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Business Strategy and the Environment
Bus. Strat. Env. 13, 289–305 (2004)
Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/bse.415

EDITORIAL
MANAGEMENT AND POLICY
ASPECTS OF INDUSTRIAL
ECOLOGY: AN EMERGING
RESEARCH AGENDA
Jouni Korhonen,1,5 Fredrik von Malmborg,2 Peter A. Strachan3 and
John R. Ehrenfeld4

1
University of Tampere, Finland
2
Linköping University, Sweden
3
Robert Gordon University, UK
4
International Society for Industrial Ecology, USA

This special issue is based on the
international symposium Business and
Industrial Ecology held alongside the 2003
Business Strategy and the Environment
Conference in Leicester, UK. The main
message is that the dominant natural
science and engineering aspects of
industrial ecology (IE) need to be linked
to management and policy studies. IE
has rapidly evolved into a new field with
the concept of an ‘industrial ecosystem’
that uses the metaphor of sustainable
ecosystems to provide innovative routes
to change present unsustainable
* Correspondence to: Dr. Jouni Korhonen, University of Tampere,
Research Institute for Social Sciences, Kanslerinrinne 1 (Pinni B),
FIN-33014 University of Tampere, Finland.
E-mail: jouni.korhonen@uta.fi
5
This author gladly acknowledges support from the Academy of
Finland RIEM Project (Code 53437).
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
industrial systems. The editorial article
identifies three themes as organizing
categories in linking IE to management
and policy studies. First, the systems and
network philosophy of IE can be coupled
with inter-organizational management
studies to complement the more
traditional intra-organizational
environmental management. Second,
management and policy studies
complement descriptive IE studies of
physical flows of matter and energy to
produce prescriptive suggestions for how
industrial systems can be moved through
human action toward the vision of IE.
Third, the metaphor is a source of
inspiration and creativity in the
transformation of management and
strategic visions towards a new
sustainability culture. Copyright © 2004
John Wiley & Sons, Ltd and ERP
Environment.

Received 23 April 2004
Revised 19 May 2004
Accepted 21 May 2004
INTRODUCTION
The concept of industrial ecology
uring the last 15 years industrial
D ecology (IE) has emerged as a signifi-
cant approach in the theory and prac-
tice of sustainable development. As a concept,
IE became popular with the Frosch and Gal-
lopoulos Scientific American article ‘Strategies
for manufacturing’ in 1989, and is rapidly
evolving into an interdisciplinary field
(Ehrenfeld, 2004).
The IE concept uses the metaphor of sus-
tainable natural ecosystems as a model for
transforming unsustainable industrial sys-
tems. The global ecosystem relies only on solar
energy inputs and releases only waste heat
(infrared radiation) to space while operating
with material cycles and energy cascades
(using ‘waste’ energy). Contemporary indus-
trial systems rely predominantly on non-
renewable and emission-intensive fossil fuels,
frequently imported from beyond the immedi-
ate system boundaries. Industrial systems
exhibit a linear throughput flow of matter and
energy that depletes natural resources and
generates wastes and emissions that the
surrounding ecosystems cannot assimilate
without causing upsets.
IE has captured the imagination of the inter-
national academic, business and governmental
communities alike primarily because of the
powerful vision of an industrial ecosystem pre-
sented by, for example, Jelinski et al. (1992),
Graedel and Allenby (1995) and Graedel
(1996). Using the natural ecosystem evolution
over time as a metaphorical model, the indus-
trial system should develop material cycles
and energy cascades based on sustainable use
of renewable natural resources and waste and
by-product utilization (Figure 1). The material
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
290
EDITORIAL
cycles and energy cascades would be enabled
by cooperative networks between manufactur-
ing firms, energy industries and other societal
actors including, e.g., agriculture, forestry and
households. The wastes and renewables
coming from within the system would sub-
stitute for non-renewables and renewables
derived from outside the system. In this highly
idealized vision, the amount of wastes and
emissions dumped to nature would be reduced
as waste becomes increasingly used as a
resource with a positive economic value.
Academic, business and governmental orga-
nizations have become attracted to the asserted
possibility of concurrent environmental, eco-
nomic and social gains in this idealized vision
of a more sustainable industrial ecosystem
(Korhonen, 2004a). In the vision, potential
gains are possible in all three dimensions of
sustainable development: economic, social and
environmental. Proponents of IE argue that
raw material and fuel costs on the input side
and waste and emission management and
control costs on the output side can be reduced
while new market opportunities can emerge
for products with less impacts. The most
often cited practical example for the indus-
trial ecosystem vision is the local industrial
symbiosis, also often referred to as an eco-
industrial park, at Kalundborg, Denmark. In
Kalundborg, companies have achieved envi-
ronmental and economic gains through waste
and by-product utilization in industrial ecosys-
tem-type cooperation (Ehrenfeld and Gertler,
1997).
The current status of industrial ecology theory
The rapid development of IE into an interdis-
ciplinary field has resulted in a high quality
body of international literature. So far, IE
theory has mainly been developed by drawing
from natural science and engineering-oriented
frameworks (Korhonen, 2004b; Korhonen and
Strachan, 2004). The core of the theory focuses
on physical flows of matter and energy within
industrial systems and ecosystems and
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL

Type I ecosystem;
Unlimited
Resources
System System Unlimited linear flows
component component sinks for
(energy and
Matter) waste
waste
heat

Type II ecosystem;
System System
component component semi-cyclic flows
Energy
and limited Limited
resources waste
System
component
waste
heat

Type III ecosystem;

System System
component component cyclic flows

Solar energy
System
component
waste
heat

Type III industrial

Manu ecosystem
Consumer
facturer

Solar energy
and limited Limited
resources waste

Materials Waste
processor processor
waste
heat
As life increases, the diversity and interdependency in material cycles and energy cascades between

ecosystem actors or organisms increase. The global ecosystem relies entirely on the (infinite) solar

energy input. In local ecosystems, wastes do not exist in the human economic sense of the term,

because waste serves as a resource. An economic/industrial ecosystem that could move toward this

vision could reduce its environmental burden, resource use and waste and emission generation and is

termed the industrial ecosystem. The industrial ecosystem would develop material cycles and energy

cascades through cooperation and networking between firms and other societal actors and rely on

sustainable use of renewable natural resources.

