Adoption of sustainable technology in the Dutch manufacturing industry
Freddy Menko Radboud University
Master Thesis – Master Innovation & Entrepreneurship Supervisor: Dr. Armand Smits
Second examiner: Dr. Robert Kok
Contact:
Freddy Menko (s4650603) Phone: 06 510 439 10 Email: f.menko@student.ru.nl
Acknowledgments
Writing this master thesis has been an adventurous quest with a tear and a smile. An adventurous quest for that it was a long search including trial and error, but coming out stronger. A tear for the bumps and delays in the process and differences of opinions. A smile for the gain of new know-ledge, promising findings and process made. I am glad sustainability was included within the topic, as I see it as part of the future. It would definitely be part of my future career as well. The practise of sustainability within organizations is still new in an interesting way and should get more attenti-on, not only among academics. My topic was initiated by Dr. Robert Kok, thereafter structured by Dr. Paul Ligthart as it was part of a larger research done by the Radboud University. Supervision however was by Dr. Armand Smits, who helped me content wise, but most importantly kept me on track. Numerous times have I walked into his office at which he helped me organize the chaos in my head with constructive feedback, and for that I am thankful. Additionally I am grateful for my cat Pikkie who supported me with a lot of meows and head bunts in times of solitude writing my thesis. The untold times of her screwing up my document due to her casual stroll on my keyboard is hereby forgiven. Despite the sometimes difficult times, I am very pleased with my choice of both pre-master and master and see a bright future.
Content
Introduction . . . 5
Problem Description . . . 5
Research objective and question . . . 7
Theoretical relevance . . . 7
Managerial relevance . . . 8
Scope of the research . . . 8
Theoretical framework . . . 9
Rogers’ diffusion of innovation theory . . . 10
Types of sustainable innovation in manufacturing firms . . . 13
Stakeholder theory . . . 14
Roger’s adoption theory and stakeholders theory – external stakeholders . . . 15
Roger’s adoption theory and stakeholders theory – (potential) employees . . . 17
Sustainable technology, stakeholder’s effects and environmental effects . . . 18
Method . . . 20
Introduction . . . 20
Data collection . . . 21
Survey & Research ethics . . . 21
Variables construction . . . 22
Independent Variable (IV) – Sustainable technology adoption . . . 23
Mediating variable (MV) – Environmental effects . . . 23
Dependent variables (DV) – Stakeholder effects . . . 23
Control variables . . . 24
Statistical Analysis . . . 24
Analysis . . . 26
Descriptive Statistics . . . 28
Assumptions (prior to analysis) . . . 29
Correlation matrix . . . 31
Hypothesis 1 . . . 32
Hypothesis 2 . . . 32
Hypothesis 3 . . . 33
Hypothesis 4 . . . 33
Discussion and conclusion . . . 34
Rate of adoption outcomes . . . 35
Environmental effect outcome . . . 36
Managerial implications . . . 37
Limitations and future research . . . 39
References . . . .40
Introduction
Problem Description
There is a growing demand and pressure by sta-keholders that businesses in general, and manu-facturing firms in particular, minimize any ne-gative impact on the environment (Wolf, 2013). This phenomena started when the concept of sustainability was introduced in the Brundtland Report in 1987, the Rio Declaration in 1992, fol-lowed by the Kyoto Protocol of 1997. Busines-ses aim for environmental sustainability which attempts to better human welfare by assuring natural resources used to fulfil human needs and to make sure that the sinks for human wastes are not exceeded, in order to prevent any harm to the human kind (Goodland, 1995). In order to show ones commitment, businesses publish an-nual environmental performance reports (Hart, 1995). A means to achieve environmental sus-tainability is incorporating sustainable techno-logy in a product, process, service or business
model (Schiederig, Tietze, & Herstatt, 2012). In this study, sustainable technologies are seen as technologies that limit or reduce negative impacts of products or services on the natural environment. The operations of manufacturing firms have been perceived as the most cutting driver of environmental performance (Hart, 1995). Therefore, governments worldwide are increasingly stimulating sustainable economic development and urge manufacturing firms to reduce waste and energy consumption. This being said, the focus point of this study will be on sustainable process technology implying im-proved production methods.
Companies differ in their inclination to adopt sustainable technologies, which is the main reason why some will not adopt a parti-cular technology (Davies, 1979). The inclination to adopt depends on costs and benefits from the adoption which differ among originations due to their characteristics such as industry, size, products, process, capabilities, management,
Adoption of sustainable technology in the Dutch
manu-facturing industry
A master thesis written by Freddy Menko for the Radboud University. 2018 May 16
Abstract - A thesis on the adoption of sustainable process technology and its relationship to stakeholders of the adopting firm in terms of motivation, recruitment, reputation and investment interests. An explorative research of 198 manufacturing firms operational in the Netherlands. Most auspicious finding is the positive effect environmental friendliness of adopted sustainable technology has for all above mentioned terms. The rate of adoption however seems to be negligible.
network and their financial status. Furthermo-re organizations differ in their attitude towards sustainability and perceive risk differently. It is however not entirely up to organizations to de-cide whether to adopt sustainable technology as there are environmental regulations. Other than regulations, sunk costs is an important fac-tor that affect the adoption behavior of sustai-nable process technology (Stoneman & Battisti, 2000), not even mentioning the charges on pol-lution, taxes on emission and prices of sustaina-ble technology.
The demand for sustainable technology grew so much, that sustainability can be used as a management tool to gain competitive advan-tage. It could enhance the reputation multiple stakeholders hold of a firm. For this study repu-tation is seen as Fombrun (2002) describes, as a collective representation of a company’s past actions and future prospects and its ability to deliver valued outcomes. It entails the beliefs or opinions that are generally held about the firm.
Internally, the adoption of sustainable technology could be beneficial for a firm’s (po-tential) employees; current employee motivati-on could rise and more sophisticated recruits are attracted towards the firm. (Mandip, 2012; Oates, 1996). Externally it could benefit the firm as the beliefs about the firm of external stakeholders in general could improve. Epstein & Roy (2001) researched the beliefs of exter-nal stakeholders in relationship to sustainability and found that improved environmental perfor-mance could lead to enhance the public image of an organization and motivate customers to increase purchases. Furthermore, the interests
of investors in particular towards the firm could improve, making the firm more attractive to in-vest in (Spicer, 1978). Epstein & Roy (2001) also mention that investors react positively to sustai-nable developments as they see it as evidence of forward-looking leadership. Investors screen their investments on sustainable criteria as they believe it can also have positive consequences for the stock price.
The use of best practice commercial technologies in manufacturing industries has the potential to reduce 18-26% share of industrial energy use and 19-32% share of industrial CO2 emission (International Energy Agency, 2007). Since the best practice commercial technologies are mostly process technologies, it is assumed that the adoption of sustainable process tech-nologies has large potential for manufacturing firms to reduce energy consumption and pollu-tion emission. Hence, it is important to further investigate within this field as there are many as-pects still unknown to the world. Extensive rese-arch is done on this subject, preliminary on the antecedents for adoption of sustainable techno-logy in manufacturing firms. However, little is known about what happens after the adoption; the outcome. Therefore, this study is of an ex-plorative nature, discovering how the adoption of sustainable process technology affects the organization’s stakeholders by looking at the rate of adoption. Focus is on the business / ma-nagerial level aspects, and not on technological aspects. Sustainable technology is said to possi-bly lead to a favorable opinion of external stake-holders towards the firm. Furthermore are there mixed findings of whether sustainable
techno-logy is positive for the (potential) employees of the firm, which makes it interesting for further investigation. Moreover, it is unknown if level or intensity of environmental friendliness plays role in the effect on these internal and external stakeholders. These are the gaps in research this study will narrow, by exploratively researching the effect side of sustainable technology adopti-on in Dutch manufacturing firms.
Research objective and question Many effects of sustainable technology adop-tion are hard to measure in absolute numbers (e.g. the effect on recruitment), and if so, they are most likely not measured by every single or-ganization. Therefore there was chosen for this research to bring the managerial perceptions of the effects of sustainable technology adoption in Dutch manufacturing companies to light. Re-porting a representative amount of managerial perceptions within the industry gives a better understanding of what impact sustainable tech-nology has on an organization itself and its na-tural environment. This understanding in turn may be used to as an impetus for (other) organi-zations to adopt sustainable technology in their production process. The purpose of this study is to not only report the static effects that are measured, but to also discover connections be-tween the stakeholders effects and how this is possibly mediated by environmental effects, in order to get a better understanding of the re-sults. The research question follows:
“What is the relationship between the adoption of sustainable process technology and stakeholders of the
adopting company in terms of motivation, recruitment, reputation and investment interests?”
Theoretical relevance
This study follows adoption processes through the lens of adoption theory, in particular Ro-ger’s innovation diffusion theory that provided the foundation of adoption theories in 1962. Adoption theory examines the choices that are made to accept or reject a particular innovation. Adoption is not solely the choice to accept an innovation, it is also about the integration of the innovation in the right context. (Rogers, 1995). The relevance of this study in short is providing new insights in the field of sustainable techno-logy adoption in manufacturing firms, from an organizational perspective. Since there has only be done little research on the affective aspects of technology adoption, this could complement the current knowledge.
Straub (2009) mentioned that future research on adoption may examine the con-sequences of technology to create a holistic understanding of how technology change in-fluences the organization. There have been con-flicting findings regarding sustainability and its relationship towards employee motivation and recruitment (Branco & Rodrigues, 2006; Sku-diene & Auruskeviciene, 2012). This study adds to the discussion by providing new insights of the Dutch manufacturing industry on this topic. It furthermore reveals several other insights on the outcome of sustainable adoption. It shows the influence that adoption of sustainable tech-nology has on the stakeholders of the adopting company. It both shows how the rate of
adopti-on impacts the organizatiadopti-on as well as whether this effect is mediated by the intensity of the effect that sustainable technology has on the natural environment.
Further research is often suggested in the field technology adoption. So does Del Rio (2009) suggest that further research would al-low identification of relevant details that are lacking in current available data regarding the determinants for technological change. The current sustainable technology adoption stu-dies display mixed results, therefore additional investigation in this field could shed light on this topic (Telle, 2006), which is what this study wishes to accomplish by investigating manage-rial perceptions on the adoption of sustainable technology.
Managerial relevance
The study is viewed from a business perspec-tive rather than a technological one. Manage-rial perceptions are researched which adds to the managerial relevance of the study. The main and primary managerial relevance is to show management how sustainable technology adoption could be a win-win situation for the adopting firm and its surroundings. Multiple researchers have stated that a mean to provi-de managerial relevance in business research is to provide managers with the appropriate concepts (Astley & Zammuto, 1992; Jaworski, 2011). It is important for managers to know the consequences of their decisions, in order to make the best possible managerial decisions. When this is absent, unanticipated and undesi-red consequences may occur. Within the large
sector of manufacturing in the Netherlands, managers have different strategies and consi-derations. Therefore, by generically displaying the perceived effects of how sustainable tech-nology affects different kind of stakeholders is important for managers to understand in order to make decisions according to their own stra-tegy. It has been shown that adoption of tech-nology can fail because of wrong managerial decisions (Chiesa & Frattini, 2011).
Scope of the research
This research focuses preliminary on the gene-ric adoption of sustainable process technology in the production process of manufacturing firms located in the Netherlands. The word generic is explicitly used here as no distinction between several types of technology are made to come to the results. The sole rate of sustai-nable technology adoption will be seen as the predictor. The rate of sustainable adoption is measured by the amount of sustainable tech-nology types a firm has adopted. The manufac-turing industry was chosen due to the fact that manufacturing firms have an extremely large contribution to the world’s depletion of natu-ral resources and it is one of the most polluting industries. Further focus is on sustainable pro-cess technology and not on product techno-logy. The polluting aspects of manufacturing described earlier lies in the production process, and not so much in the manufactured products themselves. Whenever there is referred to ‘sus-tainable technology’ this will always be about the production process of the manufacturing unless described differently. Sustainable
tech-nology has multiple characteristics, this study stresses the environmental side of sustainable technology. There also are economic and social characteristics of sustainability (Boons, et al., 2013). These two characteristics are left outside the scope of this research. Quantitative rese-arch will be done in which the effects of sus-tainable technology adoption are examined, as how these effects are perceived by the organi-zations themselves. This leaves the antecedents of adoption out of the scope. It is not desired to explain the relationships in depth yet by sup-portive qualitative research. The purpose here is to find relationships between generic substanti-ally technology adoption and the stakeholders, from a business point of view. There are more effects of sustainability than researched in this study, however there is chosen to only focus on the motivation and recruitment of the firm’s (potential) employees, and the reputation and investment interests of external stakeholders.
These four elements are highly important for a company’s vitality and are suspected to be affected by sustainable technology adoption. The underlying reason for this is to show that adoption of sustainable technology could be a win-win situation, and not just a cost item.
Theoretical framework
Figure 1 displays the simplified conceptual mo-del of this study. The theory behind the momo-del will be elaborated on in the succeeding secti-on. To give a comprehensive understanding of sustainable technology adoption and its effects, two main theories will be used; Rogers’ diffusi-on of innovatidiffusi-ons theory and stakeholder the-ory. Rogers’ diffusion of innovations theory will explain how the process of innovation (or technology) adoption works in firms, structu-red in five steps (Rogers, 2003). Most concepts of this study are defined in this section to limit
Sus. Tech. Adoption Env. Effects
Motivation & Recruit-ment Internal
Stakehol-ders
Reputation & Investment Interests External
Stake-holders Figure 1. Conceptual model
any uncertainties and secure intelligible lingo of this field. A detailed overview of all defi-nications can be found in appendix 1. Stake-holders theory addresses the morals and values of an organization. In the traditional view of a company, the shareholders and the owner are of sole importance. Stakeholder theory argues that more members are involved (Freeman, 1984). In this study, employees, communities, governmental bodies and customers are the most salience members involved. The Resource Based View (RBV) is partly integrated into the stakeholders theory and provides an under-standing of the beneficial consequences that sustainable technology adoption could have for a firm. The RBV argues that the success of a firm depends on its (in)tangible resources in order to gain advantage over their competitors, this also entails good stakeholder management (Wernerfelt, 1984).
