Journal Archive

A firm with objectives to the optimization in environmental management and strengthened competiveness commits to building networks with governmental institutions and suppliers, even establishing strategic partnerships with competing enterprises[20]. In other words, building relationships allow the long term communication among collaborative partners. Based on such long-term communication, firms attempt to strategically attain new knowledge from partners by taking corporate internal learning and accumulation procedures[21]. Such efforts will further contribute to promoting the firm’s environment management activities. That is, the establishment and utilization of the corporate internal information system will enable the firm to create an inimitable resource combination serving as the corporate key competitive advantage, compelling the firm to search for organizational improvements and adaptation, ultimately improving the quality in product, service, and consumer demand. Moreover, environment management performance reflects a firm’s voluntary dedication to focus on future environmental management activities and taking initiatives to strengthen the company’s core competencies. Such voluntary forms of objectives followed by efforts to strengthen core competencies have been shown to bring significant growth on sales, cost reductions, and effects on competitive advantage in market position[22]. Thus, a firm’s utilization of IT and building of relationships would lead to the enhancement of environment management performance. Accordingly, we hypothesized the following:

H5a: More active establishment and utilization of the corporate internal information system would lead to more active building relationships for information and knowledge.
H5b: More active establishment and utilization of the corporate internal information system will lead to the greater enhancement of environment management performances.
H6: More active building of relationships for information and knowledge will lead to the greater enhancement of environment management performances.

Figure 1 shows the research model to test the hypotheses. The current study attempted to identify and distinguish the effects of internal and external factors of SMCs on the environment management performances, and examine the factors that improve the utilization of information systems and building relationships for information and knowledge.

Fig. 1. 
Research Model

The current study bases its analysis measurement on industrial sectors that had relatively close environmental association, specifically surveying managers in environmentally related corporations. Examining enterprises as the research analysis measurement unit, this research targeted on directors, CEOs, and managers who held a general holistic view or executed corporate environmental administrative as well as managing decisions, selecting one participant per company. Firm selections were made through the report on corporation lists provided by the Regional Bio industry Foundation. Total data of 195 companies located in the southern regions in Korea were incorporated in the final analysis.

The founding dates of respondent corporations included: 9 firms were established between 1967 and 1980(4.6%), 14 between 1982 and 1990(7.2%), 80 between 1991 and 2000(41.0%), and 92 in 2001 or after(47.2%). Numerical scale of employment included: 112firms with less than 10 workers(57.4%), 50 firms from 11 to 30 workers(25.6%), 23 firms from 31 to 50 workers(11.8%), and 10 firms with 51 or above(5.1%). The total asset distribution included: 26 firms that owned approximately from $18,000 to $90,000(13.3%), 65 firms from $90,000 to $900,000(33.3%), 28 firms from $900,000 to $2,700,000(14.4%), 14 firms from $2,700,000 to $4,500,000(7.2%), and 11 firms that owned $4,500,000 or above(5.6%). Total sales distribution included: 43 firms that earned approximately $90,000 or below(22.0%), 72 firms from $90,000 to $900,000(36.9%), 33 firms from $900,000 to $2,700,000(16.9%), 16 firms from $2,700,000 to 4,500,000(8.2%), 15 firms from $4,500,000 to $9,000,000(7.7%), and 16 firms that earned $9,000,000 or above(8.2%). Total of 141 male respondents(72.3%), and 54 female respondents(27.7%) participated in the study. Age distribution included 21 respondents aged from 28 to 29(10.7%), 55 respondents from 30 to 39(28.2%), 65 respondents from 40 to 49(33.3%), and 54 respondents 50 or above(27.7%). Distribution in position include: 48 CEOs (24.6%), 28 directors(14.4%), 105 managers and assistance managers(53.9%), and 14 Division Heads and Team Leaders(7.2%).(Exchange rate calculation based on $1 = 1,190 WON)

The variables were properly modified for the study. A 5-point Likert-type scale was used to measure the variables, 5 being "Strongly Agree" and 1 being "Strongly Disagree." Measurements on the interest levels of CEOs, considered as primary internal factors, were examined based on three criteria: degree of value recognition regarding environment management and subsequent policy promulgated and implemented towards environment management; progressiveness in achieving objectives and benchmarks; and awareness of market trends regarding environment management. Applying Spanos and Lioukas(2001)’s[23] research index on corporate information technology resources, the study’s measurements were based on three criteria: the degree of information technology system establishment, environment management-related technology establishment system establishment and utilization, measured in comparison to the firm’s competing enterprise; Transaction Processing System(TPS), and Electronic Payment System(EPS). The intensity of competition within the industry and government regulation on environment were measured through Delmas and Toffel(2004)’s[14] criterion. First and foremost, the intensity of competition within the industry was based on four criteria; heightened competition for differentiation through environmental management activities within the industry; overall intensive competition on environment related matters; and increased levels of competing enterprises within the industry. The government regulation on environment was based on three criteria; overall strictness; restrictions on sales through environmental regulations; and consequences followed after violation on environmental regulations. The measurement on system establishment and utilization was based on the definition delineated by Welch and Pandey(2007)[24], referring to corporate internal business related system establishment and the effective and productive utilization of composing members of organization. Thus, measurement units were based on four criteria; strengthened degree of the organization by utilizing information technology; utilization of information systems by members of the organization; utilization on information technology on new product establishment; extended scope of chance on new product establishment utilizing information technology.

