The Effect of the Adoption of Environmental Strategies on Green Product Development: A Study of Companies on World Sustainability Indices

Abstract

To face the environmental sustainability challenge, a growing number of companies are shifting (or are planning to shift) toward more sustainability-oriented business models, adopting environmental strategies and developing green products. In this paper, we study the influence of the adoption of different environmental strategies on green product development and compare the behaviour of two samples of companies, assumed to have different levels of commitment towards sustainability: 255 companies listed in the Dow Jones Sustainability World Index and 255 in the Dow Jones Titans Indexes. These companies are worldwide located and belong to several industries. Data have been collected through the content analysis of companies 'web-sites and documents, by means of specific keywords, and analyzed though regression. Results show that green product development cannot be conceived as a standing alone practice within companies, but it needs to be supported by environmental strategies. In particular, companies more committed to environmental sustainability develop green products through a comprehensive adoption of environmental strategies. Introduction Environmental sustainability is no longer being questioned as a passing trend but has become a relevant issue both for companies and society (Nidumolu et al., 2009). In this context, the development of green products may play an essential role in helping companies and economies towards environmental sustainability (e.g, Commission of the European Communities, 2001). In order to face the environmental sustainability challenges, companies adopt specific environmental strategies (e.g. Stead and Stead, 2000; Aragon-Correa and Sharma, 2003; Hoffman, 2000; 2008; Orsato, 2006). Some attempts to integrate green product development within the broader context of environmental strategies have been done (Hart, 1997; KoIk and Pinkse, 2005; Orsato, 2006). Nevertheless, the relationship between different types of environmental strategies and Hie development of green products remains a quite neglected area. In the paper of Albino et al. (2009), there is first evidence that higher implementation levels of environmental strategies are positively linked to the development of green products for companies with strong commitment toward environmental sustainability (henceforth sustainabilitydriven companies). However, further research is needed to understand which are the environmental strategies more supportive for green product development, and if the relationship between each environmental strategy and green product development is influenced by the degree of company's commitment towards sustainability. The aim of this paper is, thus, to study the influence of the adoption of different environmental strategies on green product development and to compare the behaviour of two kinds of companies: sustainability-driven companies and companies with similar characteristics but without a recognized specific commitment towards sustainability. The paper is structured as follows. We first briefly review the most relevant literature on environmental strategies and green product development. After that, existing literature gaps are identified and research questions and hypotheses are presented. We then report the research methodology, data analysis and results. In the last section, we discuss the relationships between environmental strategies and green product development, providing a comparison between sustainability-driven and other companies, we present managerial implications from the study, and we conclude with suggestions for future research. Theoretical framework Environmental strategies New environmental regulations and standards, growing stakeholders' pressures, and the development of new clean technologies make the competitive scenario around environmental issues highly dynamic (Bansal and Roth, 2000; Sharma and Vredenburg, 1998; Murillo-Luna et al., 2008). To tackle it companies implement specific environmental strategies (e. …