integrating hotel environmental strategies with management control - a structuration approach

Integrating Hotel EnvironmentalStrategies with Management Control:

a Structuration Approach

Lai Hong Chung1* and Lee D. Parker2†

1Nanyang Business School, Nanyang Technological University, Singapore2School of Commerce, The University of South Australia, Australia

ABSTRACTThis study addresses the development of environmental strategies and associatedmanagement control in the international hotel industry, a sector of major economicand environmental impact hitherto largely neglected in the environmental manage-ment and accountability literature. The low key level of commitment to environmen-tal management currently exhibited by the industry is considered in the context ofdominant systems of hotel management performance evaluation and control, as wellas the industry’s current strategic management and budgetary practices. Informed byGiddens’ structuration theory, the study offers a new theoretical framework, environ-mentally efficient resourcing, as a structured approach to the development of hotelenvironmental strategy and its management. Copyright © 2006 John Wiley & Sons,Ltd and ERP Environment.

Received 12 October 2005; revised 26 February 2006; accepted 22 March 2006

Keywords: hotel; environmental strategy; structuration; management control; management accounting; budgeting; performance

measurement

CORPORATE ENVIRONMENTAL STRATEGY AND ACCOUNTABILITY HAS RISEN TO PROMINENCE IN

government and business policy, particularly over the past decade. This has increasingly been

reflected in the management and accounting research agendas and literatures internationally.

Community environmental concerns have come to affect a widening range of industries.

However, most research into corporate environmental strategy, control and reporting has focused on

the mining, manufacturing and chemical industries, especially those heavy industries where the poten-

tial for direct pollution and degradation of the environment is most obvious and appears to be the most

significant. Increasingly, however, community environmental concerns have begun to extend to busi-

nesses in the service industry. Among these stands the international hotel industry, which has begun

Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment

Business Strategy and the EnvironmentBus. Strat. Env. 17, 272–286 (2008)Published online 16 May 2006 in Wiley InterScience(www.interscience.wiley.com) DOI: 10.1002/bse.546

* Correspondence to: Associate Professor Lai Hong Chung, Nanyang Business School, Nanyang Technological University, S3-B1A-15, Singapore639798. E-mail: [email protected]†This article was published online on 16 May 2006. Prof. Parker’s affiliation was at that time the School of Commerce, The University of Adelaide, South Australia. This printed version incorporates an updated affiliation.

Integrating Hotel Environmental Strategies with Mansgement Control 273

Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 17, 272–286 (2008)DOI: 10.1002/bse

to exhibit signs of taking up environmental strategies as part of some hotels’ core missions and profiles

(O’Brien and Parker, 1999).

A number of factors contribute to the importance of environmental strategy and management in this

industry. First, it represents a foremost part of the hospitality and tourism industry, one of the largest

global industries. Second, with the growth of national and international tourism, the hospitality sector

and the hotel industry in particular are assuming a higher public profile and may increasingly attract

the attention and scrutiny of community groups, environmentalists and regulators. Third, more afflu-

ent consumers may increasingly demand ‘green’ accommodation, and regulation may intensify for

better waste disposal, improved water and energy conservation etc. With the heightened interest in envi-

ronmental strategies comes the challenge of not only developing corporate environmental objectives and

strategies but also achieving effective implementation. One key to effective implementation lies in the

linkages between environmental strategies, corporate accounting and management control functions.

For example, there is a need to develop a better understanding of environment-related costs and bene-

fits as inputs to conventional management accounting (Parker, 2000a, 2000b). Bartolomeo et al. (2000)

report on the results of a trans-European project to investigate links between environmental manage-

ment and management accounting functions of a business. The results suggest that opportunities exist

for companies to become more active in environmental management accounting and control and that

the pressures on them to do so will increase. Arguably this requires a strategic approach to environ-

mental management, accounting and performance evaluation. Before this can happen, however,

research is needed in these areas, in relation to both the specific needs of the hospitality industry and

possible contributions from the broader accounting and management control disciplines (Harris and

Brown, 1998).

This paper offers a contribution to the establishment of foundations for the development of strategic

environmental management and control systems with specific reference to the hotel industry. To this

end, it sets out to critically evaluate the extant environmental research relating to the key drivers of hotel

environmental strategy, concluding that there is an environmental control gap. This is evidenced through

our review of two important components of control systems in hotels, namely budgetary and perfor-

mance measurement practices. On this basis, the paper offers a new integrative framework of environ-

mental strategy and management control, using the environmental efficient resourcing (EER) approach,

to facilitate environmental strategy practice in the international hotel industry. Our theoretical frame-

work draws from Giddens’ structuration theory in its development and implementation of environ-

mental values, objectives and actions.

