Mainstreaming Green Product Innovation- Why and How Companies Integrate Environmental Sustainability

8/12/2019 Mainstreaming Green Product Innovation- Why and How Companies Integrate Environmental Sustainability

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Mainstreaming Green Product Innovation:

Why and How Companies IntegrateEnvironmental SustainabilityRosa Maria Dangelico

Devashish Pujari

ABSTRACT. Green product innovation has been rec-ognized as one of the key factors to achieve growth,environmental sustainability, and a better quality of life.Understanding green product innovation as a result of interaction between innovation and sustainability hasbecome a strategic priority for theory and practice. Thisarticle investigates green product innovation by means of amultiple case study analysis of 12 small to medium sizemanufacturing companies based in Italy and Canada. First,we propose a conceptual framework that presents three keyenvironmental dimensions of green product innovationsuch as energy minimization, materials reduction, andpollution prevention as identified in the life cycle phases of products. Based on insights gained from in-depth inter-views, we discuss firms motivations to develop greenproducts, environmental policies and targets for products,

different dimensions of green product innovation, andchallenges faced during developing and marketing of greenproducts. Results from the study are then synthesized andintegrated in a toolbox that sheds light on various aspects of green product innovation and provides solutions to chal-lenges and risks that are faced by firms. Finally, implicationsfor managers, academia and public policy makers are dis-cussed.

KEY WORDS: environmental sustainability, greenproduct innovation, life cycle analysis, manufacturingrms, Italy, Canada, multiple case studies

Introduction

A large number of trade magazines and numerousmedia reports in the past few years have shown thatcompanies from disparate industries have launchedor are planning to launch new green products. Inrecent years, academic research on green productinnovation has also grown in interest (e.g., Chen,

2001 ; Chung and Tsai, 2007; Pujari et al., 2003,2004 ; Pujari, 2006; Rehfeld et al., 2007). In a recentsurvey on companies thinking on climate change,

McKinsey and Company ( 2008 ) nd that the greatestpercentage of executives surveyed consider climatechange strategically important, and about 60% take itinto account in developing and marketing newproducts. According to Datamonitor, companieshave so far launched 458 products that claim to besustainable, environmentally friendly, or eco-friendly, and this number is likely to touch 1570new green products launched this year (Greenbiz,2009 ). For example, Ford has developed soy-basedseat cushion foam, while SC Johnson uses a green listprocess to weed out restricted ingredients, and Lip-ton Tea recently announced an expansion of their sustainability program, pledging to source 100% of their tea from estates certied as sustainable. Thiskind of intent among companies suggests a new shiftin the environmental debate indicating that changetowards environmental value and social good is fos-tered by market-driven product innovation and newtechnologies rather than regulation alone (Berger et al., 2007).

Even thoughrecent trendsshow that greenproductinnovation is becoming mainstream among the

companies, there is still much confusion on whatconstitutes a green or sustainable product (Baumannet al., 2002; Berchicci and Bodewes, 2005; Ottman,1997 ; Peattie, 1995; Roy et al., 1996). In this article,we follow Ottman et al. ( 2006 ), who state thatalthough no consumer product has a zero impact onthe environment, in business the terms greenproduct or environmental product are used com-monly to describe those that strive to protect or enhance the natural environment by conserving

Journal of Business Ethics (2010) 95:471486 Springer 2010DOI 10.1007/s10551-010-0434-0


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energy and/or resources and reducing or eliminatinguse of toxic agents, pollution, and waste. This

denition highlights how different types of greenproducts focus on key environmental issues suchas energy, materials/resources, and pollution/toxic waste (Roy et al., 1996) as shown in a con-ceptual framework for green product innovation(see Figure 1).

As shown in Figure 1, green product innovationis a multi-faceted process wherein three key types of environmental focus material, energy, and pollu-tion are highlighted based on their major impacton the environment at different stages of the prod-ucts physical life cycle manufacturing process,product use, and disposal. It is important to note thatneither all products have a signicant environmentalfootprint on each stage of physical product life cyclenor does the footprint stem from all aspects (material,energy, and pollution) but almost all products havesignicant environmental impact in at least one of the stages. For example, a furniture companysenvironmental impact may be primarily on the for-ests (material) whereas washing machine manufac-turers main environmental impact occurs during

product usage (energy use, water use, and detergentuse). There are, of course, other high environmental

impact industries such automobile and oil whoseenvironmental footprint may be bigger as it coversall physical life cycle stages (manufacturing, productuse, and disposal). Introducing radical green inno-vation in any stage of products physical life cycle or addressing sustainability challenges across differentdimensions such as material selection, energy use, or pollution prevention can bring substantial productdifferentiation and competitiveness for these prod-ucts at the market place. However, the intent tointroduce innovation will require not only an en-hanced level of corporate environmental responsi-bility but also a sustained level of implementation of the rms environmental policies to put greenproduct ideas into practice and overcoming of challenges and risks.

A review of literature reveals that there is littleknowledge on why and how companies integrateenvironmental sustainability into new productdevelopment. The business climate is undergoingrapid change in terms of societal and environmentalexpectations from multiple stakeholders. Marketers

- Recycled products/packaging- Products/packaging made of

renewable materials- Recyclable products/packaging- Biodegradable products/packaging

- Energy eff iciency inproduct use

- Products usingrenewable energysources

- Energy eff iciency inproduction

- Use of r enewableenergy sources inproduction

Competitiveness

Responsibility

Legitimacy

GREEN

PRODUCT

INNOVATION

Energy

Material- Products reducing/

preventing pollution- Pollution

reduction/preventionin productionprocesses

Pollution

Manufacturing

Disposal

Use

Firmsenvironmental

policies

Figure 1. A conceptual framework for green product innovation.

