PARADIGM SHIFT IN A FINNISH PACKAGING ...

ENVIRONMENTAL ISSUES IN PRODUCT DEVELOPMENT PROCESSES: PARADIGM SHIFT IN A FINNISH PACKAGING COMPANY Minna Halme Abstract: Tbe debate about tbe differing pbilosopbies of buman-nature relationship Is ongoing. Several studies discuss tbe need to develop and adopt a new environmental paradigm to replace the neoclassical economic paradigm predominant in Western societies. Tbis issue bas been discussed mainly at a societal level. Society or societies are, bowever, entities tbat consist of smaller particles. If a pbenomenon is supposed to exist in an entity, signs of tbe pbenomenon sbould also be found in Its particles, business enterprises among otbers. Tbis paper examines a shift of a managerial paradigm in a business organization, since not only tbe actions of individuals and governments but also tbose of business enterprises account for tbe preservation of tbe natural environment. It studies empirically bow a managerial paradigm can sbift from "traditional managerial thinking" to "environment-related management." Two frameworks will be developed for tbis purpose.

Introduction ' I 'be magnitude of environmental problems bas expanded considerably over A the past several decades, from pollution and solid waste issues to deforestation, soil erosion and otber forms of natural resource depletion and degradation, to global concerns sucb as climate cbange and tbe tbinning of tbe ozone layer. A growing number of studies suggest tbat tbere is a need for a new economic paradigm in wbich environmental issues bave a more important role tban tbey bave at present (Bucbbolz 1993, Sbrivastava 1995, Stead and Stead 1992, Colby 1991, Dunlap and Van Liere 1978, Throop, Starik and Rands 1993, Burrows 1993, SSderbaum 1992, Maier-Rigaud 1991, Klaassen and Opscboor 1991, Daly and Cobb 1989, Ebrlich 1989, Goldsmith 1992, Tomer 1992). Tbis paper focuses on a paradigm sbift in one organization, a Einnisb packaging company called Walki-Pack. Tbe paper explores bow tbe paradigm sbift emerges in an organizational context. Understanding tbis sbift is of critical importance since not only governmental actions but also the individual acts of countless decision makers in tbe industrial sector will in large part determine wbetber or not society is capable of taking effective action in environmental matters. Tbe paper studies from an empirical vantage point how a managerial paradigm can sbift from "traditional managerial tbinking" to "environment-related management." Tbe demonstration of tbe paradigm sbift is examined through production and product decisions in tbe target organization. Two frameworks will be developed in tbe paper. One of tbem describes bow a managerial paradigm works in an organization. Tbe otber identifies key elements of an environmental paradigm sbift.

©1995. Business Ethics Quarterly, Volume 5, Issue 4. ISSN 1052-150X. 0713-0733.

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The Notion of Paradigm in an Organizational Context The Definition There is evidence that managers share a set of core beliefs, assumptions and values which are specific and relevant to the organization in which they work. Individual managers may hold quite varying sets of beliefs about many different aspects of that organizational world, but there are likely to exist some core values, assumptions and beliefs held relatively commonly by the managers. Several studies have documented the existence of such a shared sense-making system or interpretative world view of management or organizations. This has variously been called 'ideational culture' (Schein 1992), 'myths' (Hedberg and JSnsson 1977), 'belief systems' (Donaldson and Lorsch 1983), 'interpretative schemes' (Bartunek 1984) or 'paradigm' (Pfeffer 1981, Etzioni 1988 and Johnson 1987 and 1992). Some of these thoughts can be traced back to Durkheim's (1925, 1973) ideas of the "collective conscience" of a society. To him shared meanings are the core of a culture. In Durkheim's texts the word "society" has more meanings, but underpinning is the conviction that society is something more than the sum of its individuals; it has its own individuality different from that of its constituent individuals. It might first be useful to look at some underlying assumptions about paradigms. Johnson (1992) argues that a paradigm is likely to evolve over time and it might embrace assumptions about the nature of the organizational environment, managerial style and operational routines seen as important to ensure the success of the organization. There is some evidence that the paradigm is durable and thus also important in the decision-making of the organization (cf. Johnson 1987 and 1992 and Pfeffer 1981). Donaldson and Lorsch (1983) point out that corporate managers have deep emotional commitments to their beliefs. To them these beliefs are the "correct" way to view the external environment and the organization and they represent the "right" choices to make. Characteristic of the paradigm is firstly that its constructs are held more or less in common throughout the organization. These constructs are not an explicit set of issues for potential debate but rather powerful and tacit assumptions about the business. Secondly, the set of assumptions that comprise the constructs of the paradigm also provide a system of meaning that makes sense of a complex environment in terms of 'what works' and is therefore relevant to managerial experience. The internal 'logic' of the paradigm is self-preserving and self-legitimizing (see Johnson 1987). In many organizations the paradigm creates a relatively homogenous approach to the interpretation of the complexity that the organization faces. However, a paradigm may be more easily perceived by outsiders than those inside of the organization, to whom its constructs are likely to be self-evident (Johnson 1992). In The Moral Dimension Etzioni (1988) speaks basically about the same phenomenon, a shared sense-making system or world view of social entities. He contends that a social entity's interpretation of and response to the world depends on its values and perceptions. Etzioni thus acknowledges the importance

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of values as a cornerstone of tbe interpretative world view of groups and individuals. According to bim tbere is a close relationsbip between facts and values: examination of facts is often accompanied by examination of one's values. Values in turn direct one's cboice of relevant facts. Keeping Etzioni's, Donaldson and Lorscb's, and Jobnson's definitions in mind, in tbe context of a business organization paradigm can be defined as a world view which is composed of shared values, core beliefs and assumptions of the members ofa certain group. In tbis study tbe "group" refers to tbe managers of tbe target organization.

