E X C H A N G E Green Management Matters Only If It Yields More Green: An Economic/Strategic Perspective by Donald S. Siegel Executive Overview This essay was written in response to the theme of this year’s Academy of Management meeting, “Green Management Matters.” I assert that firms should adopt “green management” practices only if such activities complement the organization’s business- and corporate-level strategies and ultimately enhance profitability or shareholder wealth. To illustrate this I outline an economic/strategic perspective on green management practices, focusing on the strategic benefits and competitive dynamics associated with this activity. I also identify specific tactics firms can employ to achieve such strategic goals as well as the functional areas affected by these decisions. The convention of denouncing economists had been estab- lished [at the end of the 18th century] and was pursued with enthusiasm by men great and small. Why has it been fash- ionable to abuse economists (even granting the possibility that they may deserve it)? The main reason is easily named— economists have been the premier “pourers of cold water” on proposals for social improvement, to the despair of the re- formers and philanthropists who support these proposals. —Professor George J. Stigler, Nobel Laureate in Economics T he theme of this year’s Academy of Manage- ment meeting is “Green Management Mat- ters.” In selecting this theme, the leadership of the Academy of Management challenges us to consider how academic research can shed further light on the managerial implications of growing societal concern regarding the environment. In responding to this concern, we must not lose sight of the fundamental goals of the firm and sound business practices. In this paper, I assert that man- agers of publicly traded firms have a fiduciary responsibility to adopt “green management” prac- tices only if such actions complement the organi- zation’s business- and corporate-level strategies. They should not engage in such activities for “moral” reasons or in response to societal pressure alone, but rather in response to a legitimate demand for green management practices from groups (e.g., consumers) that can directly benefit the firm. This profit-maximizing approach to “green management” still allows for considerable scope in formulating and implementing strategic initiatives that simulta- neously advance corporate and environmental goals. Under certain conditions, managers can maximize profit while adopting environmentally friendly prac- tices. Note that my consideration of green manage- ment strategies does not necessarily apply to pri- vately held firms or nonprofit organizations, since they are under no obligation to maximize profit. Theoretical Framework W e begin with first principles. The theoretical framework used to assess the question of whether “green management matters” and more broadly the topic of environmental social responsibility (henceforth, ESR) is the theory of I thank Michael Barnett, Andrew King, Mary Ellen Malia, Alfie Marcus, Abby McWilliams, Paul Miesing, and David Waldman for insight- ful comments and suggestions on an earlier draft of this paper. Donald S. Siegel (DSiegel@uamail.albany.edu) is the Dean of the School of Business, University at Albany, SUNY. 2009 5 Siegel Copyright by the Academy of Management; all rights reserved. Contents may not be copied, e-mailed, posted to a listserv, or otherwise transmitted without the copyright holder’s express written permission. Users may print, download, or e-mail articles for individual use only.