Received: 17 December 2017 Revised: 26 May 2018 Accepted: 27 May 2018

DOI: 10.1002/bsd2.20

RESEARCH ARTICLE

Corporate environmental responsibility and competitiveness:

The maquiladora industry of the Mexican northern borderlands
Nancy Ayala‐Ponce1 | Agustín Vilchis‐Vidal1 | Maria Luisa Picard‐Ami2

1
Universidad Autónoma de Ciudad Juárez—
UACJ, Ciudad Juárez, Instituto de Ciencias
Sociales y Administrativas, Chihuahua, Mexico
2
University of Texas at El Paso—UTEP,
Masters of Public Administration Program, El
Paso, Texas, USA
Correspondence
Dr. Maria Luisa Picard‐Ami, University of
Texas at El Paso, 3532 Lebanon Ave, El Paso,
Texas, 79930.
Email: marialp@utep.edu
Abstract
This article sustains that competitive advantages can be developed when industries
implement corporate environmental responsibility (CER) programs systematically
and strategically, as demonstrated by data provided by a case study conducted with
maquiladora industries in Ciudad Juárez, on the Mexico–United States border. In that
study, organizational theory and studies were combined with qualitative analytical
techniques to explore relationships between environmental management programs
and competitive advantage indicators such as innovation, corporate image, and cost
reduction. The data were collected from semistructured interviews with managers
of environmental issues and from the official documents of seven regional maquila-
doras. The findings showed a direct relationship between implementation of CER pro-
grams and activities with the resulting evolution of competitive advantages. Further
analysis shows that it is the systematic and strategic implementation of CER programs
as part of an overall managerial strategy that allows for the generation of competitive
advantages through the mediation of innovation as a key factor.

KEY W ORDS

business case studies, corporate environmental responsibility programs, corporate social

responsibility, innovation and competitive advantages, maquiladora industry, U.S.–Mexico
borderlands

1 | I N T RO D U CT I O N
The impact of industrial pollution on the environment is as old as the
19th century industrial revolution, but the realization is relatively
recent that something should and can be done to ameliorate its dam-
age. During the 1970s and 1980s, worldwide activist groups began
creating supportive movements, and governments responded at
national and supranational levels with environmental protection legis-
lation (Climent Sanjuán, 2006, pp. 132, 136; Johnson & Frickel, 2011).
In the past few decades, corporations have recognized the importance
of environmental sustainability in staying competitive. The Silicon
Valley Leadership Group (2018) recently stated, for example, that
“to successfully compete today, corporate leaders must embrace
environmental sustainability as a way not only to serve ‘green con-
sumers’ but to achieve market and industry leadership.” Large corpora-
tions are recognizing the pressure to comply with the “green
mandate”; but data are lacking that smaller regional industries are
yet following suit. Today's critical need is for empirical evidence that
supports the premise that environmental sustainability and competi-
tiveness go hand in hand. Using the data from the subject case study,
this article discusses competitive advantages of cost, innovation, and
corporate image as these relate to implementation of environmentally
responsible strategies in seven assembly plants or “maquiladoras”
located on the Mexico–United States border.
This location provided a critical mass of medium to large‐size
assembly plants having both local and international regulations of
environmental issues, as well as regional and local social pressures.
The study combined organizational theory and organizational studies
with case study methodology and qualitative analytical techniques to
explore relationships between environmental management programs
and competitive advantage indicators such as innovation, corporate
image, and cost reduction. The goal of the case study research was
to determine a relationship between corporate environmental respon-
sibility (CER) and organizational competitiveness. Their data were