Figure 1. Ecosystem development as a metaphor for sustainability of economic and industrial systems

Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 13, 289–305 (2004)

291

between these two interdependent systems.
The concept of industrial metabolism (Ayres,
1994) has been influential in the field, empha-
sizing that, like organisms in nature, economic
activities of industrial actors and society as a
whole are based on metabolism of matter
and energy. Industrial metabolism has been
useful when describing how materials and
energy flow in industrial systems and between
industrial systems and ecosystems (Erkman,
1997).
The concepts of IE add prescriptive dimen-
sions beyond the more limited concept of
industrial metabolism. IE not only describes
how industrial systems operate but also sug-
gests how the industrial system should operate
in order to evolve toward a sustainable con-
figuration (see Boons and Roome, 2001;
Korhonen, 2004b). Several authors have ques-
tioned whether IE can significantly expand
beyond its present dominant industrial metab-
olism focus and move from the descriptive
analysis of materials and energy flows in
industrial systems toward a prescriptive
framework offering concrete solutions and
practical measures for policy-makers and
business managers (Boons and Roome, 2001;
Andrews, 2003; Korhonen, 2004b).
Although the focus on the physical flows of
matter and energy is important for sustainable
development, IE theory should also consider
the human dimension, that is, the actors
involved with the flows (Cohen-Rosenthal,
2000; Ehrenfeld, 2000; Boons and Roome,
2001). Without understanding the human
dimension, the full prescriptive and normative
potential of the field of IE is unlikely to be
exploited. Different societal actors – firms,
organizations and households, and not to
forget, individuals (and their values and pref-
erences) – drive and affect the physical flows
of matter and energy. Boons and Roome (2001,
p. 52) state that ‘Industrial ecosystems are not
simply ecologies. They are driven and guided
by human thought and action. Industrial ecolo-
gies are, therefore, more precisely viewed as
human ecologies . . .’.
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
292
EDITORIAL
Mere descriptive analysis of the industrial
metabolism and its effects on ecosystems is
inadequate to achieve a real change in practice
toward sustainable development. The analyti-
cal tools of IE (e.g. material flow accounting,
substance flow analysis, energy flow analysis,
life cycle assessment; van Berkel et al., 1997)
can provide important inventories of the
present situation of societal material and
energy flows or scenarios illustrating desired
future visions. But actual change toward these
future visions and a move toward a more sus-
tainable situation will not happen without
understanding and influencing human behav-
iour, and will require shaping the concrete
measures that decision-makers, firms and indi-
vidual consumers implement in practice (cf.
Steger, 1996). It follows, then, that the natural
science and engineering aspects of IE need to
be linked to aspects commonly dealt with in
social sciences, particularly in management
studies, and also in policy studies.
Sociology, political science, psychology and
anthropology can provide important contribu-
tions to the study of industrial ecosystems,
which unlike natural ecosystems, are consti-
tuted by actors capable of intentional and
planned action, foresight and the application
of symbols. Human actors formulate per-
ceptions and cultural constructs that affect
how they understand and interpret indus-
trial ecosystems and ecosystems (Boons and
Roome, 2001). For example, consider the
concept of waste. What is waste and what is a
valuable raw material differs in different cul-
tures. In developing countries, the meaning of
waste is different than in developed countries.
Similarly, what were valuable materials cen-
turies ago may now be regarded as waste. For
example, before the fossil fuel era, heat pro-
duction had to rely on whatever combustible
materials were available. ‘Waste management’,
then, is always dependent on its spatial, cul-
tural, social and temporal context.
An ultimate and difficult to realize aim for
the field of IE would be to fully integrate
natural and social science perspectives,
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL
making it a truly interdisciplinary field. A first
step would be to highlight key domains of IE
where management and policy studies could
support the development of theory. Similarly,
it would be relevant to identify areas where
traditional IE research could make a significant
contribution to further developing organiza-
tional and management studies related to envi-
ronmental and sustainability issues, i.e., theory
in business strategy and the environment.
Reviewing the so-called ‘organizations and the
natural environment’ (O&NE) related research
from the last 10 years, Kallio and Markkanen
(2003) question whether this research has made
any significant contributions to the general the-
ories of business strategy and management.
The environmental dimension has not altered
the way in which business is done. One reason
is said to be the lack of integration of natural
science perspectives in management studies.
Perhaps IE could serve as a basis for further
O&NE related research?
The attraction of IE as a theoretical approach
towards sustainable development has resulted
in several programmes in the United States,
Europe, Australia and Asia for eco-industrial
development at national as well as regional
levels. Critical analysis of the development of
IE in practice would provide a basis for better
understanding of the potential of the concept
of industrial ecosystems and of the value of the
field of IE as such.
The broad objective of this special issue and
editorial article
In attempting to pursue an integration of
natural science and social science perspectives
in IE, an international symposium on the
theme of Business and Industrial Ecology was
held as part of the 2003 annual Business
Strategy and the Environment Conference in
Leicester, UK. We acknowledge and thank our
contributors for their efforts in making the
symposium a very successful event. The pub-
lished conference proceedings are available
from ERP Environment (Korhonen et al., 2003).
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
Following the event, the first three authors
were invited by Professor Richard Welford to
compile this volume, selecting a few of the
many papers presented for this special issue’s
review process.
Our primary objective of this special issue is
to provide further insight into the important
links between the natural science and engi-
neering side of IE and corporate management
and public policy aspects of sustainable devel-
opment. We see the management and policy
areas as being largely unexplored in the
current IE literature. The importance of also
including public policy was one of the princi-
pal themes arising from the international sym-
posium. The objective of this editorial article is
to identify themes and issues that we believe
are important in linking IE to management and
policy studies. Before presenting the themes,
we provide a synopsis of the papers that con-
stitute this special issue.
CONTRIBUTION OF THE PAPERS
IE is only one among several concepts that
have arisen in recent years in the sustainable
development policy and management context,
drawing directly from systems theory and
addressing the flows of material, energy (and
information) in industrial production and con-
sumption systems. Many of these concepts
have developed in parallel in more or less iso-
lated academic ‘schools’ and ‘societies’. Man-
agers and policy-makers interested in them
have difficulty in finding out if and how they
are related. This confusion in turn may inhibit
assessment of the strategic and instrumental
merit of each concept in relation to policy and
management (Robèrt et al., 2002; Korhonen,
2004a). These authors cited and others main-
tain that, in such a situation, it is difficult to use
the many tools and approaches in a strategic
and integrated manner to make progress
toward the common vision of sustainability
connected to all of these conceptual packages.
Bus. Strat. Env. 13, 289–305 (2004)
293

