Strategic Analysis on Green Operation of Medium-Small Firms in Jiangsu Province

doi:10.4236/jss.2014.29030

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Open Journal of Social Sciences, 2014, 2, 173-178

Published Online September 2014 in SciRes. http://www.scirp.org/journal/jss

http://dx.doi.org/10.4236/jss.2014.29030

How to cite this paper: Sun, J., Wu, J.P. and Meng, Q.J. (2014) Strategic Analysis on Green Operation of Medium-Small

Firms in Jiangsu Province. Open Journal of Social Sciences, 2, 173-178. http://dx.doi.org/10.4236/jss.2014.29030

Strategic Analysis on Green Operation of

Medium-Small Firms in Jiangsu Province

Jia Sun, Jianping Wu, Qingjun Meng

Business School, Hohai University, Nanjing, China

Email: [email protected]

Received June 2014

Abstract

Green operation is an important part for Medium-Small enterprise taking the sustainable devel-

opment path. It requires enterprises to undertake environmental protection and social responsi-

bility actively. Although green operation is limited by enterprise capital and technology, it is con-

ducive to the harmonious unity of economic and environmental benefits. Enterprises’ green oper-

ation is based on the attention to green brand and culture constru ct i on, related personnel training,

developing green products, and reducing green operation costs. The government of Jiangsu Prov-

ince attaches great importance to construct better environment for green operation of medium-

small ente rpri se.

Keywords

Medium-Small Enterprise, Green Operation, Social Responsibility, Environmental Benefits,

Economic Benefi ts

1. Introduction

More and more enterprises in Jiangsu Province attach importance to green operation. Large enterprises, due to

technical and financial advantages, often develop better than medium-small enterprise. As an eastern coastal

province of China, Jiangsu Province has relatively less resources while population increasing rapidly. Environ-

mental capacity problems and the construction of ecological civilization result in more pressure for enterprises

to implement green operation. It is also a key factor to promote economic development of Jiangsu. Enhancing

the international competitiveness by green operation has become a necessary condition for enterprises’ survival

and development. Green operation refers to the whole process of environmental integration into enterprise man-

agement, as well as business activities of integrating environmental protection and business development [1].

Green operation is earlier than enterprise’ green operation. With the rise of environmental awareness, the quality

of living and the concept of green consumption are major considerations for consumers to choose products.

Chinese Government pays attention to enterprise’ green operation. China’s State Council approved the “China

National Implementation Plan of the Stockholm Convention to fulfill” to keep the promise in the protection of

human health and ecological environment in April 2007. The government of Jiangsu Province formulated the

“Implementation Opinions energy conservation work in Jiangsu Province” and other regulations. Enterprise’

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green operation requires that every aspect of business and management guidelines is based on environmental

protection and solve environmental problems caused by business activities by realizing zero emissions of pollu-

tants and recycling of resources. The core of enterprise’ green operation is to regard the environmental protec-

tion as a fundamental link to corporate profit-making activities, which can result in the harmony and unity of

corporate economic and environmental benefits. But there are still some enterprises, especially medium-small

enterprises, to ignore green operation. It will bring the risk of corporate sustainability.

2. Literature Review

W. Hopfenbeck (1993) [2] proposed: green operation requires companies to establish operations in ecology-

based policy, so that enterprises are not only beyond the mere pursuit of interests, but also in a dominant posi-

tion in the competition. Green operation means taking measures to environmental issues in advance so that

companies can avoid conflicts of economic interests and ecological environment in order to achieve harmony

and unity of the two. Cao Lingqiu (2011) stressed that companies should establish green management plan based

on business requirements as soon as possible in order to get comprehensive environmental benefits and reduce

the pressure from society and government [3].

Li Jingjiang (2006) [4] also mentioned that the direct background for enterprise’ green operation arising is

that we are facing deteriorating global environment, and this deterioration, is mainly caused by economic activ-

ity of the human society. So it is necessary to make enterprise’s green operation a vital part of the sustainable

development strategy and understand problems from the height of corporate development strategy. The concepts

mentioned in study of Chinese scholars include environmental management and green operation in addition to

environmental operation and green operation. Economists in developed countries have also some theories on

corporate green operation concepts. China took a step later whether in corporate green operation theoretical

study or practical exploration. So, these theories still need improvement.

