Business Strategy and the Environment

Bus. Strat. Env. 18, 500514 (2009)

Published online 18 February 2008 in Wiley InterScience
(www.interscience.wiley.com) DOI: 10.1002/bse.611

Factors Affecting Corporate Environmental

Strategy in Spanish Industrial Firms
Elena Fraj-Andrs,* Eva Martnez-Salinas and Jorge Matute-Vallejo
Faculty of Economics and Business Studies, Department of Economy and
Business Administration, Zaragoza, Spain

ABSTRACT
During the last 30 years, environmental issues have become very important for governments, consumers and companies. Firms, aware of their environmental responsibilities,
have started to show an important commitment to society and the natural environment,
developing environmentally friendly strategies. However, the factors that determine the
choice of environmental strategies are still unclear. They range from ethical motivations to
social, legislative and competitive factors. This study analyses the main antecedents that
inuence rms ecological behaviour, distinguishing between environmental orientation
and environmental strategies. The hypotheses proposed in this study are analysed by
means of a structural equation model on a sample of 235 industrial rms. The results reveal
that competitive motivations and management commitment are the most important factors
explaining why rms incorporate environmental issues into their strategic planning process.
Moreover, management commitment is a critical factor for rms because managers perception about customers ecological concern directly inuences rms environmental
behaviour. Copyright 2008 John Wiley & Sons, Ltd and ERP Environment.
Received 22 June 2007; revised 8 November 2007; accepted 12 November 2007
Keywords: environmental strategy; environmental orientation; sustainable development; environmental marketing

Introduction

URING RECENT DECADES, FIRMS HAVE CARRIED OUT AN ENVIRONMENTAL TRANSFORMATION PROCESS
adopting less polluting technologies and developing and commercializing green products that have
considerably reduced their environmental externalities. Some authors argue that this transformation
process reects a new way of conceiving the rms relations with its external environment, introducing
a new economic paradigm that considers that companies economic activities are closely linked with sustainability
issues (Garrod and Chadwick, 1996; Menon, Menon, Chowdhury and Jankovich, 1999; Banerjee, 2002). Nevertheless, the number of rms that have adopted a proactive position towards the external environment is still limited
to those that perceive certain environmental motivations for embracing ecological aspects (Gonzlez and Gonzlez,
2005).

* Correspondence to: Elena Fraj-Andrs, Associate Professor in Marketing, Faculty of Economics and Business Studies, Department of Economy
and Business Administration, C/Gran Via 2, 50005 Zaragoza, Spain. E-mail: efraj@unizar.es
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Corporate Environmental Strategy in Spanish Industrial Firms

501

Several studies focusing on environmental management have analysed different aspects related to the implementation of the ecological factor into the strategic planning process. These include the repercussions of introducing an environmental certication system into management strategies (Miles et al., 1997), interorganizational
relations and internal management activities (Shrivastava, 1995a) and the inuence of different factors on the
environmental responsibility of rms (Banerjee, 2002; Pujari et al., 2004). Previous literature reveals some evidence about the main determinants of rms environmental behaviour (Wong et al., 1996; Stone and Wakeeld,
2000) and concludes that the main antecedents of green initiatives are based on legislative, social and competitive
pressures (Shrivastava, 1995b; Bansal and Roth, 2000; Christmann, 2000; Banerjee et al., 2003; Sharma and
Henriques, 2005; Saha and Darnton, 2005; Rivera and Molero, 2006). However, there is a lack of literature about
the implementation of environmental strategies and few studies have addressed the impact of the environmental
factor on the corporate and marketing strategies of industrial rms. Moreover, there is still little literature that has
empirically analysed the inuence of the different factors that determine companies environmental behaviour.
This study attempts to contribute to the knowledge of the environmental responsibility of rms in the Spanish
industrial sector, analysing how legislative, social, competitive and ethical pressures determine rms environmental behaviour. It applies the model proposed by Banerjee et al. (2003) that, using the politicaleconomical theory
(Hahn, 1990; Menon and Menon, 1997; Langerak, Peelen and van der Veen, 1998) and stakeholder theory (Polonsky, 1995; Polonsky and Ottman, 1998), explains that rms environmental behaviour and strategies depend on
some internal and external forces to the rm. To describe rms environmental behaviour, Banerjee (2002) and
later Banerjee et al. (2003) introduced the corporate environmentalism concept, which distinguishes between
the internal and external environmental orientations of rms, and corporate and marketing environmental
strategies.
To reach the objectives pursued in this study, the rest of the paper is structured as follows. First, we review the
literature on the corporate environmentalism and the environmental pressure factors, which will be the basis of
the conceptual model and hypotheses. Second, the methodology used to obtain the information will be explained.
Third, we describe the analyses used to test the hypotheses and the results. Finally, the conclusions and implications will be presented.

