the influence of green marketing strategies towards
TRANSCRIPT
THE INFLUENCE OF GREEN MARKETING STRATEGIES
TOWARDS ECONOMIC SUSTAINABILITY
By:
Pramayassya Amero
107081100070
DEPARTEMENT OF MANAGEMENT
INTERNATIONAL CLASS PROGRAM
FACULTY OF ECONOMICS AND BUSINESS
SYARIF HIDAYATULLAH STATE ISLAMIC UNIVERSITY
JAKARTA
1432 AH/2011
THE INFLUENCE OF GREEN MARKETING STRATEGIES
TOWARDS ECONOMIC SUSTAINABILITY
Undergraduate Thesis
Submitted to Faculty of Economics and Business
as Partial Requirement for Acquiring Bachelor Degree of Economics
By:
Pramayassya Amero
107081100070
DEPARTMENT OF MANAGEMENT
INTERNATIONAL CLASS PROGRAM
FACULTY OF ECONOMICS AND BUSINESS
SYARIF HIDAYATULLAH STATE ISLAMIC UNIVERSITY
JAKARTA
1432 AH/2011
Curriculum Vitae
Name
Nick Name
:
:
Pramayassya Amero
Yassa Address : Perumahan Bumi Sani Permai L4 No. 26, 006/014,
Setia Mekar, Tambun Selatan, Bekasi 17510
Handphone : +6285711536823
E- mail : [email protected]
Formal Education :
Education Name of School Year
University : Universiti Utara Malaysia,
Bachelor of International Business Management (Hons.) (CGPA: 3.55)
(Double Degree Program)
Universitas Islam Negeri Syarif Hidayatullah Jakarta Sarjana Ekonomi (CGPA: 3.81)
(Double Degree Program)
2009 – 2011
2007 – 2009
Senior High School : Sekolah Menengah Atas Negeri 2, Bekasi, Indonesia
2004 – 2007
Junior High School : Sekolah Menengah Pertama Negeri 1, Bekasi, Indonesia
2001 – 2004
Elementary School : Sekolah Dasar Aren Jaya 18, Bekasi, Indonesia
1995 – 2001
Skill Proficiency:
Language Skill
> English Competent in Speaking and Writing
> Malay Competent in Speaking and Writing
> Indonesian Competent in Speaking and Writing
Personal Detail :
Computer User Skill
> Internet User Skill
> Windows PC User Skill
> Microsoft Windows Application (Microsoft Word, PowerPoint, Excel)
A Affiliation:Attributes:t Attriributes:Attributes:
Dean Awards in semester 2 in Universiti Utara Malaysia (GPA: 3.54)
Winner of Debate Competition in Faculty of Economics and Social Sciences UIN
Syarif Hidayatullah Jakarta (2008)
Runner-up SIFE Exposition 2010 in Universiti Utara Malaysia (August 2010)
Attributes:
Honest, have a good personality, and friendly
Good leadership
Responsible
Ability to adapt to different environments
Hard working
Willing to learn
Motivational and energetic
Able to work independently
Able to change
OSIS SMAN 2 Bekasi (2nd Vice Chairman, 2005-2006)
English Club SMAN 2 Bekasi (2nd Vice Chairman, 2005-2006)
‘Galacticoz’ Inter-School Multi-Tournaments SMAN 2 Bekasi (Chief, 2006)
Achievements:
Affiliation:
‘Hyzteria’ School Anniversary SMAN 2 Bekasi (Chief, 2006)
Community of People against Corruption UIN Syarif Hidayatullah Jakarta (Chief,
October 2008 – April 2009)
Corruption Preventing Alliance UIN Syarif Hidayatullah Jakarta (Vice Chief,
April 2009 – October 2009)
Member of English Debating Language Society UUM (2010)
Indonesian Students’ Association (PPI), Universiti Utara Malaysia (Member,
2009 – 2010)
Basketball Club of Indonesian Students Association, Universiti Utara Malaysia
(2009 – 2010)
Towards Palestinian Statehood and Peace in the Middle East, addressed by
President of Palestine, Mahmoud Abbas (October 23, 2007)
‘Kenaikan BBM dan Implikasinya terhadap Bangsa dan Negara’, UIN Syarif
Hidayatullah Jakarta (June 10, 2008)
‘Kupas Tuntas Kontroversi NAMRU: Kedaulatan RI dalam Ancaman’, UIN
Syarif Hidayatullah Jakarta (September 11, 2008)
Multiculturalism in Religion, Democracy, and Modernization’, held by UIN-
McGill Canadian Resource Centre (December 4, 2008)
Business in Canada, Lesson Learned from Canadian Company to Apply CSR,
addressed by Senior Trade Commissioner Canadian Embassy (December 9, 2008)
MarkPlus Conference 2009: New Wave Marketing (December 11, 2008)
Introduction to The European Union & European Union’s Trade Policy, held by
The Delegation of the European Commission (2008)
Multiculturalism in the US, addressed by US Embassy representative (2008)
Religion in the Contemporary World, addressed by Amien Rais (February 5,
2009)
Innovation in Entrepreneurship Seminar, Universiti Utara Malaysia (August
2010)
Conference Participation:
Company visit to P.T. Indosat Tbk. Jakarta (2008)
Study visit to Australian Embassy in Kuningan, Jakarta (2008)
Study visit to European Union Commission in Jakarta (2008)
Training of Trainer Education of Anticorruption held by KPK in UIN Syarif
Hidayatullah Jakarta (September 2008)
Steering committee in Education for Anticorruption in SMA 46 Jakarta, SMA 86
Jakarta, Madrasah Pembangunan UIN Jakarta (June 2009)
Participant in Launching of International Students Affairs & Racial Integration
Bureau “Creating World Class Manager” of Sime Darby Residential Hall UUM
(July 2009)
Participant and delegation of Indonesian Student Association Basketball Team in
PORSENI UUM (August 2009)
Steering committee in Education for Anticorruption in SMA 47 Jakarta and SMA
2 Tangerang Selatan (December 2009)
Participant in Cultural Night Tradewinds Residential Hall UUM (August 2009)
Participant in “Pencegahan Kanser” Workshop (February 2010)
Participant and delegation of UUM in “National Novice Debating Championship”
held by Universiti Teknologi MARA (February 2010)
Committee in Parenting and Children Education of Anticorruption held by
Corruption Preventing Alliance (May 2010)
Activity bureau in Indonesian Student Orientation (July 2010)
Participant in Protocol and Etiquette Course held by UUM (August
2010)Participant in “Every Things about Photoshop CS 4” Workshop (August
2010)
Participant in C.U.T.E Project AIESEC 2010 (August 2010)
Participant in SIFE Exposition 2010 held by SIFE UUM (2010)
Participant in 1 Malaysia Innovation Tournament 2010, held by Alpha Catalyst
Consulting (August 2010)
Co-Curricular Activities:
R&D Serindit Assistant Computer Lab July 2010 - November 2010
UUM Sdn. Bhd.
Bank Indonesia Internship December 2010 - April 2011
UIN Jakarta Assistant Lecturer October 2011 - present
Place and Date of Birth
Nationality
:
:
Tanjung Pinang, May 9, 1989
Indonesian
Religion : Moslem Sex : Male
Marital Status
Interests/ Hobbies
:
:
Single
Writing Reading Travelling Playing football Green and sustainability issues
Identity :
Working Experience:
i
ABSTRACT
Marketing literature contributes different and inconsistent results in analyzing
social responsibility or environmental strategy with financial performance. Thus, this research tries to investigate the relationship of green marketing strategies and economic sustainability. This research comprised several phases, including the development and comparison of green marketing concept, decision to use the appropriate measurement for green marketing strategy, and a study of the influence of green marketing strategies on economic sustainability. This research employs Greenpeace's quarterly Guide to Greener Electronics from version eight (June 2008) to fourteen (January 2010) and accounts eighty four samples. The statistics process involves classical assumption test and regression analysis to validate hypotheses. The study indicates green marketing strategies are associated with economic sustainability, specifically, product strategy has positive significant influence towards stock price; production strategy has negative significant influence towards stock price; distribution/market strategy has negative significant influence towards stock price; and promotion strategy has positive significant influence towards stock price.
Keywords: Green Marketing Strategies, Economics Sustainability, Guide to Greener Electronics
ii
ABSTRAK
Literatur pemasaran menyumbangkan hasil yang berbeda dan inkonsisten
dalam menganalisis tanggung jawab sosial maupun strategi lingkungan terhadap kinerja keuangan. Oleh karenanya, penelitian ini bertujuan untuk menginvestigasi hubungan antara strategi pemasaran hijau dan ekonomi berkelanjutam. Penelitian ini terdiri dai beberapa fase, termasuk pengembangan dan perbandingan konsep pemasaran hijau, keputusan untuk menggunakan ukuran yang tepat bagi strategi pemasaran hijau, dan sebuah kajian pengaruh strategi-strategi pemasran hijau terhadap ekonomi yang berkelanjutan. Penelitian ini menggunakan publikasi triwulanan Greenpeace, yakni Guide to Greener Electronics dari versi kedelapan (Juni 2008) sampai versi keempatbelas (Januari 2010) dan menghasilkan delapan puluh empat sampel. Proses statistik dalam studi ini melingkupi uji asumsi klasik dan analisis regresi yang digunakan untuk memvalidasi hipotesis-hipotesis. Kajian ini menyatakan bahwa strategi pemasaran hijau berhubungan dengan ekonomi yang berkelanjutan, khususnya, strategi produk berpegaruh positif terhadap harga saham; strategi produksi berpengaruh negatif terhadap harga saham; strategi distribusi/pasar berpengaruh negatif terhadap harga saham; dan strategi promosi berpengaruh positif terhadap saham. Kata kunci: Strategi Pemasaran Hijau, Ekonomi Berkelanjutan, Guide to Greener Electronics
iii
PREFACE
Bismillaahirrahmaanirrahiim
Assalamu’alaikum Wr.Wb
First and foremost, I would like to thank to Allah Subhana Wa Ta’ala for
giving me a direction and a couple of good health and mind, so that I could finish this
thesis. This research is entitled “The Influence of Green Marketing Strategies towards
Economic Sustainability”. First, this research aims to fulfill the prerequisite for
achieving Bachelor Degree of Economics in Faculty of Economics and Business of
Syarif Hidayatullah State Islamic University (UIN Jakarta). Second, this research
aims to contribute extensive literature for academic discipline so that can be
developed broadly.
The road to complete this thesis is so long, challenging, and tiresome.
Notwithstanding, supports and prayers have become the main drivers in finishing this
research. In this occasion, the researcher would be very grateful to convey deep
gratitude to:
1. Allah Subhana Wa Ta’ala and Mohammed the Prophet. The power of prayer
and spirit to strive like the Prophet is the anchor to struggle finishing this
research.
2. My beloved family –Alm. Amri Syahlul (father), Dra. Esti Rohmawati
(mother), and Prispayana Vidro Amero (brother)- who shed the lights
whenever my spirit down and thanks to my big family. This is a gift to offset
any shortcomings during the research process.
3. Prof. Dr. Abdul Hamid, MS as Dean of Faculty of Business and Economics
Syarif Hidayatullah State Islamic University Jakarta.
4. Dr. Ahmad Dumyathi Bashori, MA as academic supervisor I and Mr.
Suhendra, S.Ag, MM as academic supervisor II, whom their counseling and
direction helps making this research feasible.
5. Mr. Arief Mufraini, Lc, M.Si as chief international program of Faculty of
Economics and Business of UIN Syarif Hidayatullah Jakarta and as mentor in
assisting the statistical counseling.
iv
6. Prof. Dr. Ahmad Rodoni, Mr. Pheni Chalid, MA, Ph.D, and Ms. Leis
Suzanawaty, SE, M.Si as comprehensive examination committee.
7. Mr. Sugih Waluyo, SE who assists academic and administrative needs during
the research phase.
8. My fellow friends who help me up when down and encounter debate during
research stage, especially Management and Accounting classmates, Hatta,
Wike, Hilyah, Adhya, Ika, Ami, Dewi, Fitra, Ariningtyas, Weldan, Kharisma,
Basyir, Fathhy, Rizki Z., Leo, Surya, Kiki, Isma, Tina, Dwi, Ade, Asrul,
Sharah, Liko, Aga, Andrea, Sukria, Very, Yudi, Zahra, and Adel. I owe you
all.
Last but not least, this research has limitation and shortage in some aspects.
The researcher expects feedback and discussion to better improve the building blocks
of fundamental framework in variables employed in this study. The researcher
encourages students to develop framework and replicate study to enrich green
marketing and sustainability literature. Perhaps, this study can contribute to variation
and diversity of research for Faculty of Economics and Business UIN Syarif
Hidayatullah Jakarta.
Wassalamu’alaikum Wr. Wb.
Jakarta, July 2011
Author
Pramayassya Amero
v
LIST OF TABLE
3.1 Environmental Regulations Has Competitive Implications 54
3.2 Operationalization of the Frame Reference 57
3.3 Summary of Operational Variables 62
4.1 Summary of Toxic Chemicals Criteria in Depth 78
4.2 Summary of E-waste Criteria in Depth 79
4.3 Summary of Energy Criteria in Depth 79
4.4 Example of Nokia’s Score in Greenpeace’s Guide to Greener Electronics 81
4.5 Descriptive Statistics 82
4.6 Multicollinearity Test Result 87
4.7 Autocorrelation Test Result 88
4.8 F Test Table 91
4.9 t Test Table 92
4.10 R Square Test Table 96
vi
LIST OF FIGURES
2.1 Logical Framework 44
2.2 Hypothesis Model 45
4.1 Guide to Greener Electronics Version 16 75
4.2 PVC-free and/or BFR-free Models 83
4.3 Own GHG Emissions Reduction Commitment 84
4.4 Voluntary Take-back 85
4.5 Company Carbon Footprint Disclosure 86
4.6 Heteroscedasticity Test Scatterplot 89
4.7 Normality Test Histogram 90
vii
LIST OF ATTACHMENT
A Statistics Output
B Guide to Greener Electronics
C Stock Price Quotation
viii
TABLE OF CONTENT
SHEET STATEMENT
CURICULUM VITAE
ABSTRACT ……………………………………………………………….. i
ABSTRAK ………………………………………………………………… ii
PREFACE …………………………………………………………………. iii
LIST OF TABLE …………………………………………………………... v
LIST OF FIGURE …………………………………………………………. vi
LIST OF ATTACHMENT ...………………………………………………. vii
TABLE OF CONTENT ………………………………………………….... viii
CHAPTER I INTRODUCTION
A. Background...................................................................... 1
B. Problem Statement……………………………………... 6
C. Research Objectives ………...…………………………. 7
D. Significance of the Study……………………………..... 8
E. Research Structure…………………………………........ 10
CHAPTER II LITERATURE REVIEW
A. Theoretical Framework.................................................... 12
1. Green Marketing Definition………………………... 12
2. Green Marketing Activities....................................... 15
3. Green Marketing Strategies..... .................................. 16
4. Why Do Companies Need Green Marketing Strategy? –
The Greenwashing Risk…………………………….. 26
5. Sustainability………………………………………... 34
B. Previous Research........................................................... 41
C. Logical Framework………………................................. 44
D. Hypothesis Development…............................................ 45
CHAPTER III RESEARCH METHODOLOGY
A. Scope of Research........................................................... 47
B. Sampling Technique........................................................ 48
ix
C. Data Collection Techniques …………………………... 49
1. Types of Data………………………………………. 49
2. Sources of Data…………………………………….. 49
3. Data Collection…………………………………….. 50
D. Boundary of Operational Variables ............................... 53
1. Operational Definition……………………………... 53
2. Measurement of Variables…………………………. 58
E. Data Analysis Technique................................................. 62
1. Classical Assumption Test………………………….. 63
2. Regression Analysis………………………………… 67
CHAPTER IV ANALYSIS AND DISCUSSION
A. Description of Research Object………............................ 71
1. Greenpeace at A Glance……………………………. 72
2. Guide to Greener Electronics………………………. 74
3. NASDAQ………………………………………….. 80
B. Analysis and Discussion …………………….................. 81
1. Descriptive Analysis……………………………….. 81
2. Classical Assumption Test ....................................... 87
3. Hypothesis Test ………………………..................... 91
CHAPTER V CONCLUSION
A. Conclusion ……………………………………............... 97
B. Implication …………………………………………....... 98
C. Recommendations ………………...……………….…… 99
D. Limitation……………………………………………….. 100
REFERENCES……………………………………………………………... 101
1
CHAPTER I
INTRODUCTION
A. Background
Companies never stop digg revenue, while the environment has been getting
suffered. Every business entity all over the world aptly views shareholders’ wealth
maximization as basic goal of the company. In effort of attaning this goal, company
will strive to lower cost of production for the sake of economies of scale (Mankiw,
2008: 281; Krugman, 1980: 950). As a consequence of industry value chain activities
and lack of control during upstream and downstream activities, the environment faces
an obvious dreaded threat: our planet is in danger.
