Green Information System Impact on the Improvement of Organisational Core Capabilities in Realising Green Innovation

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Green Information System Impact on the Improvement of

Organisational Core Capabilities in Realising Green Innovation

Prepared by:

Muhammad Rifqi Irshadi

11107057

MSc Thesis – Information Studies:

Business Information Systems

Faculty of Science

University of Amsterdam

Supervised by: Erik de Vries

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Abstract

Research of green information system in the IS academic community are still scarce. Among them, there is a need to address the usefulness of green information system in realising better practices of green innovation management. Therefore, this study focuses on seeking which functions of green information system that are able to improve organisational capabilities, in order to develop core competencies for green innovation management. Literature study is conducted to the theory of green information system and green innovation management. Additionally, theory of dynamic capabilities is utilised to draw relationship between the two theories. Afterwards, more data are collected through document analysis to five organisations and interview to a company that implement green information systems as well as offer them to their clients as products. The results show that several green IS functionalities are regarded as significant to the organisations, whether because those functionalities provide tangible profit or because they help organisations to improve their capabilities. Furthermore, it is found that green IS functionalities positively affect dynamic capabilities and, ultimately, green innovation capabilities.

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1. Introduction

1.1 Research Background

Management of innovation is the economic implementation and exploitation of new ideas and discoveries, and it concerns with improvement and development of new processes and products, structure of organisation, internal processes, and management techniques used (Riederer, Baier & Graefe, 2005). It is an important part of management that every organisation needs to put their concern on, moreover in the current situation where new innovations and inventions continuously appearing and become new trend. Furthermore, in their paper, Rieder, Baier & Graefe (2005) also classify innovation as two types: technology push and demand pull innovations. While technological innovation emerges from technological invention and development, demand pull innovation emerges from market demand forces that pull invention and innovation. Among numerous demand pull innovations, a recent one is green innovation management which is the central topic on the papers of Schiederig, Tietze, and Herstatt (2011) and Reuvers (2015). These two papers show a currently emerging trend of innovation management, by encouraging ecological-friendly and sustainable innovations.

Many organisations recently become more aware and focus on environmental friendliness of their innovations. Societies and government also influence organisations to conduct their business in eco-friendly manner which applies additional pressure for them to change their business processes. For instance, Siemens in their Industry Journal (March 2010) focuses on create sustainable value through innovation management. In addition, the directorate general for environment of European Commission also gives annual awards for organisations that successfully develop solutions that reduce their own environmental impacts. These facts can explain the importance of research on green innovation management.

Other topics revolving around the central topic are innovation management problems, both from internal (Van de Ven, 1986) and external sources (Brunswicker & Ehrenmann, 2013). One way to solve the problems is by applying information systems that can support innovation management. Information systems can assistcompanies to develop a solid innovation strategy, create an innovation culture, and develop and implement the best ideas through idea management processes. According to Xu and Quaddus (2013), organisations can use information systems to identify and create new products and services. Additionally, information systems also can be used to develop new or niche markets and to improve business processes via automation. This role of information systems in assisting innovation management is recognised in the real world environment.

1.2 Identification of problem and research question

Nonetheless, for green innovation management the proper and suitable information systems to support it are still scarce. This condition remained true in the Information System (IS) academic community until recently Boudreau, Chen, and Huber (2008) propose a new subfield of IS called energy informatics, which recognises that information system can have a role in reducing energy consumption, and thus CO2 emissions. This so called green IS could possibly support green

innovation management in better ways than general information systems.

Another way for organisation to realise better innovation management is by acquiring certain capabilities. Lawson and Samson (2001) propose innovation management capabilities that are constructed based on the dynamic capabilities literature. Information systems, in this matter, also have roles in supporting organisation to improve their capabilities. For instance, harnessing the competence

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5 base capability which is the ability to effectively direct resources to the place they are required, could be supported by enterprise resource planning system.

The relationship between information systems, innovation management, and organisational (innovation) capabilities is then become an important and interesting topic to be investigated, particularly the gap between green information system and green innovation management. There is still very few, if any, research that address the usefulness of green information system in realising better green innovation management practice. Therefore, it is become necessary to explore the functions of green information system and their effects on organisational capabilities to achieve better green information management.

These issues then lead to the following central research question:

With which functions could green information system improve organisational capabilities to realise core competencies for green innovation management?

1.3 Contribution to scientific literature and practical relevance

As mentioned previously, the field of green information system is still newly developed. This study will help future research to focus on certain functions of green IS that have more impact in developing organisational green innovation management capabilities. In contrast, researcher can also use this study to explore the possibilities of other functions to improve organisational innovation capabilities. Moreover, organisations can use this study as an inspiration to start adapting green version of information system and as directions for organisations that already implement green IS to develop it further in the future.

1.4 Outline and structure of the thesis

In the following Chapter 2, the current state of theory related to the topic of green information system and green innovation management are presented. Furthermore, relationship between each theory and how they will help filling the knowledge gap of this study are described by using a conceptual framework. Chapter 3 explains the research methods that are adapted in this study and the procedure of how they are conducted. Afterwards, the findings are presented and then analysed in Chapter 4. Finally, the discussions of the study results and conclusions of the study, as well as the limitations are discussed in Chapter 5.

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2. Theory

In this chapter, first, the theory of green information system is explored in order to understand the concept and identify the possible functions. Then, green innovation management theory is elaborated and its core competencies are identified. Afterwards, dynamic capabilities are used to correlate functions of green information system with core competencies of green innovation management. Finally, a conceptual framework is drawn based on the literature study as a foundation for the next research steps.

2.1. Green information system

Concept and definition

In the work of Melville (2010), it is revealed that IS research on environmental sustainability is still rarely explored despite of realisation in the real-world practices that information systems have important roles in improving the natural environment. The author argues that information system is still not understood well by organisations in their mission for achieving environmental sustainability by implementing new practices and business processes.

