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TABLE 1.1PERSPECTIVES OF ECOLOGICAL TRANSFORMATION IN INDUSTRYINDUSTRIAL Patriarchal, hierarchictop-down structuresChange and break ofroles, hierarchyconflictsFlexible, network-1 ikemodels, functionalleadership, synergismGrowth eqphoriaGrowth U n i t sPrinciple of sustainabilityQuantitative f i x i n g"Qualitative" growthIntegrative growthEnvironmental pollutionEnvironmental lawsEnvironmental restorationConsumption of natureEnvironmentalcompatibility testsCreation of ecologicalsystemsExploitation ofof raw materialsRecycling, savingsA r t i f i c i a l "naturalproducts"Refuse/waste problems"Intelligent 1 1 closedsystemsNature-integrativeprocessesMaterial basic tanperspectivePluralism, confettisocietyVirtual communitiesSocial lawsWelfare stateBasic securingProduct orientationExperience orientationInsight orientationMechanistic modelsCybernetic modelsSystemic nodeIsLinear Idea of tUaeTime fractionsf I t x i b i U rationParallel time structureT e r r i t o r i a l lIzationFormation of classes.Source: l u t z , "unleh: Bom Aktuell, 1992). Quoted i nEmeat Callerback a t « l , I f f f l n n t f l m t , CCA: Mrrett-Koeliler Publishers, 1995.)

5Responding to this challenge, the International Chamberof Commerce (ICC) developed a Business Charter forSustainable Developmentthat addresses issues such aspolicy setting, systems and procedures, implementation, andreporting.Today, more than 1,000 companies worldwide haveadopted the Charter with the goal of developing environmental goals. Other initiatives, such as the U.S. Chemicalindustry's Responsible Care program, are also getting moreattention in the movement toward environmentcil stewardship(Thayer, 1992).The trend toward corporate environmentalism may bestrongest overseas, where the European Community has calledfor the establishment of voluntary environmental performanceprograms throughout Western Europe.Like the ICC BusinessCharter, the regulation would require benchmark environmental audits and corporate efforts to raise environmentalstandards above compliance level (Environment Today. 1992).Historically, multinational corporations have beenviewed as part of the environmental problem in developingcountries.Within the last decade international pressures,domestic pressures, and economic globalizations haveprovided the impetus for improving environmental compliance(Long, 1991; Greeno and Robinson, 1992? Wescott, 1992).With the development of international standards forenvironmental management, quality organizations are breakingnew ground.The International Standards Organization (ISO)

6has established a taskforce to develop an environmentalstandard that will be heavily based on the British StandardInstitute's environmental management standard, BS7750.OnMarch 23, 1993, a voluntary EC environmental management andaudit regulation was adopted to promote continuous improvement in industrial environmental performance (Chynoweth andKirschner, 1993).Likewise, the U. S. American NationalStandards Institute has also embarked on the development ofan environmental standard.Central to the trade and environmental interaction isthe debate about what role the General Agreement on Tariffsand Trade (GATT) should undertake.Though GATT is confront-ing trade and environmental issues, it is on an "as needed"basis with little consensus.addressed this issue at theMultinational organizations1991 Second World IndustryConference on environmental management.The U. S. Councilfor International Business believes that GATT's majorcontribution to sustainable development can be achieved bystrengthening its ability to act as a "multilateraldiscipline" that allows and encourages nationalimplementation of environmental policies(Gavin, 1992;Sills, 1992) .Additionally, the North American Free Trade Agreement(NAFTA) has made significant inroads into harmonizingbilateral environmental and trade issues.If NAFTA issuccessful in bridging the environmental gap, it may serve

7as the example of how industrialized countries can give lessdeveloped countries assistance in taking control of theirown resources and moving their countries to produce lesspollution (Sills, 1992).increasinglyEnvironmental degradation isrecognized as one of the most serious andubiquitous problems facing mankind.The absence of theproper management of our precious resources, namely air,waterways, the sea and land, is diminishing the capacity ofthe environment to perform the indispensable service uponwhich the quality and survival of human life is dependant(Freeman et al., 1973).Strong global competition, governmental intervention,and public opinion have forced businesses to reassess bothissues.Strategic reevaluation has discovered there may bea strong relationship between quality and environmentalperformance and has given rise to a new strategic paradigmcalled total quality environmental management (TQEM) (Clair,Milliman and Mitroff, 1994; and Friedman, 1992).While theorists believe that a logical and positiveassociation exists between quality and ecologicalperformance, few studies have examined the issue.Scholarssuch as Stead and Stead (1994) and Godfrey (1993) havequestioned what factors are most critical to TQEM.Othershave noted that successful implementation of TQEM willrequire significant organizational change to integrate bothquality and ecological practices (Bleakley, 1993; Milliman

8and Clair, 1994; Post and Altman, 1992; Stead et al., 1992,1994; Wells et al., 1992).While the literature onorganizational development and change is rich with researchto support such a reformation (Lewin, 1951; Goodman et al.,1980; Daft, 1982; Miller and Friesen, 1984; Quinn, 1985;Robbins, 1983, 1987, 1990; 1993), the relationship betweenquality practices and environmental performance must firstbe established.The purpose of this study is to exploreempirically the correlation of quality practices andenvironmental performance and suggest its applicability as amodel for integrating the two fields.This developing topic is replete with new terminology.The following list of definitions should be used to clarifyand address existing and new terms used throughout thisstudy.