Paradigm and Organizational Culture At tbis point tbe reader may witb reason ask wbat is tbe relationsbip between paradigm and corporate culture. It is true tbat tbese two concepts are closely related, but tbere seem to be varying interpretations about tbeir relationsbip. We can investigate tbe relationsbip of tbe concepts of managerial paradigm and corporate culture. It is an intriguing task and tbe debate will not suffer from tbe lack of discordant notes. In an organizational context botb concepts can be said to represent sometbing tbat is shared or beld in common. Scbein (i992) suggests tbat culture somehow implies tbat rituals, climate, values, and bebaviors bind togetber in a coberent wbole.* He continues: culture can be viewed as tbe accumulated sbared learning of a given group, covering bebavioral, emotional, and cognitive elements of tbe group members' total psychological functioning. In addition to Scbein's well-known writings, we could bave a look at Graves' (1986) work. He bas analyzed tbe literature of corporate culture and come up with several definitions of culture. Most of tbem include bebavior.^ On tbe wbole tbe literature appears to suggest tbat in addition to less tangible concepts sucb as basic assumptions and values, rules and norms etc., tbe term culture also involves bebavioral elements. Paradigm on tbe otber band bas more to do witb tbe cognitive elements altbougb it would be a mistake to conceive of tbe paradigm as merely a set of beliefs and values removed from organizational action. According to Jobnson (1992) tbe paradigm is likely to be bedged about and protected by a web of cultural artifacts. It lies witbin a cultural web. Scbein (1992) points out tbat culture can be analyzed at several different levels. By level be refers to tbe degree to wbicb tbe cultural pbenomenon is visible to tbe observer. He distinguisbes tbree levels tbat range from tangible overt manifestations to deeply embedded, unconscious basic assumptions. At tbe surface level are artifacts, visible organizational structures and processes. Tbis level includes all tbe pbenomena tbat one sees, bears, and feels wben one encounters a new group witb an unfamiliar culture, for example, tecbnology and products, language, observable rituals, and so on. Tbis level also includes tbe visible bebavior of tbe group. At tbe middle level in Scbein's tbinking are espoused values by wbicb be refers to strategies, goals and pbilosopbies, or 'espoused justifications.' Scbein calls tbis level 'a conscious level of values' and argues tbat if tbe values are not based on prior learning tbey may only be a prediction of wbat people will say, not wbat tbey actually do in a situation where tbose values

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should be operating. As a set of values becomes embodied in an ideology or organizational philosophy, it can serve as a guide and as a way of dealing with uncertainty. At the deepest level of culture in Schein's reasoning are basic underlying assumptions that guide behavior, that tell group members how to perceive, think about, and feel about things. To him these implicit basic assumptions are the ultimate source of values and action. There are culture researchers that prefer the concept of "basic values" for describing the deepest levels. I am inclined to agree with them. Values are something that are intrinsically worthwhile to a person (Freeman and Gilbert 1988). According to my reasoning, basic assumptions reflect someone's original values. The same conclusion actually is inherent in Schein's (1992, pp. 19-21) text, although he wants to make the distinction between "original values" and "espoused values." Following Schein's logic we would come to the conclusion that first there are a leader's original values. Some of these turn into basic, taken-for-granted assumptions through organizational processes. Simultaneously there are espoused values which are rationalizations or only aspirations. The discussion indicates that the relationship or interaction between core values and underlying core beliefs or assumptions is a network or a process of which it is sometimes very difficult to isolate separate elements. As to the relationship of managerial paradigm and organizational culture, I would like to suggest that a paradigm is a set of shared core beliefs, assumptions, values and perceptions at the deepest level of an organizational culture.

How Paradigms Work in Organizations One of the important points about the significance of the paradigm is the extent to which it bridges beliefs and assumptions and actions. Etzioni (1988) and Johnson (1987) suggest that not only does managers' interpretation of the world depend on the paradigm, but that it also helps those who act within the world, it provides a framework for decision and policy making. Both the interpretation of external events and the responses to them (i.e. actions) depend on the paradigm. A paradigm has a mediating role, it acts as a filter between an organization and the outside world. The managerial paradigm affects — what events managers find relevant, — what meaning they give to these events, and — how, on the basis of their understanding, they choose to act within the world. According to Pfeffer (1981, p. 325), attacks on dominant beliefs or a paradigm are likely to be met with counter-argument. Once a set of shared basic assumptions is formed, it can function as a cognitive defense mechanism for both the individual members and for the group as a whole. Individuals and groups tend to seek stability and meaning. In this tendency it is easier to distort new data by denial, projection, rationalization, or other defense mechanisms than to change basic assumptions (Schein 1992). Also Johnson (1992) points out that it is likely that the paradigm dominates the development of strategy and causes resistance to significant change. Even if managers as