In the first paper of this special issue, Stefan
Seuring offers a way out of the confusing situ-
ation by analysing from a management per-
spective differences and interrelations between
the concepts of (i) industrial ecology, (ii) life
cycle management, (iii) integrated chain man-
agement and (iv) environmental supply chain
management. Analysing in particular the
physical system boundaries, time perspective
and actor networks related to each concept,
Seuring proposes a framework that links each
to the strategic management level where it has
its major strength. IE is suggested to best serve
as a management philosophy or mission state-
ment – using nature as a role model or vision
for developing society. Integrated chain man-
agement can then be used to concretize this
vision in the political arena, for instance, in
terms of policies and legislation for extended
producer responsibility. Moving one step
further towards an operational application of
the vision, life cycle management highlights
the need when engineering a new product or
service for companies to have a product design
strategy that embodies all environmental
concerns throughout the processes along the
product life cycle. Seuring finally puts supply
chain management at the operational level
as a framework for structuring operational
activities needed to market products and
services.
A more differentiated understanding of IE is
provided in the paper of Hilde Opoku. Her
paper provides a description and analysis of
different conceptualizations of IE found in the
literature related to efforts to concretize the
meaning and implications of IE for practical
policy-making for sustainable development.
She claims a major problem is the present lack
of explicit references to different conceptions of
IE in ideologically based policy argumentation,
a result of IE having been developed mainly by
natural scientists and engineers. As a conse-
quence, it is currently difficult to use IE as a
unifying principle to guide public and corpo-
rate policy and management for sustainable
development. Her analysis points to four
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
294
EDITORIAL
different sets of policy objectives and policy
mechanisms that can be found in existing
examples. In short, the ‘soft reformist
approach’ to IE, which covers most policy-
related IE literature, puts the actors’ economic
interests in front of those of the environment,
and favours only continuation or incremental
societal change. In comparison, the ‘technoc-
racy approach’ urges radical systems change,
but still the actors’ interests go first. This
approach is found in one of the few attempts
to develop an entire policy framework for IE
(Allenby, 1999a). Of the two approaches to IE
that put the environment in the front row, the
‘radical approach’ calls for system change,
while the ‘pragmatic approach’ favours con-
tinuation. In comparison to Seuring, Opoku
shows that the applications of IE-related tools
and approaches – e.g. integrated chain man-
agement, life cycle management and environ-
mental supply chain management – are always
dependent on the underlying conceptions of
IE. For instance, integrated chain management,
with extended producer responsibility as a
concrete policy area, relates to the soft
reformist approach of IE.
Opoku also provides a comparison of the
radical and the soft reformist approaches as
applied at the local government level in a
Norwegian context. Despite a limited set of
available indicators, this study gives empirical
evidence that different conceptions of IE will
lead to different objectives, and subsequently
will lead to different outcomes of policies
when implemented eventually. The study also
indicates that, regardless of the underlying
conceptual base, IE principles can be imple-
mented on a large scale only if there is politi-
cal will to support these principles, if the
institutional structure allows for the principles
to be implemented and if the technological
principles are in place. Without the right poli-
cies and actions taken by governments and
public authorities at different levels, neither
extended producer responsibility nor eco-
industrial parks such as Kalundborg are likely
to become a reality.
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL
This conclusion sets the scene for the third
paper of this special issue, which brings
insights from an area closely related to IE. With
development and management of industrial
symbiosis at the local and regional level in
mind, Fredrik von Malmborg takes a closer
look at the role of local authorities (LAs) in the
transfer of knowledge, information and ideas
among actors in inter-organizational networks
related to management for regional sustainable
development. Based on studies of public–
private partnerships in Sweden – where LAs
collaborate with groups of small and medium
sized enterprises in order to improve environ-
mental performance and enable regional and
business development – von Malmborg shows
that LAs can play several roles.
Besides their roles in initiating networks and
being network brokers and managers, the
paper discusses how LAs act as ‘knowledge
banks’ or ‘knowledge brokers’ in the process of
knowledge transfer. As a knowledge bank, offi-
cers in the LA hold knowledge that is trans-
ferred to companies and engage closely with
the companies through small active networks.
As knowledge brokers, LA officers are less
active and mainly help companies to identify
consultants and technical experts that hold
the knowledge the companies need in order
to develop environmental management pro-
grammes. Malmborg argues that these func-
tions could be seen as more specific approaches
to be taken by the LA when playing the overall
role of an ‘institutional anchor tenant’
(Burström and Korhonen, 2001), facilitating
development and management of regional
industrial ecosystems.
As the different conceptions of IE will imply
different policy outcomes (see Opoku in this
issue), so is it likely that the different roles of
LAs will also imply different policy outcomes?
According to Malmborg, it seems that the
knowledge bank approach favours develop-
ment of regionally oriented industrial ecosys-
tems such as eco-industrial parks, while the
knowledge broker approach, if anything,
favours development of product-oriented
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
industrial ecosystems along the supply chains.
Moreover, the knowledge bank approach
seems to give more room for the LA to set the
agenda, at least initially. If an LA has a vision
and strong will to implement eco-industrial
development, a knowledge bank approach
would probably be better than a knowledge
broker approach.
However, an LA acting as a knowledge bank
or a knowledge broker is not a guarantee for
industrial symbiosis. Malmborg stresses the
importance of mutual trust among the poten-
tial members of a network as a basic condition
for successful inter-organizational collabora-
tion. Other conditions identified for effective
inter-organizational collaboration refer to
intra-organizational capabilities, bottom-up
perspectives in visions and project goals and
collaborative project leadership (cf. von
Malmborg, 2003).
As indicated, developing eco-industrial
parks is an example of a local policy initiative
attempting to apply the principles of IE. At the
same time as responding to concerns for the
environment, LAs have to strive to compete for
inward investment. Responding to changes in
their economic base, local governments world-
wide have taken on a function of recruiting
new businesses in order to replace traditional
jobs in a drive for re-development or to
broaden the traditional employment base in
rural area development. IE has emerged as a
concept which its proponents claim can deliver
the win–win–win outcome of sustainable
development including economic, social and
environmental benefits at the local or regional
scale. Thus, eco-industrial development initia-
tives are seen not just as a means for increas-
ing the eco-efficiency of participant firms, but
also as a basis for a new form of local and
regional development. In the fourth and final
paper of this volume, Pauline Deutz and David
Gibbs, two human geographers, present a crit-
ical study of the existing and potential use of
the concept of eco-industrial development and
the ‘eco’ label it provides as a marketing tool
and means of regional differentiation and
Bus. Strat. Env. 13, 289–305 (2004)
295

