Enhancing Corporate Environmental Performance of Large Companies: A Fuzzy Cognitive Mapping Approach

Abstract

The global wicked problem of environmental sustainability issues forces us to work on understanding the collective and complex nature of our current systems. Large businesses and organizations are known to play a crucial role in influencing environmental sustainability, with their impact on the environment being significant and multifaceted. The ever-increasing environmental concerns have put large companies under scrutiny from different stakeholder groups like regulators, consumers, employees, investors, activists and non-governmental organizations (NGOs). Consequently, corporate environmental sustainability and performance have become a strategic priority. However, the corporate environmental landscape has evolved into a complex system of interdependencies due to dynamically changing regulations and stakeholder expectations. Furthermore, corporate environmental performance (CEP) is a multidimensional construct influenced by a complex interplay of internal organizational factors as well as external business environment factors. As a result, companies often struggle to make effective decisions to enhance CEP, leading to a gap between ambition and effective action toward corporate environmental sustainability.

The existing literature presented a critical gap in understanding the interactive and holistic effects of the most critical factors influencing CEP. Building on the knowledge gap and the identified problems, the primary objective of this study was to support large companies in the Netherlands in improving their CEP by analyzing and identifying the interplay of the most critical factors within technological factors, organizational culture, corporate governance, and external stakeholder pressures that significantly impact CEP. Hence, the following central research question was formulated: How can large companies utilize the interplay of technological factors, organizational culture, corporate governance, and external stakeholder pressures to enhance corporate environmental performance?

The study adopted an inductive, semi-quantitative research design, utilizing the fuzzy cognitive mapping (FCM) approach. Initially, a literature review was conducted to conceptualize CEP and identify factors associated with it. Then, data was collected through 10 semi-structured interviews with experts from various stakeholder groups, including large companies, consultants, academia, and research organizations. Furthermore, qualitative content analysis of the interview transcripts was performed to identify the factors influencing CEP and the relationships among them, leading to the development of individual FCMs. These individual FCMs were subsequently combined into an aggregated FCM. Then, a structural analysis of the aggregated FCM was conducted to determine the nature and importance of the factors identified. The aggregated FCM was further condensed (simplified) to facilitate more in-depth analysis. Finally, to formulate strategies that might enable large companies to improve their CEP, the findings from the structural analysis were integrated with an analysis of the pathways through which different factors influence CEP. This resulted in three sets of strategies: the first based on high centrality factors, the second on high direct impact factors, and the third on low centrality transmitter concepts.

The results identified 26 critical factors influencing CEP within the broad categories of technological factors, organizational culture, corporate governance and external stakeholder pressures. Furthermore, the developed aggregated FCM demonstrated how these factors interact to influence CEP by highlighting the complex causal interrelationships between the identified factors. Moreover, the study formulated 14 strategies that might enable large companies in the Netherlands to enhance their CEP. The first two sets of strategies defined 12 priority strategies. Furthermore, the third set of strategies provided two guiding strategies to enhance the effect of the variables involved in the priority strategies.

Furthermore, the study establishes that interactions among various factors significantly influence CEP. Hence, it emphasizes that future research should take an integrated and holistic approach when investigating the impact of factors influencing CEP. Moreover, the study encourages companies to formulate strategies that include the interactive effects of different factors to create a more holistic approach to enhancing CEP. By considering the interplay between the identified factors, companies can develop more nuanced and effective strategies that do not merely target individual factors in isolation but rather address the broader system of influences. In addition, the study provides an FCM template that companies can use as a decision-support tool, enabling them to understand the potential outcomes of different strategic choices and allowing them to simulate how changes in one area might affect others. By using the FCM, companies can devise specific strategies by taking into account their unique circumstances, industry, and external environment.

In conclusion, the study highlights the importance of an integrated and holistic approach to improving CEP, considering the complex interplay between internal and external factors. The study contributes to the academic field of corporate sustainability and management by filling a significant knowledge gap concerning the interplay of critical factors influencing CEP. The findings provide insights for companies to enhance corporate environmental sustainability, ultimately contributing to broader global sustainability goals.

The study recommends future research to focus on validating the developed FCM and the strategies to improve CEP. The findings can be validated by integrating quantitative methods such as regression models, organizing workshops with focus groups, and conducting scenario and sensitivity analyses.