Environmental Policies and Strategies

Environmental management might best be summarized as the suite of strategies, actions and controls

that are aimed at reducing an organization’s dysfunctional environmental impact and includes both tech-

nical (hardware) and organizational (software) activities (Klassen and Whybark, 1999; Cramer, 1998).

It broadly covers issues such as environmental impact, sustainability, resource management and pollu-

tion control (Kirk, 1995). In the specific case of hotels, environmental management consists of opera-

tions that cover aspects of consumption of energy, water and other resources (Gil et al., 2001), food waste

production, waste management and pollution emissions (Kirk, 1995). Gray and Bebbington (2001) high-

light the potential range and significance of environmental impacts of even a small size hotel when they

define potential environmentally related inputs, leakages and outputs.

Empirical evidence shows that hotels have begun to respond to the need of environmental manage-

ment. The first step in the process, as suggested by Elkington and Burke (1991), is the formation of an

274 L. H. Chung and L. D. Parker


environmental policy. Brown (1996) reports that in her sample of UK hotels more than 40% of the

respondents stated that they had an environmental policy. However, Kirk’s (1995) sample of general

managers (GMs) in Edinburgh shows a smaller number, with only 19% having a written environmen-

tal policy at the time of the study. A subsequent study showed comparable numbers of 22% having an

environmental policy (Kirk, 1998). Given the overall evidence suggesting that only a small number of

hotels have a written environmental policy, another way to ascertain commitment to environmental man-

agement may be in terms of the implementation of environmental initiatives. Brown (1994) found some

evidence of environmental initiatives in her sample of UK hotels. Examples include recycling of cans,

paper and food, less frequent change of bed linen and ‘green’ purchasing policies. However, more than

65% of the respondents were still failing to adopt these types of green initiative. Gil et al. (2001) exam-

ined hotels’ environmental management in terms of the practices they adopted to reduce their negative

impact on the natural environment. These practices included quantification of environmental costs and

savings, environmental training programmes, green purchasing policies, energy and water-saving

actions and recycling.

From our review, it is apparent that environmental strategies are not widely adopted by hotels. To

begin with, few hotels have a written environmental policy. Of those with a written policy, only a small

percentage has taken the next step of implementing their environmental strategies by committing

resources to specific environmental management practices. A host of factors may drive the degree of

commitment and the extent of adoption of environmental policies and strategies by hotels. We will

review the literature on these environmental strategy drivers in the following section.

Environmental Strategy Drivers

In their survey of 262 3*, 4* and 5* Spanish hotels, Gil et al. (2001) found that various factors had an

effect on the degree of environmental practice implementation. These were hotel size, age of facilities,

chain affiliation and pressures from operation management and internal and external stakeholders. It

is noteworthy that, except for stakeholder pressures, the other factors are all internal organizational

factors. This study also explored the linkage between environmental management and the firm’s finan-

cial performance and found a positive relationship.

In a study of a total of 85 hotel managers in Edinburgh, Kirk (1998) found no significant association

between the presence of a written environmental policy and hotel characteristics such as size, owner-

ship and classification/grading. However, this result could be due to the small number of respondents

declaring a written environmental policy.

Brown (1994) reported that the most cited reason for implementation of a number of typical envi-

ronmental measures has been cost. This emerged as a significantly more cited reason than care for the

environment, customer pressure, regulatory requirement or competitor action. Indeed, managers

ranked care for the environment as a less important concern for hotel management than factors such

as quality and customer care. Somewhat surprisingly, they also viewed competitors’ actions as the least

important criterion.

Based on a survey of GMs of hotels in Edinburgh, Kirk (1995, 1998) reported that the most signifi-

cant perceived benefits of environmental management were the positive effects on the local community

and public relations. This perception was enhanced by the presence of a written environmental policy

(Kirk, 1998). GMs of hotels with a written environmental policy perceived greater potential benefits in

terms of increased profitability and marketing advantage compared with GMs in hotels without a written

policy. Hotel size and classification also had an effect on general managers’ perception. Managers of



large hotels, and hotels with classification of 3*–5*, perceived greater positive public relations benefits

from environmental management.

Research into hotel patrons as drivers of environmental policy and management reveals somewhat

mixed evidence. A survey of frequent travellers revealed that (1) they want to stay in hotels that show

concern for the environment, but (2) they are not willing to pay extra for it (Watkins, 1994). About 70%

of those sampled say they are likely or extremely likely to stay in a hotel with a proactive environmen-

tal policy, while 26% reported that it does not matter. About 50% do not think that hotel room rates

should change in environmentally active hotels.

One other potential driver that cannot be ignored is the effect of environmental strategy on firms’

financial performance. Yet again, the empirical evidence regarding this is rather mixed. Some studies

have reported a positive relationship between environmental strategy and financial performance (Gil

et al., 2001; Judge and Douglas, 1998; Russo and Fouts, 1997) while others have reported a negative

relationship (Cordiero and Sarkis, 1997; Worrell et al., 1995).