DefinitionsCompliance - adhering to governmental laws and regulationsregarding the impact of business on the natural environment.Ecomanagement - a systemic view of how organizations shouldbe operated to preserve the natural environment.Emissions - includes a multitude of terms; waste, sourcepollution, pollutants and toxic emissions. Although totalelimination is an admirable goal, achievement is not likely.Environment - anything that surrounds or encompassessomething else. Management literature often explains theterm contextual environment (competition, political/legal,economy, technology), but for the purposes of this study, itwill be used to refer to the natural environment, unlessotherwise stated.Environmental management - the process of planning,organizing, leading and controlling factors which affect thenatural environment. The term ecomanagement is used is themore current academic literature, while environmentalmanagement is the preferred term in practitioner literature.Environmental performance - is rated based on the decreaseof toxic emissions and the compliance with governmentalregulations.Natural environment - the surrounding biophysical or naturalenvironment of which humans and other living and nonlivingentities are a part.Sustainable competitiveness - similar to the termsustainable development, but used on the micro level as ameans of attaining organizational effectiveness throughecologically safe behavior.Sustainable development - a term popularized in aninternational report on the environment, Our Common Future.Defined as the process through which economic systems canmeet existing human wants without destroying the resourcesfuture generations will need to meet their wants.

10Statement of ProblemInstitutional ecomanagement is rapidly developingthroughout the world.Total quality management (TQM) hasevolved to total quality environmental management (TQEM).TQEM integrates environmental aspects of business with totalquality and blends environmental management into thecorporate business strategy.The compatibility of these twoconcepts is evidenced by a recent study of 15 chemicalcompanies regarding management practices and environmentalrisk (Winn & Roome, 1993).The study found that: (l)economics (cost savings) drive environmental actions, (2)companies with positive environmental records possess topmanagement commitment, written company environmentalpolicies, and statistical measurement and control systems,and (3) facility audits which focus on continuousimprovement rather than rigorous inspection.These findingsreflect the basic precepts of TQEM.If companies expect to achieve sustainablecompetitiveness, they must improve quality.At; the sametime, environmentally responsible behavior requiresdecreased wastes and compliance with stringent governmentalregulation.This paradox has prompted organizations to seeknew sustainable strategies.Specific to this study, theproblem remains how to measure quality, environmentalpeiformance, and the association of the two issues.

11In this study the relationship of effective qualitypractices and environmental performance will be examined.In general, the research question becomes: is therecorrelation between quality practices and environmentalperformance.More specifically, do companies that implementquality practices experience lower toxic emissions andhigher compliance?

12Significance of ProblemOrganizations are learning that their ecologicalmanagement practices (ecomanagement) can have a large, oftenenduring impact on corporate performance.In a recentsurvey investors ranked environmental liability as thehighest priority item in making investment decisions(GEMI/IRRC, 1992).Additionally, consumers are becomingmore environmentally conscious and demanding more sociallyresponsible products, such as recycled or green products.Though the high costs of environmental compliance canbe substantial, non-compliance can be even costlier.Forexample, the Superfund Act, as passed and later amended,establishes the protocol for handling environmentallyhazardous situations.Liability imposed by the Act isretroactive without limit, and company-owned contaminatedsites can be held accountable for 50 years.Potentialpollution liabilities may induce governmental scrutiny ofcompany balance sheets.The Environmental Protection Agency(EPA) currently sends the Securities and Exchange Commission(SEC) a list of companies with potential Superfundliabilities.Securities reporting and information services,such as Moody's Investors Service, require even morestringent company information concerning environmentalcompliance that could affect securities ratings (Bloom andMorton, 1991).While significant, Superfund does notconsider air and liquid wastes attributed to routine

13industrial operations.This type of pollution is only nowbeing addressed with pending legislation.Businesses reap three basic benefits from TQEM:alignment with business strategy,improvement, and (3)(GEMI, 1991).(1) an(2) measurable continuousa customer and supplier alignmentFirst, total quality practices applied toenvironmental management can become part of a company'sstrategy:the same tools and strategy that apply toproduction, sales, and distribution are applied toenvironmental management.Second, the basis of totalquality is continuous improvement based on fundamental databased understanding of every process.Total qualityprovides an understandable and documented guide toenvironmental management.Third, alignment betweensuppliers, customers and company, in concert with continuousimprovement, can foster environmental excellence.Thissynergy could create a more efficient company committed toproviding environmentally sound products and services.AsFriedman (1992) recapitulated, a commitment to quality, bothin the production process and environment, is essential forfirms today.One fact has emerged in the environmental era,companies that reduce environmental damage invariably rankamong the best managed and highest quality organizations inthe world (Cairncross, 1993).In 1980, Xerox establishedits commitment to the environment by creating a corporate

14environmental health and safety department.Thisenvironmental commitment resulted in Xerox Business Productsand Systems winning the 1989 Malcolm Baldrige NationalQuality Award.Arm & Hammer's commitment to the environment began atthe turn of the century when the company advocated usingrecyclable packaging.In the late 1960's, sales of Arm &Hammer skyrocketed when the company elected to manufactureand market nonphosphate detergents.Today, the company'sdetergent product is its biggest seller, and is number twoin the U.S. marketplace (Thomlison, 1992).Dupont's TQEM program is evidenced by the company'sdevelopment of a "state-of-the-art" tetrahydrofuran plant inSpain.It is expected that new technologies employed in theplant will cut organic compound emissions by 99 percent.While TQEM costs are not always easy to identify, AlliedSignal has witnessed lowered costs "because accidents costmoney."The company has claimed a 10 percent annualreduction in environmental incidents and a 50 to 60 percentdecrease in hazardous waste (Kirschner, 1992).Other examples of companies that are applying TQMpractices to theirKodak and 3M.environmental programs include EastmanEastman Kodak has been able to eliminate morethan 500,000 pounds of waste material resulting insubstantial cost savings.At 3M, emissions to air, water,and land was reduced by one billion pounds, saving about

15 480 million in wasted materials and pollution control costs(Willums & Goluke, 1992).Cross fertilization of environmental and qualityprograms has resulted in environmental leadership thatrepresents the application of TQEM principles.This crosspollination is moving TQEM to a level of strategic planningimportance.First, TQM has enabled communication ofenvironmental management issues to top management in a lesstechnically oriented language. Second, TQM has demonstratedto environmental management the importance of a customerfocus through cost savings and revenue increases.If thetrend continues, the environment could be managed as aprofit center.Lent and Wells (1992, p. 20) warn "This isimpossible until cost and revenue-related outcomes ofenvironmental performance are measured and linked."Additionally, company alliances are forming to addressthe issue of quality and the environment.One suchorganization, Global Environmental Management Initiative(GEMI), teaches organizations how to protect the environmentby using sound quality practices.GEMI is an alliance ofcompanies, mostly multinationals, formed in 1989 from agroup of 200 Business Roundtable CEOs.Today, GEMI includes24 member companies and strives to make companies aware thatgood environmental management and TQM contribute toprofitability.

16The environment will become more of a dominantcorporate issue as the market and regulations become moresophisticated.In a 1990 survey of major industrialcorporations, Deloitte & Touche found that 45 companiessurveyed saw the strategic importance of environmentalissues as critical.In addition to regulation, emergingmarkets for environmental product quality, competitivepressure, and global change remain strong driving forces.

17Chanter SummaryGrowing concern in both the domestic and globalmarketplace has forced organizations to reconsider theironce ambivalent approach to issues of quality and thenatural environment.This chapter cited numerous examplesof how various companies are acknowledging theirresponsibility to both issues.While the impact ofdeclining product quality certainly has been recognized andcasually addressed, businesses have been slow to adoptenvironmentally sound principles of management.Researchhas identified a need for empirical studies determining whatfactors impact both issues and how the process ofintegration can best be achieved.Organizations aresearching for a new way to effectively manage theenvironment.Effective ecomanagement should consider theintegration of quality and environmental performance (TQEM).The purpose of this paper is to determine if companies thathave implemented TQM practices in their respectiveorganizations experience higher levels of environmentalperformance.The following chapter will review the qualityand environmental literature separately and search for anyapplicable frameworks to integrate the two subjects.

CHAPTER 2LITERATURE REVIEWThis chapter will examine the literature from two broadand diverse subjects.First the literature on quality willbe reviewed to determine a common definition, strategicrelevance, and chronological progression of the qualityfield.The remainder of the quality review is organizedaccording to the quality dimensions (factors) mostrepresentative in the literature and exemplified in theSaraph (1989) study.Each quality practice was assessedfrom both the theoretical and application perspective.Second, the chapter presents the environmental literature toascertain the current state and importance of the ecologicalperformance of organizations.Third, examination willidentify any commonalities in the two fields and suggest aframework for the research.Quality DefinedThe subject of quality is an issue of much interesttoday and the search for a correct definition has beensomewhat elusive.According to Reeves and Bednar (1994)terms as value (Abbott, 1955; Feigenbaum, 1951), conformanceto specifications (Gilmore, 1974; Levitt, 1972), conformance18

19to requirements or zero defects (Crosby, 1979), fitness foruse (Juran, 1974, 1988), and customer satisfaction(Gronroos, 1983; Parasuraman et al., 1985).While each hasits own strengths and weaknesses, the definition of choiceis situational.After many years of study, a standard definition ofquality was adopted by the American Society for QualityControl and the American National Standards Institute.is defined as follows:It"Quality: the totality of featuresand characteristics of a product or service that bear on itsability to satisfy stated or impli

Tomlin, Sharynn Musick, Total Quality Management: A study of the Relationship between Quality Practices and Environmental Performance of the Standard and Poor 500 Companies. Doctor of Philosophy (Management), August, 1996. Corporations facing escalating consumer demand for higher product