Watson, Boudreau, and Chen (2010) also see the importance of research from IS academic community to satisfy the needs of environmentally sustainable development from many business leaders in companies. Additionally, they develop a framework called energy informatics to explain the roles of information system in environment sustainability by increasing energy efficiency and reducing CO2 emissions.

Furthermore, Watson, Boudreau and Chen (2010) also mention three eco-goals that can be seen as green IS goals, namely eco-efficiency which focuses on reducing ecological impacts and energy consumptions; eco-equity which means social responsibility to enable future generations accessing environmental resources; and eco-effectiveness which implies working on the right things instead of making wrong things less bad. For example, the use of cradle to cradle model transforms linear thinking to closed loop systems for goods production and building owners choose to implement natural lightings rather than try to reduce energy consumptions of artificial lightings.

Meanwhile, in the work of Ijab (2015) green IS is regarded to be the linkage between the economic, social, and environmental aspects of environmental sustainability development. Green IS is defined as specific information instruments that are implemented by organisations to achieve green goals such as reducing emissions and encouraging pro-environmental behaviour.

There are several different terms used to describe green information system, such as energy informatics, green IT, and information system for environmental sustainability. Regardless, all of their definitions have something in common, which is using information system with realising environmental sustainability as a goal.Thus, in this research green information is defined as a type of information systems that is developed with the intention of achieving environmental sustainability while also supporting organisations’ business operations.

Differences between green IS and green IT

Vom Brocke et al. (2013) argue that green IS is different from green IT because it is not limited to the energy efficiency and equipment utilisation of IT, but instead focuses on the design and implementation of information systems that contribute to the realisation of sustainable business processes.

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7 Furthermore, Dedrick (2010) indicates that green IT sees information technology mainly as a problem for environment, while green IS views information systems as potential solution to many environmental problems. The author uses two orders effects of IT on the environment to differentiate between green IT and green IS. First-order effects of IT on the environment are direct impacts caused by IT hardware during their product lifecycle, which regarded as the scope of green IT. Whereas the second-order is the effects of IT on other processes such as transportation and production that influence their environmental impacts, which are akin to the concept of green IS.

To conclude, the concept of green IS focuses on the sustainability of the whole system and how to make every business process as environmentally friendly as possible, while green IT only seeks ways for the physical infrastructures of IT hardware to be less harmful to the environment.

Functionalities

Curry et al (2011) point out three significant challenges that green IS has to overcome with the support of its functionalities. First, it needs to provide appropriate information’s degree of detail for each level of organisation, from single production line-level to corporate-level. Second, it needs to integrate multiple information systems and overcomes the high cost of data integration. Lastly, it needs to be capable of handling data inconsistency from various information systems.

Hasan, Molla, and Cooper (2014) propose several categories of green IS that are regarded as a taxonomy. Based on them, the following eight possible functionalities of green IS can be derived:

[1] Facilitating the integration of economic, social, and environmental issues of sustainable development. This function becomes necessary because IS is a multi-disciplinary field of study with strong connections to other disciplines.

[2] Meeting and collaborating virtually, in order to reduce the need of travelling, e.g., to attend a meeting.

[3] Monitoring and reducing the use of resources, particularly those that are scarce and non-renewable, by using the resources efficiently.

[4] Changing attitudes and behaviours through information. The amount of people changing their attitude into preferring greener business practices and uses of technologies are expected to increase by providing the appropriate information.

[5] Supporting decision-making for environmentally sustainable development. Business, government, and community organisations rely on information system to support their decision making, which should enable adaptation to environmental sustainable changes. [6] Improving efficiency of business operations, because being efficient has environmental

benefits as business activities can produce the same result using less amount of resources. This function is related to monitoring and reducing the use of resources function.

[7] Informing the public. Information system can play a role to gain support for scientific findings by helping present environmental sustainability-related science in ways that are relevant to general public.

[8] Building knowledge repositories. Information system can be utilised to make myriad research data available to any scientist and organisations with the interest of environmental sustainability.

Additionally, Ijab (2015) lists six types of green information systems that most organisations need, namely (1) software for sustainability performance; (2) software for carbon and energy management; (3) sustainability product development software; (4) sustainability knowledge and learning

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8 management system; (5) sustainable collaboration and communication systems; and (6) smart infrastructure management software. From these types, six additional functions of green information system are identified:

[a] Enabling organisations to analyse the environmental impact through dashboard system, which helps them to manage their corporate sustainability performance and track progress of their sustainability projects.

[b] Tracking corporate carbon footprint and resource consumption, which allows organisations to comply with the Greenhouse Gas (GHG) reporting.

[c] Assisting organisations to improve the design and development of greener products. For instance, information system that can provide materials life cycle assessments to quantify the impacts of building materials on the environment.

[d] Supporting employees’ engagement and education on environmental sustainability. [e] Reducing the needs for business travels and improving work efficiency.

[f] Managing smart infrastructure and improving utilisation of hard assets such as buildings and fleets of vehicles.

There are several functionalities listed above that have similarity with functions in the list of Hasan, Molla, and Cooper (2014). First, tracking corporate carbon footprint and resource consumption [b] can be included in monitoring and reducing the use of resources [3]. Second, Supporting employees’ engagement and education on environmental sustainability [d] can be related to changing attitudes and behaviours [4] and building knowledge repositories [8]. Third, reducing the needs for business travels and improving work efficiency function [e] is similar to meeting and collaborating virtually [2] and improving efficiency of business operations [6]. Lastly, managing smart infrastructure and improving utilisation of hard assets [f] can be regarded as a subset of monitoring and reducing the use of resources [3].