Research into environmental policy and strategy in the international hotel industry therefore reveals

a spectrum of factors driving the environmental agenda. Large hotels with recently constructed facili-

ties, and those belonging to large chains, appear more likely to be environmentally active. From the

point of view of hotel management, two major motivators emerge in the form of cost reduction and

enhancement of public relations. Nevertheless, the evidence for a relationship between environmental

strategies and better financial performance is mixed. Furthermore, while stakeholder pressure is cited

as a significant driver, evidence from hotel patrons suggests that they are favourably disposed towards

environmentally conscious hotels but vary in their willingness to pay a premium for this.

The Environmental Control Gap

One potential reason for the hotel industry’s muted support for environmental management strategies

may be due to how hotel managers are controlled and evaluated. Managers surveyed by Brown (1994)

reported that they are controlled by both budget and profit performance. Environmental reporting and

achievement of environmental targets were generally viewed as being unimportant control criteria.

When asked whether environmental improvements should be recognized as part of the reward system,

71% responded that they should not.

In a subsequent survey of 106 UK hotel managers, Brown (1996) found that their perception of

importance placed on control criteria was consistent with the earlier study. The three most important

forms of reporting cited were achievement of budget, maintenance or improvement of profit and cus-

tomer complaint reporting. The same criteria were reported for hotels with and without an environ-

mental policy. However, those hotels having an environmental policy (over 40% of respondents) did

perceive a number of other reporting requirements as significantly more important, including

environmental reporting and environmental target achievement. Brown concluded that hotels with

environmental policies have not incorporated environmental reporting into their control system to any

great extent.

It appears that managers remain primarily focused on traditional short-term budgetary and financial

performance targets, reinforced by the control systems to which they are subjected. Yet it is in control

system design and implementation that arguably the greatest potential for effective integrated pursuit

of operational, financial and environmental strategies lies. It is to this issue that this paper now turns.

We will specifically evaluate two important components of hotel control systems, namely, the budgetary

and performance measurement practices.



Hotel Budgetary Practices

The available empirical evidence regarding budgeting practices in hotels is based on surveys and limited

case studies of UK, US and Scandinavian hotels. Budgets are commonly used in hotels and most are

prepared for the purposes of control and performance evaluation.

Schmidgall et al. (1996) made comparisons between the operations budgeting practices of US and

Scandinavian hotels using a survey methodology. The approach to budgeting used by hotel chains was

found to be bottom up in both samples (US 80%; Scandinavia 64%). This compares with only 55% of

UK hotels surveyed by Jones (1998). However, for budgeting at the hotel level (rather than the chain

level), while the majority of US respondents (65%) still use a bottom-up approach, the Scandinavian

respondents exhibited a greater variety of approaches (38% being top down, 35% being bottom up and

the remainder a combination of the two). Prior to developing the budget, a majority of respondents set

tentative financial targets. The most commonly used target is net income (52%) followed by return on

owner’s equity (16%). In a subsequent study of US hotels, Schmidgall and Defranco (1998) report similar

results, with a majority setting either sales (33%) or net income (31%) financial targets prior to devel-

oping the budget. After the budget is developed, further revisions are still commonly made, since budgets

are usually prepared months in advance of the operating year.

Flexible budgeting does not appear to be widely used (Jones, 1998). This could be explained by the

relatively high fixed costs of hotels, which diminish the advantages of ‘flexing’ the budget (Collier and

Gregory, 1995a).

While most hotels prepare annual operating budgets, fewer appear to prepare a long-range budget.

Yet Schmidgall and Defranco (1998) have found a positive relationship between the sales level of a hotel

and the likelihood that the hotel will prepare a long-range budget.

Given the concerns with traditional budgeting, some have advocated that companies adopt ‘better bud-

geting’ processes. One example is zero-based budgeting (ZBB), which has been adopted in varying

degrees in different countries. For example, it is used much more by US hotels (42%) than Scandina-

vian hotels (7%) (Schmidgall et al., 1996). The rate reported for UK hotels is even higher than the US

at 52% (Jones, 1998). However, it must be noted that this rate is based on a survey conducted a few

years later than the Schmidgall et al. (1996) study. Despite a proportion of hotels adopting ‘better bud-

geting practices’, some researchers have argued that this does not address the problem that the funda-

mentals of budgeting create barriers to competitiveness (Hope and Fraser, 1997; 2003). Instead, they

advocate a new approach encompassing a more comprehensive range of steering mechanisms such as

rolling budgets, balanced scorecards and activity-based management.