Bus Strat Dev. 2018;1–11. wileyonlinelibrary.com/journal/bsd2 © 2018 John Wiley & Sons, Ltd and ERP Environment 1
2 AYALA‐PONCE
collected using both semistructured interviews with managers of envi-
ronmental issues, as well as data from the official documents of the
seven regional maquiladora industries. Their findings showed a direct
relationship between the levels of CER implementation and the evolu-
tion of competitive advantages.
The goal of this article has been to further explore the relationship
between CER and organizational competitive advantage. Using the
data from the subject case study, this article discusses the relationship
between the above‐mentioned competitive advantages with the
implementation of environmentally responsible strategies. There is
consensus in organizational theory that certain business models use
internal organizational strategies to generate competitive advantages
and differentiate themselves from their competitors. In this article,
we sustain that these models can increase economic benefits and
branding positions for stakeholders, while also generating positive
social and environmental impacts and competitive advantages for
the business. However, to do so, they must be part of a strategically
organized environmental management strategy.
The further exploration of the relationship between CER and
competitive advantages required understanding how the corporations
conceptualized sustainable development, that is, how they could “take
care of the environment” while achieving competitiveness. In turn, this
understanding allowed us to determine the competitive advantages
that develop during CER implementation processes for these indus-
tries. Specifically, the article analyzes the following points:
• the specific environmental impact;
• the corporation's environmental protection management systems
and procedures; and
• the resulting benefits of applying policies and programs related to
CER.
We believe the key contribution of this article is to initiate a dia-
logue between business and academia in the Latin American arena,
one strengthened by the voices of both environmental activists and
stakeholders from various sectors of Mexican society. We sustain that
the implications of CER as a business practice of these maquiladoras
can be extrapolated to other Latin American regions and arenas.
2 | BACKGROUND AND LITERATURE REVIEW
CER is a “branch” of the better known corporate social responsibility or
CSR, generally referring to all activities, policies strategies, and norms
that characterize the relationship of business with society. CSR implies
a corporate perspective considering interactions both within and exter-
nal to the businesses, with associations from its employees, its
providers and clients, as well as natural resources and the community
at large. This perspective carries an essential respect for people and a
community service attitude, as well as a more rational utilization of
natural resources in the management philosophy, regardless of the
goods or services produced, of the industry sector the business
belongs to, its size, or nationality (Cajiga Calderón, 2015, p. 2).
For purposes of this study, we define CER as the commitment
that a business has to preserve and care for its environment. More
ET AL.
specifically, with CER, the corporate leadership insures implementa-
tion of operational strategies, policies, and practices that focus on
environmental preservation and conservation.
2.1 | The many faces of CER
Environmental responsibility became an issue almost seven decades
ago, in the 1950s, when political, cultural, and academic sectors re‐
defined the social and environmental responsibilities of industry, and
the theme of CSR first emerged (Carroll, 2008, p. 25). The topic
gained worldwide interest, and programs to regulate the relationship
between business and society were created. Murphy (1978) charac-
terizes this as the “awareness” era, which brought more recognition
of the overall responsibility of business and its involvement in com-
munity affairs” (Carroll, 2008, p. 25). Each industrialized country has
designed its particular judicial framework. Currently, those which have
the most pro‐environment legislation and maintain low emissions are
the European countries using the Yale 2016 Environmental Perfor-
mance Index (Yale Center for Environmental Law & Policy, Columbia
University Center for International Earth Science Information Net-
work, and the Yale Data Driven Environmental Group, 2016). In Latin
America, Brazil and Argentina stand out as the countries where CSR
has relevance among community organizations (IBOPE, 2011;
Piastrellini, 2016). Mexico, however, is a country where neither CSR
nor CER are relevant for most industries, possibly because there is
no understanding of how these might benefit the corporations or
their working environments (Reyno, 2007, p. 101). According to
Dubbink and Smith (2011, p. 236), societies dictate the framework
of principles that corporations follow. That is, if the community
demanded conservation and environmental protection as a sustain-
able practice, corporations would adjust their practice accordingly. It
could be argued that corporations might limit their practice to com-
plying only with more basic environmental rules established in their
regions, but this is not necessarily the case today.
2.2 | CER and competitive advantages
Traditional economists tend to see environmental regulations only as
an expense factor, reducing profitability and the ability to compete
with those not affected by the same regulations. However, there are
countering opinions favoring the impact of CER which consider that
environmental regulations stimulate an innovation process for clean
technology and technology leadership, generating more commitment
from stakeholders, saving energy, avoiding sanctions, and, in general,
stimulating economic growth (Álvarez & Ospina, 2014; Casari &
Baldini, 2013; Compromiso RSE, 2015; Díaz, 2015; Gálvez, 2013;
Kitzmueller & Shimshack, March 2012).
According to Porter (1985), competitive advantage stems from
the benefit a company can offer its clients; added value is created
when designing, manufacturing, commercializing, delivering, and/or
servicing its products. There are two main outcomes of this added
value process: cost leadership or product differentiation—either of
which can be a result of the business taking advantage of external cir-
cumstances, by generating internal changes, or by a combination of
both. There are three key factors—related to client loyalty—where
AYALA‐PONCE ET AL.
CER and competitive advantage intersect: (a) reduced costs (and/or
increased return on investment—ROI), (b) improved corporate image,
and (c) increased innovation.
The general premise is that the integration of CER in strategic
planning processes results in sustainable development by reducing
operating expenses, strengthening brand image, and generating inno-
vation and technological development of goods and services, allowing
them to manage environmental risks (Kitzmueller & Shimshack, March
2012, p. 58). The benefits go beyond these basic factors to include
increase in efficiency and efficacy; there is an improved commitment
between direction and workers, access to new export markets and
financial credit resources (Casari & Baldini, 2013, p. 28). Additionally,
businesses that respond quickly to market stimuli will maintain validity
with solutions adequate to new realities. Thus, some maintain that
CER innovation initiatives that have shown positive influence on busi-
ness financial performance, survival, and growth (Rothenberg &
Eiríkur, 2008, p. 783). Additionally, these issues are related to the
company's providers, with implications for the entire supply chain:
“You are as green as your supply chain” (Milán, Rosa, & Macarena,
2009, pp. 13–14; Esty & Winston, 2009). More recently, Ibarra,
Redondo, and Fajardo (2013, p. 79) have stated that one of the most
important issues in maintaining competitiveness is managing a green
or sustainable supply chain.
However, the topic is still controversial. According to Kitzmueller
and Shimshack (March 2012, p. 58), the financial implications of CER
should be scrutinized. Although they consider the long‐term benefits
to be greater, the short and midterm arenas require an investment in
innovation that can lead to negative net benefits. Likewise, Chavarría
and Cuevas (2012, pp. 9–10) counter that starting environmental pro-
grams can generate additional costs; investments to comply with
changes in processes or materials generate increased expenses; how-
ever, they agree that it is a good decision in the long term.
Isolated evidence has been equally contradictory. “One study
showed that productivity of the affected industries fell 4.8%; another
showed a cost of 4.5 million dollars” under U.S. environmental legisla-
tion (Díaz, 2015) These data have been used to argue in favor of re‐
locating a business for one with less environmental legislation.
Midttun and Granada (2007, p. 25), on the other hand, consider that
the creation of long‐term value and environmental well‐being should
involve a certain level of creative disruption and innovative technol-
ogy in the sense coined by Christensen in the 1990s (Christensen,
1995; Christensen, Craig & Hart, 2001). If the latter is not present,
both environment and welfare suffer. Therefore, they argue for more
radical and disruptive innovation that, in turn, will force us to consider
a more dynamic and engaging CER agenda.
3 | METHODS
3.1 | The settings: The maquiladora industry in
Northern Mexico
The maquiladoras are a special type of industry, a model well‐known
along the U.S.–Mexico border in Mexican territory. By incorporating
in Mexico, they can establish themselves in an emerging market, with
3
lower cost labor and laxer regulatory legal and tax systems. They are
usually 100% owned by foreign companies, most of which are Fortune
500, labor‐intensive manufacturing industries. The parent company
maintains control of the production process and provides research
and development, raw materials, equipment, capital, and quality con-
trol. Local operations control labor, regulatory issues, and import–
export processes. This model has been replicated in other Latin Amer-
ican countries, although it loses some competitive advantages linked
to the proximity of the U.S.–Mexico border and access to its national
communication infrastructure network.
3.2 | Environmental issues
Even though the maquiladoras are technically multinational corpora-
tions, they are not legally obligated to comply with the laws and regu-
lations of the home countries. However, they may be subject to
headquarter policy, particularly in matters concerning CSR and CER,
where there are international pressures involved; thus, they arguably
could tend to comply with corporate headquarter pressure. (Data,
however, do not support this trend.)
Because the original (1994) North American Free Trade Agree-
ment (NAFTA) critiques argued that companies were relocating in to
the Mexican side of the border to avoiding stricter regulations
(Gomez, 1993), much of the early discussion had an environmental
undertone. However, 25 years had passed since the signing of NAFTA
and advocates on both sides of the border generated pressure to elim-
inate the early day environmental neglect. Stricter legislation has been
passed on the Mexican side of the border to avoid the most obvious
signs of dumping and air pollutants. There remained no data that pres-
sure had been sufficient to ensure compliance; had it induced local
corporations to go beyond legal compliance?
For the original subject study, 10 of the larger, most important
maquiladoras were targeted, representing the variety of the maquila-
dora community sectors. The characteristics of the seven corporations
that responded for the case study can be seen in Table 1.
3.3 | Multicase study analysis
The interviews of the case study were designed to answer the follow-
ing general research question: Given that maquiladora industries in
Ciudad Juarez implement environmental programs, how does this
implementation affect the corporations' competitive advantages? Case
study research design was deemed best suited to answer this type of
question (Yin, 2009, pp. 8–12).
Multicase study analysis involves selecting several cases to obtain
instrumental data (Stake, 2005, p. 17). Ortiz Uribe, 2003, p. 61) have
stated that analyzing several cases favors the ability to study a phe-
nomenon, the population, and the general conditions in depth. There
is no ideal number of cases for conducting a collective case study,
although between four and 10 cases should work well; with less than
four cases, it is difficult to generate any complex theory and it would
be empirically incorrect (Eisenhardt, 1989, cited in Martínez‐Carazo,
2006, p. 184). For the subject study, semistructured questionnaires
were sent out to 10 maquiladoras. Seven of those were willing to par-
ticipate in the project, considered an acceptable number of cases.
4 AYALA‐PONCE ET AL.