‘place promotion’ in economic development or
redevelopment. The study is based on inter-
views with eco-industrial park developers,
managers, participating businesses and others
associated with both operational and planned
North American eco-industrial parks.
In each of the case studies there are clear eco-
nomic goals to the development. In all, the
central goal was the creation of jobs and the
public authority overseeing the development,
when involved, was part of the economic (or
industrial) development branches, rather than
a department focused on the environment or
planning. In the cases studied, the principles of
IE, particularly materials recycling and energy
cascading, were often compromised. This
problem from an IE perspective is not neces-
sarily a fundamental barrier. The parks studied
were at very early stages of industrial symbio-
sis. Regarding the projects as promotion tools,
representatives of all sites expressed the view
that the eco-theme would help them attract
clients although they had so far experienced
different degrees of success in attracting jobs.
The paper indicates that although establishing
an eco-industrial park, as opposed to a regular
industrial park, may generate an enhanced
degree of interest, it will not over-ride more
traditional factors influencing corporate deci-
sions on where to locate a business, such as the
geography and broader economic realities of
the setting.
POTENTIAL THEMES FOR
BRIDGING INDUSTRIAL ECOLOGY
TO MANAGEMENT AND
POLICY STUDIES
Based on input from the four papers, presen-
tations at the symposium, different literatures
and our own experience, this section identifies
and discusses three themes that we see as
important issues to be considered when
linking traditional IE research to management
and policy studies. The themes are (i) inter-
organizational management, (ii) development
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
296
EDITORIAL
and management of industrial ecosystems and
(iii) industrial ecology as a vision and source of
inspiration for management strategy.
Inter-organizational management
One of the central features of the industrial
ecosystem concept is a system orientation:
aiming to understand and reroute the flows
of matter and energy (and information) in
complex production–consumption networks.
IE has also been highlighted as a network-
oriented concept and approach to environmen-
tal management in recent papers of Business
Strategy and the Environment (Sinding, 2000;
Roome, 2001). Boons and Berends (2001, p. 115)
state that ‘The concept of industrial ecology
focuses on groups of firms and their stake-
holders that interact to achieve sustainable
development’.
Stakeholder management theory is an
important path to pursue in linking corporate
environmental management theory to IE.
Madsen and Ulhoi (2001) argue that environ-
mental issues have extended the scope of tra-
ditional stakeholder theory in that more
stakeholders need to be taken into account
by the firm. Stakeholders should include not
only the standard members – the owner, the
employees and the authorities – but also neigh-
bours and non-governmental organizations
concerned with environmental issues such as
waste and pollution. In the IE context, the
number of stakeholders that must be taken into
account is likely to increase even more. For
example, industrial recycling networks or
industrial symbiosis are systems of many dif-
ferent firms and other organizations and soci-
etal actors that cooperate through common
waste material and waste energy utilization.
Hence, a firm operating in an industrial ecosys-
tem has many different stakeholders that it
needs to consider (cf. Steger, 1996). Madsen
and Ulhoi also note that the main focus in tra-
ditional stakeholder management has been on
threats and risks resulting from demands that
different stakeholders pose on the company.
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL
Besides risks, in the larger context of environ-
mental management, stakeholders can also be
seen as providing new opportunities. This
assertion has important consequences for IE.
For example, in industrial symbiosis networks,
waste can no longer be understood only in neg-
ative terms because of risks, waste treatment
and disposal costs or waste management leg-
islation burdens. Rather, waste generation can
be perceived as a proactive way to generate
new markets for flows that previously had no
value or negative value. Reconsidering the
value, waste can be a source for new business
opportunities and profits for a firm in an
industrial ecosystem that proactively cooper-
ates with its stakeholders in greening the value
chain (cf. Caldwell and Smallman, 1996;
Shireman, 1998).
The papers presented in this volume
develop the work of Roome (2001) and others
by clearly positioning IE as environmental
management in inter-organizational networks.
Physical flows cross product, process, firm,
regional and national boundaries and borders.
All societal actors affect and are affected by the
flows of matter and energy. It is important to
note that these actors also affect and are
affected by information flows that connect the
actors in the communicative coordination
system that is always a central feature in the
policy and management processes (see the
papers by Seuring and Malmborg in this issue).
The study of information flows and their con-
nection to policy and management of indus-
trial ecosystems cannot rest on the natural
science and engineering methodologies domi-
nant in current IE theory. Information flows in
human cultures are radically different from
information flows in nature that are stored and
transferred through the genes and reproduc-
tive processes (Norton et al., 1998). Industrial
ecosystems use symbols and assign meanings
to objects. Information flows in and through
cultural constructs and cultural media, e.g.,
oral, written or electronic records and mone-
tary information. Richard Dawkins (1976)
introduced the concept of ‘memes’ as the
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
carrier of cultural information as a metaphor to
cellular genetic materials.
Inter-organizational environmental manage-
ment theory extends beyond the more tradi-
tional intra-organizational theory associated
with practices such as ISO 14001 and EMAS
(Strachan et al., 1997, 2003). The main focus
of these environmental management systems
is on individual firms and organizations.
The network and inter-organizational system
approach of IE, which focuses on many differ-
ent firms and organizations, can be found in
corporate environmental management in the
form of concepts and approaches such as life
cycle management, environmental supply
chain management or integrated chain man-
agement (see Seuring in this issue), but also in
local community governance with the concepts
of public–private or other cross-sectoral part-
nerships (Malmborg, Deutz and Gibbs, and
Opoku in this issue).
Progress towards sustainable development
requires moving beyond inventories and
analysis towards practical action. For example,
LCA, perhaps the most frequently used IE tool,
usually traces material and energy flows along
the product life cycle. Analytic results are pre-
sented as quantitative calculations that assess
the potential impacts of the flows on the envi-
ronment. Less frequently, the results are also
used to create suggestions for improvement.
Going beyond this largely analytic function
to management, organizational and business
aspects, LCA can be extended to life cycle man-
agement (Ehrenfeld, 2003). Using the informa-
tion derived from LCA, life cycle management
develops a strategic environmental business
policy; sets specific targets and goals; identifies
tasks and responsibilities among the organiza-
tions along the life cycle; communicates the
information among the life cycle organizations
and their stakeholders; considers organiza-
tional and management structures, capacities
and cultures in the chain and seeks to meet
the targets with practical measures. Life cycle
management also monitors the success of the
actions against the objectives, and documents
Bus. Strat. Env. 13, 289–305 (2004)
297