472 Rosa Maria Dangelico and Devashish Pujari


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are facing increasing challenges to address sustain-ability issues in order to attract, satisfy, and retaincustomers. The size of green markets is increasingand is likely to get bigger in future. These changesand expectations make it essential for researchers toinvestigate green product innovation. New societalexpectations also make it imperative for rms tounderstand how to integrate sustainability issues intotheir product development so that the rms social,environmental, and economic goals can be achieved.Our quest for an in-depth insight into the reasons,approaches for and challenges in integrating envi-ronmental sustainability issues into product innova-tion is the key motivation for this study. To this aim,the article investigates in depth, 12 companies to nd

out why and how these companies in Italy andCanada are responding to environmental sustain-ability challenges and integrating them into their newproduct strategy and new product developmentprocess. In particular, we analyze: (i) different moti-vations inuencing companies to develop greenproducts; (ii) setting of environmental policies andtargets for products; (iii) different dimensions of greenproduct innovation (e.g., radical versus incremental,packaging, product life cycle stage, and environ-

mental performance); and (iv) challenges facedin developing and marketing green products. Thefollowing sections provide details on methodologyand a discussion of the main results. Finally, besidesdiscussing implications of the study, a toolbox isdeveloped to help understand the challenges andpossible solutions for integrating environmental sus-tainability in green product innovation.

Methodology

A qualitative approach was employed in this study toachieve theresearch aims of gaining deeper insights oncompanies green product innovation through per-

sonal interviews, company records, andpublisheddatasources (Eisenhardt, 1989; Patton, 1990; Yin, 1981,1989 ). Specically, an inductive multiple case studymethodology is employed (Yin, 2003) to cover con-textual or complex multivariate dimensions of thephenomenon-greening of new product innovation.

A series of in-depth, intensive interviews withexecutives and managers in 12 companies wasconducted. These companies are based in Italy andCanada and are small to medium size consumer and

TABLE I

Companies in the sample

Company, country Industrial sector Size (number of employees)

Market served Role of the interviewee

Company A, Italy Detergents 120 B2Ca, B2B Director of Quality Control

Company B, Italy Photovoltaic applications 14 B2C, B2B, B2G New product developmentExecutive

Company C, Italy Ink-jet systems and inks 14 B2C, B2B Project Manager Company D, Italy Glass tiles 12 B2B CEOCompany E, Italy Wooden pallets 80 B2B, B2G President & CEOCompany F, Italy Ecologic products or product

coming from fair trade

13 B2C, B2G Environmental/marketing

advisor Company H, Italy Recycled rubber products 16 B2C, B2B, B2G Director Company I, Italy Paper carrier bags 30 B2B CEOCompany L, Canada Solar integrated

roong system60 B2B VP of Sales & Market

DevelopmentCompany M, Canada Solar thermal providing

hot water/heat not electricity20 B2C Product Development

Engineer Company N, Canada Solar wall 8 B2B, B2G PresidentCompany O, Canada Bio-diesel 38 B2B VP of Business Development

& SalesaB2C = Business to Consumer; B2B = Business to Business; B2G = Business to Government.

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industrial manufacturing companies (see Table I).One of thereasons why wechose Canadian andItaliancompanies was to have an international perspectiveand to benet from our accessibility to companies inthese twocountries. Thechoice of companieswasalsobased on their commitment towards sustainability is-sues as evident from their winning environmentalawards or having environmentally-specic patents.To gain greater insights on the phenomenon, the unitof analysis in this study is green product innovationprojects (see Table II). We discussed issues relating toinnovativeness of green products companies havedeveloped, motivations to engage in green productinnovation, rm-level environmental product, toolscompanies have used to address sustainability issues,

measurement of environmental performances, andchallenges and risks they face. Even though weinvestigated sustainability issues at the rm level, thisanalysis was in the context of product development.Project level analysis in particular provided opportu-nities to investigate intricacies of the sustainabilitychallenges the product development teams face.Open-ended interviews were conducted by directvisits to companies, and clarications were soughtthrough e-mails and phone calls. Interviews on anaverage lasted for more than one hour thus coveringthe research issues comprehensively. The interviewswere then transcribed andcontent analyzedforwithincase and cross case analyses. Appropriate procedurewas undertaken in translating and back translatinginterviews in Italian language to ensure the accuracyand consistency of comments. For the purpose of datatriangulation, and to strengthen and verify the use of the interviewdata (Miles andHuberman, 1994 ; Seale,2000 ), other sources of information about the com-panies and the projects under study were also ana-lyzed, such as companies website content, companydocuments, patent ofce databases, environmental

innovation awards listings, internal company reports,as well as media reports on companies environmentalactivities.

Analysis and results

Firms motivation for green product development

Integrating environmental sustainability issues intobusiness strategy and greening the innovation

process are becoming a strategic opportunity for companies (e.g., Porter and Reinhardt, 2007). As aresult, the number of companies embracing theconcept of environmental sustainability into their business strategy, and developing environmentalstrategies is growing (Aragon-Correa and Sharma,2003 ; Dyllick and Hockerts, 2002; Sharma andVredenburg, 1998).

However, reasons that push rms to go greencan be very different (Bansal and Roth, 2000;Gonza lez-Benito and Gonza lez-Benito, 2006).Interviews with executives have allowed us to gainfurther understanding on the motivations thatinuence companies to go green and in particular to develop green products. One of the motivations is

to have compliance with regulations. During the lasttwo decades, a number of declarations and regula-tions for environmental protection have followedone another. These included the restriction onchlorouorocarbon (recommended by the MontrealProtocol of 1987), the restriction on CO 2 (re-commended by the Kyoto Protocol of 1997), theEuropean Community directives on the restrictionof the use of certain hazardous substances (RoHS)and on waste electronics and electrical equipment(WEEE) effective since 2006. The regulations con-tinue to determine growing impacts on industries,and compel companies to green their processes andproducts. However, environmental regulations donot represent only constraints for companies, ashighlighted by this executive: Regulations repre-sent for us constraints but also caution for avoidingrisks of activity breakdown, money losses or damageto the company image (Company A).

