Environmental issues in operations management

Adoption of sustainable operating practices is becoming an increasingly important issue for many organizations in the world today. In this dissertation, I use empirical methods to investigate factors that influence the adoption of sustainable practices and also identify issues that may hinder the adoption of such practices. I explore these issues in two diverse settings.;In Chapter 1, I investigate the adoption and non-adoption of energy efficiency initiatives using a database of over 100,000 recommendations provided to more than 13,000 small and medium sized manufacturing firms. Even though the average payback across all recommendations is just over one year, many of these profitable opportunities are not implemented. Using a probit instrumental variable model, I identify four biases in the adoption of these recommendations. First, managers are myopic as they miss out on many profitable opportunities. Second, managers are more influenced by upfront costs than by net benefits when evaluating such initiatives. Third, adoption of a recommendation depends not only on its characteristics but also on the sequence in which the recommendations are presented. Adoption rates are higher for initiatives appearing early in a list of recommendations. Finally, adoption is not influenced by the number of options provided to decision makers. This contributes to the debate about whether or not choice overload occurs. We highlight decision biases previously unobserved in the Operations Management literature using field data rather than experimental data. We draw implications for enhancing adoption of energy efficiency initiatives and for other decision contexts where a collection of process improvement recommendations are made to firms.;In Chapter 2, I examine the depth of adoption of the voluntary LEED (Leadership in Energy and Environmental Design) standards for green buildings. Depth of adoption refers to the extent to which the buildings adopt practices related to the standard. The LEED standard is based on a point system where buildings are awarded different certification levels based on the number of points they achieve. We use a database of 721 buildings certified to the LEED standard to investigate four issues related to the depth of adoption. First, I find that depth of adoption is influenced by the various certification levels (certified, silver, gold, platinum) incorporated into the LEED standards. In the distribution of points achieved by buildings, this results in large "spikes" at the cutoffs for the various certification levels. Second, we find that the depth of adoption of the LEED standard increases over time as the standard becomes more widely accepted. Third, we find that among organizations that adopt the LEED standard, nonprofit organizations adopt it more deeply than other types of organizations. Finally, we find that deeper adoption is associated with longer project completion times, consistent with the greater complexity involved. Our study contributes to the literature by highlighting that the structure of a standard can influence depth of adoption, that depth of adoption can evolve over time, and that depth of adoption is influenced by organization type. We draw implications for the design and future development of similar voluntary standards.