To avoid a more terrible effect of unwise practice by big companies, a number
of special interest groups (SIG) –such as Greenpeace, World Wide Fund for Nature,
and Pollution of Probe- comes up with huge pressures to prompt them acting
environmentally friendly in doing business. In accordance with visible campaign of
those SIGs, the emergence of extensive literatures discussing about environmental
concerns now become apparent. Chatterjee (2009: 367) noted that commercial and
organizational research towards sustainability and green initiatives had undergone
significant progress. To address this issue, companies are encouraged to fit themselves
into the current needs of the creation of sustainable business, which enable greater
organizational commitments with long-term view basis (Menon et al., 1999 in
Vaccaro, 2009: 318; McDaniel and Rylander, 1993 in Vaccaro 2009: 318; Peattie and
Crane, 2005: 358).
2
In addition to the urgency of the creation of sustainable business, companies
are challenged with differentiating their products and services in a more highly
competitive green marketplace (Chatterjee, 2009: 367). In connection with sustainable
business idea, some companies have begun green marketing practice. Despite there is
an ongoing debate of utilization of green or environmental or ecological marketing,
some companies view green marketing as a strategic tool (McDaniel and Rylander,
1993 in Mendleson and Polonsky, 1995: 5; Prothero, 1990 in Mendleson and
Polonsky, 1995: 5) to achieve what environmentalists and industry demand for.
In effort of executing green marketing ideas as a strategic tool, Mendleson and
Polonsky (1995: 5) suggest companies to find methods of making environmental or
green claims more credible in the consumers’ viewpoint. To align with vision of
utilizing green marketing as strategy, it is imperative to ward accusations off from
environmentalists, to avoid misleading green claims (Peattie and Crane, 2005: 360), as
well as to elude problems with green marketing (Mendleson and Polonsky, 1995: 5)
which may degrade companies’ brand equity.
To illustrate the emerging green business practice, there are great examples of
big companies that have developed green marketing ideas. General Electric -the
world's tenth largest corporation- unveiled its $90 million "Ecomagination" PR and
advertising campaign (Sourcewatch.org, 2008). Furthermoore, Wal-Mart Stores, Inc.
(branded as Walmart since 2008) -world's largest public corporation by revenue
(Forbes.com, 2010)- pioneered retail campaigns to sell environmentally safe products
in recyclable or biodegradable packaging in 1989 (SSIReview.org, 2008). Starbucks,
of which jointly did pilot project with River Pulp, proves its used paper cups can be
3
recycled into new paper cups, bringing them one step closer to its goal of 100 percent
of its cups being reusable or recyclable by 2015.
While some companies do walk the talk green business practice, we often see
the other herald green claim without actually practicing green behavior or green
policy in day-to-day operations. This action confuses green-conscious and traditional
consumers. It is believed that green marketing practice is not just putting eco-label on
product or advertising vague environmentally friendly campaign. Green marketing
should be viewed holistically.
In debates of green marketing identification, Vaccaro (2009: 315) states that
green marketing include wide range activities, such as: “product design, the
manufacturing process, service delivery processes, packaging, construction and
renovation of buildings, recycling, and other areas such as marketing
communications”. It implies that green marketing is beyond four Ps, of which product,
place, promotion, and price. If this definition is utilized, we may find few totally green
companies and these companies cannot be labeled as sustainable organization.
Sustainable organization is one who can embrace and align three subsets of
sustainability –social, environmental and economic. In the globalization era, many
firms still view economic result as the cornerstone of organizational performance.
Fauzi et al. (2010: 1346) note that some financial aspects such as profit, return on
asset (ROA), and economic value added (EVA) are often utilized as basis to assess a
company’s performance. These economic terms are known as “the bottom line”. Two
decades ago, Elkington (1997) proposed “triple bottom line” (TBL), an integrated
4
framework that bring social, environmental and economic aspects in measuring
performance of a company.
Sustainability and TBL are often interchangeably linked. Schley (2011: 1)
asserts many people devoted to sustainability have used TBL to refer to strategy. As a
plethora of research conducted in sustainability concept, a growing number of
companies turn their attention to formulate strategy that may lead to sustainability.
Some of them even claimed have achieved sustainability.
Since sustainability is referred to TBL, it is difficult to assess a company’s
success based on TBL concept. Economic sustainability may be measured with
financial tools such as profit, stock price, return on assets, (ROA), return on
investment (ROI), revenue, and the likes.
Green marketing and sustainability are inter-twinning concept. A plethora of
studies discussed green marketing (Vaccaro, 2009; Menon and Menon, 1997; Porter
and van der Linde, 1995; Mendleson and Polonsky, 1995; Peattie and Crane, 2005;
Prakash, 2002). Some scholars also conduct thorough research in sustainability
(Sebhatu; Hubbard, 2006; Schley, 2011; Yilmaz and Flouris, 2002). Nonetheless,
there is a scant literature discussing green marketing strategy and economic
sustainability altogether. It is still debatable if holistic green marketing strategy can
lead to economic sustainability.
In examining green marketing thought and in effort of achieving economic
sustainability, the decision to get immersed in environmental concerns does not come
easily. Conflict of interest may occur in a company’s boardroom. Shareholders as
5
owner of the company may insist to direct the top management to maximize
shareholder’s wealth. It is the basic objective of a business entity all over the world.
In addition to ownership issue, there is an increasing thought that a company is
not merely possessed by shareholders. Special interest groups’ (SIGs) pressure may
change a corporate policy. The cost of being accused by communities and SIGs is
more expensive than investing in green innovation and lean technology that foster
efficiency and effectiveness in day-to-day operation. Besides, another challenge may
appear from employees. They may be reluctant toward changes that require them to
gain learning experience.
While there is unwillingness to refuse greening idea in a company, a massive
demand comes from external side. Government may urge company to act and
behavior environmentally friendly. Customers demand safe and long-lasting product
or services. Communities around the company where it operates begin suffered from
manufacturing plant operation. This scenario will push company to reformulate the
way they operate business in a benign and safe way.
Shareholders are not solely as ultimate stakeholders. There are many
individuals who own “stake” in a company. A land and water that a plant
contaminates are local communities’ resources to live and utilize. Heat and hazardous
materials that make labors pain are cost that a company should offset. Degraded
customers’ health due to materials effect in a product’s ingredients is also an expense
that a customer may claim. These parties also own “stake” in a company’s operation.
Nonetheless, this research relies on economic sustainability, which is indicated by the
6
value of stock price, making shareholders as the primary object of research than other
stakeholders.
Based on situation described above, this research tries to analyze the influence
of green marketing strategies towards economic sustainability. There will be in-depth
discussion on green marketing definition. A number of definitions presented in this
research. In addition, types of green marketing activities and green marketing
strategies are also identified here. Nevertheless, the green marketing strategies are
constrained in four types: product, production, distribution/market, and promotion
strategies.
Furthermore, sustainability concept is elaborated through “triple bottom line”
(TBL) approach. But, this paper only focuses on economic sustainability, represented
by stock price. In gaining a conclusion of a company performance, the paper employs
Greenpeace’s Guide to Greener Electronics to assess green marketing policies and
practices of firms in electronics industry. This research aims to investigate the
influence of green marketing strategies towards economic sustainability.
B. Problem Statement
Market is increasingly hypercompetitive. To gain competitive advantages,
companies strive to differentiate or to focus on low cost. Green marketing is seen as a
breakthrough idea to grasp customer attention to turn into a wiser, safer, and healthier
way of life. Green marketing campaign subsequently looks like a race to grab swing
consumer. Unfortunately, some companies practice unethical campaigns, which
mislead customers. They claim green, but they did the opposite way. They even claim
7
sustainable, but they have shortcoming in sustainability or corporate responsibility
report.
This research tries to figure out false claim on green marketing and economic
sustainability issues. Stakeholder role appears to bridge the gap between the two
concepts. The road to economic sustainability is not always easy, but it is feasible. It
requires high level commitment of leadership, receptivity of changes, transparency,
and accountability. Besides, clear measurement is a main key to assess economic
sustainability performance.
Based on consideration above, this research aims to answer a major question:
Do green marketing strategies have influence towards economic
sustainability?
This big question is divided into four minor questions:
1. Does product strategy have influence towards economic sustainability?
2. Does production strategy have influence towards economic sustainability?
3. Does distribution/market strategy have influence towards economic
sustainability?
4. Does promotion strategy have influence towards economic sustainability?
C. Research Objectives
This research explores the various perceptions and definitions of green
marketing strategies. The following objectives of this research are:
8
1. To identify if green marketing has influence towards economic
sustainability.
2. To identify if product strategy has influence towards economic
sustainability.
3. To identify if production strategy has influence towards economic
sustainability.
4. To identify if distribution/market strategy has influence towards economic
sustainability.
5. To identify if promotion strategy has influence towards economic
sustainability.
D. Significance of the Study
This study is essential to answer query if green marketing strategy can lead to
economic sustainability. To be more managerially practical, this paper examines
several companies in Greenpeace’s Guide to Greener Electronics. Furthermore, this
study presents benefits as follow:
1. Benefits for Company
This study provides insight for companies aiming to achieve economic
sustainability in designing and executing green marketing strategies. To
make the economic sustainability obtainable, identification and assessment
9
of green marketing strategies are presented, so this research is not a
rhetoric nature, but rather than practical.
2. Benefits for Future Research
This research aims to enrich literature review, especially in green
marketing and sustainability fields. In the future, there are research
opportunities in examining green marketing that can lead to triple bottom
line –economic, environmental, and social sustainability. Scholars may
also examine green marketing strategies that can lead to sustainability with
other performance measures. Since there is no universally accepted
definition and strategy of green marketing, researchers are free to choose
one of such green marketing definition and strategy. Other performance
measures are also available to be examined.
3. Benefits for the Researcher
This study provides broad and holistic understanding of both green
marketing and economic sustainability concept. They are beyond engaging
in corporate social responsibility and certification. Both concepts provide
comprehensive insights for researcher to understand the breadth of each
variable. Since there is no consensus of definition of green marketing,
research opportunities are presented to analyze it empirically rather than
theoretically.
10
E. Research Structure
To simplify understanding of the whole parts in this research, there is a brief
systematic explanation that describes plot of writing, of which generally comprises of
five chapters as follow:
CHAPTER I : INTRODUCTION
This chapter discusses background of study, problem statement,
research objectives, significance of the study, scope of the study, and
research structure.
CHAPTER II : LITERATURE REVIEW
This chapter elaborates relevant theory related to the main topics,
identifies the most appropriate concept and performance
measurement, and stipulates previous research in regard of each
variable.
CHAPTER III : RESEARCH METHODOLOGY
This section discusses research design, of which how the research is
conducted. Subsequently, population, sample and/or object of
research, and hypotheses to be tested are elaborated. The next
discussion is defining variables and how the variables are measured.
Furthermore, there is explanation on technique of collecting data,
method of data analysis, data processing, and assumptions.
11
CHAPTER IV : ANALYSIS AND DISCUSSION
Chapter four will explain research findings based on the steps
conducted in previous chapter and also elaborate the relationship
between variables, as well as testing the hypotheses with performance
measurement framework chosen.
CHAPTER V : CONCLUSIONS AND RECOMMENDATIONS
In the end of study, the last chapter presents conclusions and
recommendations, which will beneficial for future research. The
researcher also identifies recommendations and limitations in the
research process.
12
CHAPTER 2
LITERATURE REVIEW
A. Theoretical Framework
1. Green Marketing Definition
Henion (1976) in Bäverstam and Larsson 2009: 1) firstly explains green
marketing as "the implementation of marketing programs directed at the
environmentally conscious market segment" (Banerjee, 1999: 18 in Bäverstam and
Larsson 2009: 1). On the contrary, Prakash (2002: 286) views green marketing is “the
strategies to promote products by employing environmental claims either about their
attributes or the systems, policies and processes of the firms that manufacture or sell
them”. Henion seems to be program oriented, while Prakash is persistent with a
strategy-based approach. Both definitions are not solely approved by company-wide
and scholars.
Although there is no single commonly accepted definition, some scholars
contribute various ideas from different disciplines. People may use “environmental”
(Kärnä et al., 2001: 60), “ecological”, or “sustainable” terms (Simula et al., 2009) to
supersede “green”. Notwithstanding, the key comprehension of green marketing is to
deeply understand whatsoever business activities that a company may exercise as long
as it is responsible to the nature.
In addition to a green marketing definition debate, there are myriad
perspectives to encounter aforementioned interpretations. Peattie (1995) stipulates
green marketing as “the holistic management process responsible for identifying,
anticipating and satisfying the requirements of customers and society, in a profitable
13
and sustainable way”. On the other hand, Mintu and Lozada (1993) hold that green
marketing is ""the application of marketing tools to facilitate exchanges that satisfy
organizational and individual goals in such a way that the preservation, protection,
and conservation of the physical environment is upheld". Peattie (1995) tries to
generalize management process without specifying in what value chain activities a
company should engage in and he identifies two stakeholders only should be taken
into account in the process. On the contrary, Mintu and Lozada (1993) try to integrate
organizational and individual interests with environmentally friendly marketing tools.
In another occasion, Peattie (2001 in Simula et al., 2009: 322) suggested that
‘‘green marketing has been used to describe marketing activities which attempt to
reduce the negative social and environmental impacts of existing products and
production systems, and which promote less damaging products and services’’. A bit
different from his prior definition, Peattie emphasizes product and production
processes as core activities which contribute to degradation of environment.
Therefore, he encourages companies to design and create product, and to run
production process that enable minimum detrimental effects generated by both
activities.
To enrich green marketing definition, Polonsky and Resenberger (2001 in
Simula et al., 2009: 322) asserted that ‘‘green marketing is a holistic, integrated
approach that continually re-evaluates how firms can achieve corporate objectives and
meet consumer needs while minimizing long-term ecological harm’’. They utilize
holistic and integrated terms to elaborate the concept, means that green marketing is
not constrained to making good environmental claim or how many green products
14
sold, but it encompasses a firm’s strategy to achieve its objectives in accordance with
environmental protection.
In a search for comprehensive green marketing definition, Charter (1992 in
Simula et al., 2009: 322) referred green marketing to ‘‘a holistic and responsible
management process that identifies, anticipates, satisfies and fulfils stakeholder
requirements, for a reasonable reward, that does not adversely affect human or natural
environmental wellbeing’’. In this definition, he just strengthened the notion that
green marketing is a holistic process –not only associated with sales and promotion-
that addresses stakeholders’ demand –not limited to shareholder’s interest, and keeps
environmental concerns as a focus for formulating corporate strategy.
Speaking of a more holistic green marketing definition, Fuller (1999) views
green marketing is "the process of planning, implementing, and controlling the
development, pricing, promotion, and distribution of products in a manner that
satisfies the following three criteria: (1) customer needs are met, (2) organizational
goals are attained, and (3) the process is compatible with ecosystems". This notion
seems to complement previous definitions discussed above.
Since there is no universally agreed definition, it is imperative to encounter
one definition to others in order to build strong fundamental concept that embrace
multi-faceted aspects of green marketing. Therefore, to integrate definitions
elaborated above, the researcher defines green marketing as a strategy that embraces
systems, policies, and process (Prakash, 2002), of which pricing, promotion,
distribution, and development of products (Fuller, 1999 in Bäverstam and Larsson,
2009: 1) satisfy interest of multiple internal and external stakeholders, as well as
balancing economic, social, and environmental goals (Elkington, 1997).
15
2. Green Marketing Activities
Generally speaking, the core marketing activities are four Ps, which are
product, place, price, and promotion. Meanwhile in green marketing, environmental
concerns hold strong influence in traditional marketing practices and its activities are
broader than traditional ones.
In addition to green marketing activities, Polonsky (1994) contends green
marketing encompasses product modification, changes to the production process,
packaging changes, and modifying advertising. In another study, Mendleson and
Polonsky (1995) identify four green initiatives may range from “repositioning existing
products without changing product composition” to “modifying existing products to
be less environmentally harmful” to “modifying the entire corporate culture to ensure
that environmental issues are integrated into all operational aspects” to “the formation
of new companies that target green consumers and only produce green products”.
Furthermore, Polonsky et al. (1997) indicate marketing activities can include
environmental concerns in “planning, product and package design, pricing,
distribution, retailing, promotion, customer segmentation, strategic alliances,
industrial marketing, and even overall marketing strategy”. This proposition holds
more holistic greening activity than the previous stance. Polonsky et al. (1997) realize
green marketing is not simply integrating marketing mix by adding environmental
issues into the process, but it deals with multi-facets value chain activities and
corporate strategy.
Since green marketing activities may vary from many perspectives, Vaccaro
(2009) comes with idea of business-to-business green marketing which includes “a
wide range of activities related to: product design, the manufacturing process, service
16
delivery processes, packaging, construction and renovation of buildings, recycling,
and other areas such as marketing communications”. With this notion, he tries to
corroborate that green marketing is a holistic process, not only constrained at creating
environmental claims or designing environmentally friendly products, but also
considering internal system and even building design.
From the identification green marketing activities above, some options are
taken into account for companies willing to green themselves. As Prakash (2002)
clarifies green marketing can be implemented in such attributes or systems, policies
and process, an organization can start its greening initiatives from production process.
In this level, a company can redesign product or substitute hazardous substance with
the environmentally friendly one.
Moreover, management can restate new policies that include social and
environmental concerns in overall value chain activities. For example, company can
increase bargaining power over suppliers by enforcing them to supply safe and benign
materials. In social issues, a company can set policies that support local communities
and increase society well-being through corporate responsibility programs. In third
level, a company can green its attributes or systems. This requires high level
commitment of all organization members because it is highly related with corporate
culture and reputation.
3. Green Marketing Strategies
Strategy is often used as a tool to achieve an organization’s objectives.
Marketing -as a subset of management discipline- has offered a wide range of
17
propositions to assist an organization in satisfying the needs of customers in a
profitable way (Kärnä et al., 2001) and gaining competitive advantage over the
competitors (Porter and van der Linde, 1995). Furthermore, the cost to pay attainment
of an organization’s goals is not cheap. Major companies even struggle to build
reputation and keep the brand well-wrapped from accusation of certain groups. Once
the brand is injured, there would be extra cost to offset the loss.
Speaking of organizational goals, traditional perspective views that profit and
shareholders’ wealth maximization (Jensen, 2001) are the core objectives that a
company should strive for. Unfortunately in effort of attaining these goals, some
companies ignore non-economic issues. Social and environmental matters are the
increasingly public attention in three decades ago. Poor working condition, human
rights abuse, degrading natural environment, and injured consumers’ health are little
problems arise due to unlawful business activity. To encounter this condition, some
special interest group began to accuse those profit-driven companies. Subsequently,
companies not only face legal impeachment, but also loss of reputational degradation
due to negative backlash. Thus, a company should bring economic, social, and
environmental issues together in determining corporate strategy.
The moment of growing concern in economic, social, and environmental
issues has led some companies to align this triple bottom line (Elkington, 1997) into
an integrated corporate strategy. McDonald’s formulated environmental strategy three
decades ago (Polonsky, 1995), Nike began overarching corporate responsibility
strategy two decades ago (Nike, Inc. Corporate Responsibility Report FY07-FY09,
2010), General Electric bolstered its corporate strategy with Ecomagination project as
a single framework in 2005 (GE 2005 Ecomagination Report, 2006), and other
18
companies has turned their conventional strategy into a greener concept. Their
fundamental belief relies on a greener overall business operation may better lead to
higher economic performance (Porter and van der Linde, 1995; Menon and Menon,
1997; Menon et al., 1999; Kassinis and Vafeas, 2006).
After extensive exploration on what should be avoided in formulating green
marketing strategies, some questions may arise: What are green marketing strategies?
Can a green marketing strategy be applied to all business? How to identify strategies
that fit into an industry-specific firm? It is important to note that “there is no single
green-marketing strategy that is right for every company” (Ginsberg and Bloom,
2004). That is why academic literature identifies plethora concept of green marketing
strategies.
Firstly, Menon and Menon (1997) assert enviropreneurial marketing strategies
are functional or tactical, quasi-strategic or business-strategic, and strategic
approaches. In addition, Prakash (2002) contends greening strategy can be done in
three ways: value-addition process, management systems, and/or products.
Meanwhile, Ginsberg and Bloom (2004) introduce the green marketing strategy
matrix that includes lean green, defensive green, shaded green, and extreme green.
Furthermore, Orsato (2006) reveals four types of generic competitive
strategies: eco-efficiency, beyond compliance leadership, eco-branding, and
environmental cost leadership. On the other hand, Vaccaro (2009) stipulates seven
proactive green marketing strategy areas contain marketing research, production,
product, distribution/markets, price, promotion, and partnerships. Finally, Cronin et
al., (2010) identify three green strategies are green innovation, greening the
organization, and green alliances.
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The ample green marketing strategy propositions identified by scholars may
confuse some managers. Since there is no universally accepted green marketing
strategies, firms can choose strategies that best fit into their organization’s systems,
culture, and policies. Propositions held by Menon and Menon (1997) and Prakash
(2002) contends structural organization-wide policies and systems are the patron for
determining corporate greening strategy. Furthermore, green marketing strategy
matrix developed by Ginsberg and Bloom (2004) and Orsato (2006) relies heavily on
promotional efforts and cost efficiency in strategizing the green attempts. On the other
hand, Vaccaro (2009) and Cronin et al., (2010) evolve greening strategy framework
holistically, something that not only touch promotional and cost sensitive matters, but
also integrating systems, policies, partnerships, and innovation altogether in a multi-
facets embraced green marketing strategy.
The congruence between Vaccaro’s (2009) proposition and Cronin’s et al.,
(2010) framework contributes major sources of green marketing strategy in this study.
In his research, Vaccaro (2009) aligns business-to-business (B2B) green marketing
with innovation theory to gain competitive advantage. While Cronin et al., (2010)
discuss green marketing strategies, of which stakeholder examination is upheld. The
intersection of both propositions will be relatively novel complementary green
marketing strategies.
a. Proactive Green Marketing Strategies
First and the foremost, marketing research strategy are conducted to obtain
input on company strategy and environmental sustainability issues from outside
stakeholders. Research further can help determine effective design of communications
20
messages to educate stakeholders about green attempts. Subsequently, it can also be
used “to identify customers' needs before designing new products and to determine
optimum price and distribution strategies” (Vaccaro, 2009). This asserts that two
elements of marketing mix are examined in this strategy.
Secondly, production strategy emphasizes on the significance of production-
and other processes- changes to be more environmentally sensitive. Redefining green
innovations in production process is critical to change radical behavior in the way
customers consume and the way product and service is made. This strategy also
suggests factory visit for customers, media, and the general public can help company
to obtain media coverage about new green production strategies (Vaccaro, 2009).
Furthermore, product strategy stresses on creating “green products with a
differential advantage which are recyclable, biodegradable, and are based on
sustainable development and also existing these product lines” (Vaccaro, 2009).
Another strategy held is substituting product or service rentals instead of ownership of
physical goods. It is believed this notion will be cost effective for firms.
Subsequently, distribution or market strategy pertains to creating more circular
markets where materials can flow through product take-back and recycling; using
multi-channel distribution, to make easy to purchase new green products or services;
and creating new markets or markets niches (Vaccaro, 2009).
In addition, price strategy holds that long-terms costs of ownership and use
rather than short-term price are key issues to take into account. An alternative option
recommends B2B firms to offer promotions with price incentives such as quantity and
frequency discounts, coupons, and rebates to increase interest and triability.
21
Moreover, marketing communication that relies heavily on environmentally-
friendly new media is a tipping point to succeed promotion strategy. This strategy also
emphasizes on media, such as email, e-newsletters, webinars, mobile marketing, and
environmentally-friendly recyclable promotional print materials to educate and sell to
business customers. “Further, if the price of product or service is initially high,
promotional messages might need to emphasize long-term costs associated with
ownership and use rather than short-term price” (Vaccaro, 2009)
Finally, partnership or strategic alliances strategy relies more on incorporating
partnership with multiple stakeholders with similar "green values" for input, strategy,
and implementation. The eco-alliances can typically pertain to “working with
suppliers or other channel partners on environmental programs, or gaining product
endorsement and corporate sponsorships for environmental groups to enhance
credibility with stakeholders” (Vaccaro, 2009).
b. Green Marketing Strategies Proposed by Cronin et al.
1) Green Innovation
Green innovation relies heavily on the development of green products. “Firms
that utilize green as an innovative strategy are likely to develop effective ways to
reduce waste, create new packaging and production processes, and develop better
ways to deliver goods and services” (Cronin et al., 2010). A green innovation strategy
is imperative to satisfy the various stakeholders’ expectation. Furthermore, all
stakeholders are adamant to seek out advantages from successful innovation. Thus,
stakeholders’ roles in the development, implementation, and evaluation of innovative
22
green products and strategies can dramatically impact the frequency and success of
green product innovation.
2) Greening the Organization
Generally speaking, greening of the organization encompasses three subsets:
green champions, green processes, and supply chain management (SCM). Integration
of these drivers can incorporate an overarching organizational greening initiative.
Thus, allocating proportional commitment to manifest these drivers arise is so critical.
(a) Green Champions
Green champions are the individual or group of individuals who encourages
and implements greening initiatives in a firm (Cronin et al., 2010). Past study
suggests that members in an organization play a critical role in the green efforts and
success of the firm (Cronin et al., 2010). Notwithstanding, it is common that a person
or group leading the green effort is less powerful to issue new environmental policy.
Therefore, gaining support from top management is not always easy. The green
champions even seek out other stakeholders to give pressure to management in
adapting and initiating green effort.
(b) Green Processes
Secondly, another important point in turning company's attention into green
orientation is the utilization of green processes and practices. Two main topics are
identified by past research, in which waste can be reduced to improve environmental
performance and incorporating the environmental management system with a specific
certification.
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(i) Waste Reduction
Speaking of waste reduction, previous research has demonstrated that waste
reduction effort through a lean systems approach has a positive effect on
environmental performance (Cronin et al., 2010). In addition, improving
organizational processes that reduce waste increases efficiency will increase demand
from environmentally conscious consumers (Porter and van der Linde, 1995).
Research also suggests waste reduction process is associated with a more positive
green strategy than simply recycling waste (Cronin et al., 2010). Another study also
concludes that integrating waste reduction into strategies can lead not only to
pollution prevention and environmentally responsible behaviors, but also higher firm
profitability (Porter and van der Linde, 1995).
(ii) Environmental Management System
Research found that firms with formalized environmental management system
(EMS) gain higher performance (Cronin et al., 2010). The International Organization
for Standardization (ISO), the number of ISO 14000 is the most widely applied EMS.
ISO 14000 sets standards in terms of environmental policy, environmental objectives,
implementation, control and continuous improvement (Goldberg, 2001). Research
suggests that the application of ISO 14000 implies that positive indicators of systemic
approach to green business practices are effective in enhancing the triple bottom line
of an organization (Cronin et al., 2010).
(c) Supply Chain Management
A firm needs to integrate green strategy into the whole supply chain activities.
In studying the supply chain management, it can be concluded the concept falls into
24
two categories: chain construction and closed-loop supply chain management. Chain
construction widely discusses the inception of establishment of supply chain, while
closed-loop system explicitly evolves the idea of how to bring back materials into the
firms.
(i) Chain Construction
Establishment of supply chain in a company should either incorporate the
horizontal or vertical integration of both upstream and downstream operation. This is
imperative to assure flow of whole company’s operation. The chain construction itself
should be able to gain highly relative bargaining power of suppliers to gain
competitive advantage. To date, an increasingly ecological concern triggers green
supply chain to create potential advantage for an organization, as well as bolster triple
bottom line performance by delivering economic, social, and environmental benefits
(Cronin et al., 2010).
(ii) Closed-loop Supply Chain
Cronin et al. (2010) further holds that remanufacturing, remarketing, and
closed-loop supply chain are essential drivers in managing green strategies. The
rationale behind remanufacturing idea is how firm can maximize its value through
designing or distributing products, in which cost of raw materials and energy increase.
Later, remarketing can be passed through due diligence of scholars in assisting a firm
to achieve its green goals by identifying market opportunities and marketing strategies
that connect consumers with remanufactured and remarketed products (Cronin et al.,
2010).
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Closed-loop supply chain (CLSC) constitutes the combination of forward
supply chain (FSC) activities and reverse supply chain (RSC) activities, with the
potential to improve the environmental performance of industrial operations to new
standards, and to maximize profit and competitive advantages. (Talbot et al., 2007).
FSC entails the flow from new product development, environmental product design,
product research and development, and development of responsible manufacturing,
which pertains to total quality management, just-in-time manufacturing, and lean
manufacturing (Talbot et al., 2007). RSC deals with product returns, such as
(manufacturing, distribution, and customer returns (Talbot et al., 2007) to the selling
company, while the cycle will end when the company recovers the product's
maximum possible value (Cronin et al., 2010).
The integration between FSC and RSC can create a cradle-to-cradle life cycle
for goods manufactures, sold, and returned and reused, as opposed to cradle-to-grave
flow (Cronin et al., 2010). Cradle-to-grave (C2G) is a full life cycle assessment from
manufacture –known as cradle- to use phase and disposal phase, called grave
(Wikipedia.org, 2011). It is seen as traditional notion, known as end-of-pipe solutions.
On the contrary, cradle-to-cradle has similar approach with cradle-to-grave, while the
end-of-life disposal stage for a product is a recycling process. It is utilized to
minimize the environmental impact of products by exercising sustainable production,
operation, and disposal practices, as well manifesting social responsibility into
product development (Wikipedia.org).
CLSC activities provide benefit in improving the environmental performance
of industrial operations and increasing firms' competitiveness and product
differentiation (Talbot et al., 2007). Furthermore, it should be managed to achieve
26
maximum profit, comply with regulatory standards, and provide excellent customer
service to customers and suppliers altogether (Cronin et al., 2010).
3) Green Alliances
The last important point in incorporating green marketing strategies is forming
partnership. Past researches discussed the imperatives of eco- or green alliance in
formulating green strategies (Mendleson and Polonsky 1995; Hartman, 1997; Crane,
1998; Hartman and Stafford, 1998; Stafford et al., 2000; Polonsky, 2001; Ählström
and Sjöström, 2005). Stafford et al. (2000) emphasize alliance with environmental
non-governmental organizations (NGOs), which can result in operational efficiencies,
new technologies and marketable green products. They also identify stakeholder
characteristics and partnership outcomes. The same idea was also proposed by
Hartman (1997), Hartman and Stafford (1998), and Polonsky (2001), which
corroborates the significance of incorporating alliance with environmental group to
achieve competitive advantage and integrating corporate environmental
responsibilities in market goals.
4. Why Do Companies Need Green Marketing Strategy? – The
Greenwashing Risk
The environmental or green claims of some companies have got many
critiques by some scholars (Chatterjee, 2009: 367; King, 1985; Mohr, et al., 1998;
Peattie and Crane, 2005: 360) and by special interest groups (SIGs). Once companies
did not practice the claim in day-to-day operations, these groups are the front liners
27
which may accuse them and subsequently shock their brand equity. Some companies
have experienced the shortcomings of accusation demonstrated by these groups, such
as Nike vs Kasky case, GE’s poisoning of Hudson River with PCBs, Exxon Valdez
spill, the relatively fresh BP’s spill on Gulf of Mexico, and the likes. The cost of
accusation has led their brand equity weakened and stock price plummeted. By then,
the SIGs’ pressure keeps some of them silent in promoting green campaign publicly.
Due to the growing concern of market research exploring green or
environmental consciousness in two decades ago has pulled some companies to
practice “me too” effect of green buzzwords. Some of the researches (Peattie and
Crane, 2005: 358; Chatterjee, 2009: 367) indicate consumers are willing to pay more
for green or eco-conscious products, making the existing companies turned their
attention to create more environmentally friendly products, promote them with eco-
label or colored green in shelf tag, and then charge consumer with premium price.
Research conducted by the Natural Marketing Institute (NMI) estimates the
market size of the environmentally friendly or green products to reach $420 billion by
2010 (Bonini and Oppenheim, 2008 in Chatterjee, 2009: 367). Jeff Immelt, CEO of
General Electric even predicted GE's Ecomagination efforts will lead GE to sales
target of US$20 billion in 2010 (SourceWatch.org, 2008). There is always short-term
orientation benefited from environmentally friendly or socially responsible
movement. Thus, the profit-driven companies which seek to target new eco-conscious
market sometimes fail to make appropriate environmental claim or to promote green
vague green promotions. Thus, this leads them to greenwashing risk –a relatively
sensitive threat for firms’ value.