Rogers’ diffusion of innovation theory Rogers’ diffusion of innovations theory is best suited for investigating the adoption of tech-nology in firms (Medlin, 2001). Most studies of this sort involve technological innovations, therefore Rogers (2003) usually used the word “technology” and “innovation” as synonyms. For Rogers (2003), “a technology is a design for instrumental action that reduces the uncer-tainty in the cause-effect relationships involved in achieving a desired outcome” (p. 13). It is comprised out of two parts, namely hardware and software. In this context, hardware is the tangible tool that embodies the technology. Software is the brain of the tool, the
informati-on that drives the tool (Rogers, 2003).
According to Rogers (2003), adoption is a decision of “full use of an innovation as the best course of action available” and rejec-tion is a decision “not to adopt an innovarejec-tion” (p. 177). Rogers defines diffusion as “the pro-cess in which an innovation is communicated thorough certain channels over time among the members of a social system” (p. 5). There are four important terms used in this definition, innovation, communication channels, time and social system. These terms will be discussed ac-cordingly.
Innovation – Rogers (2003) offered the following description of an innovation: “An in-novation is an idea, practice, or project that is perceived as new by an individual or other unit of adoption” (Rogers, 2003, p. 12). Important notice is, that an innovation does not per defi-nition has to be something new, this would be an invention, it must at least be perceived as something novel. Whereas innovation can refer to something abstract, like an idea, it can also be concrete, like a new piece of technology. In this study focus preliminary lies on technologi-cal innovations.
The innovation decision process is the process through which an individual will pass from first knowledge of an innovation to de-veloping and attitude towards the innovation, to deciding whether to adopt or reject, to im-plementing the new idea, and at last confirming his or her decision. Therefore, the innovation decision process has five steps: (1) knowledge, (2) persuasion, (3) decision, (4) implementati-on, and (5) confirmatiimplementati-on, see figure 2.
Uncer-tainty is a barrier to the adoption of innovati-ons. We look for information at various stages in the innovation-decision process to limit any uncertainty about expected consequences. “Consequences are the changes that occur in an individual or a social system as a result of the adoption or rejection of an innovation” (Rogers, 2003, p. 436). Moreover, consequen-ces can be desirable or undesirable, direct or indirect, and anticipated or unanticipated. De-sirable consequences are the functional effects that an innovation has for an individual or so-cial system. Undesirable consequences are the contrary, thus dysfunctional effects. Direct consequences are the changes to an individual or system that occur in immediate response to an innovation. Indirect consequences are tho-se changes that result out of the direct contho-se- quences of an innovation. They are the
conse-quences of the conseconse-quences of an innovation. Anticipated consequences are changes due to an innovation that are recognized and intended by the members of a system. Unanticipated consequences are neither intended nor recog-nized (Rogers, 2003). For example. It is pro-bably desired by the firm that the adoption of sustainable technology has direct effect on the environment by being less polluting in terms of emission or energy used. Furthermore it can indirectly affect the stakeholders of the firm internally as well as externally. In general, people tend to have a better attitude towards responsible organizations. The decision stage leads either to adoption, a decision to make full use of an innovation as the best course of ac-tion available, or to rejecac-tion, a decision not to adopt an innovation.
Communication Channels - For Rogers
(2003) communication is “a process in which participants create and share information with one another in order to reach a mutual un-derstanding” (p. 5). This communication runs through channels between sources. Here sour-ces are individuals or institutions that created the communication message, and channels are the tools used to get the message to the desig-nated receiver.
Time - The innovation diffusion pro-cess, adopter categorization, and the rate of adoptions all carry the element of time.
Social System – The social system is the last key component. Rogers (2003) defined the social system as “a set of interrelated units en-gaged in joint problem solving to accomplish a common goal” (p. 23). The diffusion of in-novations is influenced by the social structu-re of the social system. This social structustructu-re is the designed arrangements of the members within the system (Rogers, 2003). The social system has influence on the innovativeness of
its members, and is therefore regarded as an important component.
For the effects of the adoption of in-novation, the relevant stages are stage four and five; the implementation stage and the confir-mation stage.
In the implementation phase, the in-novation is put into use. There always is a de-gree of uncertainty involved with novelty. In this stage, uncertainty about the outcome of the innovation can be problematic. Therefore, change agents and other support are often inte-grated in the process to reduce the uncertainty. Reinvention also usually happens in the imple-mentation stage. Reinvention is “the degree to which an innovation is changed or modified by a user in the process of its adoption and implementation” (Rogers, 2003, p. 180). The-re is a distinction between invention and inno-vation that is best explained by Rogers (2003) “invention is the process by which a new idea is discovered or created,” the adoption of an
In the confirmation stage, the decision
to adopt has already been made, and the adopter seeks support for the decision made. According to Rogers (2003), the decision can be altered if he or she is “exposed to conflicting messages about the innovation” (p. 189). Though, the adopter tends to be selective in this process by preliminary seeking positive messages that approve his or her decision. Later in this sta-ge, depending on the support of the decision, later adoption or discontinuance can happen. Discontinuance can be when the adopter re-places the innovation by a better one, called replacement discontinuance. In extreme cases, the adopter fully rejects the innovation when the performance of the innovation is not sa-tisfying, called disenchantment discontinuance. Innovations or technologies are not ex-clusively sustainable. Sustainable innovation in general can be defined as “a process where sus-tainability consideration (environmental, soci-al, and financial) are integrated into company systems from idea generation through to rese- arch and development (R&D) and commercia-lization. This applies to products, services and technologies, as well as to new business and or-ganizational models” (Boons, et al., 2013, p.3).
A returning characteristic in all the
definitions of sustainable innovation is that the firm’s negative impact on the natural en-vironment will reduce (Varadarajan, 2017). This ecological side of sustainable innova-tions will be emphasized in this research. Types of sustainable innovation in
manu-facturing firms
Whenever a firm decides to adopt sustaina-ble technology, it usually will replace the less sustainable technology and therefore will have less negative influence on the condition of the environment. Sustainable technologies are commonly divided into end-of-pipe technolo-gies (EOP), production process modification (PPM), material/fuel substitution (MFS) and
End-of-Pipe Production process
modification Material/fuel sub-stitution Waste recycling
• Remove emission / air pollutants • Remove water / soil pollutants • Efficiency of ma-terial usage • Efficiency of en-ergy usage • Decreased emis-sion generation • From coal/oil to natural gas • From grey to green electricity • Non-renewable to renewable materials • Replacement by recycled mate-rials • Reuse of waste within the firm • Reuse of waste
outside the firm • Water recycling /
water saving Table 1. Types of Sustainable Technology
innovation is the process of using an existing idea” (p. 181).