3. System Science Theory and Its Applications

3.1. System Science Theory

Bertalanffy was one of the earliest scholars to use this concept of System Science Theory. System Science

Theory believes that the system is a collection of interrelated elements. It is based on an overall perspective to

integrate various parts of the perceived object so that its purpose can be achieved [5]. System Science Theory

has a unique value for analyzing green operation issues related to medium-small enterprises in Jiangsu Province.

This theory believes that the system has a boundary, or a range. Similarly, there is also a “border” for enterprises’

green operation. “Border ” main elements are: corporations, governments, financial institutions, residents and

other personnel (Figure 1). Theory also stressed that the system is composed of certain elements. There are

complex ecological relationships just like competition, dependence and cooperation among these various system

elements. There are similar relationships among these elements in green operation of enterprises. The purpose of

enterprise’s green operation is to maximize benefits from enterprise and economic environment. The system

provides functionality services for environment, which is a positive role and enables output referred to “func-

tional.” If there are ecological cooperation relationships among the elements within the system, the system can

maintain normal speed operation overall long-term.

3.2. Applications of System Science Theory

3.2.1. “Pressure” on the System from Environment

System Science Theory believes that environment applies constraints, disturbance and pressure on the system

Figure 1. Environment of enterprise

green operation.

Figure1.Environment of

Enterprise Green Operation

function

environment

pressure

polution

resource border

Enterprise green

operation

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and even endangers the survival and development of system. It brings a negative effect and input, which is col-

lectively referred to “pressure”, such as social views or policies on the environment pollution and green opera-

tion. With the development of economy and the popular concept of circular economy, it becomes the future

trend to integrate green operation concepts and methods in business management. Since the 1990s, a number of

companies in developed countries have been a step ahead in implementing green operation. Green operation is a

new idea arising in the background of global environment deteriorating, which is the inevitable choice for sus-

tainable development. Only through changing the model from excessive exploitation of natural resources to

green operation model based on their own survival and seeking changes in the business, social and environmen-

tal can we achieve the harmonious development of man and nature enterprises.

For years, our country takes an extensive development path with high input, high consumption and low effi-

ciency, neglecting the problem of pollution and its governance. This model has come to an end. In the 21st cen-

tury, the implementation of enterprise’s green operation has become essential. And the government has gradual-

ly paid attention to environment and resources, released the “Environmental Protection Law”, “Renewable

Energy Law” and other laws or regulations, proposed path of sustainable development and implement the scien-

tific development concept, vigorously developed the circular economy and stressed building a resource-saving

society. So far from 2011, Nanjing has more than 400 “three high and two low” (high pollution, high energy

consumption, high emission and low efficiency, low output) business remediation, closes more than 500 small

boilers. There is a high proportion of medium-small enterprises. Taizhou city government issued the “Guiding

Catalogue of Industrial Structure Adjustment in Taizhou City (2013 version), “the high-energy, pollution control

and other projects included in the hard phase-out category. “Green credit” gradually plays a role to strengthen

environmental protection in the enterprise. Such as, Suzhou obtains financial support, including the development

of energy conservation, corporate restructuring and upgrading, green transportation and other green projects, in-

cluding the National Development Bank.

3.2.2. Environment “Contam i n ate d” by the System

Some internal elements have destructive and competitive activities to system environment, which belong to un-

favorable output, collectively referred as the environmental “po llu tion ”. Such as, mineral resource recovery of

many companies is very low, which results in a serious waste of resources. Because irrational economic struc-

ture, traditional resource use patterns have not fundamentally changed, it is common sacrificing the ecological

environment for immediate and partial interests. The problem of high raw material consumption intensity of in-

dustrial production is prominent. Raw material consumption Strength is the raw material consumption per unit

of gross domestic product in the proportion of consumption. It is an important indicator of the level of produc-

tion and material consumption. Since 2013, some areas in China meet frequent severe fog and haze, closely re-

lated to the direct combustion of coal and automobile exhaust emissions. The proportion of heavy chemical in

Nanjing is so large resulting in a great impact on the environment pollution.

The current national ecological environment situation is still grim. Many companies’ pollutant emissions are

chronically high, exceeding environmental self-purification capacity so far. Some of the watershed and urban air

pollution is very serious. The extent of ecological damage in some areas is still increasing. Such as the Envi-

ronmental Protection Commission of Jiangsu Province, the joint monitoring units to third parties - Nanjing En-

vironmental Monitoring Station have found sewage waste-water phenomenon of excessive emissions in check,

and as a provincial issues supervise the handling of cases [6]. With the rapid economic growth in recent years,

China’s ecological environment meets tremendous pressure. Environmental issues in a century industrialized

countries constitute encountered in our 20 years quickly occurred. Because of the limitations of capital and

technology, many small and medium enterprises have a bottleneck in controlling environmental pollution, espe-

cially the lack of core technologies and cost increases and other issues.