28
“Greenwashing is the misuse of the principles of environmental marketing and
means that consumers cannot trust the content of advertisements” (Kärnä et al., 2001).
It can injure a brand reputation and then enforces companies to carefully publicize
their green efforts. Nike, Adidas, Puma, Coca-Cola, Starbucks, and McDonald’s are
the proponents of silent green advertising, keeping them away from greenwashing
risk. Their brand is too valuable rather than simply offsetting the cost of being
accused by SIGs. Therefore, formulating appropriate green marketing strategy
appears as a wiser idea in achieving corporate objectives, as well as tackling possible
reputational risks (Louisot and Rayner, 2010) in the future.
It is imperative to determine appropriate green marketing strategy that does
not mislead and confuse consumers. King (1985 in Peattie and Crane, 2005: 359)
identifies four marketing failures -sales orientation, compartmentalism, finance
orientation, and conservatism, while Peattie and Crane (2005) indicate five
greenwashing practices, such as green spinning, green selling, green harvesting,
enviropreneur marketing, and compliance marketing. This section will further discuss
greenwashing which may answer question why strategy is necessary in executing
green marketing ideas.
a. King’s (1985) Four Marketing Failures
1) Sales Orientation
King asserted that "thrust marketing" is too highly sales-based oriented.
Peattie and Crane (2005: 360) add the environmental issues are employed by firms for
additional dimension without any effort "to analyze or modify the underlying product
itself and its environmental impacts".
29
2) Compartmentalism
Furthermore, "marketing department marketing represented a lack of
integration between marketing and other business functions" (Peattie and Crane,
2005: 360). Moreover, the scholars stipulate that by utilizing green marketing
buzzword, many companies are willing to address consumers' demand, but their effort
is limited to establishment of marketing department, production department, or other
separate functions, making them stuck in developing holistic green marketing
concept.
3) Finance Orientation
Peattie and Crane (2005: 360) then stress that King's idea of "accountant's
marketing" was characterized by an enjoyment with short-run profitability and
constrained concern for long-run brand building. They further criticize that companies
are eager to add environmental dimension in marketing when it has involved short-run
cost savings, but weakened in sustainable investment.
4) Conservatism
In addition to King's critique in terms of "formula marketing", he indicated
that much marketing activity had stressed control, risk aversion, and the use od tried-
and-tested recipes for success rather than emphasizing innovation and imagination
(Peattie and Crane, 2995: 360). Green marketing is also viewed as formula that do not
contribute to significant change, otherwise little improvements to existing products
and process -such as simplifying packaging or product size rather than changing the
core products or production processes).
30
b. Five Greenwashing Practices (Peattie and Crane, 2005: 360)
1) Green Spinning
“Green spinning is an inward-looking, reactive approach placed in the public
relations function” (Simula et al., 2009). This notion contends that companies tend to
leverage reputation instead of market- and customer- orientation. Peattie and Crane
(2005: 360) further add that companies often "went on a PR offensive, using glossy
brochures, lobbying, and countless press releases in order to persuade the skeptical
public of their environmental credentials". It is indicated by the establishment of
special environmental marketing functions, such as more emphasis on public
relations.
Peattie and Crane further assume that compartmentalization of green
marketing functions for leveraging reputation- and risk- management cannot
contribute a significant change on entire value chain activities. The scholars perceive
that green spinners are categorized as conservatism and they -green spinners- do not
respond various stakeholders' interests, otherwise making "the classic marketing error
of looking inward when many of the answers they sought were to be found by looking
outside of the organization" (Peattie and Crane, 2005: 361).
Finally, Peattie and Crane (2005: 361) conclude that "green spinning was
always going to fail because unless they are involved and consulted, contemporary
consumers and pressure groups are unlikely to be fully convinced by the protestations
of commercial enterprises".
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2) Green Selling
Green selling notes that environmental concerns among consumers are
increasing, firms tend to conclude that something green will be best-selling. Peattie
and Crane (2005: 361) refer green selling to "a post-hoc identification of
environmental features in existing products, thus prompting a (usually short-term) hop
onto the green bandwagon". It indicates that companies are engaged in sales
orientation with promotional activity as the anchor, while product development is set
aside. This type of greenwashing can also be identified with the existing products are
still produced with additional green themes added in promotional activities and little
market research conducted in responding to consumers' needs.
Peattie and Crane (2005: 361) further hold that "facile, meaningless, and
unproven green claims were slapped on unchanged products in failed attempts to
boost sales, leading to mounting consumer cynicism and suspicion, and concerns
about a potential consumer backlash". Their stance indicates that consumers'
skepticism towards green marketing is tailored by marketers’ failure in enhancing
green operations in a company value chain activities, of which incremental sales is
seemed as the superior goal rather than eco-conscious consumers' demands.
Moreover, some managers even committed in environmental certification
program and put green arrays in the product labels to convince consumers, in fact
their companies still lacking good environmental practices. Peattie and Crane view the
selling orientation contributes to drawbacks of why green marketing fails to become a
marketing strategy in many major businesses.
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3) Green Harvesting
“Green harvesting is associated with a corporate culture that fosters short-term
profitability and a financial orientation to green issues instead of radical change”
(Simula et al., 2009). Firms take advantage with this approach by charging premium
price for niche markets. A quite different from green selling, of which the firms turn
attention into sales orientation without improving green aspects on product and
production aspects, green harvesting brings environmental improvements and short-
term profit orientation together.
Furthermore, "economies in terms of energy and material input efficiencies,
packaging reductions, and logistics rationalisation provided strong incentives for
firms to develop their environmental programmes" (Peattie and Crane, 2005: 362).
Nonetheless, even though this notion may enable firms to gain incremental cost
savings, firms lacking development of cheaper greener products, leading to hampered
market penetration.
People may consider green harvesting firms direct themselves to conservatism,
which is indicated by orientation of cost reduction, short-term profitability,
shareholder value, and other financial gains. This makes them reluctant to invest in
green marketing agenda.
4) Enviropreneur Marketing
Enviropreneur marketing was coined two decades ago, indicated by seminal
research of Menon and Menon (1997). It holds that start-ups and big firms begin to
increase the number of green products as market research suggests doing so. Since
there were ample market research studies revealing that consumers began to aware of
33
and were able to buy green products, enviropreneurial marketers responded the
demands quickly to bring the intended products to the market.
Nevertheless, Peattie and Crane identify this approach misses the point in
three important ways. First, much of the research was weak due to much scope for
respondents to give unrealistic and socially desirable answers. Second, much of the
research emphasized general environmental issues, while in practice it addresses
specific environmental concerns which will finally lead to specific green products for
the market. Third, few companies take the considerable product-specific market
research into account for ensuring their products' success in the market.
Many of the enviropreneur firms focused on production orientation, of which
the goal was to produce the most environmentally friendly products against the
products that consumers really demanded. Therefore, they failed to market products
that are economically unsuccessful, as indicated by perceived products as under-
performing, high price tag, and bad for business.
Finally, Peattie and Crane (2005: 363) concluded "the enviropreneur
marketers may have meant well, but whilst they had the right environmental goals,
they were always destined to have problems establishing a significant market
presence in the long-term because they failed to successfully research, understand or
educate their customers”
5) Compliance Marketing
The last point, compliance marketing is highly related with firms’ retention
not to comply what legislation necessitates minimum requirements or standards. This
is often called reactive or end-of-pipe marketing. Peattie and Crane (2005: 365)
34
describe this approach as a green marketing in a very conservative guise, of which
"the firm seeks to travel the path of least change and will only go beyond compliance
when there is a very real expectation of imminent legislation".
Moreover, there are a number of firms adopting "two-handed" approach in
which "they simultaneously respond proactively to the pressures for change, and also
reactively shore up their barricades against any further legislation" (Peattie and Crane,
2005: 364). For example, apparel makers in one hand keep producing benign
products, which in turn they lobbying legislators to enact laws that enforce other firms
in the industry to fit their operational standard into a new legislation.
“Whichever approach the compliance marketers have taken though, they have
never had much hope of appealing to the environmental concerns of increasingly
savvy customers, or of making any significant advances towards sustainability”
(Peattie and Crane, 2005: 364). Thus, firms should carefully formulate appropriate
strategy that segregates greenwashing and actual green marketing practices.
5. Sustainability
Sustainability has been buzzword in the growing globalization era to date.
Some companies even solely claim that they have achieved sustainability, while their
operations adversely show unsubstantiated evidence. To be sustainable, a firm cannot
merely set its own standards to measure sustainability performance. They should align
its corporate performance with some sort of commonly accepted measurements. To
date, sustainability has been major concern and ongoing agenda in local and
35
international forum. Thus, the trend now enforces every business entity to behave
socially responsible and environmentally friendly.
a. Definition of Sustainability
As opposed to green marketing, scholars reached consensus to define
sustainability. Sustainable development -as initially formalized at the Earth Summit in
1992 (Earthwatch, 2000) – “is development that meets the need of the present without
compromising the ability of the future generations to meet their own needs.” This
definition implies that companies should focus on limiting the consumption of present
generation and leverage the ability to meet present and future needs (Garimella and
Bhaskar). As a consequence, companies should put all attention to turn the operation
in more efficient and effective ways, which reducing damaging impact both for
society and environment.
Speaking of sustainability in organization-wide, Dyllick and Hockerts (2002)
define corporate sustainability as achieving the needs of a firm's direct and indirect
stakeholders, -such as shareholders, employees, clients, pressure groups,
communities, etc- without compromising its ability to satisfy the needs of future
stakeholders as well. From this definition, the scholars try to integrate interests of
various stakeholders towards policy that affect organization’s objectives in present
and in the future. Unfortunately, both scholars fail to clarify the boundaries of the
stakeholders’ needs. Yilmaz and Flouris (2010) also justify that the vision of
corporate sustainability is not well-defined, which leaves a wide approach with
various characteristics.
On the other hand, Charter et al. (2002) hold that "sustainability means to
maintain or prolong both environmental and human health and is simply good
36
management". It simply implies the paradigm shift from utilization of hazardous
materials to renewable ones, minimization of pollution effects, improvement of
working condition, and socially responsible program that touches people who do not
have access to clean water, good sanitation, and other environmental-based issues.
This notion further criticizes capitalism believers to not only attain economic
objective, but also pay attention in environmental and social issues. The traditional
paradigm should also turn thought from maximizing shareholders’ wealth into
satisfying individuals who own stake on a firm.
In addition, Yilmaz and Flouris (2010) thoroughly discuss corporate
sustainability in many perspectives. They argue that it can be viewed as a new and
evolving corporate management paradigm, of which paradigm itself implies an
alternative to the traditional growth and profit maximization model. The shift should
count “future imperatives”, namely social and ecological concerns. This proposition
further strengthens previous approaches that emphasize the importance of preparing
the future generation with sustainable living.
Yilmaz and Flouris (2010) further enrich their study in corporate sustainability
with examining proposed definition of various scholars. Salzmann et al. (2005) define
corporate sustainability as "profit-driven corporate response to environmental and
social issues that are caused through the organization’s primary and secondary
activities". From in-depth business core perspective, it can be defined as "a business
approach that creates long-term shareholder value by embracing opportunities and
managing risks derived from economic, environmental and social developments”
(Dow Jones Sustainability Indexes, 2009).
37
In another point of view, Yilmaz and Flouris (2010) assert that corporate
sustainability management can be described in both functional and institutional
justifications. The first model is designed to guide ecological, social, and economic
impacts of business activities with the direction of sustainability are developed by a
firm. Meanwhile, the latter concept argues "corporate sustainability management
describes the group of actors and organizational structure within the business
enterprise that are concerned with social and ecological aspects and their integration
in the conventional process of operational management of business activities”.
Nonetheless, Visser (2007) employs different terms to define corporate sustainability,
where it is the way in which the interface between business, society, and the
environment is managed. All the definitions point out to emphasis on social,
environmental, and economic aspects, which are much popular with triple bottom line
concept.
b. Triple Bottom Line Concept
The terms sustainability is often interchangeably linked with triple bottom line
(TBL) concept coined by Elkington (1997). To strengthen, Beilin et al. (2007) assert
“the work of Elkington (1997) and others suggests that the TBL is useful in defining
the concept of sustainability, seeing the two as inextricably linked”. The concept is
growing as a widely popular conceptualization and reporting tools for justifying
social, environmental, and economic performance, simply known as people, planet,
and profit.
Triple bottom line gains popularity to date. Major companies argue to measure
a sustainability of a corporation cannot be seen from one perspective, economic
matters solely. The integration of three-dimensional framework will assist the next
38
successors and policy makers in a firm to face more complex challenges in the future.
The scarcity of resources, in terms of raw materials, shortage of energy and land, and
well-educated human capital that fully concerns in social and environmental justice
become prominent and all stakeholders of a firm by then to seek out the multi-faceted
solution that satisfy them and non-economic factors.
Panapanaan (2002) indicates triple bottom line pertains to economic,
environmental, and social sustainability. Economic sustainability comprises of
economic profitability, competitiveness, and job or market creation. By ensuring this
first bottom line fulfilled, a company can survive in highly competitive business, as
well as improve employee’s welfare. In addition, environmental sustainability
constitutes the way a company uses natural resources, environmental management
and protection efficiently. It implies that company should run the business in ethical,
safe, and benign ways. Meanwhile, social sustainability deals with social well being
of everyone, both inside and outside the corporation. It denotes that a company should
satisfy economic well being of its employees so that they can perform more
productive and it should give feedback to the society through program like corporate
social responsibility.
This idea implies economic sustainability can only be achieved if business
matters, such as profit, revenues, return on investment, return on assets, competitive
advantage, and employment are well-managed without hurting major stakeholders’
interests. Meanwhile, environmental sustainability should be strategized differently
from economic ones because it involves participation of non-fiduciary or secondary
stakeholders in conserving nature with constraints of natural resources are upheld. To
date, social sustainability is also difficult to achieve because it is somewhat changing
39
from time to time and level of basic economic needs also differs frequently. Thus,
ensuring the three pillars are well-satisfied cannot be conducted without participation
of stakeholders and well-determined corporate green strategies.
Furthermore, research conducted by Deloitte indicates the major respondents
modeled definition of sustainability after the concept of TBL -pursuing performance
in economic, social, and environmental aspects (Deloitte, 2010). Notwithstanding,
some respondents define it as framework of company's policies and goals, which led
to widely disparate areas of emphasis among themselves as a whole. It implies the
significance of achieving sustainable business should integrate three pillars altogether,
while the company’s policies should be in accordance with its goals.
1) Performance Measurement of Economic Sustainability
The management process from planning, execution, and evaluation will result
in measurement of performance as a whole. To improve competencies and gain
competitive advantage, a firm should gradually reach a higher point and by then
requiring holistic measurement to assure if objectives are met. Corporate performance
is defined as "the organization’s ability to attain its goals by using resources in an
efficient and effective manner" (Fauzi et al., 2010). Then a question arises: What are
indicators to measure corporate performance?
Generally speaking, the concept of corporate performance primarily points out
to financial instruments such as profit, revenues, return on assets (ROA) and
economic value added (EVA), naming after the so called “the bottom line”. In this
regard, the aforementioned profit is net profit which is gained from gross profit minus
overheads minus interest payable for a given time period (Wikipedia.org). In addition,
revenue is the income that a company gains from its normal business activities,
40
usually from sale of goods and/or services (Wikipedia.org). Return on assets indicates
how profitable a company is relative to its total assets (Investopedia.com, 2011). The
net income gained from company's business activities divided with its total assets.
Economic value added is a measure of a firm's financial performance based on the
residual wealth calculated by deducting cost of capital from its operating profit. The
formula for calculating EVA = Net Operating Profit after Taxes - (Capital * Cost of
Capital).
On the other hand, Fauzi et al. (2010) hold market mechanism as the heart of
corporate performance by which the company deals with the financial, factor, and
customer product markets. In the financial market, management utilizes corporate
performance to meet interests of shareholders and creditors. In the factor market, the
corporate strives to build good relationship with suppliers and other production
owners by employing relative bargaining power that benefits both parties. Finally,
from customer product market's point of view, a corporation's ability to deliver value
to customers and generate revenue is the critical point for corporate performance.