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individuals perceive changes they may not necessarily acknowledge them impinging on the strategy or performance of their organization. The paradigm is embedded in a wider cultural context. This set of collectively owned values, and taken-for-granted assumptions and beliefs is likely to be hedged about and protected by a web of cultural artifacts such as stories, myths, symbols, power structures, organizational structures, control systems, rituals, and routines (ibid.). This is not, however, to suggest that the paradigm is fixed; it can change with time and in action. Johnson suggests that it is not typically susceptible to rapid change. Evidence of this kind can also be found from the studies of Donaldson and Lorsch (1983): when the survival of the firm is at stake and corporate direction needs reshaping, it also involves reshaping of the underlying belief system and questioning of current values. The following framework is proposed for analyzing the development process of a more environmentally sound product and specifically the role of the managerial paradigm within the process (Eigure 1). It depicts the product development process of a business enterprise, the external forces affecting the enterprise, and the role of paradigm. Before turning to the emergence of a paradigm shift in the target organization, we shall briefly address the influence of external forces on the company. This framework recognizes the power of forcing elements such as legislation, pressure from the public and the environmental organizations and that caused by competitors' actions as well as the "pulling" effect of customers on the company. The term "Forcing Ecology-Factors" refers to the somewhat compelling elements that underlie the demands of certain stakeholders of a company. Companies comply with these demands in order to avoid negative results. On the other hand, there are forces that tempt the company to act, termed in the model as "Ecology-PuU" (cf. Meffert et al. 1988). Conforming to these forces or demands contains some positive outcomes for the company, for instance an increase in sales.^ Occasionally the forcing ecologyfactors and ecology-pull can be interrelated. One of the underlying assumptions of this framework is that despite the market forces and pressures from legislatures etc., it is still to a great extent up to the company how it interprets the signals from these sources and how it responds to them. A business enterprise is not supposed to react mechanistically to the aforementioned forces. Otherwise all enterprises facing similar external conditions would act in a similar way. A firm's interpretation of external events and its response to them (i.e. action) both depend on the managerial paradigm. The paradigm is a mediator between an organization and the outside world. Interpretation of the events of the outside world takes place throughout the product development process, from the moment the idea for a product change comes into being until the outcomes are known, i.e. when the new product concept is ready. The firm's actions also have an effect on the external environment and what we could call two-way interaction (understanding-action) continues throughout the process. Since business firms, like all other organizations, operate not only in human but also in physical environment, the notion "external environment" here includes also the natural environment.


Environmental regulation Environmental awareness of the public Extra-finn institutions and infrastructures Competitors' actions Technological development

Customers' demands for environmentally sound product solutions, operations 3nd business prscticcs

Figure 1. The managerial paradigm and product development process: paradigm'srolea: facilitating managers' understan£ng of the world and their action within the world

The Target Company The target organization, a package manufacturing company called WalkiPack, belongs to a Finland-based international paper corporation. United Paper


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Mills Group (UPM). The packaging industry is among the leading five industries in the country. Over half of Walki-Pack's turnover comes from export. Main export marketing areas are Scandinavia and Central Europe. Since many of its domestic customers are export companies, Walki-Pack is fairly dependent on export. The specific target firm of this study is the corrugated fiber board unit of Walki-Pack, the biggest of its ten subunits. Corrugated board is used mostly as secondary and transit packaging, protecting goods while they are being transported. It is manufactured by gluing together corrugated fluting (the inner corrugated layer) and one or two liners (outer facings). Liners are called kraftliner and testliner. The raw material of kraftliner is usually bleached or unbleached chemical pulp whereas testliner contains recycled fiber. Ninety percent of the wood used by the European pulp, paper, and board industry for virgin paper comes from European forests; the rest is mainly from North America (Peippo 1993).

The Research Methodology In-depth interviews of managers and company documentation were the main data collecting methods. Data was gathered from informants from different levels and functions of the target organization. Twelve managers and two workers were interviewed. Two respondents were from the UPM corporate level; one was the managing director of Walki-Pack; and nine managers as well as both workers were affiliated with the corrugated board unit. The respondents represented general management, marketing, production and R&D functions. Interviews lasted from two to three hours each and some managers were interviewed more than once. The main interviewees were also contacted by phone after and between the interviews to check new developments in the process of change. Most of the interviews were conducted in April and May 1992, some in December 1992, and some follow-ups in the fall 1993. Interviews were semi-structured. All interviews were tape recorded, transcribed in full, and coded. For the purpose of gaining a wider perspective and more reliability, industry experts from six organizations were interviewed: the Ministry for the Environment, the Packaging Technology Group, Finland's Consumers' Association, Finnboard (the fiber board exporters' association), the National Consumer Research Centre, and the Technical Research Centre of Finland (Food Laboratory). Documents and artifacts such as letters, memos, newspaper articles, company newsletters, trade journals, annual reports, product brochures, packaging studies, and legislative texts served as complementary sources of data.

Environmental Issues within Packaging The most visible environmental problem created by packaging is municipal waste. Others include the toxicity of landfills, the depletion of scarce or nonrenewable resources, litter, pollution and ozone depletion. In tackling these issues, source reduction, recycling, choice of raw materials, energy consumption, use of chemicals in the production process and use of harmful substances in addition

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to basic packages are important considerations (Buchholz 1993, Karjalainen and Ramsland 1992, Stilwell et al. 1991). The main question in the recycled vs. virgin raw material debate in the Nordic countries is, whether it makes sense to use recycled fiber since — it has to be imported (the collection rate of corrugated board in Finland is 65 percent and it is used in fiber board manufacturing), while these countries realize an annual savings in forest stock (25 million cubic meters (m3) annually in Finland); — the use of recycled fiber requires more energy for transportation; — recycled fiber-based corrugated boxes are heavier than their virgin fiber counter parts (Lightweighting, i.e. development of lighter packages is an important method of source reduction) ;"• and — fiber cannot be reused endlessly: from four to five times on the average, seven times at the most. After that it becomes useless for anything else except for energy production. At an aggregate level the process thus always calls for primary fiber (Peippo 1993).^

A Brief Chronology of Environmental Decisions and Events at and around Walki-Pack Walki-Pack's corrugated board unit started to use recycled fiber in 1987. Recycled fiber comprised three percent of the total raw matetial used. The reasons for starting to use recycled fiber were not environmental; wastepaper based fiber was cheaper than virgin fiber and lessened Walki-Pack's dependence on domestic primary fiber suppliers by offering an additional source of raw material. Environmental issues became a frequent topic of discussion in Walki-Pack's management group in 1987. They have been the most arduous of the managerial group's issues. According to Walki-Pack's managing director's estimation, between 1987 and 1992, 90 percent of Walki-Pack's investments were based on environmental considerations. For instance, three new plants were built for environmental reasons. The year 1990 was "The Year of Environmental Protection" at United Paper Mills. Operations were evaluated from an environmental point of view and the staff received environmental education. An Environmental Policy Statement was published in 1991. These measures did not have a major influence on Walki-Pack, because they were directed at the environmental problems occurring at UPM's main business area, paper making. Corrugated board had always been considered an environmentally sound material because it is made of renewable resources and is biodegradable. However, visits to central European corrugated container factories and industry conferences started to change the minds of some of Walki-Pack's corrugated board unit's managers. In the summer of 1990 one of the biggest customers asked for corrugated board boxes made mostly of recycled fiber. Walki-Pack was unable to meet this request. This incident was an impetus to search for reliable recycled


