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Business Strategy and the Environment
Bus. Strat. Env. 20, 421–427 (2011)
Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/bse.736
Editorial: Managing Industrial Symbiosis (IS)
Networks
Alfred Posch,1 Abhishek Agarwal2* and Peter Strachan2
1
Institute for Systems Science, Innovation and Sustainability Research, University of Graz, Austria
2
Aberdeen Business School, Robert Gordon University, UK
Introduction
T
HE FIELD OF INDUSTRIAL ECOLOGY (IE) WAS POPULARIZED BY ROBERT FROSCH AND NICHOLAS E. GALLOPOULOS, AND
over the last 20 years interest in it has significantly increased. Business Strategy and the Environment, for
example, published a special issue on ‘Business and IE’ in 2004 and the lead article has become widely
cited in academic literature, due to its provocative attempt to bridge IE and mainstream business and
management research, including (1) the systems and network philosophy of IE to complement more traditional
intra-organizational environmental management approaches, (2) using descriptive IE to produce prescriptive suggestions on how industrial systems can be moved through human intervention towards the IE vision and (3) the
use of the IE metaphor as a source of inspiration and creativity in the transformation of management and strategic
visions towards a new sustainability culture (Korhonen et al., 2004).
The current special issue makes it clear that IE research continues to engage scholars from a wide range of
disciplinary backgrounds, not only in engineering, economics, psychology and sociology, but also of course business
and management studies. However, in terms of business studies and management research at least, it is questionable how influential this work has been in steering the management of – and the decision-making in organizations
to engage in - industrial symbiosis (IS) initiatives. In broad terms, IS is the concept of inter-firm cooperation that
focuses on the exchange of by-products (waste), whereby the waste produced by one company can be used as raw
material by another. In this way, it is anticipated that the industrial impact on the natural environment is reduced.
In addition, the competitiveness of the participating companies can be improved as a result of the savings made in
raw materials and/or waste disposal.
Besides Kalundborg in Denmark, as this special issue illustrates, examples of independent energy and waste
exchanges between companies are now beginning to emerge. Material and energy flows are often illustrated in
charts, which help in understanding the physical flows between the network entities. However, Baas and Huisingh
(2009) noted that the description of inter-company material and energy flows for by-product exchanges alone does
not provide sufficient evidence to suggest that a company network really exists in the sense of a social network.
Mitchell (1975, p. 2) defined a social network as a ‘specific set of linkages among a defined set of persons, with
the additional property that the characteristics of these linkages as a whole may be used to interpret the social behaviour of the persons involved’. For example, it is often not clear whether the companies involved are aware of the
network, which is obviously a prerequisite for developing a shared network identity, common objectives, a network
culture and so on. Therefore, the inter-organizational exchange of waste and energy should not be regarded as a
mere technical problem, as it always revolves around management decisions made by particular people, in specific
organizational and social settings (Cohen-Rosenthal, 2000; Edwards, 2005; Blackburn, 2007). How such individuals, or groups of individuals, perceive their concrete situation, their possibilities and responsibilities determines
whether or not IS networks emerge. Thus, a simple analysis of energy and material flows is not sufficient. Instead, it
is necessary to develop a profound knowledge of the IS system, especially at decision-makers’ (actors’) level, in order
to decide which IE solutions might be (more) advantageous (Wolf et al., 2007).
Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment
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A. Posch et al.
This is also true for more sophisticated forms of inter-organizational cooperation towards sustainable development, such as sharing facilities, further integration of processes or even the joint development of products and
services. Here, it is worthwhile to mention that the activities of IS networks also contribute to the regional innovative
capacity by means of enhancing inter-organizational collaboration and learning in general (Mirata and Emtairah,
2005). Furthermore, decisions on IS activities not only lead to new material and energy flows or other technological
solutions, but they themselves, once again, determine the social relationships between the organizations involved.
On the positive side, they might create mutual trust by intensified interactions; on the negative side, they may lead
to technological ‘locked-in’ situations or path dependencies that hinder different types of development and future
innovations (Binder, 2009). Having set the paper in context, we now explore the decision-making process of organizations engaging in IS initiatives before discussing key issues in the management of IS networks. We conclude by
reviewing the main contributions arising from the articles presented in the special issue.