Some of these improvements in budgeting have been adopted by hotels, e.g. the Lakefront Hotel noted

by Brown and Atkinson (2001). Lakefront Hotel is a 1200-room property located in Chicago and is widely

considered as a ‘flagship’ operation within the well established international company that is managing

the property. Its annual plan is supplemented by frequent revised forecasts and updates that are devel-

oped through teamwork and widely communicated in the hotel. Its approach to performance manage-

ment and control is also more balanced, and performance indicators include both external and internal

quantitative data as well as ‘softer’ performance indicators. These strategic indicators include long-term

leading indicators of future performance and short-term measures of outcomes already attained.

So, the picture of the hotel industry budgetary practice is largely one of short-term incremental bud-

geting focussed on net income or monetary sales. While a degree of innovation in budgetary systems is

evident in a significant proportion of some national locations, there remains considerable scope for inno-

vation and experimentation with more comprehensive, broader based strategic and financial steering

mechanisms.



Hotel Performance Measurement

The problems faced by organizations in designing optimal performance measurement and evaluation

systems are not peculiar to the hospitality industry. In recent years, new performance measurement

frameworks have been developed to meet the changing competitive demands faced by organizations.

Criticisms have been directed at traditional systems for their focus on measuring short-term financial

outcomes and failure to measure factors of strategic importance to the organization and facilitate early

intervention. To refocus manager attention upon the longer-term strategic issues, frameworks such as

the balanced scorecard and EVA have been increasingly adopted by organizations. Based on the rather

limited research available in the hotel industry, it would appear that the hotel industry has adopted such

frameworks only to a limited extent.

Surveys of hotels in Europe indicate that most are emphasizing financial measures, despite their well

documented limitations. Harris and Mongiello (2001) surveyed GMs of chain-based European hotels,

and followed up with interviews with a selection of GMs in UK and Italy. Their preferred key perfor-

mance (if information was available) was based on a balanced scorecard with financial, customer, oper-

ational and human resource perspectives. Financial and customer-related indicators formed the basis

for actions taken by these GMs.

Similarly, a study of UK hotels reported that the highest rated measures monitored were financial

dimensions of performance – profitability had the highest rating, followed by turnover and cost control

respectively (Atkinson and Brown, 2001). Overall, the hotels appear to pay significantly less attention to

non-financial dimensions. While the non-financial performance measure that rated most highly was

quality of performance, other measures such as innovation received scant attention. These findings are

not limited to Europe – GMs in Australia also put significantly more emphasis on financial indicators

in evaluating subordinates’ performance (Mia and Patiar, 2001).

Given the empirical evidence, there is cause for concern. Brown and McDonnell (1995) voiced their

concerns in three areas. First, hotel information systems lag the range of techniques available (e.g. mon-

itoring multiple dimensions of performance). Second, despite the high level of interest shown in human

resource and marketing issues, current performance measurement and evaluation systems are weak in

these areas. Finally, they argue that hotel companies must develop performance measures unique to

their circumstances and needs and suggested the use of the balanced scorecard approach, which they

illustrated by developing a balanced scorecard for a 5* hotel in England.

Since then, several other cases of balanced scorecard adoption have been documented in the litera-

ture. The Hilton Hotel developed the balanced scorecard as a way to quantitatively track financial and

non-financial data that have an impact on the company’s strategic plan and to ensure consistency among

all Hilton properties (Huckstein and Duboff, 1999). Hilton’s balanced scorecard included performance

measures focussing on revenue maximization, operational effectiveness, customer value and brand man-

agement standards.

White Lodge Services (WLS) Corporation started developing its balanced scorecard system in January

1997 to monitor performance at both the property and corporate levels (Denton and White, 2000). WLS

manages a hotel portfolio consisting mainly of Marriot limited-services franchises, namely Courtyard,

Fairfield Inn and Residence Inn. Their balanced scorecard elements included employee and manage-

ment turnover, internal operational and human resource practices, guest satisfaction and financial

success. Performance improvements were reported in several areas during the first two years of the bal-

anced scorecard’s implementation. These included improvements in quantitative measures of revenue

and profitability, as well as greater alignment of objectives between owners and property managers.

Neither reported balanced scorecard had environmental performance as a significant focus.



Whilst it is encouraging to find examples of hotels that have experimented with the balanced score-

card, very little else has been documented in the literature with regards to the adoption of other new

performance measurement frameworks. In a sample of 18 hotels, Atkinson and Brown (2001) identi-

fied only one company that had developed and implemented a balanced scorecard. There was very

little evidence of the adoption of other new performance measurement frameworks. For example, the

concept of activity-based costing and its application to customer profitability analysis, while potentially

beneficial to hotels, has received little exposure in the hospitality literature (Noone and Griffin, 1997).

In a research report looking at management accounting in hotel groups, the authors found that there

was a consistent failure to implement activity-based costing in the cases studied (Collier and Gregory,

1995b).