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fiber suppliers wbo could provide tbe firm witb sufficient quantities of tbis material. Only in 1991, bowever, wben more customers began to ask for recycled corrugated containers, did Walki-Pack's corrugated board unit systematically start to increase tbe proportion of wastepaper raw material. By tbe end of tbat year, tbe proportion of recycled material used bad grown to ten percent. Environmental efforts did not take place only at tbe recycling front. Tbe new corrugated board plant, completed in tbe beginning of 1991, uses natural gas as an energy source and bas modern waste color purifying equipment, altbougb tbe water-soluble colors used by Walki-Pack are not supposed to be barmful to tbe environment. All in all, tbe year 1991 was a time of confusion in Walki-Pack's corrugated board unit. Tbe old beliefs tbat corrugated board was an environmentally sound packaging material and tbat tbe Nordic countries sbould always make corrugated board of virgin fiber did not seem so obvious any more. Eor many years no limits to tbe growtb of tbe packaging industry bad been projected. Now in a sbort period of time, societies were taking more and more serious measures to reduce packaging. In 1991 Germany decided to reform its packaging legislation. According to tbe new regulations, manufacturers and retailers are obliged to take back and recycle tbe packages in wbicb tbeir products are sold. Enforcement of packaging waste acts was pbased in during tbe years 1991 and 1992. Also tbe European Community's firts proposed directive on packaging and packaging waste set bigb targets for reducing tbe impact of packaging on tbe environment. Ten years after tbe directive enters into force, 90 percent by weigbt of packaging sbould bave been recovered, 60 percent by weigbt of packaging sbould bave been recycled as a material, and no more tban 10 percent of packaging waste output sbould bave been disposed of tbrougb landfill or otber means. Tbe proposal was not passed, and in December 1993 tbe EC accepted a more fiexible amended proposal. Einland, too, was in tbe process of reforming its own waste act witb measures somewbat similar to Germany's but not quite as extreme. Einland's new waste management act, wbicb came into force in 1994, aims at quantitative prevention of waste and increased recycling of packaging waste so tbat in tbe year 2000 tbere will be less packaging waste disposed tban in 1990. In tbe beginning of 1992 Walki-Pack's corrugated board unit made its first long-term environmental decision. It began to use recycled fiber in ten different corrugated board qualities on a continuous basis. Earlier tbe use bad been occasional and products containing recycled fiber bad been marketed only to customers wbo bad asked for it themselves. By mid 1992 tbe amount of recycled fiber bad risen to 30 percent. In addition, development of ligbter packages was continuous. Erom 600g/m2 in 1983 Walki-Pack bad come down to 5O6g/m2 in 1993. Tbis long-standing trend of "ligbtweigbting," originally adopted in order to reduce energy and material costs, is an important form of source reduction. Commitment to environmentally responsible business strategy increased tbrougbout 1992. In cooperation witb Einland's Corrugated Board Association, Walki-Pack conducted researcb among retailers concerning tbe advantages and

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disadvantages of corrugated board (in terms of the environment) and published a brochure "Corrugated Board and the Environment." Walki-Pack also worked with other Finnish corrugated board manufacturers to organize the collection of used corrugated board in Finland and launched an extensive information campaign about environmental aspects of corrugated board to 12 stakeholder groups in January 1993.

A Comparison between the Former and Current Managerial Paradigms of Walki-Pack-Pack Environmental considerations began to enter in Walki-Pack's decision-making in 1987. At the corrugated board unit, which is under most scrutiny here, the years 1991 and 1992 were a time of most turbulent shift in managers' conceptions about their business' relationship to the natural environment. The former paradigm which prevailed throughout most of the 198O's has been termed "Frontier Economics" because it represents some of the central notions that underlie Colby's (1991) "Frontier Economics" paradigm and the Dominant Social Paradigm as described by Milbrath (1984), such as economic growth without constraints and unlimitedness of natural resources. Previously the firm's orientation was only toward production and product quality. The current paradigm has been termed "Environment-related management." It has an active environmental focus. There are seven dimensions along which the paradigm shift in the target organization is analyzed (Table 1): (1) Concept of the product (2) Industry (3) Competitive advantage (4) Relationship between the product and the environment (5) View of economy and nature (6) Parties responsible for the environment (7) Environmental policy and management systems These dimensions are based on the examination of the core beliefs and assumptions about the nature of organizational environment and managerial work held in the target company. I analyzed the past core beliefs and assumptions of the managers (concerning what their firm and business is and what it should be), and then compared these beliefs with the current ones in order to find out whether a shift in managerial paradigm had occurred. By evaluating citations concerning the corrugated board development process and decision-making I have tried to find a shared sense-making system or world view, i.e. a paradigm, through which the organization filters the various and confusing signals it faces. Table 1 compares the former and current core beliefs and assumptions of the managerial paradigm of Walki-Pack along the aforementioned seven dimensions.


