. Environmental labeling. Move towards rational consumption. Stimulation of both primary and selective demand utlizing mass media. Attempt to create desire for unsought goods. Focus on image and emotion of products. PLACE Where and how of availability Lifecycle assessment, Total Cost Assessment of distribution.[4] Distribution based on interrelation-ship between costs of distribution and strategic objectives. PERSONAL COMMUNICATION Personal messages with goals of maintaining awareness and interest and stimulating desire and sales. Focus on meeting consumer needs at minimal cost to environment, while achieving long term profits. Focus on meeting customer needs at a profit.[3]

PLACE Where and how of availability Lifecycle assessment, Total Cost Assessment of distribution.[4] Distribution based on interrelationship between costs of distribution and strategic objectives. PRICE The cost and method of payment Total cost assessment, Full Cost Accounting,[4] or the explicit internalization of all external costs must be considered in setting price in relationship to strategic objectives and demand.[5] A strategic decision based on interrelationship between marketing objectives, financial objectives, and demand.

Notes: 1 Van Watershoot and Van den Bulte (1992) 2 Sheth and Parvatiyar (1995) 3 McCarthy and Perreault (1993) 4 GEMI (1994a, 1994b) 5 Miles, Russell, and Arnold (1995)

Table 3. Selected Environmental Product Certification and/or Labeling Systems The following chart reads as follows Row 1: Product Certifier Row 2: Geographic Scope Row 3: Attributes Blue Angel Germany Criteria for each product category is determined through a public hearing process. Certified products carry the Blue Angel Logo. Must be re-certified every three years.[1] Certification appears to focus on

product design characteristics. Environmental Choice Canada Similar programs in New Zealand and Australia.[2] Environmental Canada, utilizing public hearing and with Canadian Standards Board establish criteria. Criteria considers a "modified life-cycle approach that looks at production, transportation, use, and disposal of products."[1] Eco-design appears to be omitted. Products that meet the criteria carry the EcoLogo. Eco-mark Japan Simple process for product certification. Green Cross or Scs United States Initially certification based on specific product attributes. SCS utilizes a life-cycle approach assessing a product's level of environmental burden.[2] Green Seal United States Similar to the Canadian Environmental Choice modified lifecycle analysis, testing done by UL.[1] BS 7750 United Kingdom Labeling part of total lifecycle and environmental management system. ISO 14000 World Labeling part of total lifecycle and environmental management systems.

Notes: 1 Frause and Colehour (1994)

2 Coddington (1993)

Table 4. Total Quality Management (TQM) Compared to Total Quality Environmental Management (TQEM) The following chart reads as follows Row 1: Attribute Row 2: TQM Row 3: TQEM Dimensions Customer Focus[1], Value[2], Social Loss[3], Teamwork[4], Continuous Improvement[4], Proactive[5] Customer Focus[6], Continuous Improvement[6], Environmental Focus[6], Systems Approach[6], Proactive Problem Solving[6] Founders Deming GEMI Date Philosophy Developed 1950's 1990's Champions Operations Management, Marketing Operations Management, Marketing, Accounting Motives for Development Consumer demands for higher quality products; global markets Consumer demand for eco-responsible products and business Theoretical Roots[7] Statistical Process Control,[7] Systems Theory[7] Corporate Social Responsibility, Systems Theory,[6] Stakeholder Theory

Formalized by and Codified by ISO 9000 ISO 14000

Notes: 1 Deming(1986) 2 Adapted from Kotler (1994) 3 Taguchi (1987) 4 Dean and Bowen (1994) 5 Svedberg (1990) 6 GEMI (1993) 7 Shani and Mitki (1996)

Table 5. Motives for Environmental Standards Adoption Legend for chart: A - Motive B - Support A

B

Corporate Social Responsibility

A motive based on ethical perspective of business's role in society.[1,2,3,4]

Differentiation

The ability to obtain a price premium due to the effect of differentiation; the potential for increased sales and/or market share due to differentiation.[5]

Entry Barrier

Certification as a barrier to entry in some markets resulting in less competition.[6,7] For example the EC may force some type of environmental compliance for organizations hoping to gain entry into their markets.