After acquiring the listed green IS functionalities, further examination is required to determine which functions will give significant impact to organisational capabilities of managing green innovation.

2.2. Green innovation management

Definition

Theory of green innovation management started with the concept of sustainability in innovation management. According to Horn and Brem (2013), since it is become easier to produce more products in order to meet demand of customers, particularly from emerging markets, innovations have to be developed with the highest level of sustainability, which results in less usage of resources and fewer dangerous emissions. Moreover, sustainable innovations can increase organisation’s financial performance because customers and society in general are becoming more aware of environmental issues and consequently put more interest in social- or ecological-oriented organisational strategies. Afterwards, Reuvers (2015) defines the notion of green innovation as “the process to develop new, or significantly improved, products and processes, which provides a significant decrease in environmental impacts compared to relevant alternatives, either with or without having the intention.” Furthermore, in the author’s work it is revealed that green innovation does not really need novel innovation management practices. The main difference between green and conventional innovation management is only on the focus of goal. Whereas conventional innovation focuses on increasing organisational value through cost savings and competitive advantages, green innovation focus is on increasing organisational value through decreasing the impact of organisation’s products or processes

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9 on the environment. Consequently, if an organisation wants to shift from conventional to green innovation, it requires management that is willing to change its focus into giving a significant decrease of environmental impacts.

As a conclusion, green innovation management in this research is defined as the act of managing innovation of organisation’s products, services, and business processes with decreasing the environmental impact of organisation’s activities as the goal.

Green innovation from industrial ecology perspective

The field of Industrial Ecology has been using the term “eco-innovation” to describe the actions taken by business which result in environmental benefits, along with competitiveness and economic growth (OECD, 2009). Additionally, Industrial Science Technology Policy Committee of Japan defines eco-innovation as a new type of techno-social eco-innovations that focuses less on products’ functions and more on environment and people (METI, 2007). According to Organisation for Economic Co-operation and Development (OECD), several governments and the European Union are now promoting eco-innovation as a way to achieve sustainable development targets while still keeping industry and the economy competitive (OECD, 2009). Eco-innovation is different from conventional innovation because it also incorporates innovation in social and institutional structures besides the common innovation in products, processes, and organisational systems (Rennings, 2000).

Furthermore, while technology plays a significant role on eco-innovation in products and processes, eco-innovation in marketing, organisations, and institutions is inclined to rely on non-technological methods (OECD, 2009). As a result, there is little, if any, support from information system for the three types of eco-innovation. Eco-innovation in marketing includes new ways of integrating environmental aspects in communication and sales strategies. For instance, company can improve the development and sale of eco-efficient products through better market research and marketing practices that appeal to environmentally aware customers. Meanwhile, organisational eco-innovation includes the introduction of new management methods, such as environmental management system and corporate environmental strategies. It can also take place through changes in (1) the company workplace, such as the establishment of training programmes for employees to improve environmental awareness; and (2) how companies organise their relations with other firms and public institutions, such as the adoption of Green Supply Chain Management and the participation in public-private partnerships for environmental research and projects. Lastly, institutional eco-innovation can be divided into informal and formal institution types. While eco-innovation in informal institutions refers to changes in value patterns or norms that lead to improvements in environmental conditions through social behaviour and practices, formal institutional eco-innovation refers to structural changes that redefine roles and relations across many independent institutions. An example of informal institutional eco-innovation is the shift in the choice of transport modes from personal car to train or bus because of people’s higher environmental awareness. On the other hand, the establishment of an institution with the responsibility of handling global climate and biodiversity issues in other organisations would be an example of formal institutional eco-innovation.

Moreover, eco-innovation can also take form of organisations’ alliances with other firms and stakeholders via industrial symbiosis (Authority & Allé, 2012). In the concept of industrial symbiosis, organisations share their usage of resources through “inter-firm recycling linkages” (Authority & Allé, 2012). This mechanism enables wastes from one organisation to be raw material for another organisation, thereby forming a chain of resources sharing. In the work of Lombardi and Laybourn (2012), establishing a network of diverse organisations is considered as the essential part of industrial

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10 symbiosis creation. As a result, a lot of effort needs to be done in order to make organisations from different industries connected. In this case, information system can be utilised to create and manage the connection between those organisations. In addition, Authority and Allé (2012) argue that ICT could have an important role in increasing customers’ conveniences when using eco-innovation products. As an example, car eco-monitoring system would show a compilation of data, including emission level and driving behaviours, to the driver in a simple and aesthetically-pleasing format. In conclusion, eco-innovation offers different perspective of green innovation management based on industrial ecology field. Marketing eco-innovation is an example of another type of green innovation and its ways of innovating could possibly become new functionalities of green information system. Additionally, industrial symbiosis as an alternative form of eco-innovation and role of ICT in increasing customers’ convenience can also be included as potential green IS functionalities.

Core competencies

Lampikoski (2012) identifies three critical managerial capabilities for green innovation, in which they are neither successive nor independent capabilities but rather evolve together as a set. Firstly, research capability assists managers in seeking ingenious ideas of green innovation and understanding of how to adopt various sustainable frameworks and design principles into innovation development. It focuses on identifying potential ways of connecting green innovation to organisational context and industrial setting by linking innovation to their core strategies and business operations.

Secondly, recognise capability helps management recognising new business opportunities and identifying potential gaps and weaknesses in the current industrial system. Managers who possess this capability are able to identify potential market size for green products as well as their risks and internal weaknesses. Additionally, managers with recognise capability are also able to find the appropriate stakeholders and partners who are capable of overcoming the identified gaps.

Lastly, revolutionise capability enables managers to set green innovation ideas as their organisation’s priority and make the ideas integrated deeply into the vision, strategy, and culture of the organisation. Managers who are capable of developing successfully all three capabilities will be able to better understand the whole green business paradigm, and consequently will succeed in making profit without damaging the environment.