Discussions with case companies suggest thatcompliance with environmental regulations is alsoone of the means for risk minimization, revenue, andimage protection. Furthermore, regulations can even

become an opportunity for new business creation, ashighlighted by this executive: Some years ago theItalian government was thinking of enacting a lawforbidding the use of plastic bags, which are verypollutant. So the idea to create a company produc-ing low environmental impact bags was born(Company I).

Environmental sustainability imperative also rep-resents an opportunity to improve competitivenessin a winwin logic (Porter and van der Linde, 1995).In particular, the development of green products, by



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T A B L E I I

D e s c r i p t i o n o f g r e e n p r o d u c t i n n o v a t i o n s

C o m p a n y ,

c o u n t r y

P r o d u c t d e s c r i p t i o n ( s o u r c e : i n t e r v i e w s , c o m p a n y m a t e r i a l , w e b s i t e ,

m e d i a

, e t c . )

M a i n e n v i r o n -

m e n t a l f o c u s

C o m p a n y A

, I t a l y

I t i s a l a u n d r y d e t e r g e n t w i t h t h e E u r o p e a n o w e r e c o - l a b e l . A s s u c h , i

t h a s a r e d u c e d

i m p a c t o n t h e a q u a t i c e n v i r o n m e n t : i t d o e s n o t c o n t a i n d a n g e r o u s s u b s t a n c e s ,

i t h a s a

l i m i t e d e f f e c t o n t h e g r o w t h o f a l g a e i n w a t e r , a

n d i t i s l a r g e l y b i o d e g r a d a b l e

. M o r e o v e r , i t

u s e s l e s s p a c k a g i n g , i t c o n t a i n s i n f o r m a t i o n o n h o w t o w a s h e c o l o g i c a l l y a n d e c o n o m i c a l l y

,

a n d i t i s g u a r a n t e e d t o p e r f o r m a t l e a s t a s e f f e c t i v e l y a s c o n v e n t i o n a l d e t e r g e n t s

P o l l u t i o n

C o m p a n y B

, I t a l y

I t i s a l u m i n o u s s q u a r e t h a t l i g h t s g a r d e n s a n d p a t h w a y s u s i n g s o l a r e n e r g y ( i t i s e n d o w e d

w i t h a p h o t o v o l t a i c u n i t )

. T h e p r o d u c t i s m a d e o f L E D l a m p s ,

m o r e e n e r g y e f c i e n t a n d

l a s t i n g t h a n c o n v e n t i o n a l l a m p s

E n e r g y

C o m p a n y C

, I t a l y

I t i s a n e c o l o g i c a l i n k n o n - t o x i c , b i o d e g r a d a b l e

, a n d e a s i l y r e m o v a b l e f r o m t h e p a p e r . T h e

p r o d u c t p a c k a g i n g i s m a d e o f r e c y c l e d p a p e r a n d i s p r i n t e d w i t h t h e p r o d u c t i t s e l f

M a t e r i a l

C o m p a n y D

, I t a l y

I t i s a d e c o r a t i v e g l a s s t i l e r e a l i z e d w

i t h 8 0 % o f r e c y c l e d m a t e r i a l s ( p o s t - c o n s u m e r r e c y c l e d

m i r r o r s a n d p r e - c o n s u m e r r e c y c l e d

g l a s s ) .

P a c k a g i n g i s m a d e o f p o l y s t y r e n e a n d r e c y c l e d

b o a r d

M a t e r i a l

C o m p a n y E

, I t a l y

I t i s a n e n v i r o n m e n t a l l y s u s t a i n a b l e

w o o d e n p a l l e t . I t i s m a d e o f F S C o r P E F C c e r t i e d

w o o d . T h e p r o d u c t i o n p r o c e s s e s u s e e n e r g y c o m i n g f r o m r e n e w a b l e e n e r g y s o u r c e s . T h e

p r o d u c t i s t r a n s p o r t e d b y m e a n s o f

a n e f c i e n t l o g i s t i c s p l a t f o r m .

I t i s d e s i g n e d f o l l o w i n g

e c o - d e s i g n p r i n c i p l e s a n d a c r a d l e t o c r a d l e l o g i c

. I n f a c t , i

t c a n b e r e u s e d

( w i t h o r w i t h o u t

r e p a i r i n g ) ,

c o l l e c t e d ,

d i s a s s e m b l e d a n d c o m p o n e n t s c a n b e r e c y c l e d

M a t e r i a l

C o m p a n y F , I t a l y

I t i s a t o y m a d e o f c o r n s t a r c h a n d n a t u r a l c o l o r i n g s , a

n d i t i s c o m p l e t e l y b i o d e g r a d a b l e . I n

t h e d e s i g n p h a s e t h e e n v i r o n m e n t a l i m p a c t s d u r i n g t h e w h o l e l i f e c y c l e o f t h e p r o d u c t i s

a s s e s s e d i n t e r m s o f e n e r g y ,

e m i s s i o n s ,

a n d m a t e r i a l s c o n s u m p t i o n

M a t e r i a l

C o m p a n y H

, I t a l y

I t i s a o o r m a d e o f r u b b e r r e c y c l e d

f r o m t i r e s a n d c o v e r e d w i t h s y n t h e t i c g r a s s . A t t h e e n d

o f l i f e i t c a n b e r e c y c l e d

M a t e r i a l

C o m p a n y I , I t a l y

I t i s a c a r r i e r b a g m a d e o f r e c y c l e d p a p e r a n d p r i n t e d w i t h w a t e r - b a s e d i n k s