TABLE 1 Main characteristics of cases studied

Case Founded Headquarters Industry Employees in Juarez Years in Juarez

Lexmark 1991 Lexington, Kentucky, USA Printers and cartridges 2,800 11
Electrolux 1919 Stockholm, Sweden Home appliances 5,400 12
Stoneridge 1965 Novi, Michigan, USA Auto industry 900 50
Delphi 1988 Troy, Michigan, USA Auto industry 1,853 20
Nidec 1973 Kyoto, Japan Motors and generators 700 11
Eaton 1911 Dublin, Ireland Power management 1,150 29
Honeywell 1885 New Jersey, USA Engineering services and aerospace systems 1,500 22

3.4 | Constructs, dimensions, variables, and indicators
The interviews were designed to cover two main categories with
several key dimensions:
• CER implementation: operational certifications, policies, strate-
gies, internal norms, and systems in place to allow for and signal
CER implementation
• Competitive advantages allegedly related to CER implementation:
cost reduction, increased innovation, and improved corporate
image, each one operationalized as shown in Table 2.
For each maquiladora, the person responsible for CSR and CER
programs was interviewed using a semistructured interview technique.
Data collection was conducted using this type of interview, which has
the advantage of allowing more flexibility to ask questions and record
answers with the use of preplanned questions that can be adapted to
the interviewees (Sabino, 1992, p. 18). This also permits one to adapt
the questions, to clarify terms, identify ambiguities, and to reduce for-
malities (Díaz‐Bravo, 2013).
We defined four operating variables, or dimensions: CER imple-
mentation, cost reduction, product innovation, and corporate image,
establishing indicators for each one. These indicators allowed us to
measure the variable in both quantitative and qualitative forms. The
process utilized in the present research project is recorded in Table 2.
In summary, this research project is transversal, correlational, and
qualitative and utilizes a case study research method. Data were col-
lected in categories, using semistructured interviews, and data analysis
was conducted. Participation was requested from 10 Maquiladoras in
the State of Chihuahua, in Northern Mexico. Three did not respond:
Bosch, Capsonic, or Flextronics. Lexmark, Electrolux, Stoneridge,
Delphi, Nidec, Eaton, and Honeywell all participated. The last two
agreed to participate only on the online version of the semistructured
interview.
4 | RESULTS
Results will be summarized based on the four dimensions mentioned
in Section 4:

TABLE 2 Operationalization of variables related to CER and competitive advantages

Operational
Variable and conceptual definition Definition Dimension Indicator

Corporate environmental responsibility (CER) Level of • Technology policies • Clean energy

management • Complying with certifications, ISO • Certifications
commitment 14000, ESR, Environmental Audits, etc. • Compliance
• Implementing
strategies
Cost reduction: Aggregated cost of conducting activities Cash • Design costs • $
less the historical costs or costs of competitors • Processing costs (raw materials, labor, • $
indirect costs)
• Logistic costs (supply costs, • $
transportation to final consumer)
Product innovation: Introducing new or significantly better Number of • Product or service design • Number
products or services into the market. innovations • Technical specifications of:
Includes significant alternations in technical specs., components, • Components
materials, incorporating functional characteristics
• Materials
• Software
• Other functional characteristics
Participation in market: Degree of influence in the market Market share (%) • Total sales in market or % market share • $
• %
Environmental corporate image: Collection of environmental Likert Scale • Respect for environmental impact • Stakeholder
qualities that the consumers attribute to a specific company; • Use of environmentally friendly raw perception
how the company is perceived by society materials

Source: Elaborated by authors, 2016.