In the confirmation stage, the decisi-on to adopt has already been made, and the adopter seeks support for the decision made. According to Rogers (2003), the decision can be altered if he or she is “exposed to conflic-ting messages about the innovation” (p. 189). Though, the adopter tends to be selective in this process by preliminary seeking positive messages that approve his or her decision. La-ter in this stage, depending on the support of the decision, later adoption or discontinuance can happen. Discontinuance can be when the adopter replaces the innovation by a better one, called replacement discontinuance. In extreme cases, the adopter fully rejects the innovation when the performance of the innovation is not satisfying, called disenchantment discontinuan-ce.
Innovations or technologies are not ex-clusively sustainable. Sustainable innovation in general can be defined as “a process where sus-tainability consideration (environmental, soci-al, and financial) are integrated into company systems from idea generation through to rese-arch and development (R&D) and commercia-lization. This applies to products, services and
technologies, as well as to new business and or-ganizational models” (Boons, et al., 2013, p.3). A returning characteristic in all the de-finitions of sustainable innovation is that the firm’s negative impact on the natural environ-ment will reduce (Varadarajan, 2017). This eco-logical side of sustainable innovations will be emphasized in this research.
Types of sustainable innovation in manu-facturing firms
Whenever a firm decides to adopt sustaina-ble technology, it usually will replace the less sustainable technology and therefore will have less negative influence on the condition of the environment. Sustainable technologies are commonly divided into end-of-pipe technolo-gies (EOP), production process modification (PPM), material/fuel substitution (MFS) and waste recycling (WR) according to the way they are integrated in the production process. The EOP technology adds extra equipment such as scrubbers and filters to the production process which remains essentially unchanged (Frondel et al., 2007). PPM involves modifying (parts of) the existing production process, working pro-cedures, machine instructions et cetera, which generally leads to reduction of pollution and waste recycling (WR) according to the way they are integrated in the production process. The EOP technology adds extra equipment such as scrubbers and filters to the production process which remains essentially unchanged (Frondel et al., 2007). PPM involves modifying (parts of) the existing production process, working pro-cedures, machine instructions et cetera, which generally leads to reduction of pollution and of energy and resource usage (Frondel et al., 2007). MFS involves substituting non-sustai-nable materials and fuel for sustainon-sustai-nable alter-natives (Del Río González, 2005). This can be from coal or oil to natural gas or biomass, from gray electricity to green electricity, from hazar-dous or non-renewable resource inputs to less hazardous or renewable inputs and transitio-ning to using recycled materials as inputs. WR entails reusing your own waste as a resource within or transforming it into usable products to be used outside the company. EOP techno-logy solves environmental problems after the pollution has been produced, so it is also cal-led pollution-abatement technology. By com-parison, PPM solves environmental problems from the source of the production, so it is also called pollution prevention technology. PPM are perceived to be more risky for a business as
they have influence on the production process, in contrast to EOP technology that leaves the production processes intact by being an add-on (Murphy & Gouldson, 2000). Table 1 shows an overview of the different technologies.
It is clear that these sustainable tech-nologies have different consequences for the natural environment. The effects that these technologies have on the environment can generally be divided into three categories; ef-fects on resources, ecological end-effects, and effects on human health (Thoresen, 1999). Ef- fect on resources happens when the new sus-tainable technology reduces the depletion of natural resources. Ecological end-effects has everything to do with the state of the planet in relationship to the organisms whom live there. Typical end-effects of manufacturing firms are global warming, ozone layer damage or habitat alterations. Effects on human health has to do with direct toxicological impact on the human health, such as chemical leakage and radiation that have severe negative consequences on the human health. Table 2 displays the various environmental effects.
Resources Ecological end-effects Human Health
• Depletion of natural re-sources
• Global warming • Ozone layer damage • Habitat alterations
• Toxicological impact • Chemical leakage • Radiation
of energy and resource usage (Frondel et al., 2007). MFS involves substituting non-sustai-nable materials and fuel for sustainon-sustai-nable alter-natives (Del Río González, 2005). This can be from coal or oil to natural gas or biomass, from gray electricity to green electricity, from hazar-dous or non-renewable resource inputs to less hazardous or renewable inputs and transitio-ning to using recycled materials as inputs. WR entails reusing your own waste as a resource within or transforming it into usable products to be used outside the company. EOP techno-logy solves environmental problems after the pollution has been produced, so it is also cal-led pollution-abatement technology. By com-parison, PPM solves environmental problems from the source of the production, so it is also called pollution prevention technology. PPM are perceived to be more risky for a business as they have influence on the production process, in contrast to EOP technology that leaves the production processes intact by being an add-on (Murphy & Gouldson, 2000). Table 1 shows an overview of the different technologies.
It is clear that these sustainable tech-nologies have different consequences for the natural environment. The effects that these technologies have on the environment can generally be divided into three categories; ef-fects on resources, ecological end-efef-fects, and effects on human health (Thoresen, 1999). Ef-fect on resources happens when the new sus-tainable technology reduces the depletion of natural resources. Ecological end-effects has everything to do with the state of the planet in relationship to the organisms whom live there.
Typical end-effects of manufacturing firms are global warming, ozone layer damage or habitat alterations. Effects on human health has to do with direct toxicological impact on the human health, such as chemical leakage and radiation that have severe negative consequences on the human health. Table 2 displays the various en-vironmental effects.
Stakeholder theory
The origin of the stakeholder theory lies with Mitroff ’s work in 1983 in his book Stakeholders of the Organizational Mind (Mitroff, 1983). Although, Freeman is seen as the father of sta-keholder theory work thanks to his book Stra-tegic Management: A stakeholder Approach (Freeman, 1984). The starting point of the sta-keholders theory is the assumption that values are a necessity and by all means a part of doing business. The theory questions shareholders’ wealth maximization as the most important goal of an organization and argues that orga-nizations should be managed in the interest of all parties involved. Freeman’s book was meant to offer a strategic approach that would take multiple stakeholders into account in order to achieve superior performance. Stakeholder the-ory is still present in today’s literature because of the increased reports of ethical malpractice and the negligence towards our planet’s natural environment. It also looks at how organizati-ons affect societies, which was often ignored in the past (Hinings & Greenwood, 2003). Sta-keholder theory’s take off point is from emoti-ons, other than rationality, which was a contro-versial way of doing business back then and it
shed light on social issues in management that led to corporate social responsibility and sustai-nable development accordingly (Wood, 1991; Sharma & Henriques, 2005).
Freeman (1984) argues that existing theories were no longer completely applica-ble in the swiftly changing environment. This changing environment was the globalization which among others entailed foreign competi-tion, global markets, consumer movements and increasing environmental awareness. His claim was backed up by large organizations failing to compete due to new environmental laws and regulations, activist groups for corporate social responsibility and the voice of the customer.