The Integration of Environmental Issues into Firms Strategy

Previous studies have traditionally considered rms environmental attitude from a linear perspective that identies different behaviours that range from negative to proactive strategies (Roome, 1992; Post and Altman, 1994;
Henriques and Sadorsky, 1999; Fernndez and Nieto, 2004). Nevertheless, some authors have criticized this view,
arguing that rms can adopt reactive positions when faced with environmental threats, and can take advantage of
proactive strategies at certain moments (Kolk and Mauser, 2002; Gonzlez and Gonzlez, 2005). Following this
idea, Banerjee et al. (2003) proposed the concept of rms corporate environmentalism as a strategy that embraces
two different dimensions of their environmental behaviour: environmental orientation and environmental
strategy.
Environmental orientation refers to the rms overall responsibility towards the environment. In other words,
it means the recognition of the impact that the companys economic activities have on the natural environment
and the need to minimize it. The adoption of environmental issues into the strategic planning process requires a
prior change in the rms culture in all functional areas. Thus, rms environmental culture may serve as a behavioural philosophy for the whole organization (Chamorro and Baegil, 2006).
Banerjee (2002) distinguishes between internal and external environmental orientations. The former focuses
on the rms internal values, its ethics and its commitment to environmental ideals across all the hierarchical
levels of the rm. External orientation refers to the relationship of the rm with its external stakeholders, emphasizing the need to satisfy their demands through actions that respect the environment and foster its protection. In
the same line, Kotler (1982) considered the environment as a factor of the rms external macroenvironment.
However, management actions should not limit themselves to merely interpreting external needs, but adopt a new
philosophy that promotes policies aimed at environmental protection, in both the internal and external settings of
the company (Mier-Tern, 1997).
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A companys strategic planning process can also be inuenced by environmental variables. Firms have discovered that environmental strategies may lead to the improvement of such different aspects as product quality,
reduction of production costs or process exibility. The integration of these variables may occur at different strategic levels (Schendel and Hofer, 1979; Gonzlez and Gonzlez, 2005), depending on managements perception
of the relevance of such issues (Banerjee, 2001). In this respect, we can distinguish two levels where environmental strategies can be implemented: corporate environmental strategy and environmental marketing strategy
(Banerjee, 2001, 2002).
Corporate strategy includes decisions about entering new markets, adopting more environmentally friendly
technologies, new plant location and R+D+i investments. Corporate strategy determines the type of business
the rm has to focus on in order to accomplish its strategic objectives. In consequence, this strategy also conditions other decisions such as the product-market the rm will target or the composition of its business portfolio
(Banerjee, 2001). Therefore, it is essential to provide the necessary resources in order to gain a competitive advantage in the subsequent markets the rm may enter.
Environmental marketing strategy involves decisions at the business and functional levels. Business level actions
attempt to improve the rms competitive position through commercial strategies, while the functional strategy
manages planning operations procedures in different functions such as marketing or research and development.
Environmental marketing strategy tries to satisfy the needs of a segment of customers that is demanding greener
products and services through different actions such as the launch of new ecological products, the redesign of
products and packaging in order to minimize their environmental impact, the use of ecological messages in the
rms advertising, the development of specic programmes in order to educate consumers and the development
of strategic alliances with environmental organizations. Consequently, within this context, environmental marketing strategy not only involves the commercialization of green goods and services with the purpose of satisfying
the green customers needs, it also requires the greening of systems and processes in order to avoid consumers
apathy or distrust of environmental claims (Crane, 2000; Prakash, 2002).

Factors Affecting Environmental Orientation and Strategies

Previous research has used two different, though interrelated, viewpoints in order to analyse the antecedents of
organizations environmental attitudes.
On the one hand, some authors have considered that the degree of adoption of environmental strategies depends
on a series of internal and external forces within the politicaleconomical context in which the rms operate (Hahn,
1990; Menon and Menon, 1997; Langerak et al., 1998). This approach stems from the premise that there are four
aspects that explain the degree of adoption and success of environmental strategies: rst, external polity, which
involves the intensity of the regulatory and institutional environment and consumer sensitivity to ecological ideals;
second, external economy, which expresses the competitiveness and attraction of the green market targeted by the
rm; third, internal polity, which encompasses managements sensitivity to environmental commitment, and
fourth, internal economy, which is related to the structure of the organization and its specialization, centralization
and formalization.
On the other hand, the stakeholder theory has been profusely used to identify the groups or individuals that
inuence, or may be inuenced by, the accomplishment of the organizations objectives. Different stakeholders,
such as the community, suppliers, governments, customers or stockholders, may have an effect on the rms
orientation and strategies (Polonsky, 1995; Polonsky and Ottman, 1998; Buysse and Verbeke, 2003; Delmas and
Toffel, 2004; Gonzlez and Gonzlez, 2006).
Following Banerjee (2002), our paper adopts an approach based on these two theories, identifying four environmental behaviour antecedents: customer and social concern; environmental regulation; management commitment to the environment and expectations of gaining competitive advantage with proactive initiatives.
Social pressure from activists and consumers may inuence the rms environmental strategies in two ways: rst,
by projecting an environmentally friendly image that expresses a companys responsibility towards the natural environment; second, by developing environmental strategies aimed at the environmentally friendly consumer segment.
Consumers commitment to sustainability issues has triggered a change in the purchase pattern of individuals and
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Corporate Environmental Strategy in Spanish Industrial Firms

503

they have started to demand not only more environmentally friendly products but also a change in the sensitivity of
economic agents towards social and environmental problems (Schuwerk and Lefkokk-Hagius, 1995; Sheu and Lo,
2005; Geng et al., 2007). Wong et al. (1996) found that consumer pressure was the factor that most inuenced rms
to launch ecological or less polluting products. Bansal and Roth (2000) concluded that one of the reasons why rms
assume responsibilities towards the environment is their search for social legitimacy. According to these authors,
rms take social actions to adapt their image to social values in general and to customers in particular. Recently, in
a study carried out in Norway, Doonan et al. (2005) found that consumer demand plays the most important role as
a driver of organizations environmental investments. In line with these results, this pressure factor is expected to
inuence orientation and environmental strategy.
H1a.
H1b.
H2a.
H2b.