Further, the three core green innovation managerial capabilities of Lampikoski (2012) can also be related to core abilities of managing innovation by Tidd and Bessant (2009). Research capability is similar to the combination of three abilities: recognising (searching the environment to find triggers for innovation), aligning (ensuring a good fit between core strategy and the innovation idea), and choosing (exploring and then selecting the best response to environmental triggers which fit organisation’s strategies). On the other hand, recognise capability can be related to acquiring (recognising the limitations of organisation) ability. Meanwhile, revolutionise capability is align with the combination of executing (managing the whole development phase for new products and processes which are resulted from the innovation), implementing (managing the early phase of change process in the organisation to ensure acceptance of innovation), and developing the organisation (integrating innovations to organisation’s daily activities, both in its structures and processes) abilities.

The green innovation management core competencies which consist of different type of organisational capabilities should be possessed, maintained and continuously developed by

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11 organisations in order to achieve the goal of green innovation. Green information system, in this case, would be able to support organisations in developing these capabilities through its functionalities. Therefore, the concept of dynamic capabilities will be utilised in the next section to explain possible relationship between the theories of green information system and green innovation management.

2.3. Dynamic capabilities

Definition

Dynamic capabilities of organisation is one of more recent theories that explains how an organisation able to adapt and survive within its dynamic environment. A reason of choosing this theory for investigating the topic is because, according to Ambrosini and Bowman (2009), there are open possibilities to integrate dynamic capabilities perspective into many related fields, such as innovation, knowledge management, and organisational change. Thus, dynamic capabilities could also be integrated with the multi-disciplinary field of green information system and green innovation management.

Akwei, Peppard, and Hughes (2007) define dynamic capabilities as “a set of learned behaviours, which are fully or partially repeated resulting partly from tacit knowledge, specific organisation objectives, and combination of resources and activities which brings about change.” This definition emphasises on the uniqueness of dynamic capabilities for every organisation. Different organisations will also have different, specific dynamic capabilities that are learned and embedded through the combination of their knowledge, objectives, resources, and activities which enable them to adapt with dynamic business environment. Prior to the definition, Teece and Pisano (1994) argue that dynamic capabilities emphasise on two aspects. First, they refer to the shifting (dynamic) character of the environment. Second, they also emphasise the key task of strategic management in appropriately adapting, integrating, and reconfiguring organisational abilities, resources, and functional competences toward changing environment.

In conclusion, dynamic capabilities theory is regarded as a suitable proposition to investigate the relatively new field of green IS and green innovation management, since they belong to the products of dynamic business environment.

Dynamic capabilities relations with information systems

Lo (2012) identifies two capabilities based on the dynamic capabilities theory, which are created and enabled by information systems, namely absorptive capacity and agility. Both capabilities consist of sensing and acquiring information and respond to it. However, absorptive capacity refers to the organisation’s ability to manage knowledge on daily basis, while agility is more inclined to organisation’s ability to manage more episodic changes in the environment. Organisations which adopt innovative information system strategies, instead of rely solely on the conservative ones, have better potential to increase their absorptive capacity because they would seek new knowledge continuously in order to gain business advantage. Meanwhile, information system has both direct and indirect effects on organisation’s agility, which would also increase when the organisation applies either innovative or conservative information system strategies.

Further, Danesh and Eric (2014) opine that flexible information technology play a fundamental role in dynamic capabilities by facilitating agile operation and decision making in organisation. This role of IT can be fulfilled if the organisation implements information system that treats flexibility as a fundamental concern.

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12 In summary, there are two key dynamic capabilities that are enabled by information systems, namely agility and absorptive capacity. These capabilities are argued to be also generated by the green information system. Additionally, flexibility can be regarded as an important quality of green information system to promote agility and absorptive capacity.

Dynamic capabilities relations with innovation management

Lawson and Samson (2001) view innovation management as a form of organisational dynamic capabilities, which enables organisations to execute effective innovation processes and results in excellent business performance. This so called innovation capability combines the efficiency of organisation’s mainstream activities with the creativity of its exceptional innovation. In other words, innovation capability is an organisational ability to be successful at both running a novel business practices and manage mainstream capabilities.

Furthermore, according to Lawson and Samson (2001), there are seven core elements of innovation capability, namely vision and strategy, harnessing competence base, organisational intelligence, creativity and idea management, organisational structure and systems, culture and climate, and management of technology. Organisations that develop these elements continuously will have a higher chance of achieving sustainable innovation to maintain and possibly improve their business performance. One way of developing innovation capability is by possessing three innovation management capabilities of Lampikoski (2012) which are elaborated in the previous section, i.e., research, recognise, and revolutionise.

2.4. Knowledge gap and conceptual framework

Based on the elaboration of various theories around the research problem, several knowledge gaps can be identified. First, although it is revealed that dynamic capabilities are influencing and influenced by both green information system and green innovation management, there is still no further detail on how green information system could generate dynamic capabilities that are important for realising a better green innovation management. Further, it is argued that green information system’s functionalities are the ones that are capable of generating dynamic capabilities. However, the knowledge on which functionalities are more significant to enable dynamic capabilities is not sufficient.

As a way of reducing these gaps, a conceptual framework is proposed and depicted in Figure 1. This framework shows that green IS has functionalities to support organisation developing its dynamic capabilities, which is needed to continuously manage their green innovation activities.

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13 Figure 1 Conceptual Framework

In the conceptual framework, functions of green information system are argued to be able to generate two dynamic capabilities, namely agility and absorptive capacity. On the other side of the framework, green innovation management requires three dynamic capabilities as its core competencies, namely research, recognise, and revolutionise. The next part of the research will try to investigate which green IS functions are capable of creating or improving the six dynamic capabilities, and how significant the influences could be.