Decision-Making for Engaging in IS Initiatives
For the effective management of IS projects, understanding the logic behind the behaviour and decisions of actors
within companies is crucial, since decisions about engaging in IS initiatives might, in many cases, lead to consequences that reach well beyond the person or group making the decision. A large number of parties can be affected
by the outcome of the decision. Imagine the case of a cement plant that reuses many different kinds of by-product
from various collaborating partners. In such instances the decision-maker is faced with the great difficulty of making a decision that allows him or her to take the objectives, interests and restrictions of the stakeholders concerned
into consideration, as well as the possible uncertainties regarding these parameters.
It cannot be assumed a priori that all companies are interested in cooperating in closing material and/or energy
loops. Rather, there must be an obvious benefit recognizable from those participating in an IS project in order to
justify the transaction costs of inter-organizational cooperation.
When assuming that inter-organizational by-product exchange decisions are made one-dimensionally, on the
basis of economic criteria alone, the decision on by-product exchange can be reduced to a comparison of costs.
For example, the choice between the use of natural raw material or by-products as production input depends on
the relative material costs, production costs and disposal costs. Here, the possible revenue increases, accrued as a
result of changes in product quality or image, should also be taken into consideration. On the other hand, the choice
between the disposal and reuse of the production waste generated simply depends on relative waste management
costs, including those for temporary storage and transportation, minus the possible proceeds resulting from the sale
of the by-product.
This one-dimensional decision-making implies that further criteria, extending beyond the direct costs and
proceeds, such as the impact on reliability of supply or disposal, or various ecological effects, are not relevant to
the decisions made related to by-product exchange. Jacobsen (2006) found out that, in the IS network in
Kalundborg, each by-product exchange project is clearly justified by an individual economic argument and related
environmental considerations. These and other practical experiences in industry show that not too much faith
should be placed in the power of persuasion of short term, profit-oriented decision models. Even where these models prove by-product exchange to be the best alternative, opposition might arise when adaptation of existing production technology is necessary. Consideration also needs to be given to economically advantageous ways of waste
disposal, which can easily lead to long term environmental or social problems, or to other seriously negative sideeffects. In these cases, one dimensional decision models that consider only the consequences of the waste
management measure in one field and neglect all the others imply a far too narrow and restricted description of
the given situation. Even if the considered objective is specified very precisely, a one dimensional model will
probably lead to the wrong conclusions and sub-optimal decision-making. This would suggest the implementation
of a decision model that allows more than one objective to be taken into consideration simultaneously. Instead of
developing such a model, according to the prescriptive decision theory, we shall descriptively discuss how such
decisions might occur in practice.
Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment
Bus. Strat. Env. 20, 421–427 (2011)
DOI: 10.1002/bse
Editorial: Managing Industrial Symbiosis (IS) Networks
423
Referring to Simon’s (1979) concept of bounded rationality, it can be assumed that those who decide whether or
not to engage in IS activities have only a fragmentary knowledge of the options available for managing their waste.
Furthermore, it can be assumed that, in reality, companies do not define clear and distinct objectives in the field of
waste management beyond short term goals of cost reduction. Also, the consequences of different alternatives are
not easy to assess; e.g., the impacts of engaging in IS activities on production processes or on product quality might
be quite unclear. As a consequence, no optimum solution is sought. Instead, simplified rules and heuristics are
applied in order to make ‘reasonable’ decisions.
It is apparent that there might be a tendency to select the first best alternative for waste disposal, e.g. to hand over
the waste to professional waste disposal companies, especially under the premise that waste management in
companies is rarely seen as a key factor for success. The concept of optimizing is replaced by the concept of
satisfying.
Existing social networks may help to encourage companies to engage in IS activities through the formation of
mutual trust (Gibbs, 2008). However, companies might need encouragement from external organizations, such
as consultancies or research institutions, in order to consider inter-company by-product exchange, as a possible
and relevant alternative in waste management. These external organizations can foster (or hinder) the development
of IS initiatives by influencing relevant factors that shape the enabling context of IS (Costa et al., 2010). If this is so,
then it raises the question of whether IS initiatives need to be managed, and if so how they should be managed.
Management of IS initiatives
Generally, the balance between the economic interests of the company and the external ecological and social interests of different groups of stakeholders is clearly becoming more and more important (Schaltegger, 2003). This
implies the need for management – or alternatively, the broader term ‘governance’ (Ehrenfeld, 2007) – of all relevant stakeholder relationships, where cooperation within IS networks can play a major role. Seuring (2004) states
that there is an important deficit in the lack of in-depth insights into how companies interact to jointly reduce environmental burdens, i.e. on the managerial processes needed for such cooperation and the instruments applied.