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TABLE 1. ENVIRONMENTAL MANAGEMENT PARADIGMS AT WALKI-PACK IN THE 1980s AND CURRENTLY Eormer Paradigm in 198O's 'Traditional Management" =cf. DSP or Frontier Economics*

Prevailmg paradigm "Environment-related management" = cf. Resource Management*

Concept of the product

Corrugated board box

Corrugated board box as part of the product life cycle from raw material to disposal

Industry

Packaging industry is a growth industry

Packaging is not likely to increase in the Western countries

Competitive advantage

Reasonably priced corrugated board of high quality

Managing the environmental aspect of company activities: using recycled fiber as raw material and managing the collection of corrugated board

Rel,ationship between the product and the environment

Corrugated board is environmentally friendly because it is made with renewable resources, it is biodegradable and its manufacture does not pollute

Packaging and packaging waste cause environmental problems

View of economy and

Environmental protection only creates additional

Interdepence of economy and ecology. Environmental consiousness and sound business practices are not mutually exclusive

Parties responsible for the environment

Environmental protection is a task of govemment officials and legislators

Businesses mUst take part in solving environmental problems

Environmental policy and management

Environmental concerns are extra-business concerns (exogenous)

Environmental considerations are a part of business and product policy decisions

^ ^ ^ Paradigm DimensitMi^^^

•Terms Frontier Economics and Resource Management originate from Colby (1991).

Tbe constructs of tbe managerial paradigm were derived from citations. Tbey were not fixed prior to tbe interviews. Categories of beliefs and values emerged from tbe empirical researcb material. Eirst I picked out from tbe field notes statements tbat seemed to represent eitber some former or current core belief, assumption, or value. Next tbese citations were organized into meaningful clus-

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ters. The clusters were created on the basis of what type of phenomenon or concept they suggested. Clusters of statements were not mutually exclusive, i.e. some statements provided indication of more than one construct of paradigm even if it was possible to categorize most of the statements as belonging to only one cluster. For instance, Walki-Pack's managing director's statement "The majority of investment decisions during the five previous years have been based on environmental considerations. Currently practically everyone of them is unprofitable, but we believe in the future prospective" provides an indication that environmental considerations are part of business policy decisions (seventh dimension). But the statement also lends itself to implications regarding the fifth dimension, "View of economy and nature." It indicates that environmental consciousness and sound business practices are not considered mutually exclusive, at least not in the long term. The research methodology is described in more detail elsewhere (Halme 1993). Not all seven constructs above are of similar nature. Donaldson (1989, p. 4 and 1992) makes the distinction between "normative" and "non-normative" or "empirical" concepts. He has used the word "normative" to refer to concepts that guide choice or conduct. If a theory or proposition is normative, then it is action-guiding, or "prescriptive." On the contrary, empirical concepts describe how things are. They are meant to reflect the actual facts (Donaldson 1989, Donaldson and Dunfee 1994). Most of the above constructs are empirical, i.e. they are descriptive of their nature. They express how things "are." But, for instance, the construct "Parties responsible for the environment" does not. It is prescriptive, telling how the managers think the state of affairs should be (see Table 1). Even if the managers assume that businesses should take an active part in solving environmental problems, it does not necessarily mean that businesses currently do it. Also the construct "Industry" contains some normative elements.^. It should be noted that even though the object of the study is the managerial paradigm, which has more to do with the cognitive elements, evidence of the existence of a paradigmatic construct at Walki-Pack has occasionally been provided by elements at a more visible level. These are visible organizational phenomena, including overt behavior, value/strategy statements, and "espoused justifications." The reason for choosing this approach is that previous research (Schein 1992, Johnson 1992) suggests it would be a mistake to conceive of the paradigm as merely a set of beliefs and values removed from organizational action.

7. Concept of the Product Walki-Pack's concept of its product used to be the end-product, a corrugated container. Today product considerations often include the whole product life cycle from raw material to disposal. Following are some statements or activities that describe this trend:


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— "The focus of R&D activities is easier recycling." — The corrugated board unit now has twelve basic product qualities (paper grades) instead of four, because it has several redesigned products ttiat contain recycled fiber. — Product development aiming at separation of materials is continuous. Composites, that are technically easy to separate into their component materials are being developed. — A prototype factory where composites of cartons and plastic can be recycled was completed in February 1992. It sbould, bowever, be noted tbat considerations about tbe ratio of recycled to virgin raw material take place constantly. Tbe main question in tbe recycled vs. virgin raw material debate in tbe Nordic countries is, wbetber it makes sense to use recycled fiber since, it bas to be imported, and it does not promote ligbtweigbting. Tbis issue caused etbical concern to tbe managers of tbe corrugated board unit. Eor all tbe reasons listed above, tbey feel it would be right to use virgin fiber for corrugated board production in Einland. But tbe managers also recognize tbe need to recycle paper and packaging waste. Tbe strongest external demand tbe managers directly face is tbat some customers require packages containing recycled material. Even if agreeing witb tbe facts listed above, for tbese customers tbe use of recycled fiber is a strong selling argument or, occasionally, a necessary requirement to market tbeir products in tbe first place. Tbe latter is true for multinational companies tbat bave common environmental guidelines and for tbose customers wbo export to Germany. 2. Industry Walki-Pack's managers used to tbink tbat it was natural and rigbt for packaging to increase and tbey saw no limits to tbe growtb of tbe packaging industry. Now most managers tbink tbat overpackaging sometimes takes place and tbat tbere are occasions wbere packaging sbould be reduced. Tbey believe tbat packaging of products in western countries is not likely to increase. But neitber do tbey tbink any considerable reduction of packaging could take place. Wben stating tbis belief, tbey usually bigbligbted it witb an example of Russia and otber countries of tbe former Soviet Union, wbere food becomes spoilt because of tbe lack of sufficient packaging. 3. Competitive

advantage

Price and good quality used to be tbe most important competitive factors. Since growtb is no longer expected from increased packaging, and tbe target company does not deliberately aim for negative growtb, growtb must be found elsewbere. Potential new market areas could be developing countries. Eastern Europe, or tbe former Soviet Union, wbere tbere exists a need for packages, particularly for food. However, tbese countries cannot afford tbese types of commodities. New markets must tbus be conquered from otber packaging materials or from competitors manufacturing similar packaging. Competition bas

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become more intensive, as well between different packaging materials as between companies manufacturing packages of the same material. Nowadays environmental considerations, particularly recycling, offer a competitive advantage. In the corrugated board unit this includes successful use of recycled fiber as raw material and managing the collection of used corrugated board from retail outlets where it accumulates. Whereas the package manufacturing industry used to be reactive and passively wait for customers to ask for environmental solutions, the initiative has now shifted to the industry itself; environmental innovations are offered actively. Walki-Pack's management thought that environmental issues created possibilities rather than a threat for them, because they had started to take environmental considerations into account in the production early enough.