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3. Research Methods

3.1 Methods selection

In order to explore the research problem and eventually answer the central research question, certain method(s) should be chosen for conducting the research. The type of research that is considered to be appropriate to tackle the issues is a qualitative research. This consideration is made due to the fact that in-depth study is essential to investigate how the functions of green information system can improve organisational capabilities to achieve green innovation management.

According to Robson (2002), there are three approaches of qualitative research design, namely case study, ethnographic studies, and ground theory studies. Since the focus of this study is to understand the situation of green information system functions that could affect organisational innovation capabilities, case study approach is found to be more suitable compared to the other two approaches. Further, a specific type of case study approach called multiple case studies is adopted because it is concerned with analytic generalisation. According to Baxter and Jack (2008), a multiple-case study allows researcher to analyse across settings that enables them to understand the similarities and differences between the cases. As for this research, several organisations are selected, and then their attitude and usage toward green information system are identified. The identification processes are done by analysing their annual or sustainability reports. Therefore, several organisations are selected as the cases and secondary document analysis is chosen as the primarydata collection method. In addition to the secondary document analysis, interview also adapted as the alternative research method. The interview is intended to provide supporting subjective data from the perspective of an organisation. The selected organisation has experiences in implementing green information systems, as well as provides green IS solutions to other organisations as its products.

3.2 Document analysis

Document analysis design

The goal of document analysis is to obtain information about what kind of green information system’s functionalities that organisations put interest in and implement in their business operations. Moreover, this method is also used for acquiring knowledge on how those functionalities might affect the organisations’ innovation capabilities. This will be done by gathering data from several organisations that are concerned about and implement some forms of green information systems.

Five global organisations are chosen as the cases to be studied. The selection is motivated by several scientific publications and European business awards for the environment from the Directorate General for Environment of the European Commission, which put the five organisations as examples of organisations excel in conducting green business. The five organisations’ names and their respective industries are:

[1] United Parcel Service, Inc. – courier [2] Interface, Inc. – carpet manufacturing

[3] Siemens AG – manufacturing (e.g., energy-related, medical, and transportation products) [4] General Electric – multi-industry (e.g., manufacturing and financial services)

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Document analysis procedure

First, the documents related to the five organisations’ ways of implementing green information system are collected from various sources, such as annual and sustainability reports, press release, and scientific articles. Afterwards, the documents are examined and information related to green information system and innovation implementations that are identified is marked and retrieved. These data then are matched to several categories. Further detail is explained in the data analysis sub-section.

3.3 Interview

Interview design

The goal of the interview is to gain deeper knowledge and understanding of why organisation uses green information system, how they implement it, and their opinion on the impact of using such information system. Semi-structured interview is chosen as the type of interview questions because the intention of the interview is to explore and possibly obtain new knowledge, rather than confirm things. An organisation that is not only use but also sell green information system products is chosen as the subject of interview, which called Decos.

Decos is a Dutch IT solution company which focuses on three areas of knowledge: e-Government, online collaboration, and sustainable mobility. Based on their expertise, Decos offer three varieties of green IS solutions, namely digitalisation, collaboration, and mobility. Digitalisation aims for paperless organisations and efficiency of their business processes. Collaboration enables organisations to meet virtually and avoid wasting energy for travel. Mobility aims to reduce CO2 emissions of

organisation’s fleet of vehicles by analysing driving behaviour as well as managing information on travelling and working times.

Interview procedure

The interview is done with Wies Simons, the assistant to CEO of Decos. The interview is conducted at Decos main office (Huygensstraat 30 2201 DK Noordwijk) and it lasts for one hour. The main focus of the interview is to obtain information on Decos history, experiences, and opinion of green information system. Afterwards, the interview is transcribed and translated into codes which are summarised in the next chapter.

3.4 Data analysis

The analysis starts with parsing the data collected from all organisations’ reports and transform it into codes. Afterwards, the next step is to set up categories of green information system functionalities and fill it in with the codes. Similar procedure is applied to interview data, where the transcription will be parsed and then translated into codes and put in the pre-defined categories.

Categories for document analysis coding are defined based on the literature study, specifically from green information system functionalities part. The nine categories below are the combination of functionalities listed by Hasan, Molla, and Cooper (2014) and Ijab (2015) in Chapter 2.1.

[1] Meeting and collaborating virtually

[2] Managing and reducing the use of resources [3] Changing attitudes and behaviours

[4] Supporting decision making for sustainable development [5] Improving efficiency of business operations

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16 [6] Informing the public

[7] Building knowledge repositories [8] Analysing environmental impact

[9] Assisting design and development of green products

On the other hand, categories for interview coding listed below are taken from literature study in general. Type of green IS category refers to various functionalities that green information system could have. Meanwhile, green innovation category is intended for codes that imply innovation with environmental sustainability as the goal. Lastly, view on green IS/innovation category is intended for codes that have subjective judgement of the interviewee about green IS or green innovation.

[1] Type of green IS [2] Green innovation

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4. Findings

4.1 Document analysis results

Several documents from five different organisations has been analysed and then numerous possible functionalities of green information system in each organisation to achieve their environmental sustainability goal can be identified. Among those, functionalities of managing and reducing the use of resources and improving efficiency of business operations appear the most. Other functionalities were also identified in some organisations, albeit less frequently. Further details of the documents findings can be found at Appendix A. In Table 1 below, the summary of coding result is provided. The complete coding process is given at Appendix B.