, w h i c h a r e n o t

p o l l u t i n g a n d a l l o w e a s i e r p a p e r r e c y c l i n g . P r o d u c t i o n p r o c e s s e s a r e c l e a n , a

n d i n p a r t i c u l a r

t h e r e i s a c l o s e d l o o p f o r w a t e r u s e

a n d p r o d u c t i o n w a s t e p a p e r i s c o l l e c t e d a n d r e c y c l e d

M a t e r i a l

C o m p a n y L , C a n a d a

I t i s a s o l a r p h o t o v o l t a i c i n t e g r a t e d

r o o n g s y s t e m

E n e r g y

C o m p a n y M

, C a n a d a

I t i s a s o l a r t h e r m a l p r o d u c t p r o d u c i n g h o t w a t e r o r h e a t .

I t i s g e n e r a l l y

c o m b i n e d w i t h

t r a d i t i o n a l s y s t e m s , a n d p r o v i d e s p r e - h e a t i n g

E n e r g y

C o m p a n y N

, C a n a d a

I t i s a s o l a r a i r h e a t i n g s y s t e m f o r c o m m e r c i a l a n d i n d u s t r i a l b u i l d i n g s

E n e r g y

C o m p a n y O

, C a n a d a

I t i s b i o d i e s e l f r o m v e g e t a b l e o i l s , s e e d o i l s , w a s t e a n i m a l f a t s ,

a n d r e c y c l e d c o o k i n g o i l s

E n e r g y



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improving rm reputation and image, is seen as ameans to enhance competitiveness, as opined by thisexecutive: The reduction of packaging materialsand of environmental risk is quantied and easilyrecognizable at the eyes of our main market, and soenvironmental innovation in products and packaginggives added value to our company (Company A).This position is further strengthened by the envi-ronmental/marketing advisor in company F whopointed out that the development of green productsrepresents a means to exploit the opportunities cre-ated by the growth of green markets: The marketfor green products is rapidly growing and surelyrepresents the most promising trend of the future.

Beyond compliance with regulations and com-

petitiveness, another important reason for companiesto develop green products is ecological responsibil-ity, deriving from the concerns that companies havefor social obligations and values. For example,company B and company L aim at increasing socialand environmental benet by making the use of renewable energy more widespread. In fact, theexecutive of company B stated: Our mission is toproduce solar energy products for a more widespreadand daily use, whereas the executive of company Lreported: Our job is to create renewable energysolutions that make solar power more affordable,more convenient and more available to anybodywho wants it we think solar should be for everybody. A similar position, even though notrelated to renewable energy solutions but to materialresources, is shown by the executive in company D,who said: The most important motivation thatpushes us to consider the environmental dimensionin new product development is to develop andcommunicate a new concept of recycle and reuse of daily used materials. These materials are transformedand moulded, in order to make waste, ugly and

useless, something nice and useful.This environmental responsibility in new productdevelopment often originates from an internalenvironmental orientation of the rm combinedwith potential to market success, as highlighted bythe environmental/marketing advisor in company F:Our company is totally committed towards therespect for the natural environment The greatestdifference from conventional new product devel-opment process is that we dont start from theeconomic evaluation, but we believe that a product

with the features we give it has great possibilities tosucceed in the market. This position is further strengthened by the executive in Company H, whostated: The idea for this new product was born fromthe companys internal sensitivity to environmentalissues, rather than from customers requirements. Inother cases, the main driver of green productdevelopment is the personal commitment of topmanagement, as pointed out by the President andCEO in company E: The interest towards envi-ronmental sustainability starts from me and involvesall the companys areas. From the analysis of casestudies, it has emerged that the development of greenproducts can be driven by different motivations thatsometimes can co-exist within the company. For

example, both compliance and competitiveness arethe main drivers for green product development incompany E, whereas both competitiveness andenvironmental responsibility are the main drivers for company F. It is important to note that simply havingmotivations to go green is not enough. The rmswill have to set policies and targets in place to moveforward on green product innovation. Taking theseresults together suggests that environmental regula-tions represent opportunities beyond simple com-pliance. Specically, they offer opportunities for newbusiness creation, waste reduction, and customer satisfaction.

Firms environmental policies for product development

At corporate level, it is important to understand howtargets andpoliciesforgreenproduct development areset and how they are communicated within thecompany. As environmental sustainability issuescontinuously evolve, for example in terms of regu-lations, new environmental technologies, and low-

environmental impact materials, we nd thatcompanies see it as important to acquire knowledgefrom a variety of actors, as opined by this executive:The environmental targets and policies for productsare set following the guidelines of European Unionand paying a greater attention to the scientic world,society, companies, universities, and other organiza-tions (Company E).

To guide the operational denition of environ-mental targets and policies and to internally com-municate them to all employees, companies develop



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sustainability plans or ethical codes, as pointed out bythese interviewees: We aim at producing innovativeand high quality products, and this means for usdeveloping products with low environmental impact.The guiding document for the environmental targetsand policies is the companys ethical code (Com-pany C). These documents provide directions for green product development, as highlighted by theexecutive of company A: There is a company sus-tainability plan, which provides general directions for product development and reduction of their envi-ronmental impact during the whole life cycle(Company A). Our further investigations into ethicalcodes and sustainability plans suggest that theseinternal company documents include sustainability

criteria that were put in place as a result of a study of production and life-cycle analysis of products. Inparticular, cross-point activities in social/environ-mental and economic/environmental elds areidentied such as selection/warehousing of compo-nents, workplace environment/product manufac-turing cycle, and product development (risks for thehealth and safety of the consumer and reduction inpackaging materials and/or optimization of packag-ing to provide logistical advantages). These resultsshow that formalizing environmental policies andtargets for products into documents such as ethicalcodes or sustainability plans is important to guidecompanies in the development of green products.