AYALA‐PONCE ET AL.
4.1 | CER implementation—Overview
The current importance of environmental protection issues opens a
new arena of action for enterprises to implement activities and strat-
egies (Izaguirre, Vicente, & Tamayo, 2007, p. 1). All of the seven corpo-
rations in the study comply with the ISO14001 certification
requirements. Lexmark is worthy of mention in that it has four differ-
ent certifications voluntarily acquired per management policy.
Quoting Gonzalez, Head of Lexmark's Area of CER and Environ-
ment (2016)1 vision at length:
Environmental investments are intangibles because what
they do is avoid problems; issues will arise if investments
are not made. Regulatory problems due to environmental
issues result in constant monitoring and once you are on
their radar they will not let you go. The way to avoid this
is to have preventive planning or self‐initiated programs
such as Clean Industry or ISO 14000 (International
Standards Organization 14000, 2015), and all other
certifications to show that the company has control
over and full knowledge of all its processes. Sometimes
those in charge of environmental issues are very literal
when it comes to the law. We may think that we are
complying by doing things right, however, excellence
requires taking things to a different level. … Therefore, I
can say, that, from my perspective you should not
skimp on environmental issues. It is a big investment,
but it opens many doors … Our company has shares in
the stock market and it must present an annual Social
Responsibility Report that includes community outreach,
health, and security; environmental responsibility is an
important component of this report. This report is
significant because it generates the conceptual
framework that guides potential investments and our
reputation. When a corporation has a bad reputation,
this starts to have collateral effects. Fines, closings,
contracts, corporate image, and other issues that affect
public image have a huge financial impact; millions of
dollars' worth of losses and even the closing of the
business could be the result.
Lexmark, Electrolux, and Nidec serve as examples of corporations
that incorporate CER in the whole supply chain process; they mention
a high initial cost but report a long‐term positive impact. Stoneridge
and Delphi stated that they do not consider CER in their supply chains.
Eaton and Honeywell did not answer the question.
Running numbers, we can see that seven out of seven (100%) of
the corporations comply with minimum reporting requirements. Four
out of 7 or 60% exceed these minimum mandatory requirements
and have sought other forms of internal and external certification.
Four out of seven (69%) cite pressure from their clients as the reason
(60%), whereas 43%, 3 out of 7, cite headquarters mandates from cen-
tral headquarters in developed countries as the reason. Sixty percent
1 2
Gonzalez, E. (2016). Personal Interview. Corporate Environmental Responsibil-
ity and Environment. (N Ayala. Interviewer).
5
(60%) cite external pressures as being more important; 43% respond
to internal strategies and policies put in place via their environmental
management systems. Several have implemented environmental pro-
grams such as greener materials, recycling programs, and water use
reduction programs that generate competitive advantages. As men-
tioned briefly before, complying with headquarter policy was not men-
tioned as an important factor in the decision‐making process.
4.2 | Competitive advantages
4.2.1 | Cost reduction
Design, supply chain, and process costs (materials, labor, and indirect
costs) can all potentially have an influence on costs when CER is
implemented. When asked to comment on the impact of design and
processes, whether there had been changes and, if so, if costs had
increased or diminished after implementing CER, the responses were
varied. Some had made changes and others had not, claiming the
clients had not requested them and that is what drove the design of
the products. Lexmark, where the client is the end user, however,
has a complex project to redesign a product with environment and
end cost reduction in mind, a savings they stated they could pass on
to their customers. Several mentioned that they have implemented
recycling programs that have had a positive impact on the cost
structure. Electrolux, for example, said:
When implementing environmental administration
program, it does help. Costs are reduced;
[environmental] impacts are reduced; we control the
generation of pollutants; we derive a financial benefit
from recycled materials, etc. The whole operation
becomes more responsible.2
When asked if materials or indirect costs had been impacted by
implementing CER, three corporations said their expenses had
decreased; one, that they had increased; one stated expenditures
had not changed; and the last one said they had not made any modi-
fications to their processes.
The same three corporations said CER had a positive impact on
their supply chain, although expenses had initially increased. Two cor-
porations, Electrolux and Lexmark, stated having redesigned processes
and product to have a positive impact on the environment. Both com-
panies stated that they saw a reduction in costs, specifically due to the
changes in the plastic used to in the production process. Nidec, how-
ever, stated they saw their costs increase, and Stoneridge said they
saw no change, despite having substituted the use of chlorofluorocar-
bon gases for other, less polluting materials. This result aligns with
Izaguirre et al. (2007, p. 2) when they state that there are initial costs
involved in ecologic projects or modifications that can later generate
competitive advantages.
If they try to use materials that are environmentally friendly, costs
can increase. At least one has decided that they will continue to use
the machines that employ lead because changing them is an extremely
López, J. M. (January 25, 2016). Personal Interview. Responsabilidad Ambiental
Corporativa y Competitividad. Electrolux (N. Ayala, Interviewer).
6 AYALA‐PONCE
costly investment. They will change only if the clients ask them to do
this. One corporation put it this way:
The first thing that will affect us is that the client wants changes
and wants environmental certification. This will generate costs to the
corporation.
We have optimized our processes, but we continue to use
the same materials. An example is with the welding
material we use … [After the production process] there
is a lot of welding material left in the residue. We used
to throw this away. Now we recycle and can save a lot
of money.3
4.2.2 | Innovation
This is, perhaps, the most salient of the competitive advantages ana-
lyzed. Elements that intervene are effects on design and functional
aspects of the product, but there are other aspects involved:
CER has meant a constant process of innovations.
Metrics for continuous improvement involve many areas
of the organization: manufacturing process, quality,
productions. However, the environmental metrics
demand reducing energy each year, reducing water
consumption, reducing the generation of residual
materials, and this means pushing all your systems to
evolve towards a level of maturity. A continuous
improvement process [implemented and evaluated]