Here, the question of how to manage IS initiatives is of interest and is closely related to the ongoing scientific debate
on whether industrial ecosystems are a case of market coordination (Desrochers, 2004), where the emergence of IS
networks is a spontaneous or self-organizing development (Korhonen et al., 2002) and the IS network needs to
become ‘uncovered’ (Chertow, 2007), or whether such networks arise out of a specific planning process.
In spontaneous or self-organizing IS development, material and/or energy flows for exchange and cascading
purposes emerge without any intervention by third parties. For example, empirical investigations into Austrian industry show that inter-company by-product exchanges between the companies in the Styria recycling network do not
significantly differ from those of other businesses in Austria’s manufacturing sector. Both groups of companies
view their relationship with their respective collaborating partner as very similar to regular customer relations
(Posch, 2010). This kind of cooperation emerges only if it results in economic benefits for all parties involved.
Otherwise, it can be assumed that the companies would probably not have been willing to start the by-product
exchanges. Consequently, the management of such IS relationships is solely restricted to the companies directly
involved in the respective exchange relationship and decentralized decisions are taken, according to the logics
described above. Nevertheless, in such situations it is possible to draw flow charts of the symbiotic relationships
between the companies. However, we need to be aware of the fact that these flow charts are only a methodological
construct of the researcher who is investigating the material and energy flows. Notwithstanding this, Ashton (2011)
found limited evidence to suggest that projects identified through the ‘uncovering process’ can provide both the
benefits or meet the expectations in terms of the environmental impacts. Therefore, the question arises of whether
the criteria uncovering any material exchange that involves at least three entities in exchanging a minimum of two
different resources, as proposed by Chertow (2007), is sufficient to categorize a materials exchange as IS. If it is sufficient, then we are actually moving away from the analogy of a natural ecosystem on which the field of IE is based,
as IE aims to reduce environmental stress besides supporting innovation, economic growth etc. Thus, effective criteria need to be developed to identify when a materials exchange can be categorized as IS and only when the
Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment
Bus. Strat. Env. 20, 421–427 (2011)
DOI: 10.1002/bse
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A. Posch et al.
materials exchanges meet these criteria should they be categorized as IS. One significant element in developing
these criteria is whether the uncovered materials exchange project has the ability to provide environmental benefit,
as highlighted in the Kalundborg Industrial Symbiosis Institute’s definition of IS. The Kalundborg Industrial
Symbiosis Institute defines IS as collaboration between different industries for mutual economic and environmental benefit. In addition, industrial ecosystems are believed to offer increased environmental benefits (Ehrenfeld,
2003; Agarwal and Strachan, 2007; Costa et al., 2010; Industrial Symbiosis Kalundborg, 2011). This clearly indicates
that environmental benefit should be one of the main outcomes of an IS network and cannot be ignored. Only after
a thorough evaluation of any uncovered materials exchanges against well developed criteria can these be categorized
as IS.
However, in consciously planned IS initiatives (e.g. by an institution, regional authorities, research institutions or
focal network organizations) it is likely that the participating companies are at least aware of the network. Perhaps a
type of network identity and shared vision even exists. An authority would have the power to coordinate the IS
activities and maybe even to make decisions on behalf of all the network participants. Verguts et al. (2010) argue that
IS network development is a change process, built up of both planned and emergent change and demands, taking
continuous perspective into consideration. One example validates the point of Verguts et al. (2010), by suggesting
that there has been a transition from planned to emergent IS development in the case of the UK National Industrial
Symbiosis Programme (Agarwal, 2011). Similarly, Costa and Ferrao (2010) suggest the use of a middle-out approach
instead of a top-down or bottom-up approach. Noticeable movement from the bottom-up approach to a top-down
approach is evident in the case of the UK NISP in an attempt to achieve the middle-out approach (Agarwal,
2011). This could be a type of public–private partnership, as suggested in the regional environmental management
system (REMS), where a conversion plan development team, with representatives from local communities and
industries and from local/regional government, is supposed to set environmental targets and protocols at all levels
(Welford, 1996). Nevertheless, as also in this case, the existence of economic benefits for the companies involved is
a necessary precondition for engaging in IS initiatives.
