Excerpt from Innovation From Differentiation: Pollution Control Departments and Innovation in the Printed Circuit Industry

Many companies now face challenges of both tougher global competition and more stringent requirements to protect the natural environment. Some firms like Union Carbide have responded by creating separate departments and functions to mediate between the firm and environmental regulators, while others like 3m and dow Chemical have attempted to integrate pollution control responsibility into existing organizational roles[l Theory suggests that these two approaches present a dilemma: a separate department allows scale efficiencies, controlled risk, and efficient production, while an integrated approach allows the firm to learn and adapt to new conditions[4 Whatever their view of the effect of such departments, these theories predict that most fums will respond to changing environmental conditions by forming specialized pollution control departments, and that once created, these departments will have little interaction with the rest of the firm and little role in process innovation[4, 7, This paper investigates the role of pollution control departments in information transfer and process innovation. The twelve printed circuit fabrication firms studied all responded to increased regulation by creating organizationally separate pollution control departments, and these departments reported initially having little interaction (measured as communication) with the rest of the organization. In spite of these initial relations, over time some pollution control departments came to interact frequently with the rest of the organization. These pollution control departments often provided information and innovation ideas to process engineers that resulted in process improvement (relative to cost, quality and capability). Pollution control departments were able to make these process improvements because they had unique information, and that this information derived in part from their specialized role. Finally, I propose that a balance between separation and integration may lead both to better process performance (cost and quality) and to better environmental performance.

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