yearly makes us improve competitiveness and
sustainability of the business.4
Again, the same three organizations that are implementing CER
policies widely state innovation as an important stimulant. Moreover,
they state that profitability had increased due to the innovations
spurred by CER.
Noncompliance and lack of innovation was referred to as a
problem:
It is important to compete in the market and be
innovative. If products do not comply with client
requirements in terms of emission controls and
materials used in its fabrication, they will stop
considering us as suppliers and that will affect the
company's bottom line.3
In terms of the competitive advantage of innovation, every corpora-
tion except for Delphi stated they had invested in both the appear-
ance and efficiency of their products and processes to benefit the
environment. Stoneridge and Electrolux mention that innovation is
vital to staying competitive and this includes considering the environ-
mental issues. When responding to the question about the relation-
ship between innovation strategies, competitiveness and financial
sustainability, Lexmark, Stoneridge, Electrolux, Nidec, and Honeywell
3
Ojeda A. (October 13, 2015) Personal Interview. Responsabilidad Ambiental
Corporativa y Competitividad. Stoneridge. (N. Ayala Interviewer).
4
Gonzalez, E. Personal Interview. Corporate Environmental Responsibility and
Environment. (N Ayala, Interviewer).
ET AL.
all stated noting a positive relationship between the three variables.
Delphi did not comment on changes and Eaton did not respond.
4.2.3 | Corporate image
Not all the corporations have clear processes to measure corporate
image. Those that do include surveys and evidence of good corporate
relationships with surrounding neighborhoods, nonetheless, regardless
of the existence of measurement mechanism being in place, five out of
seven of the corporations, however, believe that their CER programs
have helped them generate and maintain a reputation as a responsible
corporation. One said:
Nidec has the image of a business committed to
conserving the environment that maintains an
environmental administration program that complies
with legal requirements and that, in addition, tries hard
to avoid affecting the environment with its processes
and products.5
Corporate image is a clear concern and perceived benefit of CER
programs. All the corporations talked about at least one area where
they have found opportunities. They have used several areas of
opportunity to acquire this image. For example, Delphi mentioned
We do social service, we restore parks, we give talks in
schools, we minimize noise because we are not in an
industrial area and we want to avoid problems with our
neighbors. We plant trees and we have environmental
certifications.6
Other areas cited include talks to employees about conserving
nature, programs that promote saving energy in both products and
processes, among others. All these activities are reported in the annual
CSR reports.
A fifth dimension of analysis was attempted, but no results were
obtained. The people responsible for CSR and CER all stated they
had no information about the relationship between their field of work
and the market share and leadership that the company might have.
Although this would tend to indicate that there is little or no relation-
ship between CER and competitive advantages related to market lead-
ership, further studies and the application of a different questionnaire
are needed to be conclusive.
5 | DISCUSSION
Our evidence tends to show that a strategically defined environmental
management policy can be a positive factor for competitiveness. Better
environmental performance of the enterprise can increase competi-
tiveness. These are the so‐called win‐win‐win situations where the
business can maximize its financial objectives, the client satisfies its
needs, and the environment sees benefits from a minimal impact (Cha-
morro, 2001). However, it can be said that Porter (1999, p. 351) has
been arguing for decades in favor of environmental legislation, despite
5
Batres, J. (October 29, 205) Personal Interview. Responsabilidad Ambiental
Corporativa y Competitividad. Nidec. (N Ayala, Inerviewer).
6
Delphi representative preferred to remain anonymous.
AYALA‐PONCE ET AL.
the existence of other viewpoints that have stated that legislation that
can protect the environment negatively affects competitiveness,
forcing businesses to choose between economy or ecology.
This kind of policies can also become a turning point for increasing
sales, although it may be difficult to measure their exact impact
because many factors influence the commercial strategies of an enter-
prise, in addition to environmental policies. On the other hand, how-
ever, a faulty environmental management policy can generate issues
that will necessitate medium or long‐term financial, administrative, or
even penal responsibilities for the business, which can imply high costs
for the organization (Climent Sanjuán, 2006, p. 133).
Beriguete de León (2013) has stated that innovation is a funda-
mental pillar that encourages the use of clean and efficient technolo-
gies. These, in turn, reduce damages to the environment and
promote a green consciousness for both consumers and businesses.
Environmental innovations are correlated to technological innovations
because their implementation implies introducing technology changes
in processes or products to comply with environmental legislation. The
interviews with all corporations corroborate this. The need for innova-
tion is key to leadership, and CER programs are good stimuli for
innovation.
These activities favor eco‐efficiency and have positive effects on
entrepreneurial competitiveness because they encourage a rational
use of resources, less pollution, higher business differentiation, and
the incorporation of eco‐efficiency as a philosophy (Durán‐Romero,
2011, pp. 135–136; Torres, García Ocampo, & Jiménez Vázquez,
2011, p. 285). Companies that invest in clean technology tend to pur-
sue novel ways to deal with long‐term challenges; they also tend to
create a corporate culture that encourages innovation, thus generating
a competitive advantage (Restrepo, 2013).
Management that sees CER as an opportunity to adopt innovative
solutions will be the one to obtain important competitive advantages
(Porter, 1999, p. 370). The most important advantages shown to be
a result of CER are a reduction in production costs due to a decrease
in expenditures and costs attributable to waste of resources. Addition-
ally, research has shown that the financial and economic ROI is sub-
stantially higher than expected in businesses that practice CER
(Amador, 2013).
Five of the seven corporation (Lexmark, Delphi, Electrolux, Eaton,
and Honeywell) stated they had a reduction in costs by implementing
CER. Stoneridge said they saw no change. This aligns with Senior
et al. (2007, p. 486) and Cuevas, Soto, & Rocha (2015, p. 1851) who
state that environmental responsibility brings a reduction in costs and
maximizes possible environmental benefits. This, in turn, helps solve
some of the environmental issues and social interest problems and
impacts long‐term international competitiveness.
Additionally, Sandoval‐Cabrera (2015, p. 36) maintains that when
enterprises try to become more ecologically efficient, the changes in