Social concern will determine the rms internal environmental orientation.

Social concern will determine the rms external environmental orientation.
Social concern will determine the rms corporate environmental strategy.
Social concern will determine the rms environmental marketing strategy.

Environmental regulation has traditionally been the main driving force behind rms environmental actions
(Bansal and Roth, 2000; Banerjee et al., 2003). Fines and penalties for non-compliance with regulations have led
rms to adopt a more respectful attitude toward the environment, since government regulations exert a coercive
power on industry. Wong et al. (1996) observed that regulation is one of the major forces that encourage rms to
invest more in non-polluting technologies. Menon and Menon (1997) stated that, in highly regulated settings,
rms would be more liable to develop environmental strategies that help to guarantee their competitive positions.
Langerak et al. (1998) conrmed that regulatory intensity and institutional pressure were important reasons for
implementing environmental marketing programmes. Similarly, Stone and Wakeeld (2000) maintain that regulatory pressure has forced rms to consider the environmental factor within their strategic planning process. Saha
and Darnton (2005) hold that regulatory pressure is one of the main reasons for rms to adopt an environmental
orientation. Therefore, we expect environmental regulation to inuence rms environmental orientation and
strategies.
H3a.
H3b.
H4a.
H4b.

Environmental regulation will determine the rms internal environmental orientation.

Environmental regulation will determine the rms external environmental orientation.
Environmental regulation will determine the rms corporate environmental strategy.
Environmental regulation will determine the rms environmental marketing strategy.

Although some organizations see environmental requirements as potential costs and nd it hard to translate
green arguments in terms of added benets for the customers (Simpson et al., 2004), competitive advantage motivations have a driving effect on rms environmental behaviour because environmental management can lead to
the maximizing of prots by improving incomes or reducing costs. According to Porter and van der Linde (1995)
and Russo and Fouts (1997), environmental management constitutes an opportunity to increase the productivity
of resources by reducing the consumption of raw materials and energy supplies. Shrivastava (1995b) found different competitive advantages in cost reduction, quality improvement, reduction of reliabilities and public image,
among others, that a corporation obtained after integrating environmental technologies that go beyond compliance.
Furthermore, rms that target the ecological consumer segment can take advantage of being the rst to offer less
polluting products (Ottman, 1995; Roy, 1999). Miles and Covin (2000) point out that the rms advantage in
reputation/image will favour a more protable exploitation of marketing opportunities and, thus, increase market
value. Consequently, the possibility of gaining competitive advantage associated with environmental actions is a
motivating factor for the rms environmental proactivity. Accordingly, we hypothesize the following.
H5a.
H5b.
H6a.
H6b.

Competitive advantage will determine the rms internal environmental orientation.

Competitive advantage will determine the rms external environmental orientation.
Competitive advantage will determine the rms corporate environmental strategy.
Competitive advantage will determine the rms environmental marketing strategy.

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Finally, the role of top management is also a key asset in the process of adopting a more respectful attitude
towards the environment (Aragn-Correa et al., 2004). Management commitment to environmental causes is a powerful internal political force (Drumwright, 1994) that reects that managers ideals, values and, even, lifestyle are
bound to have a direct effect on their degree of commitment to the environment, which will eventually determine
the development of environmental orientation and strategies (Fineman, 1997). Empirical evidence also exists for
the relationship between managerial knowledge of the environmental problem and the integration of the environment into marketing strategies (Langerak et al., 1998). Top management demonstrates its commitment to sustainability by appointing senior managers responsible for overseeing the rms environmental orientation and
strategies. Managerial perceptions of the importance of stakeholder pressures are associated with a more proactive
stance toward environmental commitment (Henriques and Sadorsky, 1999). Aragn-Correa et al. (2004) found
that rms with one or more managers responsible for environmental issues reached higher levels of commitment
than rms where this responsibility was not considered. Stone and Wakeeld (2000) and, later, Stone et al. (2004)
conrmed that the more emphasis top management puts on environmental issues, the higher the effort to generate, spread and respond to these issues. On the basis of these results, we hypothesize the following.
H7a.
H7b.
H8a.
H8b.

Management commitment will determine the rms internal environmental orientation.

Management commitment will determine the rms external environmental orientation.
Management commitment will determine the rms environmental corporate orientation.
Management commitment will determine the rms environmental marketing orientation.

Some authors claim that the most polluting industrial rms face more social pressure because consumers perceive that they are responsible for most of the environmental problems caused by the emission of pollutants (Peretz
et al., 1997). Thus, we propose that the effect of public concern on management commitment will be deeper in
these industries. In addition, these rms are often subject to stricter environmental legislation (Hoffman, 1999)
and, therefore, the effect of regulatory forces on management commitment will also be stronger. Furthermore,
the higher managements perception of the benets obtained from developing environmental strategies, the more
likely their implementation (Henriques and Sadorsky, 1999). Rivera and Molero (2006) found a positive relationship between the social and legislative environmental pressure perceived by management and the design of environmental strategies. These results lead us to hypothesize the following.
H9. Social concern will determine management commitment to the environment.
H10. Regulatory forces will determine management commitment to the environment.
H11. Competitive advantage will determine management commitment to the environment.
In order to test these hypotheses, we will now proceed to explain the data collection process.