the results for use in the firm’s programme of
continuous improvement if it has implemented
a formal programme.
Inter-organizational management for sus-
tainability can be difficult. The possibility of
conflicting interests increases when the diver-
sity of the actors increases as in a network
of firms as compared with the more limited
set in the management system of an individ-
ual firm. The interests and preferences of an
individual firm can be conflicting with
others in the network of firms. Further, inter-
organizational cooperation requires special
intra-organizational capacities (Clarke and
Roome, 1999; Dosi et al., 2000; Boons and
Berends, 2001; von Malmborg, 2003). A firm as
well as a public authority must be able to
diversify its operation toward unfamiliar areas
to be able to cooperate with different actors.
Similarly, there must be room for flexibility in
the organizational culture to be able to adopt
new routines and ideas coming from outside
the organization from different organizational
cultures (Moxen and Strachan, 1998, 2000).
These and other authors have also observed
that, although the potential of networks and
cooperation is, in general, their ability to gen-
erate innovations and learning through new
contacts, partnerships and exchange of tacit
knowledge, over time these networks can also
become ‘closed’ and develop tight couplings
that do not allow for innovations from outside
the established network (Roome, 2001; Boons
and Berends, 2001). Such networks can
develop a path dependency and ‘lock in’
certain technologies and routines for long
periods of time, hampering innovation (see
Norton et al., 1998).
The benefits of cooperation and networking
can be fruitful, nevertheless. The environmen-
tal burden of a system as a whole is generally
more important to sustainable development
than the environmental burden of an individ-
ual system component. The system context of
IE does not lead directly to the dismissal of
intra-organizational tools and approaches that
are still necessary even in a network. Strategic
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
298
EDITORIAL
applications of environmental management
tools should incorporate intra-organizational
and inter-organizational approaches that are
parallel and complementary, rather than as
substitutes or alternatives (Robèrt et al., 2002).
One of the authors (JRE) has been working
for the past four years with a consortium of
firms working together towards sustainability
in an experiment on inter-organizational col-
laborative learning. The group works under
the umbrella of the Society of Organizational
Learning with the leadership of its founder,
Peter Senge, author of The Fifth Discipline, one
of the most popular business books ever
written. Experience in this group accentuates
all of the points expressed above. Sustainabil-
ity is sufficiently complex that it is difficult to
make progress within a single firm. Cross-firm
dialogue and joint projects to find solutions
to problems such as eliminating chromium
from products have generated learning and
improved intra-organizational processes.
The little and very preliminary theory build-
ing that has occurred so far among a small
group of researchers observing the consortium
points to the importance of relationships
within a constantly evolving social network as
a prerequisite to collaboration and learning.
Rational actor theory would seem to have little
relevance in explaining how key inter-organi-
zational activities are initiated and persist.
Contextual characteristics, such as trust and
shared visions, appear to be very important
factors (cf. von Malmborg, 2003). The best
model so far for explaining the development of
group coordination and routines is a combina-
tion of intra- and inter-organizational theory.
IE is not explicitly a part of the programme, but
many of the firms are familiar with the basic
concepts and some have employed consultants
working with The Natural Step, Natural Capi-
talism or Cradle to Cradle. This connection
with IE, although somewhat loose, is sufficient
to support the arguments being made in this
article about the importance of matching orga-
nizational theory to the context, which must
become more and more like a network as indi-
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL
vidual industrial firms join in industrial
ecosystems.
Development and management of
industrial ecosystems
Undoubtedly, many would agree that the
vision of a type III industrial ecosystem is a
desirable vision for sustainability compared to
the unsustainable industrial system of the
present world. This vision has been con-
structed mainly on a base of theories originat-
ing from natural sciences and engineering (e.g.
physics, biology, ecology and chemical engi-
neering). A serious question remains: is it pos-
sible to achieve the vision of sustainability in
practice by applying these concepts? Only a
few examples of industrial ecosystems exist
and even fewer have been documented (see
Desrochers, 2002a, 2002b). These example
systems, such as the Kalundborg industrial
symbiosis in Denmark, have spontaneously
self-organized over the course of several
decades without intentional plans and specific
strategies.
The natural ecosystem, the source of the
metaphor driving IE, is a complex self-
organizing system without any capability for
intentional and planned behaviour and action,
unlike human cultures. Industrial ecologists
are grappling with this serious distinction and
ask how it is possible to develop policy, plan-
ning or management principles and strategic
guidelines for complex industrial ecosystems
that are not isolated ecosystems but cultural
systems that include a diverse set of societal
actors with different values, interests and pref-
erences. We explicitly point to isolated ecosys-
tems as the model while recognizing that
humans are living organisms and exist within
the larger global ecosystem. This paradox is a
consequence of the framework of modern,
positive science that forces human actors to
look at the world from a detached, external and
objective stance.
Recently, the IE literature has begun to raise
the question ‘How can we develop policy or
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
management approaches to realize the Type III
industrial ecosystem vision in practice?’ The
two opposing ideologies of free market evolu-
tion and centralized planning have been
compared as alternative routes toward the
industrial ecosystem vision (Desrochers, 2002b,
2004). Potential shapes and roles for public
policy, including policy instruments used for
promoting innovation and socio-technical
change and sustainability, should be consid-
ered (e.g. direct regulation, taxes, charges, sub-
sidies and other economic instruments as well
as voluntary agreements between government
and firms). Industrial ecologists can achieve
their normative visions more effectively by
drawing from, e.g., evolutionary economics,
ecological economics, spatial planning, tech-
nology policy and innovation management. No
single ideological or monolithic solution to
such a complex set of issues that surround sus-
tainability can be anticipated. Combinations of
active governmental policy and voluntary and
proactive actions by private firms are needed.
One of the potential policy approaches already
considered in European legislation is extended
producer responsibility (Ehrenfeld, 2004),
which extends the manufacturer’s responsibil-
ity for the environmental effects of the product
over the life cycle including after-use waste
management, disposal, recovery and recycling.
This policy is a good example of an approach
that couples public policy mandates and
private incentives.
In the case of local or regional industrial
ecosystems, some authors have highlighted the
importance of cooperation between public and
private actors and have stressed the central
role of local authorities in eco-industrial devel-
opment (von Malmborg; Deutz and Gibbs,
this issue). Local authorities could serve as
network brokers and ‘institutional anchor
tenants’ (Burström and Korhonen, 2001),
initiating the actor networks and providing
political and managerial support as well as
informational and educational services and
infrastructure support for the other partici-
pants of the industrial ecosystem. Local
Bus. Strat. Env. 13, 289–305 (2004)
299

