| Firms develop and market their environment-friendly activities not only to contribute to society but, more importantly, to be perceived as environmentally responsible, capture the willingness to pay of green consumers, and increase profits. At the same time, many firms are convinced that the associated increase in costs and uncertain financial benefits will erode their competitiveness. Environmental developments require firms to identify the sources of improvement and make appropriate adjustments, which often entail extensive analyses and costly alterations. The difficulty in measuring emissions along the entire supply chain and the unclear market response make it difficult for firms to manage their environmental initiatives. Furthermore, with recent developments in markets for greenhouse gas emissions, firms are faced with the task of strategically managing a portfolio of internal and external approaches to optimizing their environmental performance.;The first essay of this dissertation provides a market-based synthesis of the possible opportunities for green within and across a firm's business model. A review of operationally internal approaches to environmental management, advancements in external carbon markets, managerial and operational issues involved, and demand-side implications are discussed. In the second essay, an empirical investigation is first conducted on the market-side response to product carbon footprints and carbon offsetting claims. Based on the findings, a theoretical model is then developed to understand how a firm, faced with a market where consumers differentially value distinct carbon footprint-reducing approaches, can manage its portfolio of environmental initiatives. In the third essay, a theoretical model is developed to investigate the impact of the voluntary carbon market and the resulting availability of carbon offsetting as a footprint-reducing initiative on competition and the environment. Taken together, this dissertation provides an outline of the areas of green, both internal and external to a firm's operations, and the influence of the voluntary carbon market on firms' environmental management strategies. |