Methodology
Data Collection
The target population of the study was industrial rms belonging to the Chamber of Commerce and Industry of
Aragn (Spain) that fullled the following requirements: rst, that these rms belong to the metal, machinery,
electric and electronics, construction, services, plastic, rubber and chemistry, food, commercial and other sectors;
second, that they had at least 20 employees, because these companies are more likely to have a specic department
or manager responsible for environmental issues. Furthermore, larger organizations tend to carry out more environmental initiatives, as they show a greater commitment towards sustainable development (Bansal, 2005).
A postal survey was designed and sent to the general managers of the 532 companies that comprised the nal
target population. A presentation letter was attached to each questionnaire, in which their collaboration was
requested and, nally, in order to increase the response rate, the surveys were mailed twice. 172 responses were
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Bus. Strat. Env. 18, 500514 (2009)

DOI: 10.1002/bse

Corporate Environmental Strategy in Spanish Industrial Firms

Macrosectors

Target population
N

Metal
Machinery, electric and electronics
Construction
Services
Plastic, rubber and chemistry
Food
Commercial
Other
Total

505

107
75
77
75
46
53
45
54
532

Final sample
%
20.1
14
14.5
14.1
8.6
10
8.5
10.2
100

61
31
28
28
24
22
21
20
235

26
13.2
11.9
11.9
10.2
9.4
8.9
8.5
100

Table 1. Percentage distribution by macrosectors

obtained in the rst mailing and 63 in the second, making a total sample of 235 rms, which means a global
response rate of 44.18%.
As can be seen in Table 1, the percentage distribution of the sample based on the macrosectors was maintained.
The most important macrosectors are metal and machinery/electric/electronics, followed by construction, services
and plastic/rubber/chemistry.
Measures
We have considered different scales to measure the environmental orientation and strategies and its antecedents.
We have used eight scales based on those proposed by Banerjee (2002) and later by Banerjee et al. (2003) that
have already been used in another market study on the consumer goods sector in a Spanish regional sample (Buil,
Fraj and Matute, 2006). These scales were validated and some items were eliminated, giving us a reduced version
of them (Table 2). Four of the scales refer to rms environmental behaviour antecedents, namely, social concern,
environmental regulation, the possibility of gaining competitive advantages and the management commitment.
The other four refer to the rms internal and external environmental orientation, and corporate and marketing
environmental strategy (Table 2). These scales range from one to six items, measured on a ve-point Likert scale
(1 = strongly disagree; 5 = strongly agree).
The social concern scale (SC) reects management perception of the importance that customers attach to environmental protection. The environmental regulation scale (ER) refers to the inuence of government regulations
on strategies and on the level of environmental regulations that the rm faces. Competitive advantage (CA) items
focus on the rms R&D investment, cost savings and growth opportunities in other markets. Management commitment (MC) reects the respondents perception of top management environmental commitment and support
for environmental initiatives.
Internal environmental orientation (IEO) reects the importance the rm attaches to the environment and the
company-wide diffusion of these values. External environmental orientation (EEO) relates the environmental principles to the rms stakeholders. In corporate environmental strategy (CES), we include items that assess the extent
to which the environmental factor is integrated into the rms strategic planning process. Finally, environmental
marketing strategy (EMS) measures the inuence of environmental issues on marketing mix decisions.

Validation of Scales
Although these concepts were validated in the nal consumer products sector, we consider it necessary to analyse
whether they are adequate for this new study focused on industrial companies. The validation process begins with
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506

E. Fraj-Andrs et al.

Social concern (SC)

SC. Our customers expect our rm to be environmentally friendly
Environmental regulation (ER)
ER1. Regulation by government agencies has greatly inuenced our rms environmental strategy
ER2. Environmental legislation can affect the continued growth of our rm
ER3. Stricter environmental regulation is a major reason why our rm is concerned about its impact on the natural
environment
Competitive advantage (CA)
CA1. By regularly investing in research and development on cleaner products and processes, our rm can be a leader in the
market
CA2. Our rm can enter lucrative new markets by adopting environmental strategies
CA3. Our rm can increase market share by making our current products more environmentally friendly
CA4. Reducing the environmental impact of our rms activities will lead to an improvement in the quality of our products and
processes
Management commitment (MC)
MC1. The top management team in our rm is committed to environmental preservation
MC2. Our rms environmental efforts receive full support from our top management
MC3. Our rms environmental strategies are driven by the top management team
Corporate environmentalism concept
Internal environmental orientation (IEO)
IEO1. At our rm, we make a concerted effort to make every employee understand the importance of environmental
preservation
IEO2. We try to promote environmental preservation as a major goal across all departments
IEO3. Our rm has a clear policy statement urging environmental awareness in every area of operations
IEO4. Environmental preservation is high priority activity in our rm
IEO5. Preserving the environment is a central corporate value in our rm
External environmental orientation (EEO)
EEO1. Our rm has a responsibility to preserve the environment
EEO2. Our rm strives for an image of environmental responsibility
Corporate environmental strategy (CES)
CES1. Our rm has integrated environmental issues into our strategic planning process
CES2. In our rm, quality includes reducing the environmental impact of products and processes
CES3. At our rm, we make every effort to link environmental objectives with other corporate goals
CES4. Our rm is engaged in developing products and processes that minimize environmental impact
CES5. Environmental protection is the driving force behind our rms strategies
CES6. Our rm develops products and processes that minimize environmental impact
Environmental marketing strategy (EMS)
EMS1. We emphasize the environmental aspects of our products and services in our ads
EMS2. The marketing strategies for our products and services have been considerably inuenced by environmental concerns
EMS3. In our rm, product-market decisions are always inuenced by environmental concern
EMS4. We highlight our commitment to environmental preservation in our corporate ads
Table 2. Pressure factors and corporate environmentalism measurements
The original measures can be obtained from Banerjee et al. (2003).