The road to reach economic sustainability is not merely linear. It involves
multi-dimensional framework, of which the decision to be economically sustainable is
not always approved by certain group of stakeholders. Therefore, integrating
strategies that possibly realize sustainability agenda with the approval of stakeholders’
agreement becomes complex consideration. Once the boardroom men approve to
become sustainable, management confuses with measurement, of which further
develop their own standards. To make the situation clear, some sort of propositions
towards measurement performance on sustainability is presented below. To narrow
the research, this study focuses only on economic sustainability.
41
(a) Economic Performance
The basic goal of business is profit maximization. This neoclassical theory
strives to satisfy fiduciary stakeholders, primarily falls into shareholders, creditors,
and other parties that have contractual ties. Fauzi et al. (2010) assert that “higher
financial performance leads to the increase in wealth of these stakeholders”.
Furthermore, financial performance can be measured by employing three
alternative approaches, such as market-based measure, accounting-based measure,
and perceptual-based measure (Fauzi et al., 2010). Firstly, in market-based approach,
“the market value of a company is derived from the stock price, all of which is used to
measure CFP” (Fauzi et al., 2010). This notion concerns heavily on shareholders’
interests.
Secondly, the accounting-based approach is derived from “a company’s
competitive effectiveness and a competitive internal efficiency as well as optimal
utilization of assets, for some certain measures” (Fauzi et al., 2010). Financial tools
such as net income, return on assets (ROA), and return on equity (ROE) are the basic
proponents of this approach. Thirdly, in perceptual method, some personal judgments
for financial performance will be exercised by respondents using some instruments,
such as ROA, ROE, and the financial position relative to other companies.
Furthermore, Sebhatu adds market share, sales turnover, and sales as complementary
for financial performance.
B. Previous Research
In terms of green marketing strategies, Vaccaro (2009) conducted study that
integrates business-to-business green marketing and innovation theory to the extent
42
that both frameworks can serve as a useful scientific insight to gain competitive
advantage. The aims of the study is to investigate how innovation theory can be
utilized to design more effective B2B green marketing strategies so that can meet the
triple bottom line of economic, social, and ecological sustainability. The researcher
initially elaborates corporate social responsibility theories relevant to green
marketing. By then, he employs diffusion of innovation theory to address the gap in
the literature on instrumental CSR theories. Furthermore, he explains reactive and
proactive green marketing strategies that can be examined in B2B and their
relationship to the levels of innovation, as well as corresponding diffusion of
innovation theory and its relationship to B2B research. He later develops five
propositions and a new conceptual model towards B2B green marketing innovation
strategies and competitive advantage. Last but not least, he presents an analysis on the
relationship of diffusion of innovation characteristics to B2B green marketing
strategies and the benefits resulted linked with competitive advantage for B2B
organizations.
A study conducted by Mathur and Mathur (2000) discussed wealth effects of
green marketing strategies. Specifically, the researchers analyzed the effects of stock
price reactions towards corporate announcements of green marketing activities -green
products, recycling, green promotions, and appointment of environmental policy
managers. The results for the sample of 73 firms show that the market value for the
average firm in the sample declines by 3.14% during the period from 10 days prior to
10 days after the news is announced. Announcements related to green products,
recycling efforts, and appointments of environmental policy managers result in
insignificant stock price reactions. Nevertheless, announcements for green
promotional efforts produce significantly negative stock price reactions.
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Gottsman and Kessler (1998 in Murphy, 2002: 3) conducted research that
analyze the environmental performers return against the Standard and Poor (S&P)
500. It explicitly classifies the S&P 500 firms based on four revenue-normalized
environmental performance measures (Investor Responsibility Research Center data),
such as emissions efficiency, compliance, spill frequency, and waste generation rates.
The companies were weighed in each category and further compared to the median
scorer in their industry. It denotes that those who score above the median score were
categorized as good performers, while those who score below were indicated as poor
performers. Furthermore, the researchers construct three portfolios of good
performers based on the score, of which the highest performers pertain to top
portfolio, while three opposed portfolios were made up of poor environmental
performers. The research that was conducted from 1992 to 1997 revealed that the
portfolio of top environmental performers recorded the highest total return, while the
worst performers' portfolio experienced the lowest return.
However Indonesian scholar as well as foreign researchers, Fauzi et al. (2010)
develops a proposition by exhibiting triple bottom line (TBL) as a sustainable
corporate performance (SCP). They insist SCP should account financial, social, and
environmental measurements. They propose TBL as SCP to be derived from the
interface between them. They eloquently suggest that the content of each of TBL
elements may vary across context and over time. Subsequently, they argue TBL as
SCP should be interpreted as a relative dynamic and iterative concept. Likewise, TBL
as SCP requires that the complexity and variability between financial, social, and
environmental measurement elements are synchronized. Finally, the contribution of
TBL as SCP stresses the connection between current business and social orientation
on the one hand, and the forthcoming planet orientation on the other.
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C. Logical Framework
Figure 2.1
Logical Framework
Sampling Process
Dependent Variable Independent Variable
Economic Sustainability (Stock Price)
Green Marketing Strategies (Product Strategy, Production Strategy, Distribution/Market
Strategy, and Promotion Strategy)
Calculate based on operational variable
definition
Calculate based on operational variable
definition
Regression Model
Y = αί + βί1 PROD + βί2 PRDT + βί3 DIST + βί4 PROM + ℮ί
Regression model test
Hypothesis test
Analysis
Conclusion
45
Figure 2.2
Hypothesis Model
Based on literature review discussed above and by considering some
propositions developed by some scholars in green marketing strategies, and economic
sustainability aspects, therefore this study aims to investigate the influence of green
marketing strategies towards economic sustainability, by employing product,
production, distribution/market, and promotion strategies as independent variable,
while stock price constitutes dependent variable.
D. Hypotheses Development
Based on literature review discussed above, thus there are some hypotheses to be
tested, as follow:
Green marketing has been rarely used as a strategy to achieve a corporate
objective. There is also scant research discussing the connection between green
marketing strategy and economic sustainability. However, green marketing strategy
Product Strategy
(Vaccaro, 2009: 322)
Production Strategy
(Vaccaro, 2009: 322)
Distribution/market Strategy
(Vaccaro, 2009: 324)
Promotion Strategy
(Vaccaro, 2009: 324)
Stock Price
(Fauzi et al., 2010: 1347)
46
can lead to economic sustainability, such as increased revenues and profits, as well as
higher market share and return on investment (Vaccaro, 2009). In addition, Cronin et
al. (2010) suggest firms that have a green orientation are likely to gain higher
financial results and market share. However, this research employs four green
marketing strategies to detect their influence towards stock price –as proxy for
economic sustainability. Thus, based on these notions, wide range hypotheses are
developed:
H0: Green marketing strategies do not have significant influence towards
economic sustainability.
H1: Green marketing strategies have significant influence towards economic
sustainability.
H0a: Product strategy does not have significant influence towards stock price.
H1a: Product strategy has significant influence towards stock price.
H0b: Production strategy does not have significant influence towards stock price.
H1b: Production strategy has significant influence towards stock price.
H0c: Distribution/market strategy does not have significant influence towards
stock price.
H1c: Distribution/market strategy has significant influence towards stock price.
H0d: Promotion strategy does not have significant influence towards stock price.
H1d: Promotion strategy has significant influence towards stock price.
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CHAPTER III
RESEARCH METHODOLOGY
A. Scope of Research
This research is quantitative which employs secondary data, taken from
extensive journals and books review, corporate responsibility report, Greenpeaces’s
Guide to Greener Electronics, National Association of Securities Dealer Automated
Quotation (NASDAQ) quotation, and some indexes data. For the purpose of the
study, the researcher employs stock price (Y) and green marketing strategies (X) with
four sub variables, namely product strategy (X1), production strategy (X2),
distribution strategy (X3), and promotion strategy (X4).
Furthermore, in assessing green marketing strategies, the researcher employs
Greenpeace’s Guide to Greener Electronics as the basis for scaling each independent
variable. The guide ranks leading mobile phones, game console, personal computer
(PC), and televisions (TVs) manufacturers on global policies and practices. The guide
has been released since March 2006, counting sixteen versions to date. Due to the
absence indicators of aimed sub variables, the researcher opts to use guide from the
eighth to fourteenth version, counting eighteen companies.
On the other hand to calculate economic sustainability, the researcher utilize
stock price as proxy. To limit the number of sample, the researcher does screening by
utilizing Nasdaq’s stock price quotation of electronics producers, counting twelve
companies remaining. Since the Greenpeace’s Guide to Greener Electronics was
released in quarterly basis, the sock price quotation follows the scheme. In short, the
48
data analyzed in this research pertains to June 2008, September 2008, December
2008, March 2009, June 2009, September 2009, and January 2010 (as replacement for
December 2009).
B. Sampling Technique
In this study, the researcher utilizes judgment or purposive sampling. In
judgment sampling method, data collection relies solely on capability or personal
consideration (Rodoni, et al., 2009: 17). Basically, population that will be used as
research sample is a population that fulfills certain sample criteria in accordance with
researcher's consideration. Furthermore, the chosen sample will be selected
stringently as relevant as research sample (Amelia, 2011: 52). Researcher then
explores the sample thoroughly, so become representative for any population.
It is imperative to have a sample with in-depth and distinct characteristics,
what strata should be represented, depend upon scoring or consideration from the
researcher perspective (Amelia, 2011: 52). This is done so that the result obtained
more accurate.
The criteria should be fulfilled as follows:
The observed companies are in electronics industry and belong to leading
mobile phones, game console, PC, and TVs manufacturers.
The observed companies are assessed and ranked by Greenpeace in Guide to
Greener Electronics with newly extended criteria (started from eighth edition
on June 2008).
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The selected companies should be listed in Nasdaq quotation, either the stocks
are traded in NASDAQ, NYSE, AMEX, or other over-the-counter (OTC)
market from June 2008 to January 2010. Other than NASDAQ listing, the
companies will not be observed.
C. Data Collection Technique
1. Types of Data
Generally, data are classified into two -qualitative and quantitative. "Qualitative
data are not characterized by numbers, but rather are textual, visual, or oral; while
quantitative represents phenomena by assigning numbers in an ordered and
meaningful way" (Babin and Griffin, 2010). Qualitative data relies on "stories, visual
portrayals, meaningful characterizations, interpretations, and other expressive
descriptions (Babin and Griffin, 2010). Qualitative research is an exploratory nature,
while quantitative is more descriptive and conclusive.
2. Sources of Data
The data used in this research are secondary data. It is data gathered from an
organization or firms in terms of ready-made form of publications or releases
(Paramita, 2011: 49). Data used in this study were gathered from Greenpeace's
quarterly Guide to Greener Electronics and Nasdaq's quarterly quotation of stock
price in electronics sector from June 2008 to January 2010.
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3. Data Collection
Since there is no commonly accepted of green marketing concept, either the
definition, activities, or strategies, thus the researcher collected ample journals, books,
and other articles to strengthen the fundamentals of green marketing. Beside, the
terms economic sustainability may vary from one researcher to other. That is why the
same way goes for economic sustainability to build clear principles.
Another challenging matter is measurement of green marketing strategy. The
researcher collected some data either in index format, report, or environmental
performance. Fortunately, Greenpeace provides quarterly Guide to Greener
Electronics which scales and ranks electronics companies on policies and practices.
Then this guide is justified with a conceptual framework of previous research,
For the purpose of building fundamental concept, the researcher did literary
search in internet by using keyword “green marketing”, “environmental marketing”,
“sustainable marketing”, “green strategy”, “environmental strategy”, “stakeholder
engagement”, “sustainability”, and “triple bottom line”. The results show plenty of
journals, books, and articles. More than three hundred articles were gathered. Then
the researcher classified the sources based on characteristics, such as green marketing
definition, green marketing strategy, sustainability, triple bottom line, sustainability
performance measurement, and stakeholder engagement.
In effort to gather suitable references, five-time review of each article was
conducted, resulting around fifty journals related to the research object. Then these
journals are compared and encountered to gain holistic view that lies the fundamental
blocks of green marketing and economic sustainability concept. In effort of gaining
51
high quality articles, the researcher collected top tier journals from Emerald, JStor,
Google Scholar, Elsevier, Interscience Wiley, Harvard Business Review, MIT Sloan
Management Review, Sage, and the likes.
The data collection method was conducted by tracking data of environmental
or sustainable or green marketing index in some publication. Unfortunately, some of
the published information point to environmental or green performance, unlike green
marketing strategies. In search of the data that contain elements of green marketing
strategies, the choice fell into Greenpeace’s Guide to Greener Electronics. The
rationale is the NGO provides publication that assessed companies’ strategies and
policy aiming at greening their products, policies, and systems. It is quite different
from other publicly indexes which rather contain companies’ performance (output of
the strategies) than companies’ strategies.
Greenpeace has been campaigning for electronic companies to reduce toxic
chemicals usage and improve take back recycling for the past seven years. It involves
regular meetings or calls with the majority of the electronic companies to exchange
information and discuss company progress and relevant industry developments
(Greenpeace.org). It means that Greenpeace deal with direct contact with the insiders
of the companies, as well as monitoring the improvement that companies made.
Nevertheless, Greenpeace only rank companies on their public information
and practice, not private information to make sure that the ranking is transparent and
companies can remain publicly accountable (Greenpeace.org). The goal is clear that
Greenpeace aims to encourage companies to transparently and accountably publish its
progress in greening effort to the society. That is why beside the primary sources by
52
regular meetings or calls, Greenpeace relies more heavily on secondary sources on
published progress of greening efforts. The published materials gathered from the
companies’ website and its sustainability report. Greenpeace wants to know how
transparent and accountable the scrutinized companies in publishing their greening
efforts.
To make the assessment of companies’ greening efforts reliable, Greenpeace
set stringent standards of which every company should meet. The standards itself are
summarized in the ranking criteria which encompass criteria on toxic chemicals, on e-
waste, and on energy respectively. The assessment itself was conducted from June
2006 to October 2010. In the early five versions, Greenpeace only assessed fourteen
companies. In the sixth version, it adds categories on TV and game console
manufacturers, counting eighteen companies in total.
The ranking criteria reflect the demands of the Toxic Tech campaign to the
electronics companies. The two demands that Greenpeace deserves are that
companies should clean up their products by eliminating hazardous substances and
should take back and recycle their products responsibly once they become obsolete.
The two issues are interchangeably linked. The use of hazardous chemicals in
electronics prevents their safe recycling when the products are discarded. Companies
score marks out of 30, which are then re-calculated to give a mark out of 10 for
simplicity. But then Greenpeace adds one more criteria on energy.
53
D. Boundary of Operational Variables
This research employs four independent variables –product (X1), production
(X2), distribution (X3), and promotion (X4) strategies- and one dependent variable,
namely stock price (Y). The data were collected form Greenpeace’s quarterly Guide
to Greener Electronics and Nasdaq’s stock price quotation of observed companies.
1. Operational Definition
Green marketing strategy is the strategies that embrace systems, policies, and
process (Prakash, 2002: 286), of which pricing, promotion, distribution, and
development of products (Fuller, 1999 in Bäverstam and Larsson, 2009: 1) satisfy
interest of multiple internal and external stakeholders, as well as balancing economic,
social, and environmental goals (Elkington, 1997). In the practical framework,
proactive green marketing strategies include market research, production, product,
distribution/markets, price, promotion, and partnership strategies (Vaccaro, 2009:
323).
Of the seven items, the researcher limits this research by employing four
strategies only, product, production, distribution/market, and promotion strategies due
to the absence of data in Greenpeace’s Guide to Greener Electronics.
a. Product Strategy (X1)
This strategy can be carried on by “(a) creating green products with a
differential advantage which are recyclable, biodegradable, and are based on
sustainable development” (Vaccaro, 2009: 322-323). Green products that is demanded
is such as laptop that is free from PVC and/or BFR, mobile phone that is free from
54
mercury, and so forth. Green innovations then should be perceived as having superior
value to current products (e.g. perform as well as or better than non-green products
and other green highly competitive product offerings) (Vaccaro, 2009: 323). “Once
customers try the product or service, it should function well with good technical
performance and quality workmanship” (Vaccaro, 2009: 323).
In addition, the new product/service should be designed to be easy to
understand and also easy to observe by customers and other stakeholders.
Furthermore, the innovation should also be in accordance with customers’ needs and
values. (Vaccaro, 2009: 323). The second criterion is (b) green marketing strategy
could be utilized to substitute services or product rentals against ownership of
physical good (Vaccaro, 2009: 324).
Furthermore, Porter and van der Linde (1995: 123) identify some products
issues in environmental concerns. One of the observed industry is electronics and
manufacturing.
Table 3.1
Environmental Regulations Has Competitive Implications (Porter and van der
Linde 1995: 123)
55
To add, Greenpeace extends the product strategy perspective by employing
polyvinyl chlorine (PVC)-free and brominated flame retardants (BFR)-free models of
electronics product on the market. “Greenpeace defines ‘PVC-free’ as zero use of
PVC, with no exceptions and ‘BFR-free’ as zero use of brominated flame retardants,
with no exceptions” (Greenpeace Guide to Greener Electronics - Ranking Criteria
Explained, 2010: 6).
“The ultimate goal of PVC-free and BFR-free models must be zero levels of
total chlorine and total bromine. Some recycled plastics presently contain very
low trace levels of total chlorine and total bromine. Both chlorine and bromine
belong to halogens. For recycled materials, any maximum allowable limit for
‘halogen-free’ must be demonstrated to be consistent with currently
achievable minimum levels and must incorporate stepped decreases in the
limit, with a defined timeline towards the ultimate goal of zero. Such a limit
should apply to recycled plastics only, not to new or virgin materials, and only
where truly halogen-free recycled materials are not available. Manufacturers
must be able to demonstrate that recycled plastics used do not exceed their
maximum allowable limit” (Greenpeace Guide to Greener Electronics -
Ranking Criteria Explained, 2010: 6).
b. Production Strategy (X2)
This strategy pertains to changing production and other processes to be more
environmentally sensitive (Vaccaro, 2009: 322). In addition, firms can redefine green
innovations to include the means of production of how the product or service is
processed and utilized in an environmentally sustainable way (Vaccaro, 2009: 322).
56
This strategy could be associated with business-to-business (B2B) suppliers,
manufacturers, retailers, and consumers’ compatible green values rationale for buying
organic food, fair trade materials, parts, and products (Vaccaro, 2009: 322).
Moreover, Prakash (2002: 291) and Porter and van der Linde (1995: 124) emphasize
the greenhouse gases emission reduction
c. Distribution/Market Strategy (X3)
Distribution/market strategy can be carried on by:
(a) Creating more circular markets where materials can flow through product
take-back and recycling;
(b) Using multichannel distribution (or simply internet distribution), to make it
easy to find, simple to understand, easy to try, and easy to purchase new green
products or services;
(c) Creating new markets or market niches (perhaps via green technology
transfer) (Vaccaro, 2009: 324).
d. Promotion Strategy (X4)
Promotion strategy can be conducted by using marketing communication
strategies that rely more on environmentally-friendly new media, such as internet, e-
mail, e-newsletters, webinars, and mobile marketing, as well as environmentally
friendly recyclable promotional print materials (Vaccaro, 2009: 324-325). Those
media are said to be environmentally-friendly because they do not use materials, like
paper, banner, glue, and so forth.
57
But, Kärnä et al. (2001: 62) have different stance. They argue that
environmentally oriented advertisements could include green color; nature, eco-
labels; statements of environmental friendliness; emphasis of renewable raw
materials; environmentally production processes, and recyclability. They then
explicitly elaborate five categories of green advertising strategy below.
Table 3.2
Operationalization of the Frame Reference (Kärnä et al., 2001: 63)
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2. Measurement of Variables
After understanding the definition of operational variables above, now the
challenging issue is how to measure the variables. Greenpeace provides extensive and
in-depth criteria in measuring the independent variables operated in this study.
a. Product Strategy (X1)
In measuring product strategy, the researcher utilizes PVC-free and BFR-free
models of electronic products on the market –coded as C5.
“Various industry association standards use a definition of ‘halogen-free’ that
allows up to 900 ppm (parts per million) of total chlorine and 900 ppm of total
bromine, with a maximum total halogen level of 1500 ppm. These standards
include JPCA’s (Japan Printed Circuit Association) JPCA-ES-01-1999, IEC’s
(International Electrotechnical Commission) 61249-2-21 and IPC’s
(Association Connecting Electronics Industries) 4101B. Greenpeace does not
accept such high levels of halogens in materials that are misleadingly defined
as ‘halogen-free’. A material containing total bromine below 900 ppm, and
described as ‘halogen-free’, could still contain certain BFRs (e.g. penta-BDE)
over 1000 ppm – exceeding the level banned by the European RoHS
Directive” (Greenpeace Guide to Greener Electronics - Ranking Criteria
Explained, 2010: 6).
“Companies score double points for meeting this criterion. For top points, a
company’s whole product portfolio needs to be both PVC-free and BFR-free. PVC-
free and/or BFR-free peripherals and accessories do not score points because they are
59
not product systems”. The scale ranges from 0, +1, +2, and +3, which refers to bad,
partially bad, partially good, and good respectively.
b. Production Strategy (X2)
The key point of this strategy is commitment to reduce GHG emissions from a
company’s own operations with timelines –coded as E3. It further indicates
commitment to percentage cut in GHG emission using GHG emission data calculated
in ‘Support for global mandatory reduction of GHG emissions’ –coded as E1. The E1
states that “supports global mandatory cuts of at least 50% by 2050 (from 1990
levels); cuts by industrialized countries of at least 30% as a group by 2020 and for
greenhouse gas emissions to peak by 2015” (Greenpeace Guide to Greener
Electronics - Ranking Criteria Explained, 2010: 10).
“This criterion rates brands on their corporate commitment to reduce GHG
emissions from their own operations, using GHG emission data (GHG Protocol
Corporate Standard Scope 1 & 2) calculated in E1 as a baseline. The baseline should
be GHG emission data from 2006, 2007 or 2008” (Greenpeace Guide to Greener
Electronics - Ranking Criteria Explained, 2010: 11).
This criterion also use scale from 0, +1, +2, and +3 to represent bad, partially
bad, partially good, and good. Full points go to brands that commit to reducing their
own GHG emissions by at least 20% by 2012, mean those which score +3 (good).
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c. Distribution/Market Strategy (X3)
This strategy uses Greenpeace’s Guide to Greener Electronics of ‘provides
voluntary take-back of e-waste in countries not legally required to do so’ –coded as
W2.
“This criterion scores companies on their voluntary take-back and recycling
programmes in countries/states where there are no laws requiring them to do
so. The European Union (EU) has the WEEE Directive (Waste from Electrical
and Electronic Equipment), which requires producers to take back and recycle
their waste. Likewise, Japan has the Household Appliance Recycling Law,
which makes producers responsible for recycling waste from household
appliances and computers. Taiwan and South Korea also have extended
producer responsibility (EPR) programmes for large household appliances and
PCs. A growing number of States in the US and Provinces in Canada have
take-back legislation” (Greenpeace Guide to Greener Electronics - Ranking
Criteria Explained, 2010: 8).
This criterion also use scale from 0, +1, +2, and +3 to represent bad, partially
bad, partially good, and good. Those who score +3 “go to companies who provide
free, easy and global take-back and recycling services for all their discarded products,
both for business and individual customers, in every country where their products are
sold” (Greenpeace Guide to Greener Electronics - Ranking Criteria Explained, 2010:
8).
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d. Promotion Strategy (X4)
This strategy uses Greenpeace’s Guide to Greener Electronics of 'disclosure of
carbon footprint (GHG emissions) of company’s own operations and two stages of the
product supply chain' -coded as E2. This criterion scores companies on disclosure of
greenhouse gas (GHG) emissions. Companies should use the GHG Protocol
Corporate Standard to calculate emissions from their own operations and at least two
stages of their supply chain. The keyword in this criterion is disclosure.
This criterion also use scale from 0, +1, +2, and +3 to represent bad, partially
bad, partially good, and good. Those who score full mark are companies who not only
disclose GHG emissions from their own operations and two stages of the supply
chain, but also get the calculations ISO 14064 certified (Greenpeace Guide to Greener
Electronics - Ranking Criteria Explained, 2010: 10-11).
e. Stock Price (Y)
The capital stock –or simply stock- of a business entity reflects the original
capital paid into or invested in the business by its founders. “It serves as a security for
the creditors of a business since it cannot be withdrawn to the detriment of the
creditors. Stock is different from the property and the assets of a business which may
fluctuate in quantity and value (Wikipedia.org, 2011)”.
Stock price is very sensitive as it can be affected by some sort of things, like
volatility in the market, global economic and politics condition, reputation of the
company and other market-sensitive things. Stock price is only traded in the stock
market by public companies. In this regard, the quotation utilized in this research
refers to the date of publication of Greenpeace’s Guide to Greener Electronics. The
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dates are June 25, 2008 September 16, 2008; November 24, 2008; March 31, 2009;
July 1, 2009; September 30, 2009; and January 7, 2010 respectively.
Table 3.3
Summary of Operational Variables
VARIABLE SUB VARIABLE
DIMENSION INDICATOR SCALE
Green Marketing Strategies (Vaccaro, 2009: 323)
1.Product Strategy (X1)
PVC-free and BFR-free models (product systems) on the market
Both PVC-free and BFR-free products (double points)
Ordinal
2.Production Strategy (X2)
Commitment to reduce GHG emissions from a company’s own operations with timelines
Commitment to reduce GHG emissions from own operations by at least 20% by 2012
Ordinal
3.Distribution/market Strategy (X3)
Provides effective voluntary take-back where no EPR laws
Free, easy and global take-back for all products in all countries where products are sold
Ordinal
4.Promotion Strategy (X4)
Disclosure of carbon footprint (GHG emissions) of company’s own operations and two stages of the product supply chain
Disclosure of ISO 14064-certified GHG emissions from company’s own operations and those of at least two supply chain stages
Ordinal
Economic Sustainability (Fauzi et al., 2010: 1346)
Stock Price (Y)
Stock price quotation based on Greenpeace’s Guide to Greener Electronics timeline
Quarterly stock price quotation in NASDAQ from June 2008 to January 2010
Ratio
E. Data Analysis Technique
Data analysis is “the application of reasoning to understand the data that have
been gathered” (Babin and Griffin, 2008). In addition, regression analysis will be used
to test hypotheses formulated for this study. Four independent variables –product,
production, distribution/market, and promotion strategies- are included to analyze
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their influence towards dependent variable, namely stock price. Multiple regressions
will determine the relationship between dependent and independent variables, the
direction of the relationship, the degree of the relationship and strength of the
relationship. Multiple regression are most sophisticated extension of correlation and
are used to explore the predict ability of a set of independent variables on dependent
variable. Four hypotheses then generated, which then give direction to assess the
statistical relationship between the dependent and independent variable.
To obtain the best model of research, researcher should perform other pre-
tests. The tests are classical assumption test and regression analysis, which comprises
of hypothesis test.
1. Classical Assumption Test
a. Multicollinearity Test
Multicollinearity test aims to test if there are correlation inter-independent
variables in regression model (Santoso, 2010: 203). A good regression model should
not account correlation amongst the independent variables (Santoso, 2010: 204). If
independent variables correlate one to another, it indicates these variables are not
orthogonal (Ghozali, 2006: 96). Orthogonal variable is independent variable of which
the correlation value among independent variables equals to zero (Ghozali, 2006: 96).
To detect if multicollinearity happens in regression model, Ghozali (2006: 96) suggest
researcher to consider the following:
R2 value of an estimation of empirical regression model is high, but partially
any independent variables are not significant influencing dependent one.
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Analyzing correlation matrix among independent variables. If there is high
autocorrelation (usually above 0.90) among independent variables, this
indicates multicollinearity appears. Whilst the relatively fair correlation
among independent variables does not also mean no multicollinearity. It can
be affected due to effect of combination of two or more independent variables.
Multicollinearity also can be drawn from (1) 'tolerance' value and the opposite
(2) 'variance inflation factor (VIF). Both measurement can predict which
independent variable explained by (an)other variable(s). In modest
interpretation, each independent variable bound to dependent one and is
regressed towards other independent variables. In addition, tolerance measures
variability of chosen independent variables which is not explained by other
independent variables. Therefore, a small tolerance score equals to high VIF
score (because VIF = 1/Tolerance). A commonly used cut-off score to indicate
multicollinearity is Tolerance score ≤ 0.10 or simply equals to VIF score ≥ 10.
Every researcher should determine collinearity level which can be tolerated.
In addition, a regression model can be said free from multicollinearity if
correlation coefficient among independent variables should be lower than 0.5. if the
correlation so strong, multicollinearity exists. Furthermore if it occurs, Santoso (2010:
207) suggests:
Dropping out one of variables, for instance independent variable A and B is
strongly correlated each other, so the researcher may determine if variable A
or B to be dropped from regression model.
Using advanced method, such as Bayesian regression or Ridge regression.
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b. Autocorrelation Test
Autocorrelation test aims to test if there is correlation in linear regression
model between disturbances in t period with period t-1 (previous period) (Santoso,
2010: 213). If correlation occurs, it refers to autocorrelation problem. It occurs
because sequential observation along with time series. This problem appears because
residual (disturbance) is not free from one observation to another observation
(Ghozali, 2006: 99). It is often found in time series because of disturbance in
individual or group tends to influence disturbance in the same individual or group in
the next period (Ghozali, 2006: 100).
In cross-section data, autocorrelation problem relatively rarely occurs because
disturbance in different observations come from different individual or group
(Ghozali, 2006: 99). A good regression model is one which free from autocorrelation
(Santoso, 2010: 213).
This research uses the Durbin-Watson test suggested by Santoso (2010). To
detect autocorrelation, there are some accepted frameworks, such as:
D-W value is lower than -2 indicate there is positive autocorrelation.
D-W value is in between -2 and +2 indicate no autocorrelation.
D-W value is more than +2 indicate there is negative autocorrelation.
c. Heteroscedasticity Test
Heteroscedasticity test aims to test if there is variance difference from residual
of one observation to (an)other observation(s) occurs (Santoso, 2010: 207).
Furthermore, if the variance remains constant, it is called homoscedasticity and if it is
changing or different, it is called heteroscedasticity (Santoso, 2010: 207). Most cross-
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section data include heteroscedasticity because it collects data which represent any
kind of measurements (Ghozali, 2006: 125).
To test homoscedasticity test, the more practical method is by describing
relationship between residual scores of regression model –difference of prediction
score and real one (Santoso, 2010: 208). In addition, Ghozali (2006) stipulates to
detect heteroscedasticity, but this research focuses only on graph analysis.
Graph analysis can be conducted by viewing plot graph between dependent
variable’s prediction score –ZPRED- with its residual, SRESID. Detection of
heteroscedasticity can be conducted by analyzing distribution pattern in scatterplot
graph between SRESID and ZPRED, where Y axis is a predicted Y and X axis is
residual (Y prediction – Y actual) which has been studentized (Ghozali, 2006: 125).
Decision making rationale (Santoso, 2010: 210):
If there is a specific pattern, like dots which form well-ordered pattern
(waving, spreading then narrowing), it indicates heteroscedasticity occurs.
If there is no well-ordered pattern, and the dots spread above and below 0 in Y
axis, so heteroscedasticity does not prevail.
d. Normality Test
Normality test aims to test if in a regression model, residual score of
regression has a normal distribution (Ghozali, 2006: 147). If distribution of residual
scores is not normally distributed, then it indicates a problem in normality assumption
(Santoso, 2010: 210). As commonly known that t and F test assume residual score
follows normal distribution. If this assumption ignored, then statistical test is not valid
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for small sample (Ghozali, 2006: 147). This test is more practically conducted by
drawing normal probability plot.
Normality detection:
Detection can be carried on by viewing data distribution (dots) in diagonal
from graph, with some considerations as follow:
If the data spreads around diagonal line and follow diagonal line, then
regression model meets normality assumption.
If the data spread far from diagonal line and/or does not follow direction of
diagonal line, then regression model does not meet normality assumption.
2. Regression Analysis
Generally, regression analysis is a study of interdependence of dependent
variable with one or more independent variables, aiming at estimating and/or
predicting average population or average dependent variable based on known score of
independent variables (Gujarati, 2003 in Ghozali, 2006: 85). Regression analysis
results are coefficient for each independent variable. This coefficient is drawn by
predicting independent variables score with an equation. Regression coefficient is
calculated for two purposes: first, to minimize deviation between actual score and
dependent variable’s estimated score based on available data (Tabachnick, 1996 in
Ghozali, 2006: 85).
In regression analysis, besides measuring relationship strength between two
variables or more, also shows direction between dependent variable and independent
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variables. Dependent variable is assumed random/stochastic, means that having
probabilistic distribution. On the contrary, independent variables are assumed having
constant value (Ghozali, 2006: 86).