Table 1 Summarised Table of Document Analysis Coding

Category Organisation Codes (count)

Managing and reducing the use of resources

United Parcel Service reduce material and paper usage (3)

Interface renewable energy and material usage; reduce physical sample (3)

Siemens distributed energy system;

optimise company fleet; integrate renewable energy resources; energy management; optimise energy; save energy; renewable material usage (7) General Electric reduce energy and water usage;

recycle material; increase resource productivity (5) Volkswagen renewable material and energy

usage; reduce water and material usage (4) Changing attitudes and

behaviours

United Parcel Service monitor driving behaviour; provide carbon offset

programme; customer-centred service; environment-friendly packaging (4)

Interface use environment-friendly operational standard (1)

Siemens promote behaviour changes;

involve employee (2) Improving efficiency of

business operations

United Parcel Service reduce fuel usage; optimise route (2)

Interface maximise energy efficiency; eliminate waste (2)

Siemens minimise power loss; reduce

waste and emission (3)

General Electric reduce cost; increase operation efficiency (2)

Volkswagen optimise energy usage and recycling; reduce emission; increase recycling efficiency (4)

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Category Organisation Codes (count)

Informing the public Interface inform environmental impact and strategy (1)

Siemens raise environmental awareness (1)

Analysing environmental impact

United Parcel Service analyse carbon impact (1)

Interface analyse emission (1)

Volkswagen analyse emission (1)

Assisting design and

development of green products

Interface collaboration to trigger innovation (1)

General Electric trigger innovation (1) Building knowledge

repositories

Volkswagen gather knowledge from external party (1)

Managing and reducing the use of resources

All analysed organisations implement at least three usages of information system and technology that belongs to managing and reducing the use of resources functionality. Managing the use of materials is applied by all organisations, whether it is done by reducing the use of material (UPS and Volkswagen), recycling the material (GE), or using renewable material (Interface, Siemens, and Volkswagen). An example of renewable material usage is taken from the text in Volkswagen’s sustainability report. “Wherever possible, the Group’s brands use renewable raw materials. For example, natural fibres like flax, cotton, wood, cellulose and hemp are used in floor insulation, boot linings, door and side panel trim and hood insulation.” (Volkswagen, 2015)

Moreover, energy is also considered as an important resource to be managed. Various ways to manage energy are also done by most organisations, including reduces the energy usage (Siemens and GE) and uses renewable energy sources (Interface, Siemens, and Volkswagen). A snippet from Siemens’ environmental portfolio shows their usage of technology to provide renewable energy for the city of London. “Siemens technologies are used to produce and distribute energy with a special green touch: soon the London Array offshore wind farm will come onto the grid. Siemens is building 175 wind turbines with a total capacity of 630 MW in the outer Thames estuary.” (Siemens, 2012)

In addition, there are other resources mentioned in the documents, such as paper, company fleet, and water, which are also being managed by the organisations. The following text taken from Volkswagen’s sustainability report shows the usage of technology to reduce water consumption. “In 2012, the paint shop at Volkswagen’s Chengdu location (China) became the first paint shop in Asia to use ‘EcoDry Scrubber’ technology, which reduces water consumption on the painting line by up to 23% compared with solvent-based processes.” (Volkswagen, 2015) Meanwhile, UPS claim the following text as their effort to reduce paper usage in their corporate sustainability report. “For example, we have replaced traditional pilot flight bags, which weigh upward of 70 pounds, with iPads that contain all the flight documents digitally. We estimate this change is reducing annual paper usage by 5.7 million pages.” (UPS, 2015)

Furthermore, concerning dynamic capabilities, this functionality could positively affect the agility of organisation. According to the documents, organisations gain significant business advantages after utilising information systems to manage their resources and reduce the use of resources. This function would increase the ability of organisations to manage and prepare their resources in order to be ready when changes happen in the future. For instance, information systems enable them to integrate

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19 various renewable energy resources in order to power their facilities. By doing so, they can reduce their reliance on conventional energy and be prepared if there will be energy crisis in the future. Finally, regarding green innovation, the function can trigger further research on alternative energy resources, then recognise how to use them as power plant, and ultimately revolutionise the way organisations manage their resources. As an example, Interface are able to produce their carpet products using various innovative materials, since they continuously research on renewable materials usage with support of their information systems.

Improving efficiency of business operations

Improving business operations’ efficiency is the second most identified functionality among the five organisations. Each organisation implements at least two types of information system with the capability to make their business operations more efficient. The utilisation of this functionality seems logical because more efficient business operation usually equals less money need to be spent. Maximising energy efficiency (Interface and Volkswagen), minimising power loss (Siemens), and eliminate waste (Interface and Siemens) are among the ways of improving business operations that organisations mostly prefer. Interface’s effort to eliminate waste is shown in the text quoted from environmental footprint section of their website. “We’ve gone beyond the walls of the factory to examine all aspects of our business for opportunities to reduce and eliminate waste, including product design, packaging and transportation. Our waste reduction efforts have resulted in a 91% decrease in total waste to landfills from our carpet factories since 1996.” (Interface, 2016)

Moreover, using information system to improve efficiency of business operations brings positive effect to organisational absorptive capacity, since it deals with changes in daily activities of the organisation by constantly absorbing and then applying knowledge from external sources. For example, organisation’s continuous effort to eliminate waste would increase their capability to handle any kind of waste issues in the future. Additionally, organisations that utilise information systems to maximise energy efficiency in their facilities could adapt easier to the rising energy cost or if energy crisis happen in the future.

As regards green innovation, this functionality can also benefit research capability. For instance, organisations could conduct thorough research to eliminate waste from their production processes and would eventually find solutions via green innovation. Organisations can also connect various green innovation ideas to their business operations and industrial setting while they try to find better ways to eliminate waste.

Other Green IS functionalities

Apart from the previously mentioned functionalities, almost all of the listed green information system’s functionalities are also identified in the analysed documents. Changing attitudes and behaviours function is mentioned in three organisation’s documents (UPS, Interface, and Siemens). Siemens’ usage example of this function is shown in the following snippet of environmental portfolio on their website.