Radical versus incremental green product innovation

For a deeper understanding on the differences be-tween radical and incremental green product inno-vations, our case studies included both types of greeninnovations (see Table III). Literature suggests thatradical green product innovations include the use of new technologies (e.g., hybrid or hydrogen vehi-cles), or the replacement of one critical componentwith a completely new one that signicantly reducesthe overall environmental impact of the product(e.g., an insecticide, which is based on a completelynew, natural, or eco-friendly ingredient). Incre-mental green innovations include the increasing useof existing key dimension of green product such as

eco-efciency (e.g., incremental improvement of fuel efciency in vehicles), the substitution of con-ventional materials with materials with a lower environmental impact (e.g., replacement of virginmaterials with recycled ones), or the design of recyclable products (e.g., designed for disassembly)(e.g., Hellstro m, 2007).

As described below, green product innovationsare characterized as radical if it is new to the marketor is based on a radically new technology, and/or hasbeen patented by the rm. As one project manager of a company that developed a non-toxic and bio-degradable ink that is easily removable from paper said, It is a radically new product- it is the rstecologic ink. At the present, nothing similar exists inthe market (Company C). Another interesting casein our study was a company L that has developed asolar roong membrane that is a unique solutioncombining power generation with a very light-weight material. Company L executives consider this products technology to be extremely innovativeand new. Similarly, in the case of company O pro-ducing biodiesel, the technology used is radically

new and is patented.On the other hand, our analysis shows thatincremental green product innovations are charac-terized by small or incremental improvements of previous product versions or their reliance onexisting technologies with minor changes, not dis-similar to the features of their incremental conven-tional products (for example in Companies D andN). More specically, the manager in company Hhighlights, Synthetic grass ooring had alreadyexisted, but in the considered product there is an

TABLE III

Type of innovation in green products

Company Type of innovation

Company A, Italy Incremental

Company B, Italy IncrementalCompany C, Italy RadicalCompany D, Italy IncrementalCompany E, Italy IncrementalCompany F, Italy IncrementalCompany H, Italy IncrementalCompany I, Italy IncrementalCompany L, Canada RadicalCompany M, Canada IncrementalCompany N, Canada IncrementalCompany O, Canada Radical



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announced a new goal to have 100% recyclable or reusable cups,

1whereas HP has cut packaging on a

recent product by 97%.2

Even in emerging econo-mies, such as China, where new packaging ruleshave come came into effect, government directionsencourage the development of sustainable packag-ing.

3During our interviews with companies, it

emerged that environmental design of packaging isfast becoming an integral part of green productinnovation and greater attention is devoted to greenpackaging when developing green products. For example, one executive (Company D) pointed outthe importance of R&D in packaging while another (Company A) stated, The research for reducing andoptimizing packaging for our company is one of the

most important areas of incremental and radicalinnovation development we have received awardsfor concept and production of sustainable packag-ing. Other initiatives in sustainable packaging in-clude the use of recycled materials (company C), or natural and biodegradable materials, such as bio-polymers based on cornstarch (Company F).

Products environmental performance

The reduction of environmental impact of productsthroughout their life cycle is fundamental to greenproduct innovation. However, assessing the envi-ronmental impact of a product in a scientic andsystemic way is a difcult and complex process. Theinterviews we did for this study provided interestinginsights on how companies measure environmentalperformance of products. In some cases, the mea-surement of environmental performance of greenproducts takes the form of a comparison with con-ventional products. For example, using a life cycleassessment software, company C (that develops

inks), measures and compares environmental impactduring the whole life cycle of its green product(ecological ink) with conventional products whichhelps them make a credible claim of loweringenvironmental impact in green products by 30%.Similarly, the respondent in company O alsoemphasized the uses and benets of using life cycleassessment study that compared crude oil and dif-ferent types of bio-diesel which allowed them tomake credible claims of producing bio-diesel of highest environmental performance.

It also emerged in our study that in certainproduct/service categories such as energy-basedproducts, environmental impact assessment is donein a single stage but has still been very useful for bothmanufacturers and customers. For energy-basedproducts, the outcome of the assessment generally isexpressed in terms of energy saved or pollutionavoided during the usage stage. For example, theproduct development engineer in company M says,Thanks to the use of software it is very easy tocalculate kilowatt-hours or cubic meters or litres of propane and that in turns allows us to do a CO 2calculation you can reduce typically for a homebetween 1 and 1.5 tones of CO 2 per year. Thisissue was also highlighted by an executive in com-

pany N, who says, We use computer software thatcalculates the energy savings using the local weather data We tell people it will save this amount of energy and you recover your cost over so many years. Interestingly, for material-driven productstoo, in some cases, environmental performance canbe expressed in one single stage, for example, aspercentage of recycled materials used during productdevelopment process, as highlighted by the execu-tive in company D: The percentage of recycledmaterials inside the resin may vary depending on thematerial used. For example, using waste glass bottlesor mirrors, recycled content ranges between 60%and 80%. If we use recycled electric circuits, recy-cled contents generally range between 50% and 60%,even though percentage can rise to 80% if we useglass fragments as ller. Two key insights come tolight from these discussions. First, life cycle assess-ment is not only a useful tool but it is now usedmore frequently by companies. Secondly, eventhough life cycle assessments purpose is to evaluateenvironmental impact during each stage of thephysical life cycle of the products, in some product

categories, the LCA tool is used for only one or twostages, the ones which have the potential of causinggreatest environmental impact.