4. Relationship between Corrugated Containers and the Environment The old belief, which was not even questioned, was that corrugated board is environmentally friendly because it is made with renewable resources, it is biodegradable, and manufacturing it does not pollute (compared to the air and water pollution caused by manufacturing). This has been the construct most resistant to change. Managers strongly believed, and still to a great extent do, that manufacturing corrugated board of virgin material in the Nordic countries is environmentally benign. Nobody was expected to question this "fact." For quite a while, corrugated board was seen as potentially beneficial to the environment. For instance, corrugated containers were expected to replace some of the plastic packaging, since plastic is difficult to burn or recycle. Because plastic is not biodegradable, it would clog in the landfills for centuries. There was a fair amount of confusion when the top managers of the corrugated board unit began to realize that corrugated containers can be seen to represent a throw-away mentality and that they would have to compete, for instance, with reusable plastic boxes. Also, some companies are finding ways to recycle plastics profitably. Slowly the managers have realized that packaging and packaging waste cause environmental problems. Today nature's capacity to absorb wastes is seen as limited. As Walki-Pack's managing director and the plant manager of corrugated containers unit put it: "The question is to find packages that are the least harmful to the environment." (MD) "We try to invest in production machinery with which we can manufacture more environmentally sound products." (MD) "I doubt the usefulness of life cycle comparison between various packaging materials to the average consumer. We are talking about the kind of values and things that are difficult for consumers to understand and judge. It is much more important to speak about how to reduce packaging in general as well as their weight, and how to recycle packages." (PM)


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5. View of Economy and Nature An implicit assumption among UPM's and Walki-Pack's managers seemed to be that environmental protection can only create costs. This belief has changed. Environmental consciousness and sound business practices are no longer considered mutually exclusive, particularly in the long term. Environmental investments to Walki-Pack's three new plants do not yet bring profits, but they are seen as a future possibility. When it comes to developing new products with environmental characteristics, they need to compete with former solutions not only in terms of performance but also in terms of economy. According to Walki-Pack's managers, most customers are not prepared to pay more for environmentally sound products. But when a manufacturer succeeds in developing a more environmentally sound product that is also economically competitive,' it can usually look forward to good future prospects in terms of market share. The plant manager of corrugated containers unit stated: "It is important to do this business without burdening the environment. But it should not create extremely high costs for trade, industry, or consumer. And I think it will he possible." If, however, a situation arises in which economy and environment are in conflict, when, for instance, a customer is not willing to pay more for a more environmentally benign product solution, Walki-Pack's managing director anticipates that the company would not make an unprofitable solution but would compromise the environmental considerations. 6. Parties Responsible for the Environment Environmental protection used to be viewed as a responsibility of government, its officials and legislators. The company reacted to regulations and often opposed them. Usually minimal efforts were expended to achieve compliance. Currently Walki-Pack's managers assume that businesses should take an active part in solving environmental problems since meaningful solutions cannot be created merely by laws and regulations. However, the managers feel that the optimal results for the environment could neither be achieved by businesses operating alone without regulation. Managers hope for increased cooperation between legislators and industry. They consider going beyond the regulation to be reasonable, because of the unpredictability of political decision-making. Moreover the managers think that the end result might occasionally turn out to be different from what the legislator originally intended. As some managers put "Regulation has depreciated recycling of newspapers." "Recycling should be operated on a business basis instead of the society solely being the responsible one. The packaging industry and package using industry could establish a recycling system." "The main volume of packaging waste should be taken care of by business. The regulator could impose a charge to support the collection of corrugated board. Society should still have a role here, too."

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7. Environment Policy and Management Systems Environmental concerns used to be viewed as exogenous to "normal business activities." The stand was reactive, the company used to wait for directions and orders from the authorities. Today environmental considerations are a part of business and product policy decisions at Walki-Pack. According to some statements of Walki-Pack's managers, "Environment has to be to taken into consideration in all activities." "Environmental questions are strategic." "Environmental considerations are an important decision-criteria." "The natural environment has become a factor of production, just like personnel policy or financial questions." Walki-Pack's managing director estimated that during the last six years the major part of the company's investment decisions had been made for environmental reasons. Examples of the effect of environmental considerations to business decisions in the corrugated board unit include recycling of process waste, the acquisition of new purifying machinery, and the use of natural gas as the energy source in a new plant. Also the number of suppliers has increased from four to fifteen, because the unit now has more recycled fiber suppliers. Table 1 depicted the dimensions of the former and current managerial paradigm at the Walki-Pack. At this point it might be appropriate to caution the reader to study the content ofthe constructs with care. At a quick glance it might seem that the target organization has shifted from one extreme to another as regards the environmental considerations underlying its managerial paradigm. This, however, is not the case. Even if the company now takes environmental considerations into account in its decision-making and environmental concerns are inherent in its activities, the result is not necessarily that the company always chooses the best alternative from the ecological point of view. Environmental concerns are decision-making criteria, but they still are compromised from time to time when proved to be all too costly or otherwise not feasible. We could, for instance, have a look at the dimension "View of economy and nature." Believing that economy and ecology are interdependent does not mean that ecological considerations override economic ones. It indicates that the management no longer assumes that decisions can be made merely on the basis of economic arguments but that ecological aspects must be considered simultaneously and that ecological considerations have economical implications and vice versa. Moreover, ecological sound solutions are often not perceived contrary to economical soundness. However, a change of this paradigmatic construct has occurred, since under the previous world view even considering environmental protection was supposed to create unnecessary costs. Often the natural environment was completely ignored in decision-making. To make the magnitude of the shift within each dimension of Walki-Pack's managerial paradigm as clear as possible, I shall provide another example. It might seem that assuming "packaging and packaging waste to cause environ-