With the Green Building Monitor™, businesses can demonstrate their commitment to sustainability and environmental protection by displaying information on their facilities’ environmental performance for employees and visitors. The information that the Green Building Monitor™ presents helps to raise awareness among building users of the importance

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20 of using the planet’s increasingly scarce resources responsibly and to promote buy-in for ongoing resource-saving initiatives. (Siemens, 2012)

The same numbers of organisation also mention the function of analysing environmental impact in their documents (UPS, Interface, and Volkswagen). Meanwhile, two organisations mention both informing the public (Interface and Siemens) and assisting design and development of green products functionalities (Interface and GE). The following snippet shows the usage of assisting design and development of green products function taken from one of GE’s products, Predix, on Predix: The Industrial Internet Platform document.

Typically developers spend up to 80% of their time integrating and upgrading systems and technologies, versus only 20% of time spent on innovation. GE has years of experience building software apps for industry, and the design of Predix incorporates those learnings with tools and services that decrease the amount of time spent on integration. In fact, the time spent on innovation is now closer to 80%. (GE Digital, 2016, p. 15)

Lastly, building knowledge repositories functionality only appears in Volkswagen’s documents, as shown in the following text quoted from Volkswagen sustainability report. “The participation of the Group brands in joint research projects with external partners is a further important source of inspiration and new ideas for energy savings.” (Volkswagen, 2015)

Concerning dynamic capabilities, changing attitudes and behaviours function could benefit both absorptive capacity and agility capabilities of organisations. It can support organisations to deeply embed their particular culture to employees in the long run while also useful to make the transition of a dramatic change become smoother. On the other hand, analysing environmental impact would benefit absorptive capacity capability by notifying organisations when their daily activities cause negative effects to the environment. Absorptive capacity can also be improved with the support of building knowledge repositories function. Organisations that are committed in obtaining more knowledge would gain business advantages because their ability to absorb external knowledge increases.

However, there are two functionalities that do not appear in the documents, namely meeting and collaborating virtually and supporting decision making for sustainable development. The reason could be because these two functions are only being used internally, thus they would not be mentioned in public reports. Other reasons can be because they do not give significant effect to the organisations (the profit does not worth the cost) or because the organisations do not need them (the function does not fit with their goals). In this study the former reason seems more plausible, since collecting data on internal usage of information systems is not possible through public reports.

4.2 Interview results

The interview conducted with Decos’ representative gives additional perspective of green information system and green innovation. The interviewee shared her knowledge and experience on different types of green IS, both as the company’s product and as tools of the company’s business operations. Knowledge and experience on green innovation practices at Decos and their client are also shared by the interviewee. In addition, she also shared her view on the current obstacle of green innovation management implementation at their clients and how it can be solved in the future. The transcription of the interview is provided at Appendix C and the complete table of coding process can be found at Appendix D. The summary of interview coding result is provided at Table 2 below.

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21 Table 2 Summarised Table of Interview Coding

Category Code

Type of green IS improving efficiency of business operations meeting virtually

changing behaviour

managing and reducing the use of resources informing the public

Green innovation renewable energy

paperless business operations encourage and support new ideas View on green IS/innovation complete implementation of green IS

reluctance of changing old habits need more people to use green products products to analyse individual behaviour use green products to help further development

Types of green information system

Among the functionalities that green information system could have based on the literature study, Decos’ current products are focused on (1) meeting and collaborating virtually, (2) improving efficiency of business operations, and (3) changing attitudes and behaviours. For instance, their “Minute” solution enables employees to share the meeting files and notes virtually, or even conduct the meeting itself via mobile/desktop application. As result, the amount of physical attendance and printed documents can be reduced, which further can trigger change of employees’ behaviours in the organisation. In addition, by replacing papers with digital documents organisation can avoid printing multiple-copy of the same files; thereby contribute to improving the efficiency of their business operations.

Furthermore, Decos also put interest in (1) managing and reducing the use of resources and (2) informing the public of green IS functionalities for their own business activities. Managing and reducing the use of resources function is preferred by all organisations in the document analysis findings. Hence, it is reasonable for Decos to also employ the same functionality in order to gain business advantages. Meanwhile, informing the public function also becomes main concern of Decos because they are keen to introduce the sustainable ways of working to other organisations.

Green innovation

According to the interviewee, Decos consider green innovation as an adequate alternative way of developing their products. There are two main practices of green innovation that Decos implement in their business operations. First, they use renewable energy as the sole power source of their main office which is distributed from the nearby wind farms. Additionally, good energy management enables them to use energy efficiently so there is no need for Decos to consume more energy from conventional sources. Second, almost all of their business operations are run without using any paper due to the use of their own digitalisation and virtual collaboration solutions. The only exception is made for external documents that need to be sent in hardcopy forms, such as tender documents of their prospective clients.

Moreover, Decos also encourage new ideas from their employees, including green-oriented ideas. They support internal innovations by allocating certain budget for employees to further develop their

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22 ideas until becoming new products. For instance, currently several employees of Decos are working on a separate project of developing artificial intelligence for robots, which is supported by the investment from the company.

However, green-oriented innovation is not Decos’ sole focus, since they also open to other kinds of innovation. Decos will support any innovation as long as it could bring satisfaction and offer new creative ways of doing things to their clients.

View on green information system and green innovation

The interviewee also opines that reluctance to change the old work culture, such as using large amount of papers, is the biggest obstacle of green information system and green innovation implementation in many organisations. Fortunately, some organisations are willing to implement green products completely, which is useful for the future development of green innovation and green information system.