the exploratory factor analyses of the measurement scales, which will reveal their reliability through Cronbachs
alpha and item-to-total correlation. Given that the social concern scale is formed by only one indicator, its analysis
is not relevant but we can consider that it accurately reects the concept to be explained. With the exception of the
environmental regulation scale, with a Cronbachs alpha of 67%, the results proved that all the other scales
presented an adequate reliability, because their Cronbachs alpha exceeded 70% or was very close to this value
(Nunnally, 1978; Peter, 1979). This means that the scales are consistent. Furthermore, the item-to-total correlation
analysis indicated that, in all cases, the value of 0.5, and, thus, the minimum of 0.3 (Nurosis, 1993), was exceeded
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Bus. Strat. Env. 18, 500514 (2009)

DOI: 10.1002/bse

Corporate Environmental Strategy in Spanish Industrial Firms

Variable
SC
ER1
ER2
ER3
CA1
CA2
CA3
CA4
MC1
MC2
MC3
IEO1
IEO2
IEO3
IEO4
EEO1
EEO2
CES1
CES2
CES3
CES4
CES5
CES6
EMS1
EMS2
EMS3
EMS4

507

Mean

S.D.

SC

ER

CA

MC

IEO

EEO

CES

EMS

3.69
3.28

0.99
1.18

2.59

1.17

3.79

0.96

3.26

1.07

3.68

1.08

3.29

1.06

2.69

1.04

1
0.27*
0.05
0.11
0.25*
0.25*
0.24*
0.28*
0.49*
0.46*
0.38*
0.46*
0.47*
0.46*
0.44*
0.38*
0.49*
0.36*
0.33*
0.42*
0.44*
0.39*
0.41*
0.39*
0.36*
0.41*
0.45*

0.27*
0.99
0.43*
0.39*
0.27*
0.31*
0.29*
0.21*
0.36*
0.28*
0.29*
0.41*
0.38*
0.42*
0.38*
0.27*
0.36*
0.39*
0.27*
0.41*
0.36*
0.39*
0.33*
0.29*
0.31*
0.28*
0.34*

0.26*
0.31*
0.25**
0.09
0.68*
0.95*
0.95*
0.56*
0.29*
0.23*
0.24*
0.26*
0.28*
0.36*
0.36*
0.16*
0.29*
0.28*
0.24*
0.35*
0.30*
0.41*
0.42*
0.49*
0.49*
0.49*
0.42*

0.48*
0.34*
0.11
0.21*
0.32*
0.28*
0.25*
0.32*
0.90*
0.92*
0.89*
0.58*
0.66*
0.68*
0.62*
0.58*
0.65*
0.64*
0.55*
0.62*
0.62*
0.57*
0.56*
0.43*
0.39*
0.45*
0.51*

0.51*
0.43*
0.16**
0.23*
0.42*
0.35*
0.29*
0.44*
0.71*
0.66*
0.55*
0.92*
0.93*
0.89*
0.89*
0.69*
0.83*
0.81*
0.74*
0.83*
0.76*
0.74*
0.67*
0.55*
0.51*
0.55*
0.66*

0.48*
0.34*
0.16**
0.22*
0.34*
0.28*
0.19*
0.35*
0.67*
0.61*
0.55*
0.74*
0.79*
0.75*
0.74*
0.92*
0.92*
0.74*
0.72*
0.74*
0.73*
0.62*
0.63*
0.49*
0.45*
0.49*
0.54*

0.46*
0.42*
0.18*
0.21*
0.44*
0.40*
0.33*
0.48*
0.68*
0.63*
0.58*
0.79*
0.81*
0.81*
0.82*
0.68*
0.81*
0.85*
0.85*
0.92*
0.88*
0.82*
0.83*
0.65*
0.60*
0.64*
0.67*

0.46*
0.34*
0.20*
0.20*
0.44*
0.52*
0.49*
0.43*
0.50*
0.44*
0.42*
0.58*
0.57*
0.63*
0.61*
0.41*
0.61*
0.56*
0.52*
0.61*
0.58*
0.72*
0.73*
0.93*
0.89*
0.87*
0.86*

Table 3. Descriptive statistics and correlations of pressure factors and corporate environmentalism dimensions
S.D. = standard deviation; SC = social concern; ER = environmental regulation; CA = competitive advantage; MC = management
commitment; IEO = internal environmental orientation; EEO = external environmental orientation; CES = corporate environmental strategies; EMS = environmental marketing strategies.
Each item can be read in Table 2; variables were measured on a ve-point Likert scale.* p < 0.01; ** p < 0.05 (two tailed);
N = 235.