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mental problems" (fourth dimension) would lead the managers of the WalkiPack to abandon the whole business if they acted according to their belief. This belief, however, holds no such implication. To the managers the belief in question implies instead that they must do what they as managers of a packaging firm can to diminish the environmental burden caused by packaging. Naturally we can speculate about the magnitude of change that the firm's decisions and actions have to undergo before statements concerning a shift in core beliefs and values can be made. It could be said for instance that "only when firms improve environmental performance significantly beyond the minimum level required by law can it be said that they have integrated environmental considerations to their overall strategy." On the the other hand, the degree of significance would still remain to be decided. Above I have explained my reasoning for expressing the past and present core beliefs and values in the chosen form. But if the reader feels hesitant, I suggest that she follow the explained logic throughout the dimensions.

Discussion Walki-Pack's world view formerly comprised values similar to those of Dunlap's and Van Liere's Dominant Social Paradigm or Colby's* Frontier Economics, in which environmental considerations are exogenous to business activities and according to which nature's limits in terms of both absorbency and resources seem to have nothing to do with business operations. Although Walki-Pack's managerial paradigm still cannot be said to live up to the requirements that Dunlap's and Van Liere's (1978) New Environmental paradigm or Colby's (1991) Deep Ecology paradigm' set to business enterprises, Walki-Pack's paradigm has changed significantly. In the current managerial paradigm, which I have termed "Environment-related management" environmental considerations have become a part of business and product policy decisions. The interdependence of economy and ecology is acknowledged. Business life is considered to have a role in solving environmental problems. A current desire of Walki-Pack's managers is "green growth," in which sustainability is seen as a necessary constraint. Economic growth is still the primary goal for development. On the basis of these considerations Walki-Pack would seem to represent the Resource Management paradigm, which lies halfway between Frontier Economics and Deep Ecology paradigms on Colby's paradigm development model. Walki-Pack's strategies of conservation, materials reuse, energy choice, and extensive cooperation with customers and competitors to organize the collection of corrugated board, also support this argument. If we consider Dunlap's and Van Liere's New Environmental Paradigm that presupposes holistic ecological thinking and values environmental protection over economic growth as an ideal, then Walki-Pack's managerial paradigm is still in transition. This is not surprising; according to Servatius (1992) holistic ecological thinking can so far be found only in a few pioneering companies. The current situation can be considered a transition period in another sense as

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well: the learning process at Walki-Pack is unfinished. Ecologically based thinking does not yet take place throughout the organization. The change process at Walki-Pack's corrugated board subunit has been top-down, led by managing director of Walki-Pack and plant manager of corrugated board subunit. A significant shift in core values and assumptions has occurred among top and middle management to a direction where the natural environment is an important factor in decision-making. But, even though the company has accepted environmental responsibility and the environment has an impact on production, R&D, supply purchasing, and strategy, the staff development implications have been neglected to a certain extent. By the fall 1993, when the data collection for this study was ended, environmental responsibility was not a part of every employee's function. Senior management had encouraged consensus-based forms of decision-making down to middle management and achieved commitment to environmental policies and practices from middle managers. But only a partial diffusion of the ecological thinking patterns to the operative level of management has taken place at Walki-Pack. Resistance to change existed among firstline managers, and their attitude towards including environmental issues in decision criteria could be called compliance rather than commitment. To a great extent operative managers considered environmental protection an unnecessary cost, because their performance was measured on the basis of short-term financial results. Often the right thing for the environment was not the most profitable short-term solution.'" Questioning of values and beliefs among first-line managers and workers has, however, started to occur recently.

Conclusions The study indicates that a managerial paradigm is a significant "mechanism" for managers' perception and understanding of external events and that it also affects their response to these events. Although the reformation of packaging regulation in Europe and growing public concern over the environment gave impetus to the change at Walki-Pack, the company has not been found to be purely reacting to or anticipating external demands. The results suggest that a paradigm shift is occurring in the target organization. The seven dimensions along which the shift is analyzed show that the underlying value system of management is changing so that environmental preservation is becoming a central value that directs strategy making, it is taking its place at the side of traditional economic values such as profit and growth. This implies that the way of doing "business as usual" is changing. Even if far-reaching conclusions cannot be made on the basis of one case study, the target company is a very typical representative of its industry, neither pioneer nor reactionary in terms of environmental performance. It is not an isolated element but has linkages to what is happening at least in the respective industry, if not in general. However, sustaining the natural environment calls for more profound changes in business decision-making and operations than the ones described here. The discussion about the implications of a new economic paradigm must be brought down to earth, to


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the reality of the business firms. To give business managers effective instructions about how to evolve as environmentally conscious managers, more knowledge about the benefits and problems related to the shifting world view of business organizations is needed. Only then will the full benefits be realized for the natural environment, our ultimate area for concern. University of Tampere