4. Measures on Green Operation Strategy of Medium-Small Enterprise

System Science Theory believes that “environment” provides the space, resources, incentives or other conditions

needed for survival and development to the system. It is a positive role and enabling input, referred as “re-

sources. ” By adjusting the input of resource, we can reduce the “pressure” and “pollution” to improve the sys-

tem “function.” By exerting a beneficial effect on small and medium enterprises green operation to promote ef-

fective operation of “system”, the community will be able to form mutually beneficial cooperation and ecologi-

cal relations in the economic and environmental benefits and other aspects.

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4.1. Support of National Policy Should Be Strengthened

A series of policies were proposed by our government to support green operation, such as increasing the finan-

cial input to agricultural industrialization, supporting training, base construction, asset restructuring, technologi-

cal innovation, interest payments on loans for farmers provided by leading enterprises, in addition to building a

agricultural industrialization investment and financing system for implementation of the industrialization of

agriculture leading enterprises tax incentives. Such as the State “12th Five-Year Plan” comprehensive energy

reduction program,” “the State Council views on strengthening environmental protection priorities” and other

macro-control policies, besides of “green credit guidelines” by China Banking Regulatory Commission in 2012

and “green credit rating and credit enterprises in Jiangsu Province Interim Measures” by Jiangsu provincial En-

vironmental Protection Office and the United Provinces of credit [6]. Corporate income tax from enterprises en-

gaged in agriculture, forestry, animal husbandry and fishery projects may be exempted or reduced. Service

management should also be strengthened to create a relaxed and harmonious, good development environment

and the formation of multi-propulsion force.

In order to achieve sustainable development of the national economy, China reg ar ds saving resources and en-

vironmental protection as a basic national policy. China also puts emphasis on building a resource-saving and

environment-friendly society as a sustainable development strategy, vigorously strengthening resource man-

agement, promoting environmental protection and ecological construction. Our guidelines in the implementation

of sustainable development strategy are: developing recycling economy, creating a resource-saving and envi-

ronment-friendly society, promoting the harmony among economic development, population, resources and the

environment. Essentially, circular economy is an ecological economy, which requires the organization of eco-

nomic activity to form a “resources-products-renewable resources” feedback proces s. The process is characte-

rized by low extraction, high utilization, low emissions, a reduction of its three principles, reuse and recycle.

The core idea of sustainable development refers to the same economic development, protect resources and im-

prove the environment, economic development can be sustained.

4.2. Developing Concepts of Conserving Resources and Protecting the Environment

The primary concepts for companies to implement green operation strategy is conserving resources, protecting

the environment and pursuing sustainable development. Companies should increase investment to environmen-

tal protection projects, which are helpful to reduce the pollution. Under the increasingly fierce competition

counterparts, companies pay attention to related research to protect environmental resources in a market econo-

my. New products, new processes, new technologies are emerging. Green brand and green operation receive

more attention, which are gradually integrated into the more long-term development strategy. Only by green in-

novation, can enterprises gain competitive advantages. With the change in people’s attitudes, more and more

people require green and healthy products. In order to meet consumer attitudes of the public, it is necessary to

launch a series of green products for enterprises. In the future, enterprise will pay more attention to innovative

technology, environmentally friendly and intensive direction.

There are many environmental protection activities with disappointing participation. Public participation is so

vital for a good sale of green products. It is the basis for the successful implementation of green operation.

Guiding public opinion is also very important. Many customers understand green brand through the media,

newspapers, and so on. Consumers will consider consuming only after knowing the brand and building a certain

understanding. Promoting corporate green culture is a very complex work throughout the whole process in

business activities. It must be driven by managers. Enterprises should establish a green organization dedicated to

promote green operation. Companies can establish a green management system in design and production, raw

material procurement, product marketing behavior and other processes in order to achieve optimal economic ef-

ficiency and environmental benefits.

4.3. Nurturing Talents with the Government, Universities and Other Organizations

Since strength of medium-small enterprise is weaker than large enterprises, it is often difficult to attract or leave

talents for them. How to train, introduce and play a “green operation talent” enthusiasm for innovation is impor-

tant in order to improve the capability of independent innovation. Enterprise green operation talents means tal-

ents concerned with environmental protection, marketing, management, technology and other related aspects. It

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involves environmental protection, energy conservation and waste disposal in merely technical aspect. It is ne-

cessary to change economic growth driven by increased consumption of resources to scientific and technological

progress, improving the quality of workers, innovation in management. We must deepen reform and innovation

to get rid of the shackles of ideas and institutional barriers for providing talent development with a strong guar-

antee. “Green management talent” will be favored by the market who are engaged in environmental technology,

new energy, new materials, environmental consulting and environmental services, etc.