Freeman (1984) contended that this new awareness of the environment happened among both internal stakeholders and external stakeholders. Therefore, the increased impor-tance of managing the interests of all parties involved. Freeman’s stakeholder approach was highly effective because considering the inte-rests of all parties affected by the organizati-on or affecting the organizatiorganizati-on resulted in enhanced firm performance. In other words, sublime stakeholder management can been seen as a competitive advantageous (intangi-ble) resource. The concept of having compe-titive advantageous resources originates from the resource based view (RBV). The RBV is the predecessor of stakeholder theory, hence elements of the RBV can be found integrated into stakeholder theory. To elaborate, the RBV claims that the resources of a firm is a sub-set that enables competitive advantage and a subset that leads to superiority on the long run
(Wernerfelt, 1984). Empirical studies using the RBV have found that performances between firms within the same industry differ from each other, suggesting that the effect of specific re-sources of firms can be significant for a firm’s performance (Mahoney & Pandian 1992). As Wernerfelt (1984) himself puts it, “for the firm, resources and products are two sides of the same coin”(p.177).
Sustainable technology, Roger’s adoption theory and stakeholders theory – external
stakeholders
There is a strong cohesion between the adopti-on of sustainable technology and stakeholders theory. Sustainability often goes hand in hand with the reputation stakeholders have towards the firm (Karpoff, Lott, & Rankine, 1999). A positive reputation of a firm is a valuable as-set that provides a company with sustainable competitive advantages (Barney, 1991). For this study, focus lies on two constituents of exter-nal stakeholders; the reputation for exterexter-nal stakeholders in general, and the interests of investors in particular. These two are in a way connected which will be elaborated on later. The first is important for a firm’s viability in terms of sales; negative reputation of a firm could obstruct the firm’s sales volume. The latter is important for a firm’s viability pure in monetary terms; investors are often required to make progress in a firm, such as research and development or the purchase of proper-ty. Many previous event studies have found unexpectedly large losses to firms involved in negative environmental incidents. These losses
are often caused by reputational losses, as other explanations are lacking. For this study reputa-tion is seen as Fombrun (2002) describes, as a collective representation of a company’s past actions and future prospects and its ability to deliver valued outcomes. Sales of the compa-ny can highly depend of the reputation of the firm, so when the reputation is low, sales volu-mes are likely to be low. Reputation loss can be caused by different events. For example regula-tory events such as false and deceptive adver-tising (Peltzman, 1981), product-safety-related regulatory (Viscusi and Hersch, 1990), Equal Employment Opportunity violations (Hersch, 1991), Occupational Safety and Health Admi-nistration violations (Wallace III, et al., 1994) and fraud and price fixing (Cloninger, et al., 1987).
Nonregulatory events can also lead to a bad reputation as seen by external stakehol-ders. Nonregulatory events are for example change in product formula, the Tylenol poiso-nings (Mitchell, 1989) or airline crashes (Mit-chell and Maloney, 1989). These studies show that a decline in external stakeholders’ opinion decreases the value of the firm. On the other hand, Chauvin and Guthrie (1994) show that a positive reputation potentially increases the value of the organization.
Besides (non)regulatory events, en-vironmental events can impact how stakehol-ders feel about a company, however, the results are mixed. The study of Muoghalu et al., (1990) shows that hazardous waste lawsuits resulted in losses of the accused firms. On the contrary, Harper and Adams, (1996) found no
signifi-cant reputational gains after firms participated in environmental cleanup events. Moreover, Laplante and Lanoie (1994) found no declines in reputation of firms who were reported on media because of participation on negative en-vironmental events. Then again, other studies did find losses for firms involved in negative environmental events explained by reputation loss of the firm (Karpoff, et al., 1999).
Investors are most likely to show inte-rests in firms that have the ability to deliver va-lued outcomes as it could yield more dividend. Furthermore do investors see an investment in a company not solely as a monetary agreement but have taken a personal liking to the firm’s products, actions or vision, which often is the case with angel investors. Investors would show more interests in firms they wish to be associated with than those they do not wish to be associated with. Therefore, next to reputa-tion it is assumed to be positive for the invest-ment attractiveness of the firm whenever firms participate in environmental friendly events.
Logically, one would assume that un-sustainable events in which firms have partici-pated could negatively represent a company’s past actions and holds little promise of its futu-re prospects. Thefutu-refofutu-re thefutu-re is a gfutu-reat amount of research done investigating the relationship between the reputation of organizations and their participation in unsustainable events that harm the environment and its inhabitants. This study is aimed to do the opposite; by investi-gating the relationship of an organization’s participation in sustainable events and its re-putation, as one would also assume that
previ-ous participation by firms in sustainable even-ts could positively represent a company’s past actions and holds much promise of its future prospects. One way of practicing sustainability is by adopting sustainable technology. This led to the following hypothesis;
Hypothesis 1: Adoption of sustainable process techno-logy is beneficial for a firm in terms of reputation in
general and the interests of investors in particular. Sustainable technology, Roger’s adoption theory and stakeholders theory –
(potenti-al) employees
Adoption of sustainable technology can have consequences for the opinion that external stakeholders have of the firm. Moreover, the effects on internal stakeholders are examined. Internal stakeholders are those who are direct-ly involved in or affected by a management innovations (Hamel, 2006). It is believed that adoption of sustainable technology could po-sitively influence employee’s motivation and re-cruitment. The term “(potential) employees” is used as comprehensive construct referring to both current as future employees of a firm.
Following the self-determination theo-ry, there are two types of incentives having in-fluence on employee motivation: external and internal (Minbaeva, 2008). External motivation is associated with various rewards such as com-petitive salary, benefits and bonuses. Tough, It is often argued that external motivation is not enough. According to Minbaeva (2008), exter-nal motivation only helps to keep a person on job, but in order to motivate an employee to
achieve higher performance, internal motivati-on is required. Internal motivatimotivati-on has to do with satisfaction, task enjoyment, challenging tasks, accomplishments, involvement in decisi-on making, being appreciated and recognized, et cetera (Mosley et al., 2005; Greenberg & Ba-ron, 2008; Mullins, 2006).
Employees are likely to identify them-selves with the organization they work for if their ideals, standards and actions are cong-ruent. So whenever a firm maintains a sustai-nable way of working and has an attractive image, the employees’ position and self-esteem within society will be enhanced (Gond et al., 2010). There are multiple studies that explain how responsible organizations create employee identification with the firm (Jones 2010; Lin et al., 2010; Sully de Luque et al., 2008).
Whenever employees identify themsel-ves with the firm, it can have positive effects for the firm as well. The resource based view explains the competitive advantage of firms mainly by their idiosyncratic resource endow-ment. It is thought that a sustainable working structure would have impact on the creation of competitive adventurous intangible resources. Branco and Rodrigues (2006) suggest that it would “increase current employees’ motivation and morale as well as their commitment and loyalty to the firm, which in turn may improve financial outcomes.’’ (p. 127). Moreover, accor-ding to Mandip (2012), being a sustainable em-ployer helps to increase employee motivation and engagement, reduce labor turnover, and improve the health of the employees. Adop-tion of sustainable technology is a mean to
become a sustainable employer, hence could positively influence the motivation of a firm’s current employees.