(except in the environmental regulation scale, where it was almost 0.5). Only two items in the competitive advantage scale (CA1 and CA4) were eliminated in order to increase its internal consistency.
The factor loadings of each item were signicant (>0.5) and the KaiserMeyerOlkin parameters and Barletts
sphericity test were within the required values, justifying the application of this technique. After the reliability
analysis, we proceeded to study its unidimensionality. The explained variance for each factor was, in all cases, well
over 50%, even in the competitive advantage and environmental orientation scales, formed by two items. Table 3
presents the descriptive statistics and correlations of each item of the pressure factors and the explained
variables.
The next step in our analysis was a conrmatory factor analysis (Table 4). Following the recommendations of
Jreskog and Srbom (1993), we decided to eliminate (1) items that were not signicant (t < 2.58, p = 0.01), (2)
items that presented non-signicant factor loadings ( < 0.5) and (3) those indicators that had no strong lineal
relationship (R2 < 0.5).
The results of this analysis recommended the removal of two items in the environmental regulation scale since
their R2 values were below 50%. As a result, the goodness of t of the conrmatory analysis substantially improved
with respect to the initial one. Using this model as a reference, we analysed the denitive reliability of the scales
through the statistics shown in Table 5. As can be seen, the denitive reliability of the scales is highly satisfactory
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Variables

Standardized factor loads (t-value)

R2

0.922* (21.23)
0.921* (23.81)
0.920* (18.77)
0.879* (16.97)
0.905* (17.15)
0.894* (15.33)
0.773* (15.2)
0.838* (16.74)
0.894* (21.34)
0.920* (25.11)
0.875* (20.42)
0.864* (19.97)
0.761* (12.49)
0.904* (20.48)
0.840* (19.3)
0.815* (17.13)
0.908* (22.63)
0.845* (18.58)
0.796* (17.41)
0.779* (16.45)
0.909* (22.52)
0.861* (17.61)
0.832* (16.79)
0.807* (15.69)

0.850
0.848
0.846
0.773
0.819
0.799
0.597
0.702
0.799
0.847
0.765
0.747
0.579
0.817
0.706
0.665
0.825
0.714
0.633
0.607
0.827
0.741
0.692
0.651

SC
ER1
CA2
CA3
MC1
MC2
MC3
IEO1
IEO2
IEO3
IEO4
IEO5
EEO1
EEO2
CES1
CES2
CES3
CES4
CES5
CES6
EMS1
EMS2
EMS3
EMS4

2 = 558; d.f. = 226; p < 0.001; CFI = 0.94; robust

CFI = 0.96; IFI = 0.94; RMSEA = 0.079

Goodness of t

Table 4. Standardized solution and goodness of t from the measurement model

See rst note to Table 3.

Final reliability

SC*

ER*

Cronbachs alpha ()
Composite reliability
Extracted variance analysis
Convergent validity
Discriminant validity

yes
yes

yes
yes

CA

MC

0.890
0.788
0.651

0.890
0.814
0.595

yes
yes

yes
yes

IEO

EEO

CES

EMS

Model

0.940
0.890
0.619
Validity
yes
yes

0.820
0.720
0.565

0.930
0.882
0.556

0.910
0.849
0.584

0.963
0.973
0.598

yes
yes

yes
yes

yes
yes

Table 5. Final reliability and validity

See rst note to Table 3; * scales with only one indicator.
The composite reliability coefcient is used as another measurement of the scales internal coherence. Its optimal threshold is
0.70 and some exibility of interpretation is allowed. As for the coefcient derived from the extracted variance analysis, it enables
us to nd the global amount of the variance in the items explained by the latent variable. It is recommendable that its values are
high, above 0.50 (Hair et al., 1999).

because all the coefcients meet or exceed the established optimum parameters. Moreover, the scales present
a global validity because all the items present factor loadings above 50% (convergent validity) and the value 1
was not found in the condence intervals of the correlations estimated for each pair of dimensions (discriminant
validity).
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Corporate Environmental Strategy in Spanish Industrial Firms

509

Once the global measurement model had been accepted by conrmatory factor analyses and through the nal
reliability and validity of the scales, we proceeded to run a structural equation analysis.

Analysis of Results
The dimensions obtained in the conrmatory factor analysis have been used as input variables in the causal
analysis. It is of interest to know whether social concern, environmental regulation, competitive advantage and
management commitment inuence companies environmental orientation and strategies. Consequently, a structural equation analysis using EQS 6.1 for Windows was carried out. Environmental orientation and strategies were
the dependent variables of the analysis, while the independent variables were the antecedents of rms environmental behaviour. Management commitment also acts as a dependent variable when analysing the inuence of
social concern, environmental regulation and competitive advantage on it.
Table 6 shows the results of the structural model outlined in Figure 1. It contains the standardized regression
coefcients and their t-values, the goodness of t of the causal model, the regression equations for each dependent
variable and the explained variance (R2).

Hypotheses

Standardized coefcients (t)

H1a (SC =>IEO)

H1b (SC =>EEO)
H2a (SC =>CES)
H2b (SC =>EMS)
H3a (ER =>IEO)
H3b (ER =>EEO)
H4a (ER=>CES)
H4b (ER =>EMS)
H5a (CA =>IEO)
H5b (CA =>EEO)
H6a (CA =>CES)
H6b (CA =>EMS)
H7a (MC =>IEO)
H7b (MC =>EEO)
H8a (MC =>CES)
H8b (MC =>EMS)
H9 (SC =>MC)
H10 (ER =>MC)
H11 (CA =>MC)

0.233** (2,45)
0.268* (2,63)
0.179*** (1,68)
0.326* (3,93)
0.172** (2,24)
0.104 (1,31)
0.178** (2,32)
0.156** (2,24)
0.611* (8,14)
0.592* (6,25)
0.708* (8,78)
0.555* (7,21)
0.413** (2,37)
0.420**(2,22)
0.374** (1,93)
0.101 (0,78)
0.489* (6,53)
0.214* (3,05)
0.294*** (1,72)

yes
yes
yes
yes
yes
no
yes
yes
yes
yes
yes
yes
yes
yes
yes
no
yes
yes
yes

Regression equations (from standardized solution)