processes and structure tend to reduce consumption of energy, raw mate-
rials and other inputs; additionally, they reduce waste and allow for
recuperating costs by recycling some of the byproducts generated in
the production process.
Another competitive advantage of CER mentioned by the litera-
ture is a better market position. However, it was not possible to obtain
answers to sustain this theory because the information was not part of
7
the expertise of the people responsible for environmental issues.
Nonetheless, leadership is a consequence of innovation and competitive-
ness. In this sense, it could be argued that, although there might not be
a direct link between CER and market leadership, the relationship
might be established through the mediating factor of innovation, which
is spurred by CER. Additionally, CER is linked to sustainability, and sus-
tainable enterprises are characterized by the position of leadership they
acquire ahead of their competitors because they understand that the
reason for being in business is to generate goods for society as a
whole. Thus, environmental strategies have gained importance thanks
to this kind of leadership: the one acquired by businesses that are
identified by their sustainable practices (Trujillo & Vélez, 2006, pp.
304–305; Gálvez, 2013, pp. 81, 84).
Innovation and competitiveness are stimulated by the design and
generation of new products and services and by processes that are envi-
ronmentally healthy. In terms of environmental norms, innovation can
be divided into two broad categories. The first one refers to novel
methods and technologies that can reduce the cost of pollution once
generated (Porter, 2005, pp. 296–297). Here, the key is to convert
contaminants into potentially useful products that have value. The
second type of innovation refers to the root causes underlying pollu-
tion and finding ways to increase the productivity of resources for
the beginning of the processes (Gálvez, 2013, p. 83; Kitzmueller &
Shimshack, March 2012, p. 58; Midttun & Granada, 2007, p. 25; Por-
ter, 1999, p. 358; Rothenberg & Eiríkur, 2008, p. 73). As mentioned
before, current issues require a creative disruption process that can
accelerate CER (Bower and Christensen, 1995; Paap & Katz, 2004).
The results tend to corroborate that certain enterprises tend to
comply with basic environmental legislation, while positioning them-
selves as being sustainable, aligning with what has been stated by
Scherer and Palazzo (2007, p. 1114–1115). However, it is also true
that, although most environmental activities are voluntary, they are
usually a response to pressure to comply with environmental norm,
and to client and societal expectations as pointed out by Durán‐
Romero, 2011, p. 135). Several of the interviews clearly show this
importance of this external societal pressure, particularly, Lexmark. Cli-
ent pressure also stands out as an important factor.
Trujillo and Vélez (2006) believe there are three basic motivations
behind business responses to social pressures related to environmental
issues: the possibility of achieving competitive advantages; the desire
to achieve social legitimacy; and the social responsibility per se of the
business. The term sustainability, when used in relation to the environ-
ment refers to the impact of the activities of the business and the way
they manage them in relation to their environmental impact. It refers
to the relationship with the waste produced by their procedures and
products, the resources they need and use, and how responsible they
are when dealing with environmental protection and recuperation. All
corporations stated heeding external pressures of some sort: clients,
employees, other corporations, community, and so forth. The most
important elements were the voice of the clients and, to a lesser
extent, the voice of the community and, lastly, the requirements from
corporate headquarters.
Data also corroborates this fact. Boiral and Jolly (1992, cited by
Izaguirre et al., 2007, p. 2) and (Domínguez Villalobos, 2006, p. 14)
maintain that problems in implementing environmental regulations are
8 AYALA‐PONCE
usually internal. For example, the budget for the required investment
due requires measuring long‐term profit as well as dealing with resis-
tance to change. Balian deTagtachian (2014, p. 22) has stated that most
of management continues to perceive taking care of environment as a cost.
This view is coupled with the lack of a business culture linked to ecological
issues and serves to deter a more forward‐thinking ecological vision.
Although assuming environmental social responsibility can be
considered an ethical issue, it should be seen by organizations as an
issue related to generating a competitive advantage (Trujillo & Vélez,
2006, p. 307; Fernandez, Del Campo Gomis, & Aparicio, 2017,
p. 236). Only Electrolux and Lexmark have had more than two strate-
gies related to CER and caring for environment.
An environmental outlook not only generates a reduction in cost;
it creates changes in the way the business produces goods and ser-
vices, in its goals, in the development of new products, and in the
company's commercial strategy (Chavarría & Cuevas, 2012, p. 10).
Practices that are respectful of the environment can reduce costs
and offer positioning and competitive advantage opportunities
(Rothenberg & Eiríkur, 2008, 787).
After all, in the short term, responsibility can negatively affect
costs of organizations. This means that when a business introduces
systems to control emissions and reduce energy consumption, it
obtains a permanent flow of benefits that creates a long‐term cost/
benefit relationship for CER (Chavarría & Cuevas, 2012, pp. 9–10;
Sandoval‐Cabrera, 2015, p. 36).
More than three decades ago, Drucker (1985; cited by Torres
et al., 2011, p. 287) stated all organizations require one basic compe-
tency: innovation. The needs of a decadent planet have made it neces-
sary to create new, innovative, and sustainable ways of dealing with
industry (Diezmartínez, Villalobos, & Ruíz, 2015, p. 2). The search for
business sustainability has changed the competitive landscape. The
key to progress and to competitive advantage is innovation, that is,
to make sustainability an integral part of the organization. Lexmark is
an example of how applying CER can significantly contribute to an
organization's innovation strategy. Management is aware of the need
for a global and integrated vision and of the ROI this type of project
brings. This awareness is reflected in their competitiveness and finan-
cial sustainability.
The quest for sustainability is changing the competitive arena
where companies must operate. The key to progress and competitive
advantage is innovation. This requires making sustainability a core
component of the organization. Lexmark is an example of how apply-
ing CER can contribute significantly to the innovation strategy. They
are conscious of the global and integrated vision of its management
and the capacity that its projects have to render an ROI, which reflect
on its competitiveness and financial sustainability.
Lastly, “corporate image” as a competitive advantage can also be
an outcome of engaging in CER. The experiences of the maquiladoras
under study was diverse. Stoneridge, for example, has clients