The Contribution of the Papers
While the two established journals in the field have published many articles outlining the economic, environmental
and other benefits of IS networks, this special issue is somewhat unique in that it offers a comparison of different IS
initiatives in order to develop a further understanding of an enabling context for IS network development and how
these networks can be managed better. Articles in this issue also provide an overview into the core organizing principles necessary to facilitate IS networks. This includes dimensions such as trust and cooperation. Finally, the
papers provide an imaginative insight into how the performance of such networks can be evaluated.
In his contribution to this special issue, Baas (2011) compares two industrial ecosystems, one in Rotterdam, the
Netherlands, and the other in the Östergötland region, Sweden. The first is an example of planned IS, resulting
from the Industrial Eco System research programme by the Delft University of Technology and the Erasmus
University Rotterdam. On the other hand, the latter is an example of an unplanned IS network in Swedish industry,
where biomass by-product exchanges between the forest and pulp industry have been found. An analysis of the
similarities and differences between planned and uncovered IS activities, as conducted in this contribution, can
be helpful for further developing IS application processes. For example, it is of great interest to determine whether
the loose ties between the companies of uncovered (IS) networks can be the channels through which new ideas
towards sustainability might be developed, or whether the identity as an IS network needs to be established first
as a precondition for any further sustainability oriented development of IS networks.
In any case, residual material reclamation practices in manufacturing facilities can be quite diverse and their
organizational impact and specific economic benefits are often overlooked. Thus, there is still a need to gain a better
understanding of the circumstances and requirements of such IE activities and how companies can perform them
efficiently. To this end, Kabongo and Boiral (2011) have constructed a model and proposed a typology of residual
material reclamation practices in industry. For this qualitative study, they interviewed 60 managers of 12 Canadian
facilities, who have designed and implemented innovative residual material reclamation practices. They came up
Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment
Bus. Strat. Env. 20, 421–427 (2011)
DOI: 10.1002/bse
Editorial: Managing Industrial Symbiosis (IS) Networks
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with six key dimensions that characterize the recovery and transformation of residuals: reclaiming goals, reclaiming
scope, awareness of activities, manufacturing processes, environmental management and the variety of materials
used. The analysis of these dimensions finally led to a distinction between five different types of residual material
reclamation. This typology is supposed to provide an analytical framework in which public policies and business
practices, regarding IS activities, can be better studied and explained. Organizations would be able to improve the
design of their product and manufacturing processes in relation to IE activities.
Closing material loops, through IS activities, is supposed to lead to the improved environmental performance of
the companies involved and thus to enhanced environmental quality for regional stakeholders. Consequently,
managing IS projects also means managing performance expectations, not only in regard to economic and environmental performance goals by the involved organizations themselves, but also in respect to the expectations of other
stakeholders, who might await benefits in their living conditions in their respective regions. Ashton (2011) has
dedicated her contribution to this special issue directly to this question of managing the performance expectations
of IS. Her analysis of a single case study on the island of Puerto Rico, where several firms in a predominantly pharmaceutical manufacturing cluster have participated in symbiosis initiatives for several decades, leads to results that
suggest that collaboration does not necessarily result in expected environmental performance goals. In other words,
sustainability oriented cooperation, where sustainable development is at least partly the intention or goal of the
organizations involved, is not necessarily a cooperation that contributes to sustainable development. Certainly, it
needs to be stated here that the assessment of concrete cooperative outcomes on specific systems is definitely a
complicated task, which generates considerable methodological debate concerning the validity of assessment and
aggregation technique. The possible reasons for under-performance are also of importance, such as insufficiently
trained partners, ambiguities regarding responsibilities or ineffective management of IS activities. Similar to the
reasons leading to businesses’ involvement in IS at the initial stages, companies continue to focus on their
economic interest at later stages as well, regardless of public expectations and environmental performance. Procedures that help to avoid such pitfalls will enable involved industries to better meet not only their own needs, but also
the expectations of neighbouring communities. Ashton (2011) believes that an overarching body to overlook the decisions made by individual companies is imperative to IS, as it not only benefits individual businesses but also
impacts positively on the environment and society overall.
According to existing literature, the crucial key factors for successful industry partnership are trust and general
reciprocity between the partners. Doménech and Davies (2011), in their contribution to this special issue, propose
using a modeling framework to analyse the main mechanisms in building trust and embeddedness. In order to
identify the different phases in cooperation in IS networks, they integrate the theoretical framework provided by social network analysis and economic geography with empirical methods, based on the Grounded Theory approach.