Therefore, there is a need for more people and organisations to use green products. This is one of the reasons of why Decos consistently try to inform the public about the benefit of using green products. Efforts to change the organisation’s attitudes and behaviours towards green practices internally are also important to implement green information system and green innovation management as a whole. In addition, Decos also commit to use green products from other organisations to help them survive and so the products can be developed further.

Finally, the interviewee remarks that people currently are interested in technological products that are capable of analysing individual behaviours. For example, mobile application with the ability of monitoring the user’s driving behaviour. As the result, people would put more interest in using green information system or green innovation product if it can satisfy their need.

4.3 Updated conceptual framework

The findings of document analysis and interview provide new insight on which functionalities of green information system that are more preferred by several organisations and generating significant impact to them. As the consequence, the conceptual framework initially proposed in Chapter 2 need to be revised. The revision of conceptual framework is depicted in Figure 2. In this new version, the conceptual framework is extended on several points. First, green IS functionalities entity is expanded into five entities, namely managing and reducing the use of resources, informing the public, changing attitudes and behaviours, other functionalities, and improving efficiency of business operations. According to the findings of document analysis, two green IS functionalities, namely managing and

reducing the use of resources and improving efficiency of business operations, are considered to

be more significant for organisations. This conclusion is made because the data show all analysed organisations implement these functions in order to achieve their green goals.

In addition, there are two less preferred functionalities based on document analysis findings but yet are still considered as important functionalities for organisations when referring to the interview findings, i.e., informing the public and changing attitudes and behaviours. The interview data show that these two functions are essential to increase the acceptance of green practices in many organisations that are reluctant to apply them.

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23 Figure 2 Revised Conceptual Framework

Meanwhile, other functionalities consist of functionalities that are only mentioned by half or less of analysed organisations, or unmentioned functionalities. Three functionalities are mentioned by some of the analysed organisations: analysing environmental impact, assisting design and development of green products functionalities, and building knowledge repositories. The other two functionalities are not mentioned by any of the analysed organisations: meeting and collaborating virtually and supporting decision making for sustainable development.

Another extension of the conceptual framework is the relationship between its elements. First, green IS functionalities have ability to generate two dynamic capabilities: agility and absorptive capacity. Siemens’ utilisation of renewable energy enables them to be prepared for changes of conventional energy availability in the future (agility). On the other hand, Volkswagen’s effort to gather knowledge and new ideas from external partners by participating in various projects and alliances enables them to absorb and apply more new-knowledge (absorptive capacity).

In turn, absorptive capacity and agility capabilities would positively affect the three innovation-related dynamic capabilities: research, recognise, and revolutionise. Organisation’s capability to absorb and apply external knowledge would improve their ability to research, for example Volkswagen’s participation in joint research projects to obtain external knowledge increases their chances of acquiring novel green innovation ideas. Meanwhile, the agility of organisation would enable them to be prepared for any changes and as the result supporting revolutionise capability. For instance, utilisation of recovered and bio-based materials committed by Interface pushes them to constantly trying better materials and replacing the old ones; therefore, encourage integration of green innovation ideas deeply within their organisation.

Finally, the three innovation capabilities are essential as core competencies of green innovation management. This relationship is already defined and elaborated by using the work of Lampikoski (2012) in Chapter 2.2.

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5. Discussion and Conclusion

Research on information system for environmental sustainability goals is regarded as a relatively new topic in IS academic community and the numbers of conducted research are still scarce (Watson, Boudreau, & Chen, 2010; Melville, 2010). Among them, the proposition of green information system and their usability in assisting organisation to realise green innovation management is valuable as a research topic, since many organisations are getting more pressure from customers and government to reform their business operations to be environment-friendly (Schiederig, Tietze, & Herstatt, 2011; Reuvers, 2015). Therefore, this study tries to investigate green information system functionalities and analyse their significance to green innovation realisation of organisation.

Theory of green information system and green innovation management are explored and the concept of dynamic capabilities is utilised to link them. Furthermore, case study type of research is performed through document analysis and interview in order to obtain practical understanding of the theory. The findings reveal the significance of various green information system functionalities to the generation of dynamic capabilities, the effects of those capabilities to green innovation capabilities, the obstacle of green practices in organisation, and potential functionalities of green information system from industrial ecology perspective.

5.1 Significance of green IS functionalities in dynamic capabilities

generation

Referring to the analysed documents, it appears that organisations prefer to implement green IS functionalities that give tangible profit to them. Functions such as improving efficiency of business operations and reducing the use of resources are popular, since the result usually would show immediately, for instance saving certain amount of money. Furthermore, the utilisation of these functions gives significant impact in generating absorptive capacity and agility capabilities. Using the function of managing the use of resources constantly prepares organisations of environmental changes that will affect their access to conventional resources. This positive impact also applies to the improving efficiency of business operations function, which pushes organisations to seek new knowledge and apply them so their operations can be more efficient.

Nonetheless, some organisations already recognise the importance of other functions that have great impact to green goals whilst give more intangible benefit. Changing behaviours and informing the public are two examples of such function. Changing behaviours function can help organisations to integrate green practices in the entire structure of their organisation by encouraging people to change their attitudes towards eco-friendly mind-set. Meanwhile, informing the public function will assist organisations to introduce their green practices and influence external stakeholders to support their ways of working. Concerning their impact to absorptive capacity and agility capabilities generation, both functionalities might have indirect effect to organisational ability in managing knowledge and change, particularly for changing attitudes and behaviours function. If organisations successfully implement this function, the whole stakeholders would have better understanding and acceptance towards organisations’ green practices. As a consequent, managing environmental-related knowledge and changes would be less complicated.

To conclude, the green information system functionalities mentioned above are found to be capable of generating absorptive capacity and agility capabilities of an organisation.

Green Information System Impact on the Improvement of Organisational Core Capabilities in Realising Green Innovation