performing audits that include environmental issues. The continuation
of provider contracts depends on the results of these audits.
Electrolux performs surveys with its clients, its employees, and its pro-
viders, using the image of environmentally responsible corporation to
appear attractive for investors. On the other hand, Lexmark and Del-
phi stated they lacked information or ways to measure clients'
ET AL.
perceptions. Nidec stated they promoted themselves as a business
with a commitment towards environmental conservation. Eaton
included environmental policies and community as elements they con-
sider important components of their corporate image. Honeywell
reported that their consumers have a perception of good environmen-
tal practices on their part.
Reputation and branding image increases because consumers tend
to favor businesses and products that have a good reputation. Confi-
dence and better image impact the value of the brand, triggering and
maintaining a favorable position in the market and overall
sustainability of the organization. Similarly, client loyalty is strengthened
when the above‐mentioned measures are known to customers
(Amador, 2013; Castellanos‐Castillo & Castellanos‐Machado, 2011;
Castillo, 2013; Retos en Supply Chain, 2015).
Most maquiladoras understand that environmental responsibility
is important for creating a positive corporate image among stake-
holders. On the other hand, changes in the environmental awareness
of the population can affect the image of organizations that negatively
affect the environment or that use polluting equipment to generate
their goods and services (Capriotti Peri, 2009, pp. 34, 163; Machuca‐
Carpio, 2015, p. 9).
Durán‐Romero (2011, p. 136) talks about the desire companies
have to better their images and obtain advantages over their compet-
itors believing this can be achieved through environmental activities
that also benefit the corporation. Galuppo‐Magno (2014, p. 53) men-
tions that environmental responsibility is an important attribute of a
corporation's image; it is a synergistic element that adds value to the
whole organization in the eyes of all its stakeholders. Environmental
relations with local authorities, workers unions, environmental groups,
and the public, all generate a better corporate image (Benavides‐
Delgado & Fernández‐Fernández, 2005, p. 182).
6 | CONCLUSIONS AND RECOMMENDATIONS
In sum, by analyzing all responses and theories, the maquiladoras
believe that CER can offer multiple competitive advantages when it
is well managed by companies with a vision that goes beyond the sim-
ple legal requirements. It is this belief that sustains our main conclu-
sion: That is, CER program implementation, when strategically and
systematically managed, opens opportunities to combine profitability
with a contribution towards caring for the environment of the commu-
nity to which the corporation belongs.
There are several components to this. Currently, CSR, in general,
and, specifically, of CER helps corporations increase the competitive-
ness by offering a better image and reputation of the social and envi-
ronmental attributes of their products and services. A socially
responsible enterprise reaps results by creating a positive corporate
reputation and through the loyalty and recommendations from inter-
nal and external stakeholders that comes as a result. But the ROI of
CER goes beyond corporate image by playing an important and active
role in stimulating innovation and creating an internal environment of
constant change and challenge that helps cost reduction.
The corporations that have been most successful have been the
ones that have integrated CER into their administrative, managerial,
AYALA‐PONCE ET AL.
production, and public relations policies. That is, those that have
established strategically organized environmental management poli-
cies. These elements work together to create competitive advantages
for the corporation that, in turn, contribute towards entrepreneurial
success by increasing sales and income, promoting social development
and sustainability, and by encouraging a humanitarian feeling in inter-
nal and external stakeholders involved. This is, in a sense, what is
meant by strategic corporate responsibility, when CSR and, in this case
CER, become an integral part of the way the corporation operates.
Although it is true that CER can add to expenses, evidence showed
two things: (a) that these expenses were directly related to the corpo-
rate need for innovation and maintaining competitiveness and, thus,
not only a result of complying with environmental regulations, and (b)
CER implementation also generates economies that can frequently off-
set the costs, both directly, because of economies in the processes and
savings in the use of raw materials and indirectly, due to the ability to
recycle waste and, above all, the awareness it creates in the internal
stakeholders of the need for environmentally responsible conduct, with
the consequent spillover effects this awareness generates. The result in
the short term is not always a negative cost increase. Rather, most of the
time, it seems that the awareness—product of what some might call cre-
ative destruction—forces corporations to lend a critical eye to existing
raw materials, processes, procedures, supply chains, and other critical
elements that affect the bottom line. CER stimulates critical thinking,
innovation in many if not all areas of the corporate culture and this will
inevitably affect the ROI in a positive manner.
CER may have originated from societal pressure, but it can and
has become a strategy to bring awareness to the stakeholders of the
organizations. Initially, it has been necessary to comply both with the
environmental legislation of the regions where the goods and services
are produced, with those of the countries through which the products
transit, and with those of the final destination where they will reach
the end consumer. However, world‐class corporations—at least those
that operate as maquiladoras in Latin America—are able to go beyond
mere legal compliance, to conceive a better future. They are capable
of blazing the technology trails to stay ahead of their competitors
and become green leaders in their fields.
In the Ciudad Juárez, in the heart of Mexico's borderland, it is pos-
sible to find different types of environmental development and com-
mitment in the maquiladora industry. The legal compliance vision is
still predominant. None withstanding, a 70% response rate indicates
that the strategic implementation of CER is becoming more prevalent.
Some of the larger and more client‐oriented corporations stand out as
world‐class corporations with a high level of maturity in applying CER
and garnishing its competitive advantages because they have done
this in a systematic manner—as part of a corporate strategy of innova-
tion and competitiveness.
ACKNOWLEDGMENTS
Translation from Spanish by Dr. Maria Luisa Picard‐Ami. Portions of
this article and the data set were originally part of Ms. Nancy Ayala's
Master Thesis presented in 2016 at the Instituto de Ciencias Sociales
y Administrativas (ICSA), Universidad Nacional Autónoma de Ciudad
Juárez.
9
ORCID
Maria Luisa Picard‐Ami http://orcid.org/0000-0002-3581-8713
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