Measurements on the building relationships for information and knowledge were based on Cui, Griffith, and Cavusgil(2005)’s[25] four criteria; performance on academic and collaborative research; building networks with industrial associates regarding information and knowledge relations; strengthening relations with other overseas corporations; and technology establishment funding received from governmental and associate institutions.

Measurements regarding environment management performances were derived from Selnes and Sallis(2003)[26] and Matsuno, Nentzer, and Ozsomer(2002)’s[27] research method, basing on three criteria; increased level of sales on eco-friendly products and efficient usage of environmental energy; environment related certifications and rewards received in relation to comparative enterprises within the industry; high performance scores received regarding measurements of pollutants, pollution level, and violation on environmental regulation.

Discriminant validity was assessed with the analysis of correlation matrix(Φmatrix) that checks the measured difference as among the theoretical different constructs. The results are value of "1" [calculated with correlation ± (2×standard error)] out of range correlative coefficient among all the variables. Other method of testing discriminant validity was employed with average variance extract(AVE). The AVE’s value was .607~.861, establishing the reliability at an acceptable level[30].

The analysis of the goodness of fit indexes of the research model showed χ²=274.64, df=135(p=.000), GFI=.90, AGFI=.87, NFI=.93, CFI=.95, RMSEA=.07 suggesting the superiority of the research model.  The results of the analysis of causal relationships among the variables are shown in <Table 2>.

The summary of findings in this study and their implications are as follows:

First, the interest levels of CEOs, considered as corporate internal factor, did not have significant effects on the utilization on information systems, while the interest levels showed significant effects on the building between information and knowledge. This indicates that increasing interest levels of CEOs not only stimulate information exchange with associating corporations and industries but also knowledge acquisition through building relationships as one of the contributing factors to promptly respond to the change in management environment, rather than kindling the establishment of corporate internal information systems. The results provide further insight into the necessity for government and associate institutions that work with SMCs to encourage CEOs’ interests in environmental issues through a wide variety of programs, including consulting and education, both directly and indirectly leading to the improvements of environment management performances. Corporate information technology resources showed positive effects both on the establishment and utilization of information systems and on building relationships for information and knowledge, which seems due to the increased ease in the establishment and utilization of information systems within the company. Additionally, the more information technology resources company owns, the more adept the firm would become in responding to corporate environmental changes, encouraging building relationships for information and knowledge through associate enterprises and institutions. Second, competition intensity within the industry, considered as corporate external factor, did not show a significant effect on the establishment and utilization of information systems whereas it showed a significant effect on building relationships for information and knowledge through associate enterprises and institutions. Such results suggest that despite their passive position taken regarding the establishment and utilization of information systems even if the intensity of competition was increasing within the industry SMCs have shown to take more active measurements in building relationships for information and knowledge through various routes. This commitment could be explained by the direct impact on the enterprises sustainability as industrial competition intensifies. On the other hand, the external factor of competition intensity within the industry was formed to be directly related to the corporate survival, leading to building relationships through various routes, including collaborative research and funding for technology establishment. Third, government regulation on the environment showed significant effects on both the establishment and utilization of information systems and building relationships for information and knowledge. This seems because the more intensified government environmental regulations become the more efforts firms put on the establishment and utilization of the internal information system, parallel to the more active building of external relationships. It can be further explained as the government’s simultaneous commitments to regulation enforcement as well as corporate supporting policies. Fourth, establishment of information systems had a significant effect on building relationships for information and knowledge through associate enterprises and institutions although it did not affect environment management performances. The results reveal that while the establishment and utilization of the corporate internal information system could only serve as the company’s enhanced competitiveness, not directly contributing to the performance levels, it could strengthen the building of relationships for information and knowledge with associated institutions and enterprises. Lastly, building relationships for information and knowledge through associate enterprises and institutions showed a significant impact on environment management performances. This suggests that the efforts to strengthen external relations for SMC environment management performances contribute to overcoming the limitations of internal sources, further leading to the enhanced performance levels. Therefore, industry-university-institute collaborative programs are shown to be of paramount importance in successfully improving SMC environment management performances.

The hypothesis on the causal relationship related to the acquisition of market knowledge was not supported in this study.

First, this study attempted to explain the process of corporate internal and external factors, utilizing information systems, and contributing to the building of external relations in environment management execution. However, the study includes limitations in that the interest levels of CEOs and information technology included in the study were adopted on a limited basis. Therefore, caution should be exercised in generalizing research results. Future research should encompass more diverse variables that may affect information technology on environment management performances, promoting a broader research base on information systems and environment management. Secondly, the study exclusively focused on SMCs regarding environmental concerns. However, as the government’s strategy for environment establishment industry, unlike general industrial groups, renewable energy industrial groups could promote awareness and build core competencies through environment management activities. In addition, in comparison to pure manufacturing enterprises, IT industrial groups could promote unique value awareness in environment management activities in terms of product manufacturing and disposal procedures. Therefore, it is crucial to consider the fortification of core competencies for environment management through specifically categorized and distinguished studies of industrial groups. Third, the results of the study do not show the impact of the establishment and utilization of information systems on environment management performances. It seems because the limited competencies participating corporations held, of which 57.4% employed less than 10 workers, instead of displaying systematic relations. Future research should continue efforts to collect adequate participating companies in order to appropriately explore the environment management performances of SMCs.