IEO = 0.233 SC + 0.172 ER + 0.611 CA + 0.412 MC
R2 = 0.902
EEO = 0.268 SC + 0.104 ER + 0.592 CA + 0.420 MC
R2 = 0.884
CES = 0.179 SC + 0.178 ER + 0.708 CA + 0.374 MC
R2 = 0.954
EMS = 0.326 SC + 0.156 ER + 0.555 CA + 0.101 MC
R2 = 0.521
MC = 0.489 SC + 0.214 ER + 0.294 CA
R2 = 0.372
Goodness of t

2 = 647.12; d.f = 235; CFI = 0.84; IFI = 0.841;

robust CFI = 0.91; RMSEA = 0.087

Table 6. Data from the structural model: hypothesis contrast

* Signicant at 1% level; ** at 5% level; *** at 10% level.
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E. Fraj-Andrs et al.
Corporate environmentalism
Internal
Environmental
Orientation
(IEO)

H1a +

Social
Concern

H1b +

(SC)
H7a +

H 9+
H3a +
H3b +

Environmental
Regulation

H10+

Management
Commitment
(MC)

(ER)

H11+

H5a +

H4b +

H8a +
H4a +
H8b +

H6a +

Competitive
Advantage
(CA)

H7b +

H6b +

External
Environmental
Orientation
(EEO)
Corporate
Environmental
Strategy

H5b +

H2a +

(CES)
Environmental
Marketing
Strategy

H2b +

(EMS)

Figure 1. Relationship between environmental pressure factors and the corporate environmentalism concept.

The positive coefcients of the relationship between social concern and the rms environmental attitude (H1a,b
and H2a,b) prove that social pressure is a determinant factor of the internal and external environmental orientation.
It is also a determinant of marketing strategies and, to a lesser extent, of corporate strategy. Thus, the results
support the four hypotheses. The data suggest that rms whose customers expect their economic activity to respect
the environment will be more likely to incorporate environmental aspects into their internal values and into their
image among other stakeholders. In addition, this will also inuence corporate and marketing strategic
decisions.
The relatively low, though positive, coefcients for the relationship between environmental regulation and the
rms environmental behaviour (H3a,b and H4a,b), indicate that pressure from environmental regulation inuences
the internal environmental orientation of the rms as well as corporate and marketing decisions. However, the
same does not occur with external environmental orientation (H3b). Thus, except for the latter, the hypotheses are
supported. The results indicate that strict environmental regulation will entail a higher effort from the rm to
extend its commitment philosophy to all its areas and design less polluting processes and products aimed at more
sensitive markets.
The relationship between competitive advantage and corporate environmentalism is tested by H5a,b and H6a,b,
which are clearly supported. The high and positive coefcients indicate that this is the principal factor explaining
why rms implement environmental strategies. The possibility of taking advantage of entering new markets and
increasing the market share of the rm has a decisive inuence both on internal and external orientation, and on
corporate and marketing strategic decisions.
Hypotheses H7a,b and H8a,b test the relationship between management commitment and corporate environmentalism. The data allow us to state that management commitment is an important determinant of the rms environmental orientation and corporate environmental strategy. However, this factor appears to have no inuence on
environmental marketing decisions (H8b). The results reveal that management is an important pressure factor for
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Corporate Environmental Strategy in Spanish Industrial Firms

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rm-wide environmental orientation and the development of corporate strategies related to the reduction of the
environmental impact of products and processes.
Finally, the relationship between social concern, environmental regulation, competitive advantage and management commitment was analysed through H9, H10 and H11. In this case, management commitment acts as a
dependent variable, and social concern, environmental regulation and competitive advantage as independent ones.
The results prove that social concern, environmental regulation and competitive advantage inuence management
commitment. Therefore, the three hypotheses are supported. The most inuential pressure factor on management
commitment is social concern and the second most important is environmental regulation. Thus, we can conclude
that managers who receive more pressure from customers about environmental expectations and suffer from
stricter regulation will tend to have a deeper involvement in environmental protection. Furthermore, the possibility of gaining some competitive advantage as a result of adopting environmental strategies and producing less
polluting goods will also have a positive effect on management commitment.
When analysing each of the environmental behaviour dimensions of the rm separately, we obtain the following
conclusions. First, competitive advantage is the most inuential pressure factor on internal and external orientation, as well as on corporate and marketing strategies. Second, management commitment is the second most
important driving factor of this concept within the rm, except in the marketing strategy design. Third, social
concern is the most determining factor of management commitment. Fourth, it is particularly noteworthy that
environmental regulation is the least inuential factor on corporate environmentalism even though these rms
belong to the industrial sector. Fifth, in all cases, the explained variance of the factor is very high for the dimensions of environmental orientation and strategy, and slightly lower for management commitment.