Existing Strategic Management Approaches

Phillips (1999a) notes that although the balanced scorecard is gaining in popularity it is not without its

shortcomings. For example, some companies fail to define the measure of success that needs to be

emphasized, but instead have used indicators that are easy to determine. Moreover, he argues that exist-

ing performance systems have been fixated on individual techniques such as the balanced scorecard but

have neglected the process of overall organizational performance measurement. To address this short-

coming, Phillips (1999a) proposed a hotel performance measurement system that goes beyond tech-

nique to focus on process and structure and links the three areas of strategic planning: formulation,

implementation and evaluation. The model is a contingency model consisting of the following key

elements: (1) inputs and processes – based on the resource based view of the firm (Barney, 1991), (2)

environmental characteristics – including market turbulence, competitive turbulence and technology

turbulence, (3) strategic orientation – using the typology of Miles and Snow (1978) and (4) outputs,

markets and outcomes – using performance measurement systems, such as the balanced scorecard, to

monitor outcomes of processes. The proposed model was illustrated using a 4* hotel located in England

(Phillips, 1999b).

A similar model was proposed by Webster (1994), drawing on systems theory, where the organiza-

tion with its activities and processes fits its environment and has both inputs from it and provides

outputs to it. The major elements of the model are the environment, the inputs, the organization and

the outputs. The model can be used to perform a strategic analysis of a company and was illustrated

using a case study of Swallow Hotels in the UK.

In general, however, little research has been done on strategic planning and management

control processes utilized by hotels. Phillips (2000) provided some empirical evidence of a positive rela-

tionship between strategic planning and performance. However, the significance of the relationship

depends on the exact measure of ‘performance’ (different measures of efficiency, effectiveness and

adaptability were used in the survey). Other studies tend to focus on specific elements of the strategic

management process, for example environmental scanning (Olsen and Teare, 1994; Costa and Teare,

2000).

Olsen and Ropper (1998) provided a review of research in strategic management in the hospitality

industry and found that it is still grounded in the classical view of strategy as a highly rational process.

They conclude that there is much scope for significant research in strategy as applied to the hospitality

industry and in particular argue for additional research to be conducted to develop the relationships

among the key elements in order to provide synthesized views of how they interact to produce success-

ful strategies.



Building a Comprehensive Strategic Management Framework

In order to develop a hotel environmental strategy, successfully implement it and then evaluate its impact

(both financial and non-financial) on various stakeholders, the strategy must be created and managed

holistically and linked to the overall management control system of the organization. The environmen-

tal strategy must first and foremost be a synergistic part of the hotel’s overall corporate strategy if it is

to create value both organizationally and environmentally. This will require a balancing of hotel owner

and management incentives with positive environmental outcomes. Strategizing hotel environmental

change on this basis is herein proposed via a comprehensive strategic management framework built

upon a structuration theory foundation.

A Structuration Theory Foundation

Giddens’ structuration theory (1976, 1979, 1981, 1984, 1987) has now been employed over many years

by some researchers as a lens for both constructing and critiquing organizational strategy, accountabil-

ity, information systems and the like (Roberts and Scapens, 1985; Macintosh and Scapens, 1990, 1991;

Yuthas and Dillard, 1997/98). Structuration theory recognizes a close and reciprocal relationship

between social structure and human agency. It combines the notions that people act with purpose and

in so doing create their own environment and the social structures of this environment, while at the

same time these emerging social structures also determine people’s behaviour and actions. As they both

create and are shaped by emergent social structures, people develop meaning in their actions and exer-

cise power through these structures, which are continually transformed and reproduced through

people’s actions. Thus for Giddens action and structure are both media of interactions between people

as well as being outcomes of these interactions.

Thus, for organizations, systems such as management control systems, management information

systems and corporate planning systems have structures that are produced and reproduced through orga-

nizational members’ interactions. They in turn facilitate structures and shape the form and patterns of

those interactions. Structures do not simply constrain human activity, but also enable those activities.

This is what Giddens terms the duality of structure.

Management control systems, management information systems and corporate planning systems can

essentially be conceived as part of social systems having three major properties:

(1) structures – systems of rules and resources

(2) modality – means by which structure produces action

(3) interaction – actions taken by organizational members working within these systems.

There are three types of structure conceived by Giddens: signification, legitimation and domination. Sig-

nification refers to organizational members making sense of actions and deriving meaning from them

by drawing on meanings they derive from control, information and planning systems. The modality

through which this is produced is largely the development of people’s interpretive schemes, namely the

ways in which they conceive and interpret the world around them.