Ordinary Least Squares (OLS) is an estimation technique of dependent
variable which incorporates regression analysis (Ghozali, 2006: 86). According
Gujarati (2003 in Ghozali, 2006: 86), the main assumption that incorporates classical
linear regression by using OLS as follows:
Linear regression model: 푌푖 = 푏1 + 푏2 푋푖 + 푢푖 (3.1)
X score is assumed non-stochastic, means that X score is constant in an
iterative sample.
Average bias score is zero or 퐸(푢푖/푋푖) = 0 (3.2)
Homoscedasticity, means bias variance is the same for every period and is
formulated in mathematical equation 푉푎푟 (푢푖/푋푖) = 훿 (3.3)
No autocorrelation among bias (no correlation between ui and uj) or
mathematically 퐶표푣 (푢푖,푢푗/푋푖,푋푗) = 0 (3.4)
ui and Xi are free each other, so 퐶표푣 (푢푖/푋푖) = 0 (3.5)
The number of observation should be bigger than number of estimated
parameters (the number of independent variables).
There should be variability in X score; means that each X scores should be
different.
Regression model has been specified correctly, means that no specification
biases in model used in empirical analysis.
No perfect multicollinearity among independent variables.
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This research employs multiple-linear regression as it has four independent
variables and one dependent variable. The model is explained in mathematical
equation as follows:
Y = α + β1 PROD + β2 PRDT + β3 DIST + β4 PROM + ℮ (3.6)
Where,
Y = Stock Price
α = Intercept
β = Regression coefficient
PROD = Product strategy
PRDT = Production strategy
DIST = Distribution strategy
PROM = Promotion strategy
a. T test
T statistics test basically indicates how strong influence one independent
variable partially in explaining variation of dependent variable. The null hypothesis
(HO) to be tested is if a parameter (bi) equals to zero or HO: bi = 0
It implies if an independent variable is not significant explainer towards
dependent variable. The alternative hypothesis HA would be parameter of a variable
does not equal to zero or HA: bi ≠ 0
Ghozali (2006: 89) further elaborates, if the value of t test is more than the
value of t table in positive region and if the value of t test is more than the value of t
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table in negative region, therefore HO should be rejected and HA should be accepted,
means that independent variables partially as influence significantly towards
dependent variable. On the contrary, when t test < t table therefore HO accepted and
HA rejected, means that independent variable partially has no significant influence
towards dependent variable. Level of significant used in this test is 5% or (α) 0.05.
b. Determination Coefficient
Determination coefficient (R2) aims to measure how good model in explaining
variation of dependent variable (Ghozali, 2006: 87). Determination coefficient score
is between zero and one. Small R2 score indicates ability of independent variables in
explaining variation of dependent variable is constrained. On the other hand, score
that approaches one indicates independent variables provide almost all information
needed to predict variation of dependent variable. The closer adjusted R2 score to 1,
the better independent variables explaining dependent variable.
R2 often formulated in mathematical formula as follows:
푅 = = 1 − (3.7)
R2, thus defined, ranging from 0 to 1. The closer it is to 1, the better is the fit.
However, there are problems with R2. “First, it measures in-sample goodness of fit in
the sense of how close an estimated Y value is to its actual value in the given sample.
Second, in comparing two or more R2’s, the dependent variable, or regress and, must
be the same. Third, an R2 cannot fall when more variables are added to the model”
(Agustina, 2011).
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CHAPTER IV
ANALYSIS AND DISCUSSION
A. Description of Research Object
In this study, the researcher tries to investigate the influence of green
marketing strategies towards economic sustainability. Researchers have contributed
much to the science in the field of green marketing. Most of the researches constitute
theoretical and anecdotal studies. Scholars rarely found researches that express
empirical evidence in terms of green marketing. The most common research regarding
“environmental”, “green”, or “sustainable” marketing relies heavily on environmental
performance or firm performance. The results showed inconsistent evidence.
Researchers often confuse with concept of green strategy and green performance.
That is why developing a standardized measurement or rating is important to help
researchers link the nexus between green marketing strategy and other variables.
This research uses Greenpeace’s Green Electronics Guide which consistently
ranks leading mobile phones, game console, television, and personal computer (PC)
manufacturers in terms of their global policies and practice on three domains: phasing
out harmful chemicals; taking responsibility for their products once they are discarded
by consumers; and their impact on the climate (Greenpeace.org, 2010). The rationale
behind it due to its visibility on activism, advocacy, and tie to marketing issues can
trigger companies to respond customer and NGOs demands. Even some company
policies and practices were changed due to pressure by this organization as a part of
marketing communication between company and stakeholders than shareholders.
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Beside green marketing issues, stock price as a dependent variable requires a
well recognized data from reliable institution. In this regard, the researcher utilizes
data from National Association of Securities Dealers Automated Quotation
(NASDAQ) which was quoted in Nasdaq.com. The reason to utilize data from Nasdaq
is because it has more trading volume than any other electronic stock exchange in the
world (Wikipedia.org).
1. Greenpeace at a Glance
Greenpeace is an international non-governmental organization (NGO) focuses
on environmental issues, counting offices in more than 40 countries and
headquartered in Amsterdam, Netherlands. Its objective is to "ensure the ability of the
Earth to nurture life in all its diversity and focuses its work on world wide issues such
as global warming, deforestation, overfishing, commercial whaling and anti-nuclear
issues" (Wikipedia.org).
Greenpeace's starting point is the peace movement and anti-nuclear
demonstration in Vancouver, British Columbia in the early 1970's. The Greenpeace
terms was coined by the Don't Make a Wave Committee. The starting point was the
committee sent a chartered ship, Phyllis Cormack, from Vancouver to United States
as opposing activism of US nuclear devices testing in Amchitka, Alaska. This protest
was named as Greenpeace (Wikipedia.org).
Greenpeace elaborates its mission in its official website as follows:
Catalysing an energy revolution to address the number one threat facing our
planet: climate change.
73
Defending our oceans by challenging wasteful and destructive fishing, and
creating a global network of marine reserves.
Protecting the world’s remaining ancient forests which are depended on by
many animals, plants and people.
Working for disarmament and peace by reducing dependence on finite
resources and calling for the elimination of all nuclear weapons.
Creating a toxin free future with safer alternatives to hazardous chemicals in
today's products and manufacturing.
Campaigning for sustainable agriculture by encouraging socially and
ecologically responsible farming practices (Greenpeace.org).
Furthermore, Greenpeace has played a vital role in environmental activism
and advocacy, among other things, the adoption of:
A ban on toxic waste exports to less developed countries.
A moratorium on commercial whaling.
A United Nations convention providing for better management of world
fisheries.
A Southern Ocean Whale Sanctuary;
A 50-year moratorium on mineral exploitation in Antarctica.
Bans on the dumping at sea of radioactive and industrial waste and disused oil
installations.
An end to high-sea, large-scale driftnet fishing.
A ban on all nuclear weapons testing (Greenpeace.org).
74
2. Guide to Greener Electronics
In March 2006, Greenpeace released quarterly Green Electronics Guide which
ranks leading mobile phones and PC manufacturers on their global policies and
practices on eliminating harmful chemicals and on taking responsibility for their
products once they are discarded by consumers (Greenpeace.org, 2008). Companies
are ranked on information that is publicly available and clarifications and
communications with the companies.
Nowadays, Greenpeace has released sixteen versions since the inception of
Green Electronics Guide. The guide is updated every three months. Nonetheless there
were some changes where the fourteenth edition was not published on December
2009, but on January 2010. The same goes for the fifteenth and sixteenth edition, of
which both editions were released on May 2010 and October 2010 respectively.
In the following years Greenpeace’s guide got more attention. The prior
electronics sector that focus only on mobile phones and PC then was developed by
taking game console and television (TV) into account. The number of observed
companies also increased from fourteen to sixteen companies in the sixth edition.
Ranking criteria was also improved, from two domains in first edition to three
domains in eighth edition: chemicals, electronic waste (e-waste), and energy.
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Figure 4.1
Guide to Greener Electronics Version 16
The ranking criteria indicate the demands of the Toxic Tech campaign to the
electronics firms. The demands require companies to:
clean up their products by eliminating hazardous substances;
take back and recycle their products responsibly once they become obsolete.
The two issues are related each other. The use of harmful chemicals in
electronics prevents their safe recycling when the products are discarded (Guide to
Greener Electronics Version 1, 2006: 1). The increasing attention on climate change
issues, Greenpeace added new energy criteria “to improve their corporate policies and
practices with respect to Climate and Energy” (Guide to Greener Electronics Version
8, 2008: 1).
Greenpeace consistently updates the guide to better improve the assessment of
the firms operations. Fourteen companies which produce PC and mobile phones -
based on their policies on toxic chemicals and recycling- were assessed from the first
to the fifth version. Later in the sixth release, the organization added the leading TV
76
manufacturers, such as Philips and Sharp, as well as the game console giants,
Nintendo and Microsoft. The other market leaders for TVs and game console
producers are already included in the recent guide (Guide to Greener Electronics
Version 9, 2008: 1). Moreover, Greenpeace stressed some of the recent ranking
criteria on toxic chemicals and e-waste, of which a criterion added on each issue.
Besides, five energy criteria were also added.
In addition to publication of the guide, the eighth version was released on June
25, 2008. While the ninth, tenth, eleventh, twelfth, thirteenth, and fourteenth version
were released on September 16, 2008; November 24, 2008; March 31, 2009; July 1,
2009; September 30, 2009; and January 7, 2010 respectively.
a. Criteria on Toxic Chemicals
Substituting harmful chemicals in the production of electronics will save labor
and local communities from negative effect in the manufacturing plant. Phasing
hazardous substance out “will also prevent leaching/off-gassing of chemicals like
brominated flame retardants (BFR) during use, and as enable electronic scrap to be
safely recycled” (Guide to Greener Electronics Version 2, 2006: 1). Furthermore, “the
presence of toxic substances in electronics perpetuates the toxic cycle - during
reprocessing waste and by using contaminated secondary materials to make new
products” (Guide to Greener Electronics Version 3, 2007: 1).
Toxicity matter is a critical one. “Until the use of toxic substances is
eliminated, it is impossible to secure ‘safe’ recycling” (Guide to Greener Electronics
Version 10, 2008: 1). Therefore, the points awarded to the practice on chemicals are
weighted more heavily than criteria on recycling (Guide to Greener Electronics
Version 10, 2008: 1).
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The first criterion has been explored to enforce companies not only to have a
chemicals policy underpinned by the Precautionary Principle, but also to support a
revision of the restriction of hazardous substance (RoHS) Directive that bans harmful
substances, specifically BFRs, chlorinated flame retardants (CFRs) and PVC (Guide
to Greener Electronics Version 11, 2009: 1). In addition, the criterion on chemicals
management remains the same. The criterion: BFR-free and PVC-free models on the
market, also remains the same and continues to score double points.
“The two former criteria: Commitment to eliminating PVC with timeline and
Commitment to eliminating all BFRs with timeline, have been merged into one
criterion, with the lower level of commitment to PVC or BFR elimination determining
the score on this criterion” (Guide to Greener Electronics Version 11, 2009: 1).
A new criterion further has been added, accounts Phase out of additional
substances with timeline(s). The guide further elaborates three additional substances
as suspect substances for potential future elimination, such as all phthalates,
beryllium, including alloys and compounds and antimony/antimony compounds
(Guide to Greener Electronics Version 12, 2009: 1).
b. Criteria on E-waste
Greenpeace also pays attention on extended producer responsibility, of which
companies should bear cost of e-waste generated by their products to take back and
recycle them responsibly.
In addition, individual producer responsibility (IPR) provides a feedback loop
to the product designers of the end-of-life costs of treating discarded electronic
products and thus an incentive to design out those costs (Guide to Greener Electronics
Version 12, 2009: 1).
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“An additional e-waste criterion has been added and most of the existing
criteria have been sharpened, with additional demands. The new e-waste criterion
requires the brands to report on the use of recycled plastic content across all products
and provide timelines for increasing content” (Guide to Greener Electronics Version
13, 2009: 1).
c. Criteria on Energy
The five new energy criteria address core expectations that Greenpeace has of
responsible companies that are willing to overcome climate change, such as:
Support for global mandatory reduction of greenhouse gas (GHG) emissions;
Disclosure of the company’s own GHG emissions plus emissions from two
stages of the supply chain;
Commitment to reduce the company’s own GHG emissions with timelines;
Amount of renewable energy used
Energy efficiency of new models (companies score double on this criterion)
Table 4.1
Summary of Toxic Chemicals Criteria in Depth
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Table 4.2
Summary of E-waste Criteria in Depth
Table 4.3
Summary of Energy Criteria in Depth
80
3. National Association of Securities Dealer Automated Quotation
(NASDAQ)
Nasdaq is owned and operated by the Nasdaq OMX Group, the stock of which
was listed on its own stock exchange under the ticker symbol NASDAQ: NDAQ
(Wikipedia.org). It was the successor to the over-the-counter (OTC) trading system.
“As late as 1987, the NASDAQ exchange was still commonly referred to as the OTC
in media and also in the monthly Stock Guides issued by Standard & Poor's
Corporation’ (Wikipedia.org).
It owns the NASDAQ Composite Index, which measures all Nasdaq domestic
and non-U.S. based common stocks listed on The Nasdaq Stock Market
(Nasdaq.com). The index is market-value weighted, indicating that each company's
security affects the index in proportion to its market value (Nasdaq.com).
Nowadays the NASDAQ Composite Index includes over 5,000 companies,
more than most other stock market indexes. Because it is so broad-based, the
Composite is one of the most widely followed and quoted major market indexes
(Nasdaq.com).
In this regard, the quotation utilized in this research refers to the date of
publication of Greenpeace’s Guide to Greener Electronics. The dates are June 25,
2008 September 16, 2008; November 24, 2008; March 31, 2009; July 1, 2009;
September 30, 2009; and January 7, 2010 respectively.
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B. Analysis and Discussion
1. Descriptive Analysis
Table 4.4
Example of Nokia’s Score in Greenpeace’s Guide to Greener Electronics
This research relies on secondary sources to gain the factual framework
provided by highly visible non-governmental organization on environmental focus,
namely Greenpeace. Its Guide to Greener Electronics is assessed thoroughly and
updated regularly. The guide weights company policies and practice with scale from 0
to 3. As shown above, 0 indicates bad policies and practices, while 1+, 2+, and 3+
implies partially bad, partially good, and good respectively. After all, the data are
processed by using SPSS version 17.
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Table 4.5
Descriptive Statistics
Descriptive Statistics
Mean Std. Deviation N
STOCK 32.2193 39.98171 84
PROD .97 .929 84
PRDT 1.14 1.121 84
DIST 1.19 .898 84
PROM 1.57 .607 84
The descriptive statistics shows five variables, of which STOCK refers to
stock price; PROD refers to product strategy; PRDT belongs to production strategy;
DIST indicates distribution/market strategy; and PROM represents promotion
strategy.
Of the eighty four samples, the lowest mean of independent variables pertains
to PROD, scoring 0.97, while PROM records the highest mean with 1.57. Since
promotion strategy scores the highest mean, it indicates companies’ effort to disclose
carbon footprint is greater than committing in other three strategies. On the contrary,
companies lack the product strategy as the mean is only 0.97. In general, they look so
reluctant in greening products.
On the contrary, PROM scores the lowest standard deviation with 0.607, while
PRDT tops over the other independent variables with 1.121. High standard deviation
indicates that the data are spread out over a large range of values, while a low
standard deviation means that the data points tend to be very close to the mean.
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Figure 4.2
PVC-free and/or BFR-free Models (Product Strategy - X1)
The graph above shows indicator of product strategy, namely PVC-free and/or
BFR-free models. The highest score is 3 held by Apple, while the lowest score is 0.
Apple seems improving from time to time. Its commitment to phase out polyvinyl
chlorine (PVC) and brominated flame retardants (BFR) in all its product line was
proven with significant success by topping the rank.
On the other hand, Nintendo seems doing nothing and ignoring Greenpeace’
campaign to phase out PVC and BFR in their product line as indicated in the graph it
lies in the bottom rank. Nintendo may gain continuous protest from Greenpeace as it
denies responding the critiques. The graph also shows significant difference among
the companies. More than half of the companies awarded partially bad (+1). In this
indicator, mean of the samples is 0.994048 and standard deviation is 0.916693.
