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Stakeholders of SM
 INTRODUCTION

• What prompts enterprises to adopt SM?

• Is it the compliance of the regulations /standards or the
improvement of performance or simply a social commitment to
preserve the depleting resources?
• Whatever may be the objective of SM adoption, stakeholders
pressurise the enterprises to adopt SM.

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Government

Government regulations are an important stakeholder to

pressurise the adoption of environmentally conscious
manufacturing in industry
The most apparent stakeholders that influence adoption of
environmental practices within companies are various
government structures because legislation authorizes
agencies to circulate and enforce rules and regulations

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Employees
The term 'employee' refers to a specific defined relationship
between an individual and a corporation, which differs from
those of customer or client.
Employees are directly related to a firm and have the ability to
impact its bottom line directly
The employee is a major source of a company's success, and
successful environmental policy planning requires active
participation from an employee
All the employees who are supportive of a firm’s environmental
goals are more likely to seek work within it, and hence
continue their employment.
Employees may also engage in public whistle-blowing ending up
in exposing the firm’s potentially negligent environmental
practices

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Consumers
A customer, popularly known as a client, buyer, or purchaser is the
receiver of a good, service, product, or idea, obtained from
a seller, vendor, or supplier for a monetary or other valuable
consideration.
The customers or consumers are the key source of information on
environmental issues and practices
The firms that adopt environmental management practices are
motivated by customer concerns
The results of a U. S. survey found that an estimated 75% of
consumers claim that their purchasing decisions are influenced by a
company’s environmental reputation and 80% would be willing to
pay more for environment friendly goods
Customers respond positively to a company's actions by purchasing its
product and expressing their satisfaction to the managers of the
company, can also voice their discontent by boycotting its product or
filing a suit against it

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Market

A market is one of many varieties

of systems, institutions, procedures, social
relations and infrastructures whereby parties engage in
exchange. There are two roles in markets, buying and selling.
The market facilitates trade and enables the distribution
and allocation of resources in a society.
Competition among the firms is a major part of market pressure.
Competitiveness is identified as one of the major motivations
for environmental/ecological responsiveness
Market competition within an industry affects the rate of diffusion
of environmental management practices.

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Media
The media - print, electronic, advertisement, and social - plays
an important role in increasing awareness among public and
formation of their views and attitudes toward certain issues.
When environmental crisis occurs, the media can influence
society's perception of a company
The influence of the media came from the information they
conveyed about a company. It serves as a medium which
reflects owner, employee, customer, community and other
Stakeholder expectations.
The importance of the media will be highest for reactive firms,
second highest for defensive firms, and third highest for
accommodative firms, and lowest for proactive firms
Negative press stories can damage a business more than that of
unhappy customers

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Local politicians

Local politicians, who are elected by the people can

influence the environmental performance of the company
as it influences the life of the people around the
company.
Local politicians lead the demonstrations by the people to
pressurise the companies to adopt environmental
friendly manufacturing systems.
Politicians can bend the public opinion in favour of or
against a corporation's environmental performance

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Local community

Local community is a group of interacting people sharing

an environment.
Community stakeholders are defined as those people who
are not necessarily involved in the partnership but have
knowledge o
The firms that are exposed to pressures from surrounding
communities are less likely to violate environmental
lawsf the community and the organization
Local communities also impose coercive pressure on
companies via environmental activism through
nongovernment organizations (NGOs) and by filing
citizen lawsuits

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Suppliers

A supplier is a party that supplies goods or services to the

company.
A supplier can exert its influence by stopping delivery or it
can pressurise the firm to use a more environmentally
acceptable substitute in the design.
Suppliers influence the decision to follow certification and
standards to certify (like ISO 14001 etc.)
They contribute to the overall performance of a supply
chain, the performance of the whole chain is affected by
a poor supplier performance

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Trade organisations
A trade association, also known as an industry trade group, business
association or sector association is an organization founded and
funded by businesses that operate in a specific industry.
An industry trade association participates in public relations activities
such as advertising, education, political
donations, lobbying, and publishing; but its main focus is
collaboration between companies and standardization.
Associations may offer other services, such as conducting
conferences, networking or charitable events or offering classes or
educational materials.
Industry and trade associations are important stakeholders in the
context of proactive environmental strategy.
Trade organisations can have their own environmental standards and
can ask experts or individuals within government to inspect the
compliance with these requirements.

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Environmental advocacy
groups
At the plant level the institutional actors like environmental
interest groups are most likely to directly influence
environmental practices
They can apply strong normative institutional pressure on firms
even though they are not directly involved in the firm’s
economic transactions
Environmental Advocacy Groups (EAGs) have the capacity to
mobilize public opinion in favour of or in opposition to a firm
and can use public protests to emphasize their points of view
EAGs are also known to create general awareness of
environmental degradation hazards through various
communication channels and demonstrations.

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Investors/Shareholders

An investor or shareholder or stockholder is an individual or

institution (including a corporation) that legally owns
a share of stock in a public or private corporation.
Shareholders are the stakeholders who are directly related to an
organization and have the ability to impact its bottom line.
A firm is said to be serious about environmental plans if it comm
The shareholders are the most fundamental stakeholders,
businesses must respond to them by maximizing their value.
The reduction of risks and liability from proactive
environmental practices and programs adds to the
shareholder value

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Partners

A partner takes part in an undertaking with another or

others, especially in a business or company with shared
risks and profits.
Partners are generally the business partners in joint
venture
Larger companies in competitive supply chains realize that
green supply chains are necessary to maintain a reliable
source of components and material.es and they also
include supply chain partners.