Legitimation refers to the moral sanction and thereby legitimacy derived by organizational members

from these systems. The modality through which this is produced is largely that of the creation and

maintenance of accepted social norms of belief and behaviour. Domination refers to the power derived

by organizational members from the authorization of actions and allocation of resources facilitated by

these systems. The modality through which this is produced largely relies upon the facilitating role



played by organizational planning and control systems that authorize actions and allocate resources.

Thus for each of these three types of structure, there is a corresponding modality and interaction. Thus

the interaction of people with the structure results in actions and interactions that in turn produce com-

munications, rewards and sanctions, and the power to achieve desired objectives and outcomes.

Structuration theory offers a perspective on organizational strategy and accountability that is distinct

from a purely functionalist or systems based view. It offers a focus on the interaction between structural

and human factors that influences how both operate. Its view of power is not unilateral, but rather

recognizes the exercise of power in social relations and for the purpose of altering the course of events,

at all levels of the organization, and by subordinates as well as superiors.

Opportunities exist for embedding environmental strategy into the hotel organization through signi-

fication, legitimation and domination structures. All three are capable of impacting on and being them-

selves reinforced by the actions of hotel owners, managers and employees.

Proposed Strategic Management Framework

The following framework is presented as a potential foundation for the further investigation and devel-

opment of hotel environmental management processes and outcomes. Environmental strategies require

a foundation that establishes the basis for overall strategic direction. These consist of a set of governing

corporate environmental policies that reflect consideration of

• the organization’s strengths, weaknesses, opportunities and threats

• mandatory environmental legislation and regulations in countries in which it operates

• international industry quality standards (eg. ISO14001) and guidelines

• environmental policies and strategies employed by hotel industry leaders

• community and patrons’ concerns and preferences.

These policies will reflect and be driven by emerging environmental values, which themselves can drive

longer term action by articulating hotel management and staff ’s interpretation and sense-making of

their customer-related, operational and environmental roles and responsibilities (signification) and by

embodying and legitimizing emerging norms of environmental responsibility (legitimization). These

two structures have the capacity to generate major environmental strategy actions and outcomes in addi-

tion to the more formalized management planning and control systems that an organization may

develop.

To trigger strategies and associated actions, the resulting broadly specified environmental policies

require translation into environmental objectives in both operational and financial terms. These form

an integrated part of the organization’s overall objectives, being framed in a common medium to longer

time horizon, supported by related strategies and subject to measurable key performance indicators

(KPIs) where feasible.

Given the evidence concerning hoteliers’ strong cost control orientation and hotel patrons’ environ-

ment–cost trade-off preferences, the effective implementation of environmental strategies may, at least

in the early stages of environmental strategy development and change, be facilitated by the adoption of

‘environmentally efficient resourcing’ (EER). EER offers a focus upon the linkage between environ-

mental objectives and strategies, and integrated environmental and financial outcomes for both hotels

and patrons. Thus, under EER, hotel environmental strategy and management is oriented towards the

integration of environmental and operational enhancement in the pursuit of positive outcomes for

longer term environmental, operating and cost efficiencies. This involves environmental strategy in con-

tributing to and being held accountable for



• a net reduction in the organization’s dysfunctional environmental impact

• associated cost savings, cost containment or agreed upon cost increments

• operational efficiency improvements or maintenance of longer-term operational efficiency targets

• development of a positive environmental reputation amongst communities and patrons

• a consequential positive impact on patron demand and payment for accommodation and services.

This essentially reflects a balanced scorecard philosophy, but incorporates environment as a key feature,

and drives strategy development rather than being used purely ex post to evaluate outcomes. Once more,

this philosophy reflects the mutual interaction of hotel organization members’ actions and structure,

whereby their emerging sense-making of the relationship and balance between operational, financial

and environmental values and objectives becomes more clearly agreed upon, articulated and pursued as

legitimate behavioural norms.

The effective operationalization of EER hinges on its implementation, evaluation and control. This

can be applied at three levels, as shown in Figure 1.

Level 1. Management values and philosophy (signification). The deepest level of owner and management

values and philosophy. This involves a morphogenetic1 change of deep-seated organizational culture and

its core values towards a deliberate and major commitment to fundamental principles of environmen-

tal protection and remediation – in both core beliefs and extensive action that commits significant finan-

cial, human and operational resources over the long term. This implies a focus on signification as a

crucial structure whereby people make sense of their environmental versus operational and financial

responsibilities.

STRUCTURES

Level 2: Environmental Strategy

Translation of values into environmental objectives

Level 3: Environmental Control

Measurement and monitoring of operational, environmental and financial KPIs

DOMINATION

authorising behaviour and allocating resources

LEGITIMATIONcreating norms of beliefs and behaviours

Level 1: Environmental Values and Philosophy

Morphogenetic change of culture and core values

SIGNIFICATIONsense-making of environmentalresponsibility

Figure 1. The three levels of environmentally efficient resourcing (EER)

1 Morphogenetic change refers to a lasting change in people’s or an organization’s deep, inner core beliefs about their identity, raison d’être andfundamental values (Laughlin, 1991; Gray et al., 1995).



