The Influence of Stakeholders on the Environmental Strategy of Service Firms: The Moderating Effects of Complexity, Uncertainty and Munificence*
| Published date | 01 June 2008 |
| Author | J. Alberto Aragón‐Correa,Antonio Rueda‐Manzanares,Sanjay Sharma |
| DOI | http://doi.org/10.1111/j.1467-8551.2007.00538.x |
| Date | 01 June 2008 |
The Influence of Stakeholders on the
Environmental Strategy of Service Firms:
The Moderating Effects of Complexity,
Uncertainty and Munificence
*
Antonio Rueda-Manzanares, J. Alberto Arago
´n-Correa
and Sanjay Sharmaw
University of Granada, School of Business and Economics, Campus Cartuja, s.n. E-18071 Granada, Spain, and
wWilfrid Laurier University, School of Business and Economics, Waterloo, Ontario, N2L 3C5 Canada
Corresponding author email: jaragon@ugr.es
Emails: arueda@ugr.es; ssharma@wlu.ca
Drawing on the resource-based view of the firm, we examine how complexity,
uncertainty and munificence in the general business environment moderate the
association between a firm’s stakeholder integration capability and its environmental
strategy. Our data were drawn from 134 ski resorts in 12 countries in western Europe
and North America. Our study finds that (1) an organizational capability of stakeholder
integration is associated with a service firm’s adoption of a proactive environmental
strategy; (2) an uncertain business environment has a direct positive influence and a
complex business environment has a direct negative influence on a firm’s environmental
strategy; and (3) complexity has a negative moderating influence on the relationship
between a firm’s stakeholder integration capability and its environmental strategy.
Even though firms generally understand the
importance of responding to stakeholder pres-
sures (Freeman, 1984), the heterogeneous per-
spectives and the conflicting interests of a firm’s
stakeholders on a specific strategic issue require a
firm to develop a specific capability to manage
these pressures (Frooman, 1999; Jawahar and
McLaughlin, 2001). Such a capability can help a
firm develop strategies to approach complex and
challenging problems proactively. A strategic
challenge facing firms relates to environmental
problems such as ozone depletion, global warm-
ing, climate change and deforestation on which
various organizational stakeholders hold multiple
(and often contradictory) views (Hart and
Sharma, 2004). Integrating stakeholder concerns
has been shown to help manufacturing firms deal
with this complexity of highly visible pollution
products and processes with significant environ-
mental impacts (e.g. Buysse and Verbeke, 2003;
Fineman and Clarke, 1996; Henriques and
Sadorsky, 1999; Sharma and Vredenburg, 1998).
With limited exceptions (e.g. Garcı
´a-Falco
´n
and Medina-Munoz, 1999; Rivera, 2002; Rivera
and De Leon, 2005; Schaper, 2002), considerably
less attention has been paid to how stakeholder
pressures influence the environmental strategy of
service firms. It is our contention that the
importance of engaging stakeholders for devel-
oping a proactive environmental strategy is
context dependent. For example, extractive firms
*
We would like to thank the two anonymous reviewers
for their insightful comments on earlier drafts of this
paper. We thank the European Commission, the
Spanish Ministry of Education (project SEC) and the
Junta de Andalucı
´a (‘excellence grants’) for providing
partial funding for this research.
British Journal of Management, Vol. 19, 185–203 (2008)
DOI: 10.1111/j.1467-8551.2007.00538.x
r2007 British Academy of Management. Published by Blackwell Publishing Ltd, 9600 Garsington Road, Oxford
OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
with large environmental impacts could develop
better strategies by understanding the evolution
of the interests and concerns for environmental
issues by environmental non-governmental orga-
nizations (NGOs), local communities, landowners
and consumers. This helpsthem maintain a licence
to operate and grow.
In contrast, the service sector has less visible
but high intensity impacts on the natural
environment such as intensive use of energy for
climate control in retail spaces, offices and guest
accommodations; consumption of large quanti-
ties of paper and cleaning products; negative
impacts on habitat biodiversity and resilience by
locating in ecologically sensitive areas; or con-
sumption of large quantities of water for drinking
and cleaning. For instance, the software devel-
opment of Internet-based businesses such as
Google have a high intensity impact via huge
energy consumption for vast arrays of servers,
back-up power systems and cooling systems.
However, these firms have not been on the radar
of environmental NGOs or environmentally
concerned consumers and such firms may feel
that they do not need to engage their stake-
holders to develop knowledge about environ-
mental practices. The lower visibility of the
environmental impacts of service firms may mean
that such impacts could increase in magnitude
beyond the radar of the firm. These impacts may
acquire crisis proportions in situations such as
the recent power crisis in California that was
connected to the rise of servers for Internet-based
businesses. Such crises are less likely for manu-
facturing firms in the chemicals and energy
sectors because governments and NGOs carefully
measure and monitor the levels of emissions,
wastes and toxicity generated by these firms.
A specific examination of the services sector is
also important given the rapid growth and
economic importance of this sector in developed
economies
1
and some unique differences between
services and manufacturing industries. Skaggs
and Youndt (2004) and Song, Di Benedetto and
Zhao (1999) point out that these differences are
mainly due to (1) the high degree of customer
interaction in a process of service co-creation,
production and consumption, and (2) the diffi-
culty of maintaining a competitive rate of
technical innovations because of the easier
visibility and imitability of new developments
for competitors. The former difference implies
that an integration of customer and employee
perspectives is critical in developing an environ-
mental strategy. The latter implies that a capacity
to identify, capture, absorb and integrate infor-
mation and learning from external resources may
be particularly relevant for a service firms’ ability
to stay ahead of competitors via internal flex-
ibility, cost reduction and innovation (Zahra and
Nielsen, 2002).
The resource-based view literature emphasizes
that the development of a capability for generat-
ing knowledge from external stakeholders is
based on internal processes and routines that
are organizationally embedded in managerial
interpretations (Gonza
´lez-Benito and Gonza
´lez-
Benito, 2005; Sharma, 2000). Although the
foundations of the resource-based view consider
the importance of external exploration in the
internal exploitation of existing knowledge and
capabilities (Penrose, 1980) and the notion of
strategic industry factors (Amit and Schoemaker,
1993), the extant literature has rarely examinedthe
influence of exogenous variables on the deploy-
ment of organizational capabilities. Accordingly,
in this study we attempt to answer the calls to
examine this relevant aspect (Arago
´n-Correa and
Sharma, 2003; Barney, 2001; Priem and Butler,
2001a, 2001b), examining the moderating role that
dimensions of the general business environment
play in the deployment of a firm’s capability to
integrate stakeholder perspectives in developing its
environmental strategy.
We examine the influence of the general
business environment using the three character-
istics of environmental uncertainty, complexity
and munificence commonly used in the literature
(e.g. Amit and Schoemaker, 1993; Boyd, 1990;
Dess and Beard, 1984). We acknowledge that
other characteristics of the general business
environment may also moderate the link between
a firm’s environmental strategy and competitive
advantage. We also acknowledge that it is
relevant to study general business environment
gestalts in the form of interactions among
variables. However, we attempt to explain in
r2007 British Academy of Management.
1
In the late 1990s, the service sector represented 70%–
80% of US employment and GDP. During the last
decade, the share of US GDP accounted for by service
industries increased from $2 trillion to about $4 trillion,
while the manufacturing industries remained between $1
trillion and $1.5 trillion (Song, Di Benedetto and Zhao,
1999).
186 A. Rueda-Manzanares, J. A. Arago
´n-Correa and S. Sharma
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