Supply Chain Uncertainty and Environmental Management

One of the fundamental questions related to corporate environmental management remains "does it pay to be green?". While the results in the literature mainly support the premise that it does pay to be green, the literature also suggests that the business and industrial contexts as well as the type of environmental initiatives matter in driving organizational performance.

For instance, significant value can be created by adopting pollution prevention technologies and practices rather than pollution control. Pollution prevention usually take the form fundamental changes to a product or a process that eliminate pollution at the source. Several waste reduction and energy efficiency programs aligned with that kind reduction at the source mindset. In contrast, pollution control involves proper management of pollution after it is generated. End-of-pipe technologies and remediation projects are often associated with pollution control. Interestingly, the most recent Canadian data on environmental expenditures indicate that manufacturers spent more in pollution control in a ratio of 2.2:1 when compared to pollution prevention. Why is that the case? Is there an operating context more conducive to adopt preventive approaches as opposed to control approaches?

Building on the attention-based view of the firm (ABV), this paper proposes that supply chain uncertainty is an important factor in (i) allocating organizations' resources to environmental management, and (ii) the type of environmental initiatives adopted (i.e., prevention vs. control). Because environmental management can be perceived as a non-core or 'peripheral' activity, higher level of supply chain uncertainty increases the likelihood that limited managerial attention will be diverted away from environmental management and more towards core activities. Put another way, with less predictability in the supply chain, managers' attention span is less likely to fully cover green issues within their operations, hence, spending less time and resources on environmental management. Furthermore, a less predictable supply chain is more complex to manage, which results in favoring environmental technologies and methods that are less disruptive such as end-of-pipe technologies or abatement systems.

By developing the linkage between supply chain uncertainty and environmental management, this paper provides a better understanding of the contextual elements that can be driving environmental management decisions. By gaining a better appreciation of supply chain uncertainty as a contextual variable, this paper contributes theoretically and conceptually to the literature. The empirical development and subsequent analysis also can have managerial implications as supply chain uncertainty can be mitigated by addressing variability at the source (e.g., six sigma projects) or by building buffers – hence affecting environmental management decisions.

This paper first provides a definition of supply chain uncertainty in Supply Chain Uncertainty section. This definition is then linked to environmental management in Linking Supply Chain Uncertainty to Environmental Management section where two hypotheses are proposed using ABV. Methodology section describes the research methodology and the variables measurement used for the empirical analysis presented in Empirical Analysis section. The empirical results are discussed in Discussion and Concluding Remarks section where the paper's limitations and future research avenues are also discussed.