Level 2. Strategy (legitimation). The related operational business and functional strategy level. This

involves the translation of the core values into feasible objectives and the implementation of practical

environmental strategies for the instigation or improvement of environmental management. This can

be pursued particularly through the legitimation structure, whereby the crafting of specific environ-

mental objectives and strategies begin the process of creating norms of belief and behaviour, which

influence management and employees’ perceptions and behaviour alike and in turn reinforce the legit-

imacy of the pursuit of environmental responsibility values and objectives.

Level 3. Control (domination). The environmental control level. This requires the design, measurement

and monitoring of environmental, operational and financial KPIs covering periods from short to long

term. These are oriented towards the control of both environmental resources and impacts and related

financial resources and impacts. This control level embraces domination structures involving the autho-

rizing of environmentally proactive behaviour and the allocation of resources to facilitate such actions.

It is this structure that can be brought into action by strategic management, management control and

management information system modalities.

Given the empirical evidence for a strong predisposition in the hotel towards short-term profit and

cash flow targeting, the operation of EER at level 1 most probably represents a longer-term state for

hotels that have attained the more advanced stage of corporate environmental strategic positioning. Such

hotels will have a well developed and deeply held core set of environmental philosophies, a longer-term

strategic orientation, and an integrated suite of operational, environmental and financial KPIs. They are

more likely to have combined signification, legitimation and domination structures in their overall

pursuit of proactive environmental strategies for longer-term hotel implementation.

In the shorter term, hotels without prior commitment to environmental strategies are more likely to

engage in morphostatic change,2 whereby some elementary environmental principles are adopted,

leading to incremental short- to medium-term environmental strategies only partially integrated into the

overall strategic management and control system. This represents the beginnings of environmental

change while still retaining previously held priority core commitments to other operational and finan-

cial objectives. As such, it is a partial approach, which may work through attention to legitimation and

domination structures whereby some norms of environmental responsibility are developed and some

action is authorized and resources are allocated to selected environmental strategies. While this might

constitute rebuttal or accommodation without the organization changing its fundamental philosophy or

beliefs, some positive environmental outcomes and impacts may be nonetheless generated by this incre-

mental approach.

Even if environmental change is addressed at level 1, via a morphogenetic approach, level 2 opera-

tionalization of EER will be required if any positive impact on hotel environment is to be achieved. Envi-

ronmental objectives must be articulated simultaneously with operational and financial objectives, if

related strategies are to be developed and responsive actions triggered. Without level 2 operationaliza-

tion, values and philosophies remain just that: tokens without substance. Implementation of actual and

effective environmental change management cannot follow without specific plans and related commit-

ment of resources, responsibility and accountability for outcomes – major arenas of legitimation and

domination structure.

Level 3 represents an essential performance control and input to further cycles of environmental strate-

gizing. It prompts design of information systems to answer the question ‘How will we know when (or

if ) we’ve got there?’. The development of environmental KPIs and their integration into the hotel’s exist-

2 Morphostatic change involves people or an organization in adjusting some of their routine policies, actions and/or communications to respondto external pressures or demands while maintaining the pre-existing deep level core beliefs and values (Laughlin, 1991; Gray et al., 1995).



ing system of KPIs is essential for the ongoing actioning of EER at level 2. At this level, it is most likely

that a suite of strategic steering mechanisms such as rolling three- to five-year budgets and balanced

scorecards may be developed and applied. The challenge is for them to focus strategic implementation

upon the balancing of short- and long-term objectives, to maintain a dual orientation towards both oper-

ational and financial targets and to pursue environmental improvements in a market sensitive manner.

This fundamental level 3 embodies a profoundly domination based structure. Systems of decision-

making authorization and resource allocation are developed to facilitate specific implementation and

control actions essential for securing outputs and meeting objectives – operational, financial and

environmental.

For EER to produce longer-term tangible environmental outcomes, it must ultimately operate at all

three levels specified above. Any lesser number of levels being addressed may result in environmental

outcomes that are unsustainable over the long term, that are negligible or short term only, that are readily

jettisoned in favour of short-term financial KPIs or that produce only token policies. On the other hand,

where a hotel may initially commit only to morphostatic change, for example by adopting some envi-

ronmental compliance strategies and controls3 at structural levels 2 and 3 (as per Figure 1), the poten-

tial for longer-term morphogenetic change still exists. While Figure 1 suggests that an organization may

move through structural level 1 to 2 to 3, this sequence is not immutable. A hotel may first embark on

compliance-induced environmental structures and processes, absorbing them into the organizational

culture. Absorption and related costs and benefits may incrementally impact on informally held core

values, so that over time environmental values and philosophy may become formally realigned, with

impacts on level 1 (signification) structures and consequent further realignments at level 2 (legitima-

tion) and level 3 (domination) structures.