Other than current employee motivati-on, Branco and Rodrigues (2006) suggest that sustainable organizations would attract more sophisticated employees. This can be backed up by various other studies (Oates, 1996; Wehr-meyer, 1996). Adoption of sustainable tech-nology is often done by firms to improve the condition of the natural environment, but also to improve their reputation toward the public. Desired effects include that employees also are more likely to both be attracted by and identify with the respective organizations (Lin, 2010). Accordingly, more and more employers are using sustainable practices as a management tool in order to improve their selection attrac-tiveness, specifically for the younger generation (Renwick et al, 2013). Those who are looking for a job prefer a close fit between their own values and those of the organization. There-fore, when they are sustainable self-aware, they wish to work for an organization that thinks alike. Backhaus et al., (2002) found that univer-sity students prefer to work for organizations with pro-environmental images. Albinger and Freeman (2000) found that a Corporate Social Performance index was positively linked with selection attractiveness for job-seeking indivi-duals with high levels of job choice. These indi-viduals were highly skilled and educated. Hen-ce, firms with positive sustainable reputations may have a competitive advantage regarding hiring potentially high-performing employees. Dolan’s (1997) study of US MBA students
found that more than 50% of the students would even take a lower salary to work for a sustainable organization. Moreover, it is found that in the UK over 75% of the 1018 ques-tioned employees find it important that firms have a policy to actively cut carbon emissions (Felgate, 2006). This is backed up by interview evidence from the UK and Japan that shows it is “easier to hire high-quality employees if a firm had a better environmental reputation” (Bansal & Roth 2000, p. 724).
All in all there has been done sufficient research to argue that adoption of sustainable technology that makes organizations more sus-tainable could in turn have positive consequen-ces for a firm’s (potential) employees. This led to the following hypothesis;
Hypothesis 2: Adoption of sustainable process techno-logy is beneficial for a firm’s (potential) employees in
terms of motivation and recruitment. Sustainable technology, stakeholder’s
ef-fects and environmental efef-fects One of the primary characteristics of sustaina-bility is the environmental impact. As discussed earlier can sustainable technology have impact on the environment in three different catego-ries; effects on resources, ecological end-ef-fects, and effects on human health. As sustai-nable technology has impact on the natural environment it could be hypothesized that not solely the adoption rate of sustainable techno-logy affects the opinion of stakeholders, but to which extend that the technology affects the natural environment plays a role in this, or even
fully mediates the relationship. To elaborate on this; if hypothesis 1 would be accepted, it would say that the adoption of sustainable technology would benefit a firm in terms of improved re-putation as seen by external stakeholders. The rate of adopted sustainable technology does not say anything about how environmentally friendly the technology itself is, it just shows the amount of sustainable technology adopted. It would not indicate any variation in the level of environmental effect. Therefore it is possi-ble that a high rate of sustainapossi-ble technology adoption affects the environment less intensi-vely than a low rate of sustainable technology adoption. By integrating environmental effects as mediator, it can be tested whether the re-lationship between sustainable technology and stakeholders weakens in strength, disappears or would remain the same. It would for exam-ple clarify if sustainable technology adoption that largely affects the environment enhances reputation more than sustainable technology adoption that only slightly affects the environ-ment. The environmental effect of a techno-logy expresses its environmental friendliness. However, results from the tests must be hand-led carefully and not directly be taken as true as the effects are merely a perception of the orga-nizations. We will now elaborate on these three environmental categories accordingly and the effects these could have for a company.
Natural resources - In the last two de-cades, the awareness of depletion of natural re-sources rose in the manufacturing industry, and now is a hot topic for debate in public. Many companies are altering their production
pro-cess in order to minimize resource use. Frondel et al., (2007) state that sustainable technology generally leads to reduction of resource usage. The clothing industry is nowadays fabricating clothes out of recycled materials, or bamboo as it grows faster and consumes less water than cotton in the process. Other manufacturing companies are switching to three-dimensio-nal printing, as it uses hundred percent of the material, instead of just a fraction when using molding techniques.
Ecological end-effects - Hamilton (1995) contributed largely to the field of or-ganizational reputation and its relationship towards environmental activities as he resear-ched the stock market effects of information releases about firm’s environmental pollution activities. Manufacturing firms are obligated to annually report their chemical releases to the EPA (Environmental Protection Agency). This information is passed on to the public by the TRI (Toxic Releases Inventory). Hamilton investigated how the media used the TRI and how it affected the polluting firms. He found that on the day the TRI information was re-leased, the polluting firms suffered a significant drop in market value. This drop in market value increased as the amount of chemicals released also increased. Moreover, Blacconiere and Pat-ten (1994) found that Union Carbide lost 27.9 percent, or $1 billion due to the Bhopal chemi-cal leak. Its industry rivals lost an average of 1.28 percent in market value. A relationship be-tween environmental activities and market va-lue is undeniable. According to Frondel et al., (2007) will sustainable technology reduce
pol-lution. It could therefore be hypothesized that sustainable technology would increase a firm’s market value.
Human health - It is clear that par-ticipation on events that are negative for the environment can have undesired and unantici-pated consequences for a firm’s reputation. In previous study in Malaysia, Abdullah, Y Abdul (2013) found evidence that initiatives regar-ding corporate social responsibility had a posi-tive influence on the reputation for Malaysian companies. Being responsible for your people, and surrounding people’s wellbeing can help to ameliorate your stakeholders’ opinion about you. Production processes in manufacturing can emit toxicological substances that could harm human health. Thoresen (1999) indicated that sustainable technology could benefit the human health by either substituting input re-sources for a cleaner process, or filtering toxic substances as the toxicological output is likely to decrease. This benefit can be on-site as well as off-site. This is not previously researched within the manufacturing industry yet.
All in all could the environmental ef-fects play a mediating role in the relationship between adoption of sustainable technology and the firm’s stakeholders in terms of moti-vation, recruitment, reputation and investment interests. This leads to the following mediating addons of previous hypotheses;
Hypothesis 3: The effect of sustainable process techno-logy adoption on a firm’s external stakeholders in terms of reputation in general and the interests of investors in particular is mediated by the effect on the environment
of the adopted technology.
Hypothesis 4: The effect of sustainable process techno-logy adoption on a firm’s (potential) employees in terms of motivation and recruitment is mediated by the effect
on the environment of the adopted technology.
Method
Introduction
The aim of the methodology chapter is to pro-vide a clear nature of the study, a specification of which methods will be used, the design of the study and how this all flows together. Mo-reover is explained how the data will be gathe-red, what the population is as well as which sampling techniques will be used. At last the data analysis will be discussed.