Image Enhancement

Voluntary adoption of environmental standards may enhance corporate image which allows some special considerations when dealing with public stakeholders.[8]

Legal Immunity

Voluntary adoption of environmental standards may help protect firm against

charges of environmental negligence.[9] Cost Savings

The adoption of sound environmental practices such as energy conservation and recycling may actually save the organization expenses,[10] including lower insurance rates.[11]

Influence on Legal Standards

Voluntary adoption of environmental practices allows commerce to have input on standards and may pre-empt regulations.[11]

Notes: 1. Donaldson and Preston (1995) 2. Polonsky (1995) 3. Quinn and Jones (1995) 4. Shrivastava (1996) 5. Dickson and Gintner (1987) 6. Porter (1980) 7. Porter (1985) 8. GEMI (1994b) 9. Rothery (1995) 10. Chemicals Business News Base (June 9, 1995) 11. Tibor and Feldman (1996)

Table 6. Potential Implementation Barriers and Solutions for ISO 14000 Registration Legend for chart: A - Implementation Barrier B - Potential Solution A

B

Cost Effectiveness[1]

Adapt cost/benefit assessments of ISO 9000 to ISO 14000. Utilize Rust, Zahorik and Keiningham's (1995) Return on Quality framework.

Agency Costs[1]

Make adoption and implementation of ISO

14000 congruent with other organizational and personal objectives. Trade Barrier Issues[1]

Since ISO 9000 has become the global quality standard, it is likely that ISO 14000 will become the global environmental standard. Firms (large or small) will likely be forced to comply with ISO 14000.

Conflicts with Corporate Reengineering[1]

Reengineer systems and processes such that environmental "value-added" is considered in addition to more traditional value-added activities.

Morale Problems

Involve employees and the human resources department in developing the ISO 14000 system. Allow employees to "own" the environmental aspects of their jobs[2].

Notes: 1 Jump (1995) 2 Tibor and Feldman (1996)

Table 7. ISO 14000 Total Quality Environmental Management: The Integration of Environmental Marketing, Corporate Environmental Policy, and Total Quality Management Legend for chart: A - ISO 14000 Component Standard B - Foundation Area A

B

14001

Environmental Management

Total Quality Management (TQM)

14004

System (EMS)

14010 14011

TQM and Corporate Environmental Policy Environmental Auditing

14012 14015 14020 14021 14022

Environmental Marketing Environmental Labeling

14024 14031

Environmental Performance Evaluation

TQM

14040

Life Cycle Assessment (LCA)

TQM, Environmental Marketing, and Corporate

14041

Environmental Policy

14060 Environmental Aspects in Product Standards

Environmental Marketing

Adapted from Miles, Munilta, & Russell (forthcoming) and Tibor & Feldman (1996) DIAGRAM: Figure 1. Lifecycle Analysis Using a Traditional Transformation Process Model REFERENCES Busch, A.A., Jr. (1970). A pledge and a promise. St Louis, MO: Anheuser-Busch Companies, Inc. Cardy, R.L. & Dobbins, G.H. (1996). Human resource management in a total quality organizational environment: shifting from a traditional to a TQHRM approach. Journal of Quality Management, 1 (1): 5-20. CERES. 1990. The 1990 guide to the Valdez principles. Boston, MA: The Social Investment Forum. Coddington, W. (1993). Environmental marketing: Positive strategies for researching the green consumer. New York: McGraw-Hill. Dean, J.W. Jr. & Bowen, D.E. (1994). Management theory and total quality: Improving research and practice through theory development. Academy of Management Review, 1(3): 392-418. Deming, W.E. (1986). Lecture on statistical methods for improvement of quality, 1950. Pp. 2-8 in E.W. Deming (Ed.), Out of the crisis. Cambridge, MA: Massachusetts Institute of Technology Center for Advanced Engineering Study. Dickson, P.R. & Ginter, J.L. (1987). Market segmentation, product differentiation, and marketing strategy. Journal of Marketing, 51(April): 1-10. Donaldson, T. & Preston, L.E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1): 65-91. Fredericks, I. & McCallum, D. (1995). International standards for environmental management systems: ISO 14000. Canadian Environmental Protection, Available WWW: International Standards for Environmental Management Systems: ISO 14000 MGMT Alliances Inc. Frause, B. & Colehour, J. (1994). The environmental marketing imperative. Chicago, IL:

Probus Publishing. Global Environmental Management Initiative. (1993). Total quality environmental management: The primer. Washington, D.C.: GEMI. -----. (1994a). Environmental reporting in a total quality management framework: A primer. Washington, D. C.: GEMI. -----. (1994b). Finding cost-effective pollution prevention initiatives: Incorporating environmental costs into business decision making: A primer, Washington, D.C.: GEMI. Gloria, T., Saad, T., Breville, M. & O'Connell, M. (1995). Life-cycle assessment: A survey of current implementation. Total Quality Environmental Management, 4(3): 33-50. Hawken, P. (1993). The ecology of commerce. New York: Harper Business. Hoffman, A.J. (1996). Trends in corporate environmentalism: The chemical and petroleum industries, 1960-1993. Society and Natural Resources, 9: 47-64. International Chamber of Commerce. 1990. The business charter for sustainable development. Paris: The International Chamber of Commerce. Jensen, M. & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3: 305-360. Johannson, L. (1994/95). Voluntary standards at the dawn of ISO 14000: Fit or folly for TQEM? Total Quality Environmental Management, 4(2): 101-112. Jump, R.A. (1995). Implementating ISO 14000: Overcoming barriers to registration. Total Quality Environmental Management, 5(1): 9-14. Kelly, M. (1993). Interview: Horst Rechelbacher. Business Ethics, 7(4): 19-21. Kotler, P. (1994). Marketing management: Analysis, planning, implementation, and control. Englewood Cliffs, NJ: Prentice Hall. McCarthy, E.J. & Perreault, W.D. (1993). Basic marketing: A global managerial approach. Homewood, IL: Irwin. Miles, M.P. & Munilla, L.S. (1993). Eco-orientation: An emerging business philosophy? Journal of Marketing Theory and Practice, 1(2). Miles, M.P., Munilla, L.S. & Russell, G.R. (Forthcoming). Marketing and environmental registration/certification: What industrial marketers should know about ISO 14000. Industrial Marketing Managment. Miles, M.P., Russell, G.R. & Arnold, D.R. (1995). The quality orientation: An emerging business orientation. Review of Business, 17(1): 7-15. Murray, F.E.S. (1996). Ocean spray cranberries: Environmental risk managment. Pp. 259-283 in F.L. Reinhardt & R.H.K. Victor (Eds.), Business management and the natural environment.

Cincinnati, OH: South-Western College Publishing. Ottman, J.A. (1993). Green marketing. Lincolnwood, IL: NTC Business Books. Ouellette, J. (1995). Quality strategies '95: 9000's heir apparent. Chemical Marketing Reporter, 247(15): 13-14. Polonsky, M.J. (1995). Incorporating the natural environment in corporate strategy. Journal of Business Strategies, 12(2): 151-168. Porter, M.E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: The Free Press. -----. (1985). Competitive advantage: Creating and sustaining superior performance. New York: The Free Press. Quinn, D.P. & Jones, T.M. (1995). An agent morality view of business policy. Academy of Management Review, 20(1): 22-42. Roper Organization Inc. (1990). The environment: Public attitudes and individual behavior. New York: Roper Organization. -----. (1992). Natural Resources: Can they be saved? New York: Roper Organization. -----. (1993). Conservation leads the environmental debate: The emergence of a more pragmatic public. New York: Roper Organization. Rothery, B. (1995). Third force badly needed. ISO Easy, www. Rust, R.T., Zahorik, A.J. & Keiningham, T.L. (1995). Return on quality (ROQ): Making service quality financially accountable. Journal of Marketing, 59(2): 58-70. Sanyal, R.N. & Neves, J.S. (1991). The valdez principles: Implications for corporate social responsibility. Journal of Business Ethics, 10(12): 883-890. Shani, A.B. & Mitki, Y. (1996). Reengineering, total quality management and sociotechnical systems approaches to organizational change: Towards an eclectic approach. Journal of Quality Management, 1(1): 131-145. Sheth, J.N. & Parvatiyar, A. (1995). Ecological imperatives and the role of marketing. Pp. 3-20 in M.J. Polonsky & A.T. Mintu-Wimsatt (Eds.), Environmental Marketing: Strategies, Practice, Theory, and Research. New York: Haworth Press. Shrivastava, P. (1995). Ecocentric management for a risk society. Academy of Management Review, 20(1): 118-137. ------. (1996). Greening business: Profiting the corporation and the environment. Cincinnati, OH: Thomson Executive Press.

Stoller. (1995). www.Stoller.com/isofiles.htm,11/18/95 Svedberg, B. (1990). Guiding a quality company. Page 13 in A.G. Tank (Ed.), Global perspectives on total quality. New York: The Conference Board. Taguchi, G. (1987). The evaluation of quality. 40th annual quality congress transactions, American Society for Quality Control. Taguchi, G., Elsayed, E.A. & Hsiang, TC. (1989). Quality engineering in production systems. New York: McGraw-Hill. Tibor, T. & Feldman, I. (1996). ISO 14000: A guide to the new environmental standards. Chicago, IL: Irwin.. Van Waterschoot, W. & Van den Bulte, C. (1992). The 4P classification of the marketing mix revisited. Journal of Marketing, 56(4): 83-93. Vloeberghs, D. (1996). Implementing the ISO 9000 standards in Belgium. Quality Progress, 29(6): 43-48. ~~~~~~~~ By Morgan P. Miles and Gregory R. Russell, Georgia Southern University Copyright of Journal of Quality Management is the property of Elsevier Science Publishing Company, Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. Source: Journal of Quality Management, 1997, Vol. 2 Issue 1, p151, 18p Item: 9703303301 Top of Page Formats:

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