Compensation systems for improving environmental performance

Solveig Lothe, Ingunn Myrtveit and Teresa Trapani

Business Strategy and the Environment, 1999, vol. 8, issue 6, 313-321

Abstract: This paper provides an initial understanding and insight into solving the dilemma of implementing multiple strategies within the firm. Specifically, we suggest a conceptual framework for compensation systems for different types of firms that face varying levels of conflict between environmental and business performance. The design of a compensation system depends crucially on the availability or not of performance indicators. Our conceptual framework outlines compensation systems for firms with and without the possibility of measuring environmental performance. A ‘multiplier’ model is suggested for firms with good availability of performance indicators for both profits and the environment. Compensation systems for firms without environmental performance indicators (EPIs) become more case specific, depending on the degrees of conflict in the short and long run. Consequently, EPIs give firms much more flexibility in the design of efficient compensation systems. Copyright © 1999 John Wiley & Sons, Ltd and ERP Environment.

Date: 1999
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Citations: View citations in EconPapers (20)

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https://doi.org/10.1002/(SICI)1099-0836(199911/12)8:63.0.CO;2-C

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