Challenges in green product innovation

Companies that develop and market innovativegreen products seem to face several challenges butempirical studies that report on these challenges arescant (Berchicci and Bodewes, 2005; Hall and



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Vredenburg, 2003; Ottman et al., 2006). To en-hance our understanding on the key challengescompanies face while developing green products, wegained some interesting insights during our discus-sions with companies in this study. First of all, itemerged that a key challenge in green productinnovation is to integrate environmental and con-ventional product attributes (e.g., avoiding trade-off between product quality and green attributes). An-other challenge is selling at a competitive price, aspointed out by a project manager in company C: Inthe sectors such as fuels, automotive, paper, ink,leather, etc. green solutions already exist, but their price exclude them from any possible preferencefrom industrial and nal consumers. One of the

reasons why pace of green product introduction isstill slow in several industries is not the lack of adequate technologies, but high development andmanufacturing costs that make their price non-competitive. In several product categories, withoutgovernment subsidies to companies or governmentrebate to customers, companies nd it difcult tocompete with brands and companies who have notinvested in green technologies, as highlighted byseveral executives in our study. For example, theproduct development engineer in company M elab-orates, Economics is another challenge We are at adisadvantage when comparing price to price withelectricity and natural gas We are not given anygrants Our customers have to pay taxes for savingenergy, I mean it is just not a level playing eld.Besides price, other important attributes that must beintegrated with environmental sustainability areproduct quality, esthetics, and credibility of claims.

Another key challenge that is faced by companiesthat develop and market green products is the lack of customers awareness of green products benets aspointed out by an executive (company M), who

concedes, Many people arent even aware massawareness is not present in the market awareness isone of the key challenges. Another executive incompany E highlights the difculty of sometimesleveraging products green attributes for competitiveadvantage as he says, The customers dont perceivethe added value of product sustainability. The mar-ket isnt aware of eco-design advantages, such aswaste reduction. The greatest difculty is to makethe environmental variable as a source of competi-tive advantage. However, lack of customers

awareness can be addressed by means of eco-labelingor third party certication which makes greenproducts clearly recognizable and creates credibilityof the green claims. However, some product cate-gories still do not have eco-labels as was evident inthe frustration of one of the executives (CompanyM) we had discussion with as he says, There isnt aneco-label for this type of product: it doesnt consumeenergy, it generates energy. Another challenge thatwas unraveled in our discussion related to theorganizational issues, notably the management of information ows and coordination of resourceswithin and outside of the product development teamparticularly when companies seek to get third partycertication or eco-label. Eco-labeling process is

sometimes tedious and requires managerial skills todeal with multiple stakeholders. This process is likelyto be more seamless when the role of environmentalspecialists in the product design and product devel-opment process becomes more prevalent.

Discussion

It is evident from our study that several motivationsdrive companies to develop green products. Our re-sults also show that environmental regulations dont just represent constraints or regulatory compliance,but can also offer opportunities for risk minimization,preservation of revenues and reputation, or for newbusiness creation. The literature highlights severalbenets that can arise from integrating environmentalsustainability issues into product development andbusiness operations: increased efciency in the use of resources, return on investment, increased sales,development of new markets, improved corporateimage, product differentiation, and enhanced com-petitive advantage (Fraj-Andres et al., 2008; Miles

and Covin, 2000; Miles and Munilla, 1993; Pujariet al., 2003; Shrivastava, 1995; York, 2009). For example, with a particular focus on green innovation,Chen et al.( 2006 ) found that the performance of bothgreen product and green process innovation is posi-tivelycorrelated to competitive advantage. In our casestudies we found that the expectation of green marketgrowth and increasing prots (such as in the case of company F) or the improvement of reputation andcorporate image (such as in the case of company A) areimportant drivers of green product development.



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Another motivation, common to several cases (such asin the case of companies B, L, and D), is ecologicalresponsibility, deriving from the concerns that com-panies have for social obligations and values, and thatoften originates from an internal environmental ori-entation of the company or from the personal com-mitment of the top management. An important resultis that different types of motivations often co-existwithin the same company.

However, engaging in developing and marketingof green products is not without its challenges andrisks in certain situations. One of the key risks of developing and marketing green products is anincreased public scrutiny by stakeholders, particularlythe environmental groups. Some companies may not

nd this situation comfortable. Developing customer awareness about green products is not difcult butcustomer attitude and customer behavior in buyingand paying more for green products is not the same.Some product categories are more price sensitivethan others when it comes to how much more cus-tomers want to pay for the green products. Further,several new green ventures and companies arefounded on the expectations of continuing govern-ment subsidies which may not last, leaving thecompanies very vulnerable. Finally, betting on greenproduct technologies that may achieve technical andcommercial success is not without signicant risks.Only some companies with deep pockets can affordto invest in multiple technologies but it is costly.

With regards to setting environmental policies andtargets for the development of new products, com-panies acquire knowledge from a variety of sources.These environmental policies and targets are thenformally dened and communicated by means of sustainability plans or ethical codes, which providegeneral directions for the reduction of productsenvironmental impact during the whole life cycle.

Having investigated both radically new green prod-ucts andincremental newgreen products in this study,we have highlighted how green product innovative-ness (new to the world or new features with existingtechnology) can play an important role in addressingthe environmental sustainability challenges. Sinceradical product innovation brings signicant changessuch as making old products obsolete, and permittingentire markets to emerge, transform, or disappear (Kaplan, 1999; Van de Ven et al., 1999), radical greenproducts could greatly contribute to the achievement

of the environmental sustainability objectives. This,however, requires a systemic change in both infra-structure and consumers behavior.