Here, they highlight an often neglected, but obviously important, fact for waste related decisions in industry: for
most companies, waste management is not a major concern for top management. Instead, due to the limited impact
of possible cost savings by waste minimization and/or recycling and reuse on the overall cost structure, waste
management is given a low priority in the strategic dimension of the company. Consequently, potential risks of
dependency resulting from participation in IS networks are unlikely to be taken and business limited opportunities,
derived from potential by-product exchanges, can rarely act as a localization factor on their own. Only when environmental excellence constitutes a key element in the companies’ core principles and strategies or when the IS collaboration also leads to opportunities in other areas might IS networks have a wider effect on the companies’ strategies.
A much more optimistic picture is drawn by Chertow and Miyata (2011) in their contribution to this special issue.
Their analysis of 11 enterprises on Oahu, HI, that were found to be exchanging nine different materials, led them to
the conclusion that symbiotic solutions, when made visible, are often preferable, especially on an island. Actually,
they found environmental benefits in reduced landfilling and conservation of primary materials that also led to
substantial economic benefits, i.e. cost savings from by-product exchanges. Again, it can be assumed that
the exchanges are undertaken for business reasons and that they are not typically reported. However, they need
to be uncovered. The management of such IS networks takes place de-centrally on a bi-lateral basis between the
exchange partners. Only under the assumption – referring to the concept of bounded rationality – that companies
do not routinely identify or consider collaborative strategies as part of their usual solution set might explicit planning
and coordination activities of a third party, such as a network agency, be advantageous for the management of IS.
But certainly, this again corresponds to the interpretation of IS networks as being loosely coupled systems which
Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment
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have a higher degree of adaptability and flexibility, but lower continuity and less sense of identity among members
(Boons and Berends, 2001) and not to the view of IS networks as being strongly coupled systems with members that
are at least aware of the network or even possess something like a common network identity.
Concluding Remarks
The contributions outlined provide evidence that, within the field of IE, an interdisciplinary discourse is now taking
place. The many existing contributions from the fields of natural sciences and engineering to IE are brought together with insights from social science, and in particular here, the management perspective. Hence, it can be stated
that multi-disciplinarity has become the main characteristic of the field of IE, driven by the high complexity of IS
networks and a variety of aspects of the perspectives involved. The next step would be real inter-disciplinarity, where
real cross-disciplinary thinking, translating, reconciling and integrating disparate discourses, traditions and
methodologies is facilitated (see, e.g., Tilley, 2003; Korhonen et al., 2004). For this, researchers need to gain
cross-functional competences and insights in more than one field of science (Brattebø, 2002). The objective is to
combine knowledge from different fields and different paradigms in such a way as to increase their power of expression and interpretation (Kleiber, 2001). For this, there is a need to recognize different ontologies, epistemologies,
axiologies and methodologies when understanding the logics of research in different communities (Baumann,
2009). For example, the simultaneous consideration of the science, engineering and the management perspective
has the potential to promote a much more holistic view of the phenomenon of IS networks in all their different forms.
However, in fact, the complexity of the IS concept requires an even more fundamental paradigm shift in research. It becomes obvious that the IS networks that emerged spontaneously were only uncovered by research.
Moreover, planned IS initiatives can never be established by experts alone. Rather, the creation of an IS network
needs to be performed by the organizations involved and the local/regional stakeholders, ideally supported by
universities and other research institutions. Based on the contributions in this special issue, it appears unavoidable
that a certain degree of government intervention and/or coordination is necessary alike for ‘uncovered’ and/or
intentionally planned IS networks to ensure that the performance expectations of all stakeholders including business, community and government are met. Replicating the conditions of IS into another context would also become
easier in the presence of a coordinating entity, which is essential for balanced economic growth and environmental
protection. Thus, industrial ecologists need to understand that they alone are no longer in a position to identify or,
maybe, even to implement a single correct way of managing IE networks. Rather, they need to understand how to
move from the involved and/or affected organizations’ and stakeholders’ needs and preferences towards the provision of generally acceptable solutions and technologies.
Acknowledgements
We would like to thank the Editor in Chief for commissioning this special issue and the Managing Editor of BSE for his advice
and patience during the entire process. Many thanks to all the authors who presented papers at the IS session at the Annual
International Sustainable Development Research Conference in New Delhi and to the authors who responded to a further call
for papers. We would also like to thank all reviewers who selflessly gave their time and energy to review the submitted papers.
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