Firms routinely adjust to external and internal stimuli, especially customers and each other. The question is not whether change will occur; the question is how fundamental that change will be, especially as evolutionary change may well make more fundamental change less problematic.
There are many examples of the evolution of the private firm in response to environmental stimulus. Corporate environmental codes of behavior, both at the firm level and at the trade-group level, have proliferated.
Elements of these codes begin to reflect the trends discussed above. For example, the CMA Product Stewardship Code includes a requirement that CMA members encourage distributors and direct product receives to implement proper health, safety, and environmental practices, an indirect extension of the CMA member firm into the customer chain resulting directly from the desire to improve the life cycle impacts of the product in this case, at the use stage. Other trade-group activities include the development of guidebooks for environmentally preferable technologies and practices, such as the American Electronics Association's DFE manual, which is aimed at institutionalizing.
Regulatory programs already in effect also reflect these trends. Germany has adopted a packaging take-back law; Netherlands has also done so through an agreement, or covenant, with relevant industrial associations. Postconsumer take-back of complex manufactured products is being considered in Germany. Netherlands, Sweden, Austria, Denmark, France, Japan, and other countries and is already a part of some voluntary ecolabeling schemes such as the Blue Angel requirements for personal computers.
The U. Emissions of listed materials have declined substantially, and reduced emissions and pollution prevention are now part of the technology choice process for many facilities. Significant in themselves, such regulatory requirements—and their reflection in most of the industrial codes of behavior referenced above—are a first step toward manufacturing becoming a collaborative effort among the firms involved, the suppliers and customers, the community in which manufacturing occurs, and the host culture Graedel and Allenby, Those who were not in manufacturing when each facility was a barony unto itself as is still true in too many cases cannot realize what a fundamental cultural change has already taken place within leading firms.
The above discussion indicates that there are at least some powerful trends driving a redefinition of the firm. In particular, these drivers—which face equally strong opposing forces—would tend to create a firm that is larger in scale and scope and that has explicitly assumed at least some of the responsibility for mitigating existing environmental perturbations and transitioning toward a more sustainable global economic state. The implications of such an evolution of the firm are substantial, and a few of these are highlighted below.
It is worth noting that the discussion becomes unabashedly speculative at this point. Shifting to an environmentally sustainable future places inconsistent demands on firms. On the one hand, it is likely that the rapid evolution of environmentally appropriate technologies—with technology taken in its broadest sense as the means by which a society provides its members with quality of life—is necessary to avoid potential discontinuous shifts in natural systems environmental catastrophes.
Rapidly changing markets containing highly competitive firms tend to be the most innovative and would thus be desirable in an economy moving toward sustainability. On the other hand, as discussed above, the economic and social trends generated in response to those perturbations appear to be implying the need for larger firms in more collaborative structures with significant, if unspecified, public interest components in their goal structures.
Such an economic. It is also likely that, at least initially, those public interest components, will be imposed by regulation rather than internally generated; they are thus liable to be rigid rather than flexible. Technologies will be frozen and incentives for innovation reduced, not expanded. Certainly, that is the case in the United States.
Laws such as the Resource Conservation and Recovery Act or the newly amended Clean Air Act are characterized by inflexible regulation of frequently outdated end-of-pipe control technologies rather than policies designed to elicit desirable corporate behavior and technological evolution. Large, inflexibly regulated organizations are not noted for their innovative strength or ability to change rapidly. Moreover, assume for discussions' sake that it is desirable for firms to become largely responsible for achieving sustainability and thus develop the requisite power to perform the necessary functions, probably at the expense of the nation-state.
The transition period would be quite difficult. The credibility of private firms on environmental issues is minimal at best, and public trust is virtually nonexistent. How would firms be regulated over the transition period to assure that they were able to meet accountability standards demanded by political reality and imposed by a public that is, for all intents and purposes, technologically and environmentally illiterate while they experiment with sustainability strategies? In sum, there is a need for accelerated flexibility and innovation at a time when trends seem to favor large, relatively inflexible organizations.
This is not an insoluble dilemma, but it calls for far more sophistication than has been yet demonstrated. Another subtlety is that it is not the development but the diffusion of environmentally appropriate technologies that is critical. New technologies are developed all the time; most, even if environmentally preferable, are discarded for any a number of reasons. Only technologies that actually diffuse through the economy and thus change hopefully reduce the environmental impacts associated with providing a unit of function to the consumer are meaningful to the question of sustainability.
This makes the question of the proper structure of the firm even more complex. Technology development is an engineering and scientific function, but technology diffusion becomes a question of culture, firm organization both formal and informal , public policy, and a myriad of other, complex, social phenomena that are not well understood. Having identified some of the difficulties raised by current trends, let us return to the fundamental question: What form of agents within the existing economic system and what boundary conditions on their behavior will be most effective in moving the economy toward sustainability, given that sustainability is likely to be an emergent characteristic of a suitably self-structured economic.
To this question a tentative answer is offered, albeit more in hopes of stimulating discussion than in any firm belief in its correctness. Initially, an interesting conceptual point should be noted. This paper is implicitly assuming that,through policies or individual initiatives, firms can be structured within the context of a complex economy to migrate toward a long-term stable carrying capacity, or sustainability.
Sustainability, however, is quite possibly going to be an emergent characteristic of a properly bounded and structured economy, thus unrecognizable until achieved. One must wonder whether we are capable of understanding this complex system or acting on that understanding so as to structure it to result in the emergence of the desirable self-organization. In simple terms, what does it mean operationally when a complex system ourselves, our cultures, our economies begins to become so fundamentally internally self-referential?
This is not, obviously, a new issue. Throughout history, people have taken great pleasure in writing about themselves in myriad ways. Nonetheless, the issue is now raised in a more critical context. Avoiding serious cultural, social, economic, and population perturbations may depend on humanity's ability to understand complex systems economies, and physical, financial, cultural as well as underlying natural systems and how and where we may be able to interfere with and change them constructively. This is not a skill we as individuals or societies have developed.
In this light, then, there may be one significant advantage to the profit-driven model of the corporation: It is relatively easy to establish meaningful boundary conditions for such an agent. Simplistic economic models to the contrary, firms already incorporate many aspects of their cultures and societies within their operations and are able to adopt more even as the dominance of the profit motivation is maintained.
Action 5: Continue efforts to improve the efficiency and soundness of the financial system. Nonetheless, it seems at least defensible that it is desirable to maintain the current fundamental structure of private corporations while not interfering in the adjustments they are already making as discussed above and placing far greater emphasis on understanding industrial ecosystems so as to be able to define and implement appropriate public policy. Command-and-control policies, such as one or two child policies, should be a last resort, but even such controversial policies would arguably be preferable to a world of 11 billion people. This item is printed on demand. However, this requires specific technological adaptations, and the normal route of running a CHP unit continuously is currently more attractive for most biogas producers.
Manufacturing as a collaborative effort, increased environmental responsibility within economic constraints, and new models of interfirm organization to implement life cycle programs and responsibilities are trends that imply but do not necessitate a broadening of the firm's mandate to include, for example, responsibility and authority for achieving sustainability.
Moreover, maintaining the primacy of the profit motive in a sense maintains the natural selection pressures of the economy, which are arguably critical if rapid evolution within the system is sought. No externally imposed regulatory mandate can substitute for the constant pressure, the brutal frankness, of potential commercial failure.
We want to maintain Schumpeter's "gale of creative destruction" precisely because we need creativity and evolution. If, however, private corporations are to remain narrowly defined, public policy must become far more sophisticated. What will be required is the establishment of boundary conditions that propel the evolution—especially diffusion—of environmentally appropriate technologies leading to the achievement of sustainability, when those technologies cannot be defined until after the fact.
Some aspects of such a policy can be defined: more and better data on emissions,. In a broader sense, we need much more information and knowledge to do this. For example, it is arguable, if not apparent, that complex systems such as the economy tend to self-organize and exhibit distributed, not centralized, control, feedback, and internal regulatory systems Allenby and Cooper, How can such distributed self-organizational behavior be stimulated, given that price structures, which might perform such a function, are unlikely to include all relevant environmental externalities for the foreseeable future?
How can we get there as a practical matter, when most existing environmental regulation, at least in the United States, is predicated on precisely the opposite assumption—the need for specific, mandated, central micromanagement of all behavior bearing on the environment? The details are daunting, but we may come under more stringent selective pressures than we expect or desire as environmental perturbations become manifest, which may result in far more rapid change than we anticipate.
Nonetheless, it seems at least defensible that it is desirable to maintain the current fundamental structure of private corporations while not interfering in the adjustments they are already making as discussed above and placing far greater emphasis on understanding industrial ecosystems so as to be able to define and implement appropriate public policy. Such policy, in turn, may be defined as the development and implementation of boundary conditions that create selective pressures, by acting upon private corporations, for the evolution of technologies that support the achievement of sustainability.