Notes 'By behavioral elements Schein seems to be referring to rules for behavior. He excludes overt behavior from his formal definition of culture. ^Let us take a couple of examples of the definitions of culture. Porter et al (1975) stated: organizational culture is a set of customs and typical pattems of ways of doing things. Eldridge and Crombie (1974) wrote: The culture of an organization refers to the unique configuration of norms, values, beliefs, ways of behaving and so on that characterize the manner in which groups and individuals combine to get things done (citations as in Graves 1986. All emphases are mine). ^Some studies have categorized these forces differently (cf. Smith 1990, Tomer 1992). For instance Smith (1990) when studying social control of business distinguishes between legislation and market forces. He places forces such as pressure from environmental organizations and consumer boycotts under market forces and treats legislation as the only coercive power on a business enterprise. The categorization of this study is more based on the outcome that conforming to the external forces poses to the enterprise than on the form of control. But since the main objective here is not to examine the forms of social control over business, discussion of this issue will not be developed further. "'in their efforts for environmental protection the Nordic countries have tended to resort to light weighting. The central European countries for instance tend to use more recycled fiber since they are densely populated and accumulate more recycled fiber. The Nordic countries have minor accumulation of waste paper due to small and sparse population. ^The Nordic pulp and paper industry tends to argue that Scandinavian forestry is a prime example of the sustainable use of natural resources. Criticism against the arguments has been presented, for instance, in Der Spiegel (1993) and in The Ecologist (IsomSki 1991). Critics maintain that Northern hemisphere forestry is unsustainable since the expansion of commercial forestry is leading to the replacement of most of the region's natural forests with uniform plantations and threatening many species with extinction. Isomaki (1991) also claims that instead of helping to combat the greenhouse effect, the draining of vast areas of Finnish peatlands for forestry has resulted in huge increases in carbon dioxide emissions. Furthermore, he points out that paper and pulp industries are energy-intensive. ^As will be discussed under "industry" (the second construct), the managers believe that there are occasions when packaging should be reduced, but that they do not assume that any considerable reduction of packaging could take place. ^The most recent example of this kind is a fiber-based lid for yogurt containers. It would replace aluminum lids. The fiber-based lid has better performance in many respects, but the price cannot be set higher than that of the aluminum ones. The development process lasted two and a half years and was conducted in close cooperation with the customer. ^Colby (1991) distinguishes between five paradigms of environmental management in development: frontier economics, environmental protection, resource management, eco-development, and deep ecology. Each paradigm has different assumptions about the relationship between humans and nature.

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^tt should be bom in mind that Colby (1991) discusses environmental management paradigms at a societal level. Conclusions drawn here are based on the expectations toward business enterprises in the boundaries of each paradigm. '^Another reason for operative managers to be more reluctant toward environmental issues is that changes cause "more trouble" in daily work than remaining fixed with the traditional ways of doing things. Sales managers for instance received more complaints about containers not meeting customers' quality requirements. Complaints are seen as cumbersome and compensation for faulty products create more costs. Manufacturing supervisors encounter difficulties with the machinability of recycled paperboard. Fast running automatic production lines require consistent quality and it is better achieved using primary fibres. Secondary fiber use also results in more waste and production loss.

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Graves, D. (1986) Corporate Culture: Diagnosis and Change (NY: St. Martin's Press). Halme, M. (1993) Environmental Issues in a Product Development Process (Tampere: University of Tampere, School of Business Administration Series A1:39). Hedberg, B. and Jonsson, S. (1977) "Strategy Making as a Discontinuous Process," International Studies of Management and Organization. Vol. 7. Johnson, G. (1992) "Managing Strategic Change -Strategy, Culture and Action," Long Range Planning, 1, pp. 28-36. Johnson, G. (1987) Strategic Change and the Management Process (Oxford: Basil Blackwell). Karjalainen and Ramsland (1992) Pakkaus: pakkausalan perusoppikirja (Basics of packaging). (Helsinki: Packaging Technology Group). In Finnish. Klaassen, G. and Opshoor, J. (1991) "Economics of Sustainability or the Sustainability of Economics: Different Paradigms," Ecological Economics, 4, pp. 93-115. Maier-Rigaud (1991) "Background to the Conflict Between Economic and Ecological Ends," Ecological Economics, 4, pp. 83-91. Meffert, H., Kirchgeorg, M. and Ostmeier, H. (1988) "Analysenkonzepte und Strategische Optionen des Okologieorientierten Marketing," Thexis 3. Milbrath, L. (1984) Environmentlists: Vanguard for a New Society (Albany, NY: State University of New York Press). Peippo, E. (1993) Environmental Facts about Paperboard (Helsinki: Finnboard). Pfeffer, J. (1981) Power in Organizations (Marshfield, MA: Pitman Publishing). Schein, E. (1992) Organizational Culture and Leadership (San Francisco, CA: Jossey-Bass). Servatius, H. (1992) "Umsetzung Umwelthewusster Fuhrung als Prozess eines Kulturellen Wandels," in Zahn E. and Gassert, H. Umweltschutzorientiertes Management (Stuttgart: J.B. Metzlersche Verlagsbuchhandlung). Shrivastava, R (1995) "Ecocentric Management for a Risk Society" Academy of Management Review, Vol. 20, No. 1:118-137.. Smith, N. (1990) Morality and the Market: Consumer Pressure for Corporate Accountability (London: Routledge). Stead, W.E. and Stead, J. (1992) Management for a Small Planet: Strategic Decision Making and the Environment (Newbury Park: Sage Publications). Stilwell E., Canty, C , Kopf, P. and Montrone, M. (1991) Packaging for the Environment: A Partnership for Progress. (Arthur D. Little). SOderbaum, P. (1992) "Neoclassical and Institutional Approaches to Development and the Environment," Ecological Economics, 5, pp. 127-144. Throop, G., Starik, M. and Rands, G. (1993) Sustainable Strategy in a Greening World: Integrating the Natural Environment to Strategic Management, in Advances in Strategic Management, Vol. 9. 63-92. Tomer, J. (1992) "The Human Firm in the Natural Environment: a Socio-Economic Analysis of its Behavior," Ecological Economics, 6, pp. 119-138. Zahn, E. and Gassert, H. (1992) Umweltorientiertes Management. (Stuttgart: J.B. Metzlersche Verlagsbuchhandlung).

©1995. Business Ethics Quarterly, Volume 5, Issue 4. ISSN 1052-150X. 0713-0733.