Another important aspect of green productinnovation that is emphasized in this study is mea-suring products environmental impact or perfor-mance which is rather a complex process. However,companies have started to embrace products phys-ical life cycle perspective in their product manage-ment operations. Companies in this study do believein cradle to grave/cradle philosophy, and use lifecycle analysis tool to assess environmental impact of the products at each stage of the products life cycleor at most impactful stages. One of the areas thathave received an increased attention is green pack-

aging (Kassaye and Verma, 1992; Sterling, 2008).Our interviews have shown that material reductionin packaging, packaging minimization and optimi-zation, and the use of recycled or biodegradablematerials are the main green initiatives that compa-nies have undertaken to make product packagingsustainable. In future, packaging is likely to facemore stringent regulations as well as greater scrutinyfrom the external stakeholders.

Finally, it is important to identify challenges thatcompanies will have to overcome to achieve com-mercial success for green products. To achieveenvironmental sustainability, commercial or marketsuccess of green products at a mass scale is vital. Unlessan increasing number of green products provideviable choices for customers and wrestle away marketshare from conventional products, developing greenproducts will not have much impact. It is importantto note that green products are unlikely to be able tosustain long-term success in the market unless theycan demonstrate credible environmental performancewithout compromising functional benets of theproduct. However, sometimes environmental attri-

butes are often seen by companies as distinct frommore traditional ones (Berchicci and Bodewes,2005 ). Lack of capability in some companies to rec-ognize that environmental attributes should be inte-grated with desired consumer value may lead toproduct failures (Ottman et al., 2006). From our interviews, it emerged that companies were moreaware of the importance of integrating environmentaland conventional product attributes, particularlyquality and pricing which is an encouraging sign.Another challenge the companies face is a lack of



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T A B L E I V

A t o o l b o x f o r g r e e n p r o d u c t i n n o v a t i o n

D i m

e n s i o n s

C h a l l e n g e s

U s e f u l a c t i o n s / a c t i v i t i e s

U s e f u l t o o l s

S t r a t e g y

E n v i r o n m e n t a l p o l i c i e s

S e t t i n g a t t a i n a b l e e n v i r o n -

m e n t a l t a r g e t s

A v o i d i n g t r a d e - o f f b e t w e e n

p r o d u c t q u a l i t y a n d e n v i r o n -

m e n t a l b e n e t s

E m p l o y e e e n g a g e m e n t

G a t h e r i n g i n f o r m a t i o n a n d

k n o w l e d g e f r o m

p o l i c y m a k -

e r s , t h e s c i e n t i c w o r l d

,

s o c i e t y , u n i v e r s i t i e s ,

o t h e r

c o m p a n i e s c r e a t i n g a s u s t a i n -

a b i l i t y c u l t u r e w

i t h i n t h e

o r g a n i z a t i o n

B u i l d i n c e n t i v e s / a w a r d s f o r

e m p l o y e e e n g a g e m e n t

E t h i c a l c o d e / s u s t a i n a b i l i t y

p l a n s p e c i f y i n g r m s e n v i -

r o n m e n t a l t a r g e t s a n d p o l i c i e s

M i s s i o n s t a t e m e n t

P r o c e s s / d e s i g n

E n e r g y - b a s e d p r o d u c t s

A l t e r n a t i v e e n e r g y p l a t f o r m

d e v e l o p m e n t

C o s t o f d e v e l o p m e n t

E n e r g y e f c i e n c y o f t h e

p r o d u c t i n u s e

P r o d u c t s u s i n g r e n e w a b l e e n -

e r g y s o u r c e s

E c o - d e s i g n g u i d e l i n e s

E x t r a n e t s f o r g r e e n s u p p l i e r s

n e t w o r k s

M a t e r i a l - d r i v e n p r o d u c t s

G l o b a l s o u r c e s

T r a c k i n g o f e n v i r o n m e n t a l

c r e d e n t i a l s o f s u p p l i e r s

A v a i l a b i l i t y o f

s u s t a i n a b l e

m a t e r i a l s

R e d u c t i o n o f s i z e a n d w e i g h t

U s e o f b i o d e g r a d a b l e m a t e r i a l s

U s e o f r e n e w a b l e m a t e r i a l s

U s e o f r e c y c l e d

m a t e r i a l s

U s e o f r e c y c l a b l e m a t e r i a l s


E x t r a n e t s f o r g r e e n s u p p l i e r s

n e t w o r k s

S u p p l i e r e n v i r o n m e n t a l a u d i t

P o l l u t i o n - p r e v e n t i o n

p r o d u c t s

T e c h n o l o g y d e v e l o p m e n t

P o l l u t i o n r e d u c t i o n

P o l l u t i o n p r e v e n t i o n


P a c k a g i n g

S o u r c i n g o f m a t e r i a l s

A v a i l a b i l i t y o f

s u s t a i n a b l e

m a t e r i a l

I n f r a s t r u c t u r e / n e t w o r k f o r

r e c y c l i n g

R e d u c t i o n o f s i z e a n d w e i g h t

B i o d e g r a d a b l e

R e c y c l e d

R e c y c l a b l e


I n d u s t r y a s s o c i a t i o n n e t w o r k s



13/17

T A B L E I V

c o n t i n u e d

D i m e n s i o n s

C h a l l e n g e s

U s e f u l a c t i o n s / a c t i v i t i e s

U s e f u l t o o l s

P e r f o r m a n c e

E n v i r o n m e n t a l p e r f o r m a n c e

o f p r o d u c t s

F o c u s i n g o n s i n g l e l i f e c y c l e

p h a s e s

N o t m a n y r m s i n a s a m e

i n d u s t r y d i s p l a y

e n v i r o n m e n -

t a l p e r f o r m a n c e o f t h e i r

p r o d u c t s

A d o p t i o n o f a l i f e c y c l e p e r -

s p e c t i v e

L C A s o f t w a r e s u i t e s

R e g u l a t i o n s m a k i n g i t m a n -

d a t o r y t o d i s p l a y e n v i r o n -

m e n t a l p e r f o r m a n c e o f

p r o d u c t s

E c o l a b e l s

M a r k e t s u c c e s s o f

g r e e n p r o d u c t s

L a c k o f c u s t o m e r s

a w a r e n e s s

H i g h l i g h t i n g t h e b e n e t s o f

g r e e n p r o d u c t s t o t h e e n v i -

r o n m e n t ( a s s o c i a t i n g a g r e e n

m e s s a g e t o t h e p r o d u c t )

