Paper to be presented in Selangor, Malaysia, 3-4 December 2007

In last decade, business organizations are more aware about the importance of environmental issue and its impacts on all levels of organizational operations than ever before (Greeno, 1994; Porter and Van der Linde, 1994; Aragon-Correa, 1998). Many factors such as pressures from customers and government regulation, neighborhood groups, mass media, as well as trade associations were stated as factors contributing to firms approach toward their natural environment. Each of those parties brought about potential environmental risks that have to be faced by the organizations (Henriques & Sadorsky, 1996). These could be opportunities as well as threats for companies, especially if these pressures were not well managed. Along with the study of Henriques and Sadorsky (1996), Lawrence and Morell (1995) also stated that there were five factors motivating organizations to conduct proactive natural environmental management practices, which are regulations, competitive advantages, stakeholders pressures, critical event, and top management pressures.

At this point, the classification of firm approach to the natural environment and factors that drive companies to conduct more responsible environmental management practice were becoming interesting issue in Indonesia. This was especially because there were controversial cases related to environmental violations in Indonesia, which showed that there was relatively low awareness on green management practices in Indonesia. This study was aimed to analyze Indonesian companies’ awareness on natural environmental management practices. The focus of analysis was on the firm approach to the natural environment and factors determining the implementation of such approach.

By employing factor analysis, this study was able to reveal that in the case of Indonesia, firm approach to the natural environment could be categorized into three different approaches, which are “traditional environmental operation, “modern/voluntary prevention”, and “image building/information.”. In general, the results of this study were aligned with those of Aragon-Correa (1998). Related to the profile of commitment toward natural environment that was adopted from Henriques and Sadorsky (1999) and categorized by employing Roome’s (1994) category, the results showed that leading edge cluster were comprised of 55 companies, environmental excellence cluster with 4 companies, compliance plus cluster also with 4 companies, compliance cluster was comprised of 18 companies, and noncompliance cluster with 13 companies.

Moreover, this study also tried to explore factors or source of pressures that determine the implementation of firm approach to the natural environment. The result showed that the highest pressure came from public society/community, followed by government regulation, customers, employees, considerations for efficiency profitability, controlling cost, shareholders, environmental organizations, media, and other lobbying groups, trade association, competitors, and suppliers, that was perceived as the lowest source of pressure. This finding was different from the result of Henriques and Sadorsky (1999) which showed that the first and second highest pressure came from government regulations and controlling cost.

written by: Isnaini, Nurul & Ekowati, Dian

Paper presented in Singapore, 24-27 July 2007

This article will discuss more about trust and smart networking/cooperation in building both the social and intellectual capital in the organizations. Cooperation would only be conducted if there is trust that would enable each party to be willingly cooperate with each other in conducting the job or activities.
Furthemore, the effort to build network might not achieve the state of smart networking unless accompanied by the tight consideration of high performing selection system of its members’ competencies to create synergistic relationship. Having such set of members’ competencies supported by members’ state of mind, organization will have its intellectual capital which in turn will be developed to be organization’s sustainable competitive advantage.
Meanwhile, Trust can be represented into an affective relationship situation, so that people are optimistic in seeing the future and have greater expectations to achieve their aims. Highly competent and reliable organizational member is a necessary condition for organizational growth, along with supporting and complementary abilities of other organizationa members, will drive innovative spirit in networking. The value and attitude of the members to behave ethically will also determine the sustainability of the organization to become a well governed and managed organization. Finally, yet importantly, Trust is a general feeling, yet, there are certain sources that would make people are able to trust each other. Moreover, there are many perspectives on seeing trust, which differs among different cultures.

written by Sulasmi, Siti and Ekowati, Dian

Paper to be presented in Melbourne, 18-20 November 2007 

The issue of natural environment has attracted serious concerns from the world business people and became a crucial part of international trade issues. Therefore, companies which intend to enter into global trade, are challenged to comprehend relationships between pollution prevention, ISO 14000 program, government regulations, environmental performances, and work opportunities. In addition to this, a lot of environmental violation cases in Indonesia indicate that there are only a few companies have environmental concerns. This is not only because of company negligence on environmental problems but also because of lack of law enforcement from the government. In order to avoid these problems, companies have to realize that they must consider natural environment as a potential aspect to enhance their competitive advantages.
Related to those issues, companies need to adopt approaches to face strategic, structural, and contextual problems which one of those is environmental problem (Aragon-Correa, 1998). Aragon-Correa (1998) provides a solution alternative by attaching natural environment issue with a proactive view as a consideration in changing firm’s strategic model. In his research, Aragon-Correa (1998) argues that there is a relationship between business strategy proactivity with firm approach to the natural environment. A strategy application itself could influence firm’s viewpoint in having approach to the natural environment. Moreover, business strategy tendencies correlate with company’s objective achievement (Porter, 1980). This research aims to analyze relationships between business strategy and firm approach to the natural environment. Besides that, this study also intends to examine whether industrial differences influence on firm approach to the natural environment.
This study employed Hierarchical Regression Analysis to answer question on whether there is any relationships between business strategy and firm approach to the natural environment. It can be concluded that the scale of the organizations can be perceived as a significant factor in shaping the relationship between business strategies and firms’ approach to the natural environment especially with traditional environmental operations approach. However, it should be noted that the process of accommodating natural environmental aspects into management function would not only be determined by organization scale but also by company’s business strategy. This result was aligned with study by Aragon-Correa (1998) on business strategies proactivity and firm approach to the natural environment.
Related to business strategies issues, it seems that factor significantly affecting firm intention to pursue approaches to the natural environment was differentiation business strategy. By focusing on cost leadership business strategies, firms are more possible to minimize their social responsibilities toward natural environment and assume that natural management practices will be a costly effort. It can be understood as firms with tendency to conduct cost leadership strategy will be more sensitive to the effect of price changes of the product that make them more cautious in financial related decision making related to their operational activities. However, companies should also consider that there was an increasing level of customers’ awareness toward how companies should conduct their businesses. This would relate to the notion of company social responsibility toward its environment and its contribution to balance the interest of financial profit consideration with sustainable environmental protection as public and social issue. Furthermore, although this study was not aimed to find the causes of the differences, result of ANOVA test revealed that there were differences in firms’ approaches to the natural environment based on the industrial typology. This result supported Aragon-Correa’s (1998) that the typology of industry should be involved to determined whether there are significant differences in the green management practices across industries.