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Owners

Owners include the owner of the firm as well as the board of

directors. The board of directors is at the apex of the decision-
making process in public corporations.
Every major decision, including a firm’s policy toward the
environment, must go through the board. The boards are
finally responsible for corporate environmental strategy, be it
proactive or passive
Individual beliefs and attitudes affect an individual’s behaviour
and treatment of the environment is an ethical issue for a few
of them
Firms with owners/managers who have positive environmental
attitudes are important to suppliers, have a relatively higher
level of environmental support practices

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Chief Executive Officers
(CEOs)
CEO is the highest ranking executive in a company, whose
main responsibilities include developing and
implementing high-level strategies, making major corporate
decisions, managing the overall operations and resources of a
company, and acting as the main point of communication
between the board of directors and the corporate operations
The greater the environmental awareness of managers, the
greater are their perceptions of environmental pressure
A proactive environmental response of firms is because of
manager perceive.
Executives give importance to pressure from regulatory
stakeholders, corporate government stakeholders, external
economic stakeholders, internal economic stakeholders, and
external social stakeholder

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Stakeholders for SM adoption

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Local stakeholders

• Local stakeholders (government regulations, local politicians, local

community, suppliers, trade organisations, and shareholders) are those
who are attached to the enterprise directly (government regulations,
shareholders and suppliers) or indirectly (local politicians, local
community and trade organisations) and the closure of the enterprise will
affect all these stakeholders. Regulatory concern (government) is perhaps
the most obvious stakeholder for ECT adoption.
• Various local government agencies promulgate and enforce regulations
from time to time. Government regulations can be coercive in nature by
making it mandatory to use certain ECTs or to avoid certain outdated
technologies.
• Local communities also impose pressure on companies through local
politicians or by environmental activism through non-government
organisations (NGOs)or directly through memorandums and agitations.

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Social stakeholders

• Social stakeholders (employee concerns, consumers, market,

environmental advocacy groups, and media) are those stakeholders who
influence the enterprise to adopt ECT but its closure does not affect them.
The discussion with the senior managers of Indian MSMEs has led us to
adopt employee concerns as social stakeholder not as internal
stakeholder as these enterprises adopt environmental practices to
improve employee health and safety as a societal cause and not a
coercive pressure by the employees. Employees express satisfaction or
dissatisfaction directly to the senior management. In more extreme cases,
employees may engage in public whistle-blowing that exposes the firm’s
potentially negligent environmental practices.
• Environmental advocacy groups and media have a strong capability to
mobilise public opinion in favour of or against the company. Societal
stakeholders generally utilise indirect approaches to influence
organisational behaviour because they lack a direct economic stake in the
organisation
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Internal stakeholders

• Internal stakeholders (partners, owner’s social philanthropy

and CEO’s social philanthropy) are completely internal to
the organisation with area of influence limited to the
organisation only. Part of the literature shows that company
social responsibility is to be motivated by ethical and moral
discourses.
• Many Indian MSMEs have introduced ECTs as philanthropy
of its owners or chief executive officers. Further, it has been
found that in case of joint venture MSMEs were coerced
and/or facilitated by partners to adopt environmental
practices/technologies.

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Exploratory factor analysis

EFA is used to determine the number of latent variables

or factors which represent the complete set of items. It
also explains the variations among relatively large
number of variables to relatively small number of newly
developed latent variables or factors EFA is useful at the
early stage of analysing the problem where strong
theoretical evidences are lacking. An EFA may indicate a
lack of unidimensionality wherein other cases it becomes
elusive.

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Multidimensionality of shareholders
Stakeholder Factor 1 Factor 2 Factor 3
(Local) (Social) (Internal)
Local Politician 0.844 0.274 0.006

Local community 0.776 -0.057 0.312

Suppliers 0.814 0.219 0.246
Trade organizations 0.768 0.096 0.362
Shareholders 0.611 0.191 0.596
Employee concerns -0.145 0.581 0.563
Consumer pressure 0.124 0.850 0.227
Market pressure 0.146 0.907 0.162
Environmental advocacy group 0.338 0.574 0.285
Media 0.129 0.842 0.024
Partners 0.282 0.435 0.625
Owners social philanthropy 0.343 0.158 0.783
CEOs social philanthropy 0.350 0.120 0.808
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Structural equation modelling
• Structural equation modelling (SEM) consists of two
components: a measurement model linking a set of
observed variables to a usually smaller set of latent
variables and a structural model linking the latent variables
through a series of recursive and non-recursive
relationships.

• CFA also known as the covariance structure is a special case

of the structural equation model. In CFA, factor loadings can be
viewed as regression coefficients in the regression of observed
variables on latent variables. The larger the factor loading, as
compared to their standard errors, the stronger is the evidence
that the measured variables or factors represent the underlying
constructs.

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Structural equation model of ECT
adoption stakeholders

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Thanks

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