Industrial Ecology and Competitiveness: Strategic Implications for the Firm

In the emerging field of industrial ecology one of the unsettled questions is the degree to which design for the environment, closing energy and materials loops, and other industrial ecology concepts apply at the firm level. In this article we examine this issue with a particular focus on whether industrial ecology can guide company strategy and efforts to enhance competitiveness. We conclude that industrial ecology thinking will often be useful for firms seeking to improve their resource productivity and thus their competitiveness. The systems perspective that industrial ecology promotes can help companies find ways to add value or reduce costs both within their own production processes and up and down the supply chain. But industrial ecology cannot always be counted upon to yield competitive advantage at the firm level. In some cases, the cost of closing loops will exceed the benefits. In other cases, regulatory requirements do not fully internalize environmental costs, and thus polluting firms may gain temporary or permanent cost advantages relative to companies that attempt to eliminate all emissions. Finally, because industrial ecology focuses attention on materials and energy flows, it may not optimize other variables that contribute to competitiveness within the corporate setting.