E s t a b l i s h i n g c r e d i b i l i t y

t h r o u g h t h i r d p a r t y c e r t i c a -

t i o n

A b s e n c e o f e c o - l a b e l s f o r

c e r t a i n c a t e g o r i e s o f g r e e n

p r o d u c t s ( e

. g . p

r o d u c t s r e l a t e d

t o r e n e w a b l e e n e r g y s o u r c e s )

E c o l a b e l s

C r e d i b l e g r e e n m a r k e t i n g

E x t e n s i o n o f e c o l a b e l s t o

p r o d u c t c a t e g o r i e s

P r i c e n o t c o m p e t i t i v e w i t h

c o n v e n t i o n a l o f f e r i n g s

P e r c e i v e d o r r e a l l o n g p a y -

b a c k

H i g h l i g h t i n g t h e b e n e t s o f

g r e e n p r o d u c t s t o c u s t o m e r s

w a l l e t i n t h e w h o l e l i f e c y c l e

S o f t w a r e s h o w i n g e n e r g y

s a v i n g s i n t h e l i f e c y c l e

( f o r e n e r g y - b a s e d

p r o d u c t s )

G o v e r n m e n t i n c e n t i v e s

L a c k o f i n t e g r a t i o n o f p r o d u c t

e n v i r o n m e n t a l f e a t u r e s w i t h

i t s f u n c t i o n a l a t t r i b u t e s

M o r e c r o s s - f u n c t i o n a l c o l l a b -

o r a t i o n i n p r o d u c t d e v e l o p -

m e n t

E n v i r o n m e n t a l i n t r a n e t



14/17

awareness by customers, who are often not willing topay a premium price for green product attributes.Sometimes, customers awareness can be stimulatedby means of eco-labels, which make green productsclearly recognizable for customers, but creatingcredibility through eco-labels or third party certi-cation will require stringent, scientic, and systematicinternal processes to integrate and measure productsenvironmental impact at each life cycle stage. In thisarticle, we have created a toolbox (see Table IV)which identies key elements that are integral part of green product innovationgreen product strategy,design/process, and performance. Several dimensionsand useful activities for each of these elements arehighlighted. This toolbox also identies risks and

challenges associated with developing green productsas well as useful tools and solutions that will be helpfulfor managers to mitigate these risks.

Conclusions and implications

This article investigated green product innovationprojects in companies that have pursued the path to-wards environmental sustainability. By using a quali-tative methodology, the article provides insights onmulti-faceted nature of green product innovationprocess involving both micro and macro environ-mental issues. This study advances our understandingon the green product development process, innova-tiveness of green products (radical versus incremental),and life cycle analysis as a tool for measuring environ-mental impact at each of stage of green products.

There are several implications that can be drawnfrom this study. This knowledge can help develop atheoretical framework to engage in future studies.First, this article enhances our knowledge on why andhow companies integrate environmental sustainabil-

ity into product development, explaining differenttypes and dimensions of green products. This studyprovides preliminary evidence that different types of green products could require different approaches for integrating environmental sustainability. Futureresearchers can focus on investigating distinctive ap-proaches and practices of green product innovation,by analysing innovativeness of green products, such asradical or incremental, and different types of greenproducts such as material-driven, energy-based, or green products based on pollution-prevention.

Managers will be able to appreciate benets as wellas challenges and risks of engaging in green productinnovation. Secondly, the study also provides possi-ble solutions to mitigate these challenges and risks asshown in the toolbox. Thirdly, the study emphasizesthe role of public policy that can play an active role instimulating the demand for green products throughsubsidies and consumer rebate for the new emerginggreen markets, especially alternative energy markets.Finally, the article provides useful knowledge withregards to the use of life cycle assessment and envi-ronmental performance measurement which shouldspur more detailed studies in future.

Future studies may also look at green productprograms in companies rather than focusing on

individual green projects. A deeper understanding of green product portfolio management will further enhance our understanding of how companies areinvesting in green product technologies platforms tobring new green products to markets. Future studiesshouldalso investigate the impact of the size andscopeof investments in green product technologies and thebreadth of green product portfolio on rms overallenvironmental impact, providing a more integrativeapproach towards environmental sustainability.

Notes

1http://www.starbucks.com/SHAREDPLANET/envi

ronmentalInternal.aspx?story=greenerCups (last accessedon October 2009).2

http://h71036.www7.hp.com/hho/cache/605859-0-0-225-121.html (last accessed on October 2009).3

http://sustainablebrandsinternational.com/content/column/design/new_packaging_rules_in_china (last ac-cessed on October 2009).

Acknowledgments

Dr. Ashish Pujari gratefully acknowledges the support of Social Sciences and Humanities Research Grant (GrantNo. 410-2005-1952) for conducting this research.

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Rosa Maria DangelicoDepartment of Mechanical and Management Engineering,

Politecnico di Bari,Bari, Italy

E-mail: [email protected]

Devashish Pujari DeGroote School of Business,McMaster University,

1280 Main Street West, Hamilton,ON L8S 4M4, Canada

E-mail: [email protected]



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