What EER does offer hoteliers is the opportunity to pursue environmental change strategies in the

context of their industry and their own organization’s particular profile and constraints. Being pursued

via all three levels and across all three structures, of signification, legitimation and domination, EER can

incrementally build and reinforce environmental values, actions and outcomes that match operational

and financial counterparts in organizational significance and duration. In addition, it keeps open the

hotelier’s options for pursuing an environmental leader or follower positioning within the hotel indus-

try or within a segment or region of that industry. Finally, it recognizes the importance of industry and

organization context, organizational values, adequacy of policy foundations and effectiveness of steer-

ing mechanisms for implementation and control.

Conclusion

The holistic and integrative orientation of EER broadens the scope of potential environmental manage-

ment beyond ad hoc initiatives and short-term financial KPIs. The opportunity is opened up for long-

term operational, environmental and financial effectiveness to be targeted through a strategic

management approach to environment that includes a full spectrum of dimensions, from organizational

philosophy to environmental and financial outcomes. The challenge of aiming for such a comprehen-

sive and contextualized balancing of environmental, market and financial imperatives offers major

opportunities for both research and innovation.

Further research can proceed in two basic directions. First there is a need and opportunity for field

based case studies that focus on investigating both historical and contemporary environmental strategy

and management control processes employed by hotels who have introduced these values and practices

3 Say via implementation of some albeit restricted environmental management strategies and KPIs.



into their operations. In addition, there is much to learn from the employment of research methods

such as action research or participant observer methods in studying hotel attempts at developing and

implementing such processes. Second, there remains the potential for investigating the wider applica-

bility of the structuration framework for environmental strategizing and management in other envi-

ronmentally sensitive industries.

At this point it is important to reflect on the unique features of the hotel industry that render a struc-

turation based EER approach particularly appropriate. The hospitality industry and the subset hotel

industry in particular are intensely people oriented. They increase human traffic, human spatial con-

centrations and humans’ environmental impact. They focus upon satisfying human desires, from the

basic to the ephemeral. In addition, they deliver tangible and intangible services through the employ-

ment of both material and intellectual capital. In their operations, hotels have been shown to focus

heavily on tangible factors such as operating costs, and on intangible factors such as community and

public relations. Herein lies a clear contradiction. While many avow formally stated environmental

values and/or objectives, their performance measurement and control systems invariably privilege short-

term financial KPIs – despite human capital and intangible services comprising major components of

their business.

For this distinctive environment, structuration-based EER offers a bridge between short-term finan-

cial and longer-term multidimensional environmental performance management. Management is

presented with a structured and layered approach to environmental management that includes consid-

eration of fundamental core values and philosophies that resonate with the intangible desires of patrons

and many of the intangible services and benefits delivered to them by hotels. At the same time it pays

equal attention to the tangible financial concerns of both hotel managers and patrons. For hotel man-

agement, where the customer is physically present in the organization in which its services are deliv-

ered and consumed, customer satisfaction is more immediately an organizational priority and more

observable than in almost any other industry. Thus the hotel management is more likely to feel the direct

pressure of customer values (e.g. environmental) and behaviours and to feel the direct impact of cus-

tomer attitudes to their services (and environmental applications) than in most other industries. In this

distinctive environment, a structured EER approach allows management levels of choice and flexibility

to respond to the dual forces of commercial survival and shifting societal environmental values.

What the philosophy and framework of EER also offers overall is an appreciation of the importance

of an integrated approach to hotel environmental strategy and management. The installation of for-

malized planning and control systems operates at the level of developing new environmental action

authorizations and positive resource allocation for environmental strategy implementation. However,

the possibilities for empowering management and staff go much further. They offer the prospect of cre-

ating longer-lasting hotel environmental strategies of potentially greater environmental and organiza-

tional impact via the creation of shared environmental values and beliefs and agreed norms of

environmental responsibility, seamlessly integrated into the overall organizational operational and finan-

cial values and objectives. At these deeper levels, the ways in which hotel management and staff build

their organizational culture have the capacity to develop and change hotel environmental practices, with

longer-term advantages accruing to market positioning, environmental impact and financial returns.

Acknowledgements

This paper has benefited from the critiques and advice of commentator Professor Tom Klammer, University of North Texas,and participants in its presentation at the 2004 annual meeting of the American Accounting Association, as well as from Pro-fessors David Owen (Nottingham University, UK), Katsuhiko Kokubu (Kobe University, Japan) and Chris Guilding (GriffithUniversity, Australia).



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