If this is the case, we have reached an important understanding. Corporations may indeed be evolving in response to changes in the boundary conditions affecting them. The changes result from increased anthropogenic environmental perturbations and concomitant regulatory developments. We should not expect otherwise. However, private firms should not be fundamentally redefined and, to the extent public policies have created trends to do so, must be carefully evaluated and monitored.
Meanwhile, the public policy challenge lies not in traditional environmental regulation or increasingly stringent end-of-pipe regulation, but in the establishment of boundary conditions that encourage private firms and the economy as a whole to self-organize in a sustainable structure.
The terms "corporation" and "firm" as used in this paper refer to private, for-profit entities established under various state and national general incorporation statutes, as opposed to non-profit organizations and governmental entities. There is a large literature on whether corporations should be redefined to include public-interest factors explicitly among their goals or whether they are assuming responsibilities—such as the provision of health care and support for older citizens or the conduct of international trade and control of global financial structures—formerly provided directly or indirectly by the nation-.
The question of whether firms, especially large transnationals, are participating in the devolution of the nation-states' responsibilities to others, including both local and international political units, is fascinating but far beyond the scope of this paper. Nonetheless, the trends discussed in this paper can be seen as elements of what appears to be currently accelerating shifts of power and responsibilities among political and economic entities at all levels.
Any economy consists of a number of agents—suppliers, consumers, regulators, etc. Additionally, some interesting work is being done on the self organization of loosely linked groups of firms that form frequently successful and innovative industrial districts, such as Silicon Valley in the United States, or the collection of textile firms near Florence, Italy, known as ''The Third Italy.
Note that in any such analysis, only a limited class of agents is being considered and that these agents both modify and are modified by—coevolve—all other elements of the system. Such a substitution of inputs is already evident in the transportation sector, where advanced computing technology, on-board electronic systems, sensors, and other information systems are being used to meet increasingly stringent environmental constraints.
See, generally, Auzins and Wilhelm, ; The Economist, Note that this is a separate issue from the so-called green accounting problem, arising when management accounting systems include environmental costs and liabilities in overhead, thus reducing the ability of managers to identify and reduce such costs and the associated environmental impacts Macve, this volume; Todd, Social costs are not included in management accounting systems. Not in all cases. Note, for example, the structure of postconsumer take-back in the automobile industry in the United States: Some 65 to 70 percent of automobiles by weight are recycled, and many subassemblies are refurbished rebuilt and placed back into commerce without any explicit control mechanism.
A wide variety of parts dealers, junkyards, scrap operators, and secondary smelters have formed a very effective recycling system, organized only through mutual economic self-interest Klimisch, The self-organizing properties of complex systems cannot be overlooked, but more study is required to learn what conditions favor the evolution of such behavior. Why are white goods or electronic items not similarly recycled? What boundary conditions might result in the self-organization of a similar system for such products? More pessimistically, what changes in current policies might result in the disruption of an already fairly efficient demanufacturing operation?
Sustainable Technologies, Policies, and Constraints in the Green Economy: Environment & Agriculture Books. Sustainable Technologies, Policies, and Constraints in the Green Economy [ Andrei Jean-Vasile, Turek Rahoveanu Adrian, Jonel Subic, Dorel Dusmanescu] on.
The need for firms to integrate technology and environment throughout their operations and recognize environmental issues as strategic for the firm is arising just as the shift from regional and nation-state to global economic competition at least among developed countries and from internal management based on mass manufacturing paradigms to information-based non-hierarchical models is occurring.
Environmental issues then become one of several forces fostering radical change in the firm, and such change is easier when more than one driver is at work. In some ways, the process appears analogous to punctuated evolution, but consideration of whether this is only a superficial similarity or evidence of some deeper similarity based on principles of behavior of complex systems is beyond the scope of this paper. The reader will have noted, possibly skeptically, that this paper assumes that sustainability can be achieved without social, economic, or natural upheavals.
This is, indeed, only an assumption, as the author is not aware of any data that convincingly support such an optimistic conclusion. However, it seems best in this matter to adhere to the philosophy of pragmatism espoused by William James and act as if sustainability is achievable, lest, by the failure to act, the opposite become a self-fulfilling prophecy.
Allenby, B. Design for Environment: Implementing Industrial Ecology. Industrial ecology: The materials scientist in an environmentally constrained world. MRS Bulletin 17 3 — Industrial ecology gets down to earth. Understanding industrial ecology from a biological systems perspective. Total Quality Environmental Management 3 3 — The Hows and Whys of Design for the Environment.