The motive for this research is to resol-ve the effect that sustainable technology adop-tion can have and whether this is only good for the environment, or that it can be a win-win situation for the adopting firm. One of the most polluting industries is the manufacturing industry, which was therefore chosen to be the population of interest of this study. The rese-arch question for this study therefore is;
“What is the relationship between the adoption of sustainable process technology and stakeholders of the adopting company in terms of motivation, recruitment,
reputation and investment interests?”
This study will solely make use of quantitative research methods. The quantita-tive data that will provided by this research will
be of explanatory nature which is appropriate for answering the research question. It is not necessary to find a deeper understanding of managerial decisions made or whatsoever. It is not necessary to find a deeper understanding of managerial decisions made or whatsoever. Most studies about sustainable technology adoption do require quantitative research me-thods as they test the antecedents of adoption in which a greater understanding will give a bet-ter comprehensive result. The results from this study could possible serve as a starting point for follow up qualitative studies. Note must be made that results of the research must be handled with care as it deals with the percepti-on of the firms rather than exact figures.
Data collection
For this study, all manufacturing firms in the Netherlands were selected as the population. This means all companies that produce of fa-bricate something themselves. To ensure a re-presentative sample, a list of all registered ma-nufacturing firms within the Netherlands will be purchased from the chamber of commerce. An invitation letter will be sent to all companies on that list with an URL to the online survey. For the sake of a sufficient response rate there is aimed for 5 percent which would represent the population correctly, the companies will also be invited by phone to participate. The in-dustries with the highest intensities will be cal-led first, as these form the group of most in-teresting and influencing cases. Data gathering will take three to four months in total. Because the data gathering is during the summer break,
it might take companies longer to respond. Survey & Research ethics
The survey is constructed based on research done by the Radboud University on antece-dents of sustainable technology adoption of manufacturing firms in China. Several items are adapted from this survey. The first section investigates the company’s rate of adoption of sustainable technology. The mid-section con-tains questions about the effects of sustainable technology adoption. The last section contains descriptive questions about the company’s ba-sis characteristics and trap questions. Questi-ons are answered on a 7 point Likert scale. The complete operationalization of the survey can be seen in appendix 2. To prevent response bias in the questionnaire, several action are taken to ensure validity of the questionnaire. To avoid language barriers, the survey is translated to Dutch before distribution. Difficult vocabulary is prevented by using definitions easily under-standable by operation or higher management. The questionnaire is presented in a dynamic matter that contains aberrant questions me-ant to avert steady answer patterns. Also no terms are loaded in order to steer respondents in to a particular direction. Furthermore, pri-vacy of results are ensured to the companies, also to avoid any social desirability, transpa-rency throughout the process is offered. The purpose of the research is presented together with the expected duration. To ensure confi-dentiality and anonymity, no company names are asked in the survey. The software used will be by Qualtrics, which maintains high safety
measures. There will be no information about the participating companies that could lead re-sults to a specific company so that the com-pany’s identity is completely cloaked. Data of the survey will be safeguarded by the Radboud University and will only be used for academic purposes. All participants are free to withdraw at any moment of the process. In the invitati-on letter to participate invitati-on the research is asked whether they would like to receive a report with the findings, the same is asked at the invitation phone calls. A special report will be made just for the participants containing the most rele-vant findings. Moreover can all contact details be seen in the invitation letter as well as in the online questionnaire.
Variables construction
The following section will provide understan-ding about the variables used to be able to run the analysis to test the hypotheses. A concep-tual model of the variables and hypotheses is shown in figure 3 on the next page. There are three types of variables put into use; sustai-nable technology adoption (independent va-riable), environmental effects (mediator) and stakeholder effects (dependent variable). Ap-pendix 2 can be consulted which displays the operationalization of the questionnaire and all items used for this analysis. Variables will be discussed accordingly. Sustainable Techno-logy Adoption WR MFS EOP PPM Human Health Ecological End-Ef-fects Depletion of Resour-ces Internal Stakehol-ders Recruitment Motivation External Stakehol-ders Investment Interests Reputation H3&4 H2 H1 H3 H4
Sus. Tech. Adoption Predictor
Environmental Effect Mediator
Stakeholder Effect Response
Independent Variable (IV) – Sustainable technology adoption
This study aims to relate sustainable technology adoption to different stakeholders effects. Sus-tainable technology is used as one construct, measured on four separate dimensions. As can be seen in appendix 2, will PPM (D3, D4, D5) and MFS (D6, D7, D8) be measured by 3 ques-tions, OEP (D1, D2) by 2 questions and WR (D9, D10, D11, D12) by 4 questions. Answer categories on these questions are “Not appli-cable to our firm”, “No, no plan”, “No, we are preparing for decision making”, “Yes, we are in the process of implementation” and “Yes, we are utilizing it”. The raw data will later be recoded to filter out the option “Not applicable to our firm” as these will bias the results. Whe-never it simply is impossible, or not applicable for a company to a certain type of sustainable technology, this should leave no consequences for their stakeholders’ opinion, hence the filter. After the filtering, answers will be recoded into two categories; “No, no plan” and “No, we are preparing for decision making” are considered to be as ‘non-adopting’ answers where as “Yes, we are in the process of implementation” and “Yes, we are utilizing it” are considered to be as ‘adopting’ answers. Hereafter a count variable will be computed by taking the sum of scores of all recoded items (D1-D12) leading to a sca-le that ranges from 0 to 12 to be treated as in-terval measurement level.
Mediating variable (MV) – Environmental effects
The mediating variable measures the effects the
technologies could have on the environment divided into three dimensions. They are measu-red by one item per dimension on a 7-point Li-kert scale. Originally they were designed to be tested by three items per dimension, however, due to restrictions about the length of the sur-vey they are reduced to one item per dimensi-on. A sum of scores will be made of the three items to construct one variable that measures the environmental effect ranging from 0 to 18 to be treated as an interval variable.
Dependent variables (DV) – Stakeholder effects
Two different sides of dependent variables are tested —external stakeholders and (potential) employees. Each side consists of two con-structs that are tested, being reputation and in-vestor’s interests for the external stakeholders and motivation and recruitment for the (poten-tial) employees. Again, just like the MV, these are measured by single 7-point Likert items for the same reason as mentioned earlier. Here there will be no possibility to create a summed score. Nonetheless will they be treated as inter-val variables. Strictly speaking are Likert scales ordinal, and the appropriate statistical analysis differ for ordinal and interval variables. Chan-ces of coming to the wrong findings could therefor increase. However, Norman (2010), shows that the robustness of the tests will be strong, even when violating the assumption of Likert scale being ordinal. The true distance between 1 and 7 on the Likert scale is accor-ding to Normal (2010) irrelevant to the analy-sis as the statistical software cannot affirm or
deny this. The numbers do still reflect the un-derlying constructs. Furthermore, can ranked methods only handle simple designs. Allowing confounding factors in non-parametric tests is difficult. Especially a mediation analysis is in this case too complex for a Spearman rho or Kruskal-Wallis.