authorities can also carry out land use plan-
ning and influence the locating of firms.
Despite the importance of public–private
networking and cooperation for IE, the pres-
ence of diverse public and private organiza-
tions further increases the complexity of the
network, and may increase the number of
conflicting interests and preferences. Public
and private actors, almost by definition, have
different motives and preferences (von
Malmborg, 2003). The structure of power and
leadership in these cooperative arrangements
affects their development. Some authors have
found that successful industrial ecosystems
emerge when companies take the lead; con-
versely, innovation can be slow to occur when
local authorities are the drivers (Eilering and
Vermeulen, 2004; Heeres et al., 2004). Other
studies (von Malmborg, and Deutz and Gibbs
in this issue; von Malmborg, 2003), however,
argue that without the local authority as a
central actor eco-industrial development
would not have occurred in most cases studied
by these authors. The particular choice of lead
agency was found to be important though.
Successful projects began with the leadership
of the local authority’s unit for local economic
development or local business development,
not the unit for environmental protection.
Industrial ecology as a vision and a source of
inspiration for management strategy
Unlike normal private goods, many forms of
natural capital and the ecosystem services that
natural capital stocks yield (Daly, 1996) are not
traded in markets. It is very difficult to assign
property rights for them and exceedingly
problematic to agree on their monetary value
(Wackernagel and Rees, 1997). Many natural
goods are a form of public goods: clean air and
water, life-sustaining biodiversity or the waste
and emission assimilation capacity of nature.
Successful IE in the context of corporate envi-
ronmental management would assure the pro-
vision of these public goods.
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
300
EDITORIAL
The production of public goods is obviously
very different from the traditional role of busi-
ness, which is to produce private goods while
maximizing profits in competitive markets.
Under the present set of rules that govern busi-
ness behaviour – growth, cost reduction, exter-
nalization and so on – firms have few or no
incentives to adopt sustainable practices vol-
untarily. Most changes needed to move toward
sustainability in business are likely to be seen
as irrational (the radical conception of IE in
Opoku in this issue). Welford (1998) has
argued that ecological modernization and eco-
efficiency (the soft reformist conception of IE in
Opoku in this issue) cannot produce the
required fundamental and deep change in the
dominant business economics paradigm. Eco-
efficiency, that is, producing more value with
less environmental burden, is not such a
radical strategy although it is the primary
strategy for sustainable development being
promoted by global business and many gov-
ernments. Eco-efficiency creates absolute eco-
nomic growth that can more than exceed and
offset any environmental gains achieved
through efficiency; this unintended conse-
quence has been called the rebound effect
(Berkhout et al., 2000) or the ‘Jevons paradox’
(Jevons, 1990; Mayumi et al., 1998).
Others have also argued that mere incre-
mental change is not enough to move toward
sustainability: a paradigm shift is needed
(Ehrenfeld, 2000; Korhonen, 2002; Opoku, this
issue). While the use of the systems tools of IE
will be a positive step, the fundamental world-
views, values and beliefs will have to be
replaced by a new set. The current set of beliefs
and values must be exposed and questioned
as part of the paradigmatic transformation.
Some of these new cultural determinants can
come from IE theory and its foundation on
metaphors from natural ecosystem operation
that include, for example, diversity, coopera-
tion, community, and connectedness and local-
ity (Allenby and Cooper, 1994; Ehrenfeld, 2000;
Korhonen, 2002). These, more or less, run
counter to the dominant neoclassical econom-
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL
ics paradigm, the dominant social paradigm
(Ehrenfeld, 1997) or the basic worldview of
modernity. The modern, western worldview
includes the norms of mass production, unlim-
ited economic growth, competition and glob-
alization. These beliefs and norms contribute
to many of the current severe social problems,
e.g., inequity and the collapse of many third
world economies as well as environmental
problems of resource depletion and waste and
emission accumulation.
Roome (2001) argues that environmental
problems and poverty are examples of meta-
problems, which are constituted by smaller
sets of complex problems. The systems context
for the problems of unsustainability is, at best
only partially appreciated by an individual
organization. A response to an individual
problem may provide immediate short-term
relief, but usually affects other connected prob-
lems. For example, in the IE, ecological eco-
nomics and environmental policy literature,
scholars have found that the environmental
problem may be reduced in one part of the
system while shifting it to another part (Jänicke
and Weidner, 1995; Rejeski, 1997; Anderberg,
1998). This kind of problem displacement
can happen when production emissions and
wastes are reduced at the cost of increasing
consumption emissions and wastes.
A response to an individual problem in an
interconnected set also yields outcomes that
are desirable for certain actors and undesirable
for other actors. Allenby (1999b) gives an
example of a shift from using wood fibre for
paper production to using agricultural fibre.
Besides the change in technologies and mater-
ial and energy flows, such a change also has
economic, social and cultural implications, e.g.,
shifts of capital and employment from one
sector, forestry, to another, agriculture. Cul-
tural impacts such as a reduction in logging
culture in rural communities occur and should
also be taken into account. Roome maintains
that responses to meta-problems need to be
coordinated through the interaction among
many organizations. Inter-organizational co-
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
operation and networking are critically impor-
tant for the meta-problems comprising the
social and environmental dimensions of
sustainability.
The emphasis on system-wide thinking and
analysis associated with the natural ecosystem
metaphor of IE suggests cooperative and net-
working relations among firms and between
firms and their stakeholders. This can be used
to develop approaches for meta-problems such
as those that challenge sustainability. The prac-
tical tools of IE, for example LCA, have been
important in identifying such problem-shifting
consequences of action as in the above-
mentioned displacement between production
and consumption. The locality metaphor high-
lights the importance of preservation of local
and indigenous cultural diversity. These and
other features of the ecosystem metaphor
are important for building corporate social
responsibility and sustainable development in
the increasingly global and competitive market
economy of today, and can offer important
insights for challenging the present unsustain-
able neoclassical economics and business
economics paradigms.
The metaphor of nature provides the domi-
nant social paradigm with radically new
sources for inspiration and ideas. In this sense,
it can be argued that IE has potential features
that can be used for creativity and inspiration
toward sustainability. The metaphor can be
fruitful for enhancing learning in organiza-
tional cultures and in transforming the values
and preferences of individual consumers and
their groups. The metaphor could be used as
‘learning from nature’ when developing stra-
tegic guidelines or when brainstorming the
new vision of the organization’s management
strategy. Ehrenfeld (2000, 2004) argues that
the ecosystem metaphor has an important
transformative power for developing new
worldviews and visions of a more sustainable
culture, e.g. visions of community and respon-
sibility. Further, the metaphor can be used as
a source of inspiration and creativity when
developing new business strategy planning
Bus. Strat. Env. 13, 289–305 (2004)
301

