What Can Behavioral Economics Say About Eco-Business? Toward a

Metaeconomic Synthesis

Marianna Khachaturyan and Gary Lynne

University of Nebraska-Lincoln, USA

For the Audio version, see: http://metaeconomics.unl.edu/123audio.htmlFor the Notes on each slide, see:http://metaeconomics.unl.edu/123audio-notes.html

WaveRiders on the Green Wave*

*Esty, D.C. and A.S. Winston. Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage. New Haven, NJ: Yale University Press, 2006 (See Review.

http://www.eco-advantage.com/greenWave.php http://www.surfing-waves.com/your_wave_pictures.htm ).

Who’s Riding the Green Wave?

United States: Johnson & Johnson; Baxter; DuPont; 3M; Hewlett-Packard; Interface; Nike; Dow; Procter & Gamble; SC Johnson; Kodak; Ford; IBM; Starbucks; Intel; Xerox; McDonald’s; GM; Ben & Jerry’s; Patagonia; International Paper; Alcoa; Bristol-Myers Squibb; Dell; United Technologies

WaveRiders

International: BP; Shell; Toyota; Lafarge; Sony; Unilever; BASF; ABB; Novo Nordisk; Stora Enso; Philips; Bayer; Holcim; STMicroelectronics; Alcan; Electrolux; Suncor; Norsk Hydro; Henkel; Siemens; Swiss Re; AstraZeneca; Novozymes; IKEA; Ricoh

Tsunami to Other Businesses

“Companies that dive beneath the wave, submerging themselves in the hope that it will pass, will be disappointed by its enduring presence and pounding tenacity”(Esty and Winston, 2006, p. 18)

http://www.naturalsciences.be/common/images/active/sciencenews/tsunami/tsunami.jpg

Self-interest Shared Other-interest

Value Rational Choice

Control

Cognition

Consciousness(Feelings)

AffectiveHedonism, e.g.hunger, sexual drive, pleasure and pain, profit and utility Seeking (“Max U”)

AffectiveSympathy (in sympathy with), e.g. share a meal experience, in unity with others, share an ethic, a norm

Automatic, Subconscious(Emotional tendencies)

Metaeconomic View of CEOs

Egoistic Empathetic

B u s i n e s s E n t e r p r i s e

T e c h n o l o g y I n s t i t u t i o n s

W a n t s &N e e d s

T r a n s f o r m i n g N e u t r a l S t u f f

G o o d s

R e s i d u a l s

M a r k e t sM a r k e t s

O t h e rF o r u m s

T h e r m o d y n a m i c s - 1 s t ( r e s i d u a l s ) a n d 2 n d ( e n t r o p y ) L a w s

T h e W a l l s

L i m i t s :1 s t 2 n d

I&We, I&Thou, Self-Interest&Shared Other-Interest… drives toward the Limits!

We, SharedOther-Interest(Empathy-Sympathy)

I, Self-Interest(Egoistic-Hedonistic)

“Walk-In-Their-Shoes”

“In Sympathy With”(Evolve an “Ethic of Sustainability”)

“How Would IWish to be Treated?”

ResolveConflict:AchievePeaceOf Mind!

Thermodynamics and the Metaeconomic Synthesis

WaveRider Production

WaveRider Interests

Synergy in the Interests

Walmart Case

It is going to inquire about the carbon footprint from all their product suppliers, while encouraging eco-production techniques ( a more sustainable business), using more holistic ecological & thermodynamic principles on which to organize production, distribution and marketing.

THUS it has worked to integrate sustainable practices into its supply chain moving onto path 0Z as illustrated in all three figures.

Nestle Case

Nestle started down the sustainable, eco-path in the early 2000s (Reinhardt, 2004).

Nestle came to believe that consumers wanted more than just “good food” but also were concerned with nutritional value and the contribution to a sense of well-being for the producers, as well as for the environment moving onto path 0Z.

Iceland Case

It operates on renewable energy, with 80% of its primary energy consumption from renewable sources, with most of it coming from geothermal sources (Iceland American Energy)

has used geothermal energy for heating (for 70+ years) and for electricity (for 30+ years).

Iceland is moving towards the eco-path of sustainability actively and seriously (considering thermodynamic and ecological reality.)

Conclusions

Based on our metaeconomic/thermodynamic analysis, we suggest that

– the companies who are going green and moving onto eco-paths do so by integrating profitability (gold) and environmental (green) goals.

– the companies are actually seeking own-interest, which has a component of self-interest, but a self-interest on the integrated eco-path.

Conclusions (cont.)

The dual motive analysis includes an analytical component and accords a key role for all the virtues (reflected in the environmental ethics, the shared interests) that are essential to truly sustainable business & industry, economy & community.

It is a framework that adds new insights into the movement by business onto the green and eco-path.

We ask you to join us in the quest for a greater

meta-understanding of this movement.

Thank you!

Questions? Comments?