Control variables
It is claimed that the firm’s size influences its attractiveness towards employees (Turban & Keon, 1993). Moreover Brown and Per-ry (1994) found that a firm’s profitability and ownership is related to its reputation. It is ex-pected that larger and more profitable organi-zations receive more publicity and therefore have greater recognition. To exclude any uncer-tainties there will be controlled for these firm’s characteristics on the size of the organization, the firm’s turnover and a firm’s type of owner-ship. Firm size is measured as the number of employees working for the firm and profitabi-lity is measured as the annual turnover of the firm, as the ROA is not available in the survey. Various studies have been done to research in-vestors’ reaction to pollution disclosures (Bel-kaoui, 1976; Ingram, 1978 and Spicer, (1978). They indicate that disclosure of social infor-mation, particularly pollution information had effect on investors reactions. It is possible that stakeholders other than investors also react to disclosure of these figures. Therefore disclosu-re will be included to control for. Disclosudisclosu-re is measured as publishing of detailed figures about their environmental performance and as payments for trespassing the environmental
re-quirements. One could argue that the type of industry would be of influence in the analysis as well. However, several industries are severely underrespresented which in turn could lead to false conclusions. For this reason it was chosen not to include type of industry in the analysis.
Statistical Analysis
The survey data will be analyzed by using IBM SPSS Statistics®. For the analysis of hypothe-sis 1 and 2 simple linear regression will first be used to see whether the model is usable. If this is the case, a second model will be predicted using multiple regression including the con-trol variables. This is the appropriate method of analysis because of the explanatory nature, and the metric scaled variables. In the regressi-on, the computed count variable of sustainable technology will be selected as the independent variables. The four stakeholder effects will one by one be selected as dependent. The equation if we test all predictors will be;
StakeholderEffectXi = (b0 + b1SusTechi) + Ei Simply saying that the outcome varia-bles are predicted by taking the constant (b0) and adding the slope (bn) of the predictor and accounting for error.
There are several assumptions and tests that have to be checked. A short list is provi-ded, and elaborated on accordingly.
1. Sample size 2. Reliability check 3. Homogeneity
4. Normally distributed 5. Multicollinearity 6. Measurement level 7. Linearity
1. As for the sample size, 20 would already be sufficient to continue the analysis, as there is only 1 predicting variable. However, the bigger the sample size the better the estimate of R, which is why there is aimed at 5% response. 2. A reliability check will not be necessary as there is no internal consistence of the scales. This being absence would not harm the validi-ty associated with the scores of the scale. For this study the Cronbach’s α’s of the indepen-dent variables is of no importance as each item of the scale measures a different part of the construct. For example one can score a 7 on the item “Fuel substitution from coal or oil to natural gas or biomass” (D6) but score a 1 on the item “Transition from producing gray elec-tricity to green elecelec-tricity based on solar, wind or water” (D7), as they do not need to directly correlate with each other.
3. There will be tested for the homogen-eity assumption between dependent and inde-pendent variables. The macro written in SPSS syntax by Ahmad Daryanto will be used for this. This will statistically test for heteroske-dasticity using the Breusch-Pagan and Koenker test.
4. The variables should furthermore be normally distributed, however, this is not a ne-cessity. The skewness and kurtosis should be between two times the standard error; SKEW/ SESKEW < |2|; KURT/SEKURT < |2|. If
this is violated, transformations will be done to estimate the model better. As the DV is ac-tually of ordinal measurement level, it is likely to violate assumptions of normality. To quo-te Norman (2010) “Havlicek and Pequo-terson did the most extensive simulation study [...]. They concluded that ‘‘The Pearson r is rather insen-sitive to extreme violations of the basic as-sumptions of normality and the type of scale’’ (p5-6). Norman (2010) also writes that it seems to matter very little when the assumptions are violated. So when there is evidence of slight skew, we continue regardless. Although, before completely refuting the assumptions, transfor-mations of the variables will be done to reduce the skew to a minimum.
5. Since there will be more than one pre-dictor in some of the models, there must be tested for multicolinearity. The Variance Infla-tion Factors (VIF) will help to dectect multico-linearity among the predictors. In here any VIF of higher than 4 requires some further investi-gation. A VIF higher than 10 will be unaccap-table.
6. The variables being metric is violated by the DV’s, but justified by the article of Nor-man (2010) that shows that the robustness of the tests will be strong, even when violating the assumption of Likert scale being ordinal. 7. Linearity is tested by making polynomi-als, which is furthermore helpful to find possi-ble curvilinear relationships.
In the regression, the count variable sustainable technology adoption will be se-lected as independent variable. Information
reported will be the range of standardized re-siduals, Cook’s distance, p-p plot to check nor-mal distributed residuals again, partial regressi-on plots to see the form of the regressiregressi-on, also to double-check the assumption on linearity, or whether there is a curvilinear relationship. For the entire model of regression itself, the R2 value will be reported to see how much va-riance is explained, followed by the F-value and p-value to test the significance. Whenever there is significance, the beta-score (β), t-value and again the p-value of the significant predictor will be looked at to find the unique contribu-tion of the tested variable while controlled for the mentioned firm’s characteristics.
Sus. Tech. Type Env. Effect Stakeholder Effect a c’ b Figure 4. Mediation model
For the mediation hypotheses 3 and 4, simple regression and multiple regression will be used, using the SPSS plug-in PROCESS. This tool is specifically designed for testing me-diation. The analysis differs from the regular SPSS analyses in a way that it uses bootstrap procedures, at which the confidence intervals are to be interpreted. A simplified model of the mediation can be seen in figure 4. When the MV is included in the model, it can be seen whether the simple relationship between the IV and DV will remain, gets weaker or even disappears. This can be seen by looking at the
z-score of PROCESS, which substracts the in-direct effect (a*b) from the in-direct effect (c) and checks to which extend this alters. A formal heuristic analysis will be used to detect media-tion provided by Baron and Kenny (1986). The assumptions are that first the IV must predict the DV (c). Second must the IV predict the MV (a). Third must the MV predict the IV (b). And fourth should the simple relationship bet-ween the IV and DV be smaller when the MV is included in the model. Finally a comparison between the direct effect (c’) with the indirect effect (ab) will be done. When the effect of de IV on the DV decreases to zero, it is a perfect mediation. If this effect decreases by a nontri-vial amount, but not to zero, it is a partial me-diation. As hypotheses 1 and 2 already test the simple regressions (c), it will not be necessary to perform this first step again. Only those hy-potheses that got accepted will be tested for mediation. In case that (c) and / or (a) are not significant, but (b) is, the direct effect between the environmental effects and stakeholder ef-fects will still be reported as it explains part of the research question.
Analysis
Following section will provide the results of the study, and how these results were achieved. There is a comprehensive overview of the used (original, tansformed, recoded and composed) variables shown in table 3 to be able to under-stand the analyses. These variable names will also be used as references in the text.