Conclusions and Implications

In an industrial context, using the framework provided by Banerjee et al. (2003), this paper has identied the main
variables that explain why a rm is more environmentally orientated and develops environmentally friendly
corporate and marketing strategies. We analyse the relationships between the factors of social concern, environmental regulation, competitive advantage and management commitment and the rms ecological behaviour.
Moreover, our study considers the possibility that these variables also directly determine management commitment
with the natural environment. Our results conrm the inuence of these factors on the external and internal
orientation of rms, and on the development of their environmental strategies at the corporate and marketing
levels.
More specically, the results show that internal environmental orientation, which refers to the rms effort to
transmit the importance of environmental protection to the whole organization, is mostly determined by the competitive advantage gained from developing environmental strategies and ecological products. This result reveals
that managers consider that the transformation of the management system, reected in the explicit denition of
the environmental policy and in environmental training programs for employees, could improve the efciency of
the rms activities. Placing the environment as a central value can contribute to a better response of the rm
against an environmental threat or opportunity, since the dissemination of information within the company and
its response capacity will be improved. Management commitment also constitutes an important motivating factor
since managerial environmental values, beliefs and behaviour lead rms to green their culture, incorporating
environmental considerations throughout the entire organization. Though to a lesser extent, social concern and
environmental regulation also inuence internal orientation. Social groups and legislators might consider that not
enough pressure is exerted on the industrial sector (Stone et al., 2004) and they should persevere in their attempt
to change the rms attitude to a more proactive one.
External environmental orientation is based on the idea that environmental protection is the rms responsibility
and this will be reected externally. As in the previous case, the possibility of gaining some competitive advantage
and the existence of environmentally conscious management increases the probability that the rm will attempt
to project an image of commitment to the environment to the external stakeholders. The improvement of relations
with external environmental stakeholders can lead to a better reputation and image of the rms since these groups
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512

E. Fraj-Andrs et al.

demand social responsibility, transparency and integrity. Moreover, the values and beliefs of managers in the
organization affect the development of an external orientation because they perceive environmental pressures as
opportunities and threats coming from external pressures that must be responded to.
Corporate environmental strategy refers to the incorporation of the environmental factor into the strategic planning
process, in general, and into the development of products and processes that minimize environmental impact, in
particular. This is where competitive advantage is a crucial factor, maybe because strategic decisions enable rms
to full their objectives. Corporate decisions, such as the purchase of a new green technology, the consideration
of greener distribution and transportation systems or the eco-design of products and process, will allow rms to
gain competitive advantages derived from cost reductions and the launch of ecological products. This is the variable most affected by environmental regulation, mainly due to the coercive effect that legislation can exert on the
rms decisions about the composition and packaging of their products or on the implementation of pollution
prevention systems.
Environmental marketing strategy includes decisions about the utilization of green arguments in the rms advertising and the importance the business attaches to environmental protection through product-market strategies.
The most determining factor of this variable is, as in previous cases, the possibility of gaining competitive advantage. Nevertheless, in this case, the pressure of social concern is also important, whereas management commitment has no inuence. This may be due to the fact that, in the industrial sector, as a result of the type of product,
marketing strategies play a less important role in corporate decisions. However, the sales force is particularly
important in this sector, and represents an extraordinary opportunity for the rm to project an image of environmental responsibility in its relationship with other rms. Therefore, more attention should be paid to the role of
marketing within the organization.
Another result obtained in our study is the inuence that social awareness with environmental problems has
on environmental management commitment. Environmental regulation and the possibility of gaining competitive
advantage also inuence this variable. Managers involvement with environmental issues is more intensive in rms
which perceive environmental regulations as a threat or in those ones whose main customer segment is more
aware of environmental causes.
In summary, these ndings suggest that corporate environmentalism is mainly driven by economic opportunities (Bansal and Roth, 2000) and managerial awareness. On the one hand, rms perceive that the cost reduction
associated with environmental technologies and the growth in revenues from green marketing strategies can
improve their competitive position in the markets. On the other hand, management commitment is a critical asset
since their perception of customer pressures directly inuences rms environmental behaviour. Further, in spite
of the importance of environmental regulation in the literature, our results show that its inuence is secondary.
The environmental innovation capability of rms might precede the environmental legislation if the latter does
not develop at the same pace as organizations environmental advances.
These results may be of some interest from an academic viewpoint, but also from a more institutional perspective. They can help public institutions to discover the behaviour of this sector and decide whether some legislative
measures and information or training campaigns on these issues should be undertaken. The study also reveals
the opportunist character of industrial rms since their environmental proactivity comes from the possibility of
gaining competitive advantage by entering new, more lucrative segments and, thus, increasing their market share.
In addition, environmental regulation, though inuential, does not seem to be a determining force of the environmental behaviour of these rms, even though they belong to a potentially more polluting sector than, for example,
nal consumer goods. Consequently, it would be of interest for legislative institutions to verify the rms degree
of compliance and legislate, if necessary, on still neglected issues.
Finally, this paper is not free of limitations. Addressing the industrial sector and a regional population means
that the results have to be interpreted cautiously, and a wider population in other sectors is recommended for
further research. Moreover, since the three pressure factors have proved to be the determinants of corporate environmentalism and management commitment, it is essential to analyse whether the effect of these antecedents on
rms environmental behaviour could be higher through management commitment. In other words, it would be
interesting to analyse the role of management commitment as a mediating variable. Another limitation involves
the focus of the environmental marketing strategy scale, as we have used the Banerjee et al. (2003) theoretical
model. This scale could include some other aspects like eco-labelling, ecological considerations of distribution or
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Corporate Environmental Strategy in Spanish Industrial Firms

513

the diffusion of environmental information to the companies markets. Future research lines should be addressed
to overcoming these restrictions.

Acknowledgements
The authors thank the Spanish Science and Technology Ministry (SEJ 2005-02315), the Regional Government of Aragn (Excellence Group S-09, PM 0262/2006 and the research grant B015-2005) and the University of Zaragoza Ibercaja (267-108) for
nancial support.

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