0
0.5
1
1.5
2
2.5
3
3.5
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Jan-10
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Figure 4.3
Own GHG Emissions Reduction Commitment (Production Strategy - X2)
The graph describes indicator of production strategy in terms of commitment
to reduce own greenhouse gases emission. The highest score is 3, while the lowest
score is 0. Unlike the PVC- and BFR-free models, more companies commit in
reducing greenhouse gas emissions. It is indicated by more than one company that can
score +3. Nokia, Philips, HP, and Dell are the top gainers in this category.
The graph also reveals that there is discrepancy among the companies. Only
few companies that can score +3, while almost a half of the companies ever score the
lowest point. In this indicator, mean of the samples is 1.142857 and standard
deviation is 1.120917.
0
0.5
1
1.5
2
2.5
3
3.5
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Jan-10
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Figure 4.4
Voluntary Take-back (Distribution/market Strategy)
The graph describes indicator of distribution/market strategy, namely provides
voluntary take-back in countries where there is no extended producer responsibility
law exists. An obvious discrepancy also appears in voluntary take-back and recycling.
Nokia tops the other competitors alone by scoring +3. The majority of the companies
can score +1 and +2. It indicates that there is increasing concern of a company to
provide easy access to voluntary take-back.
There are few companies which score zero and do not show significant
progress from time to time. This may happen because companies should bear the cost
of providing take-back and recycling. In this indicator, mean of the samples is
1.190476 and standard deviation is 0.89814.
0
0.5
1
1.5
2
2.5
3
3.5
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Jan-10
86
Figure 4.5
Company Carbon Footprint Disclosure (Promotion Strategy – X4)
The graph shows indicator of promotion strategy, namely company carbon
footprint disclosure. The highest score is 3, while the lowest score is 0 held by Apple.
Even though most of the companies remain consistent scoring +1 and +2 for carbon
footprint disclosure, there is only HP which can score +3.
On the contrary, it is only Apple who lacks disclosure of its carbon footprint.
The company does not show significant progress from time to time, making it as the
lone looser. Since carbon footprint disclosure can help a company to leverage
reputation by acquiring ISO 14064. In this indicator, mean of the samples is 1.571429
and standard deviation is 0.606902.
0
0.5
1
1.5
2
2.5
3
3.5
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Jan-10
87
2. Classical Assumption Test
a. Multicollinearity Test
Table 4.6
Multicollinearity Test Result
Coefficientsa
Model
Unstandardized Coefficients
Standardized Coefficients
t Sig.
Collinearity Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) 20.908 11.615
1.800 .076
PROD 11.147 4.885 .259 2.282 .025 .718 1.393
PRDT -10.901 4.019 -.306 -2.713 .008 .729 1.372
DIST -19.318 5.128 -.434 -3.767 .000 .697 1.434
PROM 22.879 7.327 .347 3.123 .003 .748 1.337
Multicollinearity test aims to avoid the habit of drawing conclusion process of
influence partially in every independent variable towards dependent variable. So, it is
imperative to detect whether there is serious correlation among independent variables.
If correlation happens, the statistical process should move back to sourcing good data.
From the table above, the result of calculation on Tolerance value indicates there are
no independent variables with Tolerance value less than 0.10, which means there is no
correlation among independent variables with value more than 95%. Furthermore,
calculation on value of Variance Inflation Factor (VIF) also reveals no independent
variables with value more than 10. It can be concluded that there is no
multicollinearity among independent variables in the regression model.
88
b. Autocorrelation Test
Table 4.7
Autocorrelation Test Result
Model Summaryb
Model R R
Square
Adjusted R
Square Std. Error of the
Estimate Durbin-Watson
1 .519a .269 .232 35.03889 .806
In particular model, autocorrelation test aims to identify the availability of
correlation between intruder variable (e1) in particular period with the previous
intruder variable (et-1). To gain autocorrelation value, the researcher utilizes Durbin-
Watson test.
The statistical calculation using SPSS 17 as shown in the Model Summary, the
value of Durbin-Watson test is + 0.806. To recognize whether the score indicates
occurrence of autocorrelation, it is essential to look up reference. According to
Santoso (2010: 215), generally value of D-W from – 2 to + 2 indicates no
autocorrelation exist. If the Durbin–Watson statistic is substantially less than 2, there
is evidence of positive serial correlation. On the other hand, if the Durbin-Watson
statistic is more than 2, there is substantiated evidence of negative serial correlation.
Therefore, based on value of the table indicates there is no autocorrelation in the
model. Furthermore, this corroborates that the model can progress to regression
analysis.
89
c. Heteroscedasticity Test
Figure 4.6
Heteroscedasticity Test Scatterplot
Heteroscedasticity test aims to detect if there is residual variance exists in
particular monitoring period to another period. Once the characteristics are satisfied, it
denotes that the factors of intruder variation towards the data have the characteristics
of heteroscedasticity. Simply, a good model should be homoscedastic, not
heteroscedastic.
Drawing conclusion from scatter plot is suggested to detect if
heteroscedasticity exists or not. Scatter plot can be utilized to refer to graphic of plot
90
between prediction value (dependent) ZPRED and the residual SRESID, of which Y
is predicted value and X is residual value. The scatter plot shows the dots spread
randomly and well-spread both above and below 0 in Y axis. It indicates there is no
heteroscedastic exist in the regression model, so enable the model to predict stock
price based on input of independent variables, namely product strategy, production
strategy, distribution/market strategy, and promotion strategy.
d. Normality Test
Figure 4.7
Normality Test Histogram
91
Normality data test aims to detect data distribution in the variables used in a
research. A good data should have normal distribution. Drawing conclusion from
histogram is a suggested way to detect whether the data is normally distributed or not.
If the graph shows the data are not normally distributed, hence research cannot be
continued. From the graph above, it can be concluded that the histogram is
symmetric; the line does not skew to left or right side. Based on this notion, the
histogram above indicates the data is normally distributed. Therefore the regression
model fits normality assumption. By then, the model is good and this research can
progress to regression analysis.
3. Hypothesis Test
a. F Test
Table 4.8
F Test Table
ANOVAb
Model Sum of Squares df
Mean Square F Sig.
1 Regression 35688.380 4 8922.095 7.267 .000a
Residual 96990.183 79 1227.724 Total 132678.563 83
From the ANOVA test or namely F test, the value of F test is 7.267 with 0.000
probability. Since the probability value is less than 0.05, therefore H0 should be
rejected and H1 should be accepted.
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To gain the value of F table, it is imperative to compare F test with F table at
0.05 level of significance. The value of degree of freedom (df)1 = k-1 = 5-1 = 4 and
df(2) = n-k = 84-4 = 80. Therefore, the value of F table at 0.005 level of significance
is 2.49, while the value of F test is 7.267. Since F test is 7.267 > F table 2.49 therefore
H0 is rejected and H1 is accepted.
Based on the result of F test, it can be concluded that all independent
variables, of which product strategy (X1), production strategy (X2),
distribution/market strategy (X3), and promotion strategy (X4) simultaneously has
influence towards stock price (Y) at 0.05 level of significance.
b. T Test
Table 4.9
t Test Table
Coefficientsa
Model
Unstandardized Coefficients
Standardized Coefficients
t Sig. B Std. Error Beta
1 (Constant) 20.908 11.615
1.800 .076
PROD 11.147 4.885 .259 2.282 .025
PRDT -10.901 4.019 -.306 -2.713 .008
DIST -19.318 5.128 -.434 -3.767 .000
PROM 22.879 7.327 .347 3.123 .003
93
1. Product Strategy (X1)
According to the table above, the obtained result reveals significance value for
product strategy (X1) is 0.025. The significance value of product strategy (X1) 0.025
is less than p-value 0.05. In addition, with degree of freedom (df) = n - total of
independent variables = 84-4 = 80 and at 0.05 level of significance, the t table is 1.99.
Since t test is 2.282 > t table 1.99, hence H0a should be rejected and H1a should be
accepted. Therefore, product strategy (X1) partially has significant influence towards
stock price (Y).
2. Production Strategy (X2)
According to the table above, the obtained result shows significance value for
production strategy (X2) is 0.008. The significance value of variable production
strategy (X2) 0.008 is less than p-value 0.05. Since the t test is negative 2.713 > t
table 1.99, hence H0b should be rejected and H1b should be accepted. Therefore
production strategy (X2) partially has negative significant influence towards stock
price (Y).
3. Distribution/market Strategy (X3)
According to the table above, the obtained result shows significance value for
distribution/market strategy (X3) is 0.000. The significance value of variable
distribution/market strategy (X3) 0.000 is less than p-value 0.05. Since the t test is
negative 3.767 > t table 1.99, hence H0c should be rejected and H1c should be
accepted. Therefore distribution/market strategy (X3) partially has negative
significant influence towards stock price (Y).
94
4. Promotion Strategy (X4)
According to the table above, the obtained result shows significance value for
promotion strategy (X4) is 0.003. The significance value of variable promotion
strategy (X4) 0.003 is less than p-value 0.05. Since the t test is 3.123 > t table 1.99,
hence H0d should be rejected and H1d should be accepted. Therefore promotion
strategy (X4) partially has significant influence towards stock price (Y).
Unstardardized beta coefficients:
From four independent variables in regression model, all variables are
significant. The indications are product strategy is significant at 0.025; production
strategy is significant at 0.008; distribution/market strategy is significant at 0.000; and
promotion strategy is significant at 0.003. From this explanation, it can be concluded
that stock price is influenced by product strategy, production strategy,
distribution/market strategy, and promotion strategy with mathematical equation:
푆푇푂퐶퐾 =
20.908 + 11.147 푃푅푂퐷 − 10.901 푃푅퐷푇 − 19.318 퐷퐼푆푇 + 22.879 푃푅푂푀
From the equation above, it can be concluded that a constant value in is
20.908. It implies that if product strategy (X1), production strategy (X2),
distribution/market strategy (X3), and promotion strategy are held constant, so the
average stock price would be US$ 20.908.
Since the t test 2.282 is more than t table 1.99, while the product strategy (X1)
has significance value which is less than p-value (0.025 < 0.05), therefore variable
95
product strategy (X1) has positive influence towards stock price. A regression
coefficient PROD amount 11.417 implies every 1 point increase of production
strategy will increase stock price as US$ 11.417.
Since the t test negative 2.713 is more than t table 1.99, while the production
strategy (X2) has significance value which is less than p-value (0.008 < 0.05),
therefore variable production strategy (X2) has negative influence towards stock
price. A regression coefficient PRDT amount 10.901 indicates every 1 point increase
of production strategy will decrease US$ 10.901.
In addition, since the t test negative 3.767 is more than t table 1.99, while the
distribution/market strategy (X3) has significance value which is less than p-value
(0.000 < 0.05), therefore variable distribution/market strategy (X3) has negative
influence towards stock price. A regression coefficient DIST amount 19.318 implies
every 1 point increase of distribution/market strategy will decrease stock price as US$
19.318.
On the other hand, since the t test 3.123 is more than t table 1.99, while the
promotion strategy (X4) has significance value which is less than p-value (0.003 <
0.05), therefore variable promotion strategy (X4) has positive influence towards stock
price. A regression coefficient PROM amount 22.879 indicates every 1 point increase
of promotion strategy will increase US$ 22.879.
Of the regression model, it can be concluded that product strategy (PROD) has
a positive significant relationship with stock price (STOCK); production strategy
(PRDT) has a negative significant relationship with stock price (STOCK);
distribution/market strategy (DIST) has a negative significant relationship with stock
96
price (STOCK); and promotion strategy (PROM) has a positive relationship with
stock price (STOCK).
c. R Square Test
Table 4.10
R Square Test Table
Model Summaryb
Model R R
Square Adjusted R
Square Std. Error of the
Estimate 1 .519a .269 .232 35.03889
From the table above, the value of correlation (R) among product strategy,
production strategy, distribution/market strategy, and promotion strategy which
influence stock price is 0.519. It means that there is a relative strong influence
between independent variables and dependent variable.
Based on SPSS output view of model summary, the amount of adjusted R2 is
0.232, means that 23.2% variation of stock price can be explained by product,
production, distribution/market, and promotion strategies, while the rest (100% -
23.2% = 76.8%) is explained by other factors, such as dividends initiations and
omissions (Michaely et al., 1994), company announcements (May, 1971), investor
sentiment (Morck et al., 1990), company earnings, stock buybacks, and the likes.
(Meta4forexbroker.com, 210) Furthermore, the value of Standard Error of Estimate
(SEE) is 35.03889. The smaller SEE value, the more correct regression model
predicts dependent variable.
97
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CHAPTER V
CONCLUSION AND IMPLICATION
A. Conclusion
This study results show the profitable relationship between green marketing
strategies and stock price. There is an interesting fact that electronics firms that focus
on product, production, distribution, and promotion strategy have a significant
influence towards stock price. This obviously may shock boardroom and possibly
encourage marketers to turn their legacy on conventional marketing strategy to a
marketing strategy which weighs heavily on environmental issues.
The initiatives of executing green marketing strategy may help companies to
avoid the risk of being accused of “greenwashing”. Moreover, electronics sector is
one of the highest energy consumption either in the manufacturing plant or in the
product use. Therefore, making green claim on marketing communication cannot
solely do with heralding green buzzword in advertisement, otherwise embracing other
stakeholders, primarily non-governmental organizations (NGOs) that focus on
environmental concerns, so that the claim will not mislead or even injure brand
reputation.
Although it is difficult to foster entire firms in electronics industry to go green,
mass collaboration with NGOs and quick respond to environmental concern demands
from consumer are an alternative to express the greenness of a firm’s operation as
strategic marketing tools. Greenpeace as one of the leading environmentally focused
NGOs assesses and ranks electronics firms towards their policies and practices in
98
responding increasingly environmental necessities. The Guide to Greener Electronics
helps consumers to voice discontent of producer responsibility and contributes firms’
initiative to implementing green policy. One of the most successful stories of the
presence of Guide to Greener Electronics was Apple reaction towards high its
customers demands of greener Apple, which is mediated by Greenpeace.
In line with Vaccaro’s (2009) idea, his four green marketing strategies are
examined in this study by matching with criteria in Greenpeace’s Guide to Greener
Electronics. The results indicate 22.8% of independent variables, namely product,
production, distribution, and promotion strategies can explain their influence towards
stock price, while the rest 77.2% is explained by other factors.
B. Implication of the Study
Results of this study reveal the profitable relationship between green
marketing strategies and stock price. Stock price is often assumed as value of a firm.
It indicates that if the implementation of green marketing strategies influence firm’s
stock price, so it means that green marketing strategies can leverage value of the firm.
By using the premise above, all stakeholders –either primary or secondary
stakeholders- can encourage firms’ management to apply the green marketing policies
and practice in day-to-day operations. This pressure can also enforce firms to act
beyond compliance. Rather than apply end-of-pipe solutions, namely compliance, a
firm is fostered to be more proactive in responding the sustainability issues –people,
planet, and profit.
99
This study also provide insights for students to explore more green marketing
matters in relation to other variables, so enabling the extensive empirical evidence in
the field. Besides, this paper may be helpful for other researchers to develop scale or
index on green marketing which can ease novel researchers to contribute insights in
marketing discipline.
C. Recommendations
This research is not only limited in organization-wide scale, but also industry-
wide ones. Perhaps, other industries can follow the electronics sector lead, so that can
tackle the global climate change issues and other environmental issues. Industry
collaboration is necessary to manifest efficient and greener operations with green raw
materials sourcing. Industry collaboration can also helps firms inside the industry to
utilize patented technology in purpose of green operations.
In addition, this study suggests firms to report or integrate report of triple
bottom line matters –economic, environmental, and social sustainability. One of the
most reliable and widely used framework is Global Reporting Initiative, with more
than 1,500 companies have adopted the guide.
Furthermore, it is recommended that more companies should join worldwide
index, such as Dow Jones Sustainability Index, KLD Index, Calvert Index, FTSE4
Goods Index, and other similar rating companies. The reason is to leverage a firm’s
reputation and value. While there are many stock markets in the world, firms are
100
fostered not only to trade the stock, but also “trade the environmental practice’. It
means that firms should perform well in other two bottom lines, namely
environmental and social sustainability in order to realize sustainable operation and
well-being.
D. Limitation of the Study
This study is constrained with lack of index that stresses on green marketing
strategy. There should be a common and standardized measurement to assess green
marketing policies and practices of a firm. Furthermore, level of consumer awareness
towards environmental issues is still low generally. Consumers still rely on economic
cost, product -features, and -lifetime. In fact, there are many issues that consumers
should understand, like take-back and recycling program, extended producer
responsibility, and so forth. That is why conducting research in green marketing
strategy may not rely heavily on consumer perspective, otherwise environmentally
focused NGOs, governments, or experts.
101
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