The basic premise and fundamental purpose of economic and social development both are human develop-

ment. For solving the imbalance in China’s economic development, uncoordinated and unsustainable ecological

pressure on the environment and other issues, we must implement science and education strategy and talents

strategy in depth. Education has the priority to develop. There are still misunderstanding in vocational education

and vocational skills talents. At present, enterprises are lack of high-quality compound green operation talents

with a global vision. In this regard, by exchanges among government, industries, academics, researches, it is

conducive to the realization of the complementary strengths of each organization’s resources and can cultivate

talents who understand medium-small green operation.

4.4. Development of Green Products to Reduce Costs of Green Operation

Only by adapting to market demand, keeping innovation, developing with intensive production methods can

medium-small enterprises obtain market recognition in competition with large enterprises, such as having em-

phasis on environmental protection and new energy industries. In face of green market, enterprises should ra-

pidly change business direction and develop green products to occupy the market quickly. Enterprises should set

up specialized agencies to collect information for green market segmentation analysis, thereby finding out the

operation and development strategies with green market positioning. Cost management is a so important that it

is directly related to the production and development. Enterprises should reduce costs to improve economic effi-

ciency and competitiveness. Products or services with high-quality and low-cost can attract more users.

It is necessary to implement cost management system if medium-small enterprise hoping to stand out in the

fierce competition. Cost management system can help reduce costs, improve the level of economic management,

the economic efficiency, enterprise competitiveness and cost-conscious corporate employees. With the devel-

opment of market economy and the implementation of commercial credit, many companies increase accounts

receivable, which is important in current asset management. The main reason is the credit receivables generated.

By providing convenience to customers through credit, companies can promote the sales and market share. Cre-

dit is more important for companies develop new products or new markets. In favorable credit conditions, cor-

porate managers should make the right decision between increased compensation and credit costs.

5. Conclusion

5.1. A Good External Condition Is Needed

Medium-small enterprise in Jiangsu Province requires a good external condition conducive to implement green

operation. External environment includes the legal environment, policy environment and the social environment.

Legal environment represents the legislative and judicial environment to constraint corporate behaviors on en-

vironment destruction and pollution. Policy environment refers to policy measures to guide enterprises to pro-

mote environmental protection, mainly in the economic benefits and constraints. And social environment means

the community participating in environmental protection actively, as well as the constraints, oversight and coor-

dination to the implementation of green operation operations.

5.2. The Change of Concept Is Necessary

The primary concepts and basic ideas of medium-small enterprises in Jiangsu Province to implement green op-

eration strategy is taking conserving resources, protecting environment and pursuing sustainable development

into consideration. We should put emphasis on research and take measures to protect resources. Specific imple-

mentation of green operation strategy involves green entrepreneurial spirits, green values, green operation ideas,

green regulations, green and cultural life. However, it will affect the decisions of managers and staff attitudes to

promote the enterprise green operation strategy. It is difficult to meet investment in green operation needs due to

the limited strength of medium-small enterprises, such as lack of capital and technology.

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5.3. Improving Operations to Meet the Financial Conditions Are Feasible

Deficiencies exist in innovative products to serve green operation from Jiangsu Province financial institutions.

Due to credit risks, role of “green credit” needs to be strengthened. Financial industries should give priority to

pollution-free industries just like tourism. If the firm meets “Jiangsu Province corporate environmental credit

evaluation criteria and evaluation methods” and it was rated as “gr een” firm, it is possible to obtain preferential

lending rates and insurance agencies to reduce environmental pollution liability insurance rates. Otherwise, en-

vironmental protection departments will delay matters about listing, financing and other environmental auditing.

Companies should have comprehensive analysis of the financing risks and benefits, according to their own con-

ditions, government support for green credit and attitude of financial markets.

Acknowledgements

We acknowledge financial support from the Key Project of Philosophy and Social Science Research in Colleges

and Universities of Jiangsu Provincial Education Department (NO.2010ZDIX M004) and the National Under-

graduate Training Programs for Innovation and Entrepreneurship in Hohai University (NO.201205XCY007).

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