principles, e.g. stakeholder cooperation and
participation with diverse actors, planning for
local community development projects etc.
(Korhonen, 2004a).
Finally, we should be continually aware of
the risk that IE, just like sustainable develop-
ment as a concept, can be conceptualized in
different ways: through different inherent ide-
ological positions that implicitly determine the
consequent policies and strategies (Opoku, this
issue). Government policy-makers and busi-
ness managers may try to hijack the concept of
IE to make it fit their own purposes (cf.
Welford, 1997). If this happens, the potential of
IE as a unifying vision and basis for strategic
management will be reduced. Deutz and Gibbs
show how local authorities in the United States
have used the notion of eco-industrial parks –
a practical application of IE – for place promo-
tion. Ideological positions need to be explicit in
any discussions, and call for further elabora-
tion of IE as a basis for public and corporate
policy and for the management for sustainable
development. We also point out that this
problem of differing interpretations is not
limited to IE. It is always found whenever
human beings enter into conversations about
what is to be done.
CONCLUSIONS
The industrial ecosystem is an appealing
metaphor for learning from natural ecosystems
in industrial systems and has generated con-
siderable attention in the literature on sustain-
able development and led to the development
of a new field. This editorial article for the
Business Strategy and the Environment special
issue ‘Business and industrial ecology’ has
identified and described three themes that may
help build bridges between the dominant
natural science and engineering aspects of IE
and the management and policy studies world.
This bridge is important for IE because the
study of the physical flows of matter and
energy cannot inform planners and managers
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
302
EDITORIAL
about how to change the ways in which indi-
viduals, groups, organizations and the general
society behave.
We believe that the systems and network
approach in IE can be used to complement the
more traditional intra-organizational manage-
ment frame in examining inter-organizational
sustainability and environmental manage-
ment. Specific approaches and tools include,
for instance, life cycle management, supply
chain management and integrated chain man-
agement. The papers in the special issue also
address the role of public policy and public
organizations in implementing IE theory in
local and regional communities. IE can be a
source for ideas about new kinds of coopera-
tive networks between private firms and
public organizations.
The use of the ecosystem metaphor in IE can
yield radically new ideas, and serve as an
inspiration and source for creativity for chang-
ing the dominant unsustainable paradigm of
neoclassical economics, business economics
and modernity. Its metaphors can offer alter-
native ways to understand the world beyond
those that have shaped the dominant current
features of political economics, business eco-
nomics and management, and public policy.
Cooperation, participation, networking and
community are fruitful concepts for the devel-
opment of the emerging theory of corporate
social responsibility. We hope these and other
ideas presented in this issue are pursued, and
that cooperation between the research com-
munities of IE and corporate environmental
management continue to grow and prosper.
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BIOGRAPHY
Dr. Jouni Korhonen (corresponding author) is
Research Professor at the Research Institute for
Social Sciences, University of Tampere,
Finland. He is Editor-in-Chief of Progress in
Industrial Ecology, An International Journal, and
subject editor of industrial ecology for Journal
of Cleaner Production. He can be contacted at the
University of Tampere, Research Institute for
Social Sciences, Kanslerinrinne 1 (Pinni B),
FIN-33014 University of Tampere, Finland.
Tel.: +358 40 577 9225
Fax: +358 3 215 6502
Email address: jouni.korhonen@uta.fi
Dr. Fredrik von Malmborg is Senior Policy
Advisor at the Swedish EPA, and serves also as
Visiting Lecturer in Management for Sustain-
ability at Linköping University, Sweden. He
has published widely on regional and corpo-
rate environmental policy and management as
well as industrial metabolism. He can be con-
tacted at Swedish Environmental Protection
Agency, Climate Policy Section (Hk), SE-106 48
Stockholm, Sweden.
Tel.: +46 8 698 8525
Fax: +46 8 698 1475
Email address: fredrik.vonmalmborg@
naturvardsverket.se
Dr. Peter A. Strachan is Senior Lecturer in
Business Strategy and Environmental Manage-
ment at the Robert Gordon University,
Aberdeen, UK. He has published widely and
his editorial responsibilities include being
Associate Editor for Progress in Industrial
Ecology, An International Journal, published by
Interscience. He can be contacted at Robert
Gordon University, Aberdeen Business School,
Garthdee Road, Aberdeen AB 10 7QE, UK.
Bus. Strat. Env. 13, 289–305 (2004)
EDITORIAL
Tel.: +44 1224 263 426
Fax: +44 1224 263 838
Email address: p.a.strachan@rgu.ac.uk
Dr. John R. Ehrenfeld is Executive Director
of the International Society for Industrial
Ecology. He was previously Director of the
MIT Program on Technology, Business and
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
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Environment, and is one of the pioneers in
bringing social science perspectives to indus-
trial ecology research. He can be contacted at
24 Percy Road, Lexington, MA 02421, USA.
Tel.: +1 781 861 0363
Fax: +1 781 861 9531
Email address: john.ehrenfeld@alum.mit.edu
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