Fink Sustainable Innovation

The impact on the success of US large caps
1. Auflage 2021
ISBN: 978-3-7534-8552-2
Verlag: Books on Demand
Format: EPUB
Kopierschutz: Wasserzeichen (»Systemvoraussetzungen)

E-Book, Englisch, 116 Seiten

Over the last decade, sustainability became more and more important for companies and consumers, as the focus on the ecological footprint of products and companies, as well as the social conditions, is increasing.

By evaluating the product announcements of the S&P 500 companies, in terms of the classic types of innovation and the social and green innovation characteristics, during the observation period from 2008 to 2018, this book aims to establish a relationship between the innovative power of sustainable products and the companies profit.

Autoren/Hrsg.

Fink, Alexander

Leseproben

3.1.2 Social
The social dimension of sustainability addresses the well-being of communities and individuals such as the non-economic gains to the society and their individuals (Choi & Ng, 2011). Communities are referred to a complex network of relationships between a group of individuals, who share a number of values, norms and meanings, as well as a common identity and history (Shepherd & Patzelt, 2011). The unique characteristics of a community are their culture and places, such as the groups within the community. Through the maintenance of the culture in a large society, individuals can preserve their personal identity (Shepherd & Patzelt, 2011). If they are not able to do so, psychological as well as physical problems often arise. For example, due to the loss of their cultural identity, the physical health and life expectancy of the Australian Aborigines diminished appreciably (Mcdermott et al., 1998). Additively to the cultural identity, families and other groups give individuals a sense of their own identity, which is why they are also considered as a foundation for highly developed communities (Miller, 1966). For individuals, the loss of the family could lead to being less able to take on social responsibilities that foster the development of a community (Stevens, 1994). Aside the community, there are also non-economic gains that needs to be developed for individuals to ensure their well-being. They contain child survival, increased life expectancy, improved education, equity, and equal opportunities (National Research Council, 1999). The non-economic gains to society also include gains for the individuals living in that society, but they are different to individual gains, because the individual gains are only available to a limited number of individuals, while the societal gains are accessible to everyone in that society (Shepherd & Patzelt, 2011). For example, the non-economic gains of society include the well-being and security of a society, as well as the strengthening of the social ties (Shepherd & Patzelt, 2011). To understand how the social dimension of Sustainability is structured and what the key elements for individuals, community and society are, improves the insight why sustainable action in companies is important and how and through what social innovations can improve people's lives. 3.1.3 Environmental
The Environmental Sustainability became more and more important to consumers, since the environmental issues were growing from acid rain in Europe to the scarcity of natural resources and the global climate change as well as the ozone depletion (Choi & Ng, 2011). As an example, the destruction of the ozone layer has caused to an increased level of UV radiation and raised skin cancer rates. Furthermore, the exposure to nature’s green areas, which significantly improves human health, are increasingly destroyed due to global warming and increased pollution (Shepherd & Patzelt, 2011). The Institution of Chemical Engineers (IChemE) defined two key indicators for Environmental Sustainability: ‘Resource usage’ and ‘Emissions, waste and effluents’ (IChemE, 2002). The ‘Resource usage’ can be separated in different criteria: ‘Air Resources’, ‘water resources’, ‘Land resources’ and ‘Mineral and energy resources’ (Labuschagne et al., 2005). The first criterion evaluates the environmental impact of a company's activities on regional air quality issues (e.g. toxicity, acidification, etc.) or global issues (e.g. global warming, ozone depletion) (Brent, 2003). The second criterion assesses the supply of clean and unpolluted water, without infectious germs or bacteria, by concentrating on a company's influence on the quality and consumption of the water and the emission of effluents and contaminants (Brent, 2003). The third criterion considers the quantitative and qualitative impact of a company on land resources comprising the land use and transition, as well as the impact on biodiversity and the emission of ground contaminants (Brent, 2003). The fourth criterion evaluates a company’s impact to the exhaustion of non-renewable energy and mineral resources. (e.g. rare earth metals, oil etc.) (Brent, 2003). If the environmental systems are not sustained, the human sustainment could be at risk. In the third world countries, millions of people die every year due to the contamination of drinking water with infectious agents, bacteria or chemicals (Shepherd & Patzelt, 2011). Besides, due to overuse of minerals or the mining of rare earth metals, large parts of fertile land have been dried up or destroyed and due to overfishing oceans, rivers or lakes the biodiversity in the water has been declined (Shepherd & Patzelt, 2011). “Declining ecosystem services also have a direct impact on human life support, for example, when the reduced purification capacity of aquatic habitats due to contamination leads to a shortage of drinking water” (Shepherd & Patzelt, 2011: 139). It cannot be denied that companies have a certain share in destruction and pollution of the environment, but companies can also help to reduce the pollution on earth and restore the destroyed natural habitat (York & Venkataraman, 2010). To understand the source of the environmental issues and what are the key objectives of Environmental sustainability, enhances the understanding why sustainable orientation in companies is essential for the human being and through what Green Innovations can help to reduce these environmental issues. 3.2 Significance for customers & companies
Due to regulations from Governances, large non-profit organizations and the consumption behavior of consumers, as well as their intrinsic corporate motivation, companies focus on the development of sustainable products. A socially orientated company concentrates on the health, security and human rights of its employees, plus on the mutual sharing of benefits with its stakeholders (Dangelico & Pujari, 2010). An environmentally orientated company strives to reduce the environmental footprints of the products, through decreasing pollution, the consumption of natural resources and the use of fossil energy (Dangelico & Pujari, 2010). Environmental issues relating to contamination or waste can be seen as an ineffective, inefficient and imperfect allocation of company resources (Porter & van der Linde, 1995). If a company orients itself towards sustainability, it will achieve efficiency gains, which are reflected in cost reductions that result in improved competitiveness (Porter & van der Linde, 1995). For example, in 1975 the 3M Company launched the Program Pollution Prevention Pays (3P), where employees got integrated to identify opportunities for waste reduction. In the following 15 years, the 3m Company decreased their total emission by 50% and saved more than $500 million through the reduction of raw material, disposal, compliance and liability costs (Hart & Ahuja, 1996). Besides, the integration of environmental and social concerns into a company’s business philosophy can generate competitive advantages through a first mover strategy in emerging ‘green’ markets (Albertini, 2013). Those ‘green’ markets arise because of the increasing concerns of consumers about the social and the environmental performance of the products they buy (Prothero et al., 2010). Choi & Ng (2011) examined the relationship between the level of Sustainability and the evaluation of the company, such as the behavior of the consumers. Regarding to the social perspective, they use the Corporate Social Responsibility (CSR) as a criterion. They found out that a low level of CSR has a higher influence on the company’s evaluation than a high level of CSR (Choi & Ng, 2011). Besides positive associations, regarding to the CSR of a company, can improve a product evaluation, while negative associations can have negative impact on a product evaluation (Brown & Dacin, 1997). In addition, Folkes & Kamins (1999) discovered that key features of a product (e.g. good processing quality), has no influence on consumer’s perception, when a company act unethically. But, if a retail store conforms to recognized environmental and social standards (e.g. organic market, unpackaged store, fair trade products), it will have a substantial beneficial influence on the consumer’s endorsement (Handelman & Arnold, 1999). This leads to the following hypothesis: Hypothesis 1: A higher relative green and social score has an impact on the EBITDA and the Return on Assets of a company. Consistent with this, consumers tend to have a positive view of a company, if the company’s identity is consistent with their own identity (Sen & Bhattacharya, 2001). There is also a relationship between the price of a product and CSR. Mohr & Webb (2005) discovered that a low price seems to be negatively related to the purchase decision, if a company has a low CSR rating through a higher pollution of waste or child labor than similar companies. In the past few years, especially the stakeholders and also several shareholders have emboldened companies to do further investments in Corporate Social Responsibility. However, some managers have refused to do so because these further investments in corporate social responsibility are contrary to their profit maximization goals (McWilliams & Siegel, 2000). Frequently, companies are required to make a...

Über Autor(innen)

Fink, Alexander
Alexander Fink graduated in Economics (B.Sc.) and Business Economics (M.Sc.) at the German Universities of Duesseldorf and Magdeburg with the main focus on Competition & Innovation Economics, as well as Management & Finance, especially Technology Innovation Management.