5
Organizations and Energy Consumption

Organizations affect energy consumption in at least four major ways. They transform one form of available energy into another: for example, an electrical utility company turns coal into electricity. They consume energy in their own activities, including their production processes: for example, a metal processing firm. They produce products that consume energy: for example, an automobile manufacturer. And they make choices that determine energy use for others: for example, an architectural firm. Many organizations, of course, do all four; thus, organizational behavior affects the aggregate efficiency of energy use. This chapter examines this relationship, drawing on research studies of organizations. The first part of the chapter focuses on organizations as energy users; the second on the roles of intermediaries—many of which are organizations—in energy use.

ORGANIZATIONS AS ENERGY USERS

There is very little empirical research that focuses directly on organizational behavior with respect to energy consumption. Although some organization-level data have been collected by the Department of Energy and other federal agencies, the quality of the data for research purposes is not established, and the data have been little used to explore systematic variations among organizations. There are also many reports of individual organizational efforts to improve energy efficiency; those reports are useful to provide hints about what is going on, but they are both too fragmentary and too impressionistic to yield a clear picture. As a result, what we say is speculative, based more on general knowledge about organizations and on inferences from the rather casual, available accounts of energy programs in organizations than on firmly established empirical observations.



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ORGANIZATIONS AND ENERGY CONSUMPTION 106 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, 5 and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Organizations and Energy Consumption Organizations affect energy consumption in at least four major ways. They transform one form of available energy into another: for example, an electrical utility company turns coal into electricity. They consume energy in their own activities, including their production processes: for example, a metal processing firm. They produce products that consume energy: for example, an automobile manufacturer. And they make choices that determine energy use for others: for example, an architectural firm. Many organizations, of course, do all four; thus, organizational behavior affects the aggregate efficiency of energy use. This chapter examines this relationship, drawing on research studies of organizations. The first part of the chapter focuses on organizations as energy users; the second on the roles of intermediaries—many of which are organizations—in energy use. ORGANIZATIONS AS ENERGY USERS There is very little empirical research that focuses directly on organizational behavior with respect to energy consumption. Although some organization-level data have been collected by the Department of Energy and other federal agencies, the quality of the data for research purposes is not established, and the data have been little used to explore systematic variations among organizations. There are also many reports of individual organizational efforts to improve energy efficiency; those reports are useful to provide hints about what is going on, but they are both too fragmentary and too impressionistic to yield a clear picture. As a result, what we say is speculative, based more on general knowledge about organizations and on inferences from the rather casual, available accounts of energy programs in organizations than on firmly established empirical observations.

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ORGANIZATIONS AND ENERGY CONSUMPTION 107 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, A conventional way to think about energy use in organizations is to treat organizations as simple, self-interested rational actors. The most common and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. assumption about the private sector is that firms attempt to maximize profits. In the public sector, the most common assumption is that agencies try to maximize size or political support. In this view, energy decisions are like any other organizational decisions: energy conservation will occur when the expected costs of conservation are less than the expected gains to be realized. It is assumed that firms will invest in energy efficiency when it is profitable and that agencies will invest in energy efficiency when it contributes more than it costs for organizational growth. The hypothesis that organizations are rational actors is useful for predicting and interpreting organizational behavior in the aggregate. According to the hypothesis, an increase in the cost of energy for industrial firms, without a comparable increase in the cost of more energy-efficient equipment, will increase the total industrial investment in such equipment. Similarly, an increase in the cost of energy for public agencies, without comparable increases in total budgets, will increase the agencies’ investment in energy efficiency. Aggregate statistics, as well as numerous case reports, do document that organizations, as a group, are responsive to substantial shifts in energy costs. In particular, major increases in the price of energy and incentives in the tax system have produced organizational response. For example, Hsu (1979) found that the expected payback period was an important factor influencing the adoption of energy-conserving technologies. Behavioral research suggests, however, that as with individuals, aggregate statistics about industry or government conceal considerable variation. Energy use among firms and among agencies varies in ways that may be due to systematic features of organizational structure and behavior. In particular, studies of organizational decision making identify two major features of organizations that affect the fit of a simple rational view to their actions. First, an organization is not a single actor with a single objective, but a collection of actors with potentially conflicting objectives. Although the existence of an organization suggests some mutual gains from cooperation, not all issues of conflict are resolved by explicit or implicit contracts among the actors. The interests of one department or employee may conflict with the interests of others, and those conflicts affect the way in which an organization makes decisions. For example, workers with innovative ideas for changes in technology often require the acquiescence, or even collaboration, of managers and others in order to implement the change. Second, organizations, like individuals, do not act on the basis of complete and precise information, but respond in a confusing world of vague, amorphous stimuli, unclear consequences, and ambiguous goals. Rational action is based on two assumptions about the future: one about the probable

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ORGANIZATIONS AND ENERGY CONSUMPTION 108 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, future consequences of current action and one about the future preferences in terms of which of those consequences can be evaluated. These are difficult and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. assumptions to make about any organization. For example, the consequences of action may depend on the not easily predicted actions of others, and future preferences may not only be different from current preferences but may also be affected by actions taken. These features of organizations lead to regularities in organizational actions that are not immediately obvious from the rational model and that may influence decisions affecting energy efficiency. They can be seen as amendations to, rather than replacements of, the simple rational model. Consideration of these factors may help policy makers understand some of the frictions in organizational response to conventional financial incentives and regulations, as well as the circumstances under which a given organization might invest less (or more) in energy efficiency than it would be expected to from the point of view of organizational self-interest. Success, Failure, and Organizational Slack When an organization is doing well, in its own terms, it acts differently than an organization that is doing poorly. If targets (for example, profit goals) are being met, policies and explicit strategies become more risk-averse, and the search for refinements in current activities becomes less important; but because internal control is relaxed and organizational slack increases, practice becomes more risk-seeking. On the other hand, if targets are not being met, policies and explicit strategies become less risk-averse, and the search for refinements in current activities becomes more tant; but because internal control is tightened and organizational slack decreases, practice becomes more risk-averse (Cyert and March, 1963; March, 1981; March and Shapira, 1982). These theories about risk taking and success have been developed as a result of apparently contradictory arguments and data on the effects of performance on innovation. There are data supporting the idea that innovation is stimulated by adversity,1 while other studies either do not support that hypothesis or suggest that innovation is more characteristic of successful organizations.2 Such contradictory results have been interpreted in terms of a distinction between “problem” search and “slack” search (Cyert and March, 1963). The former is characteristic of unsuccessful organizations and leads to refinements of existing technologies; the latter is characteristic of successful organizations and leads— under some circumstances—to new technologies. Although there are variations in discussions of the relation between organizational slack and innovation, it is generally argued that success and the presence of slack lead to a loosening of controls and decentralization (Pfeffer and Leblebici, 1973; Pfeffer, 1978) and that failure (Perrow, 1981) or stress (Staw, Sandelands, and Dutton,

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ORGANIZATIONS AND ENERGY CONSUMPTION 109 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, 1981; Hall and Mansfield, 1971) leads to a tightening of controls and centralization. Under conditions of organizational slack, lower-level decision and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. makers are likely to take actions that are “foolish” from the point of view of general organizational objectives but have a chance of being serendipitously innovative (March, 1981). As a result, decentralization leads to greater innovation (Wilson, 1966; Zaltman et al., 1973; Moch and Morse, 1977; Pierce and Delbecq, 1977; Daft and Becker, 1978), and slack search contributes to the discovery of new technologies. For example, Hsu (1979) found that the adoption of energy-saving technologies was related to organizational slack generated by rapid growth. Such a theory is different from a simple rational model. In a rational model, neither organizational performance targets nor the current level of performance —as seen in the current level of profits—is relevant to understanding or predicting decision behavior. That is, the investment decisions of an organization should be unaffected by its current subjective success. Studies of organizational behavior, on the other hand, seem to indicate that organizations that are achieving their goals will be less likely to search for energy-saving modifications of current technologies and procedures and more likely to search for state-of-the-art modifications that cater to the professional training and attitudes of subunits or individuals without necessarily making immediate contributions to manifest organizational goals. Unsuccessful organizations are likely to have shorter time horizons than successful organizations; thus they will be more interested in retrofits or refinements than in major changes and less likely to invest in technologies with long payback periods. Conversely, successful organizations are more likely than unsuccessful firms to take actions that have low probability of success but are characterized by some chance of major gains. Rules, Routines, and Budgets Organizations follow rules. Every organization has a large collection of rules that direct and coordinate activities, and most decisions are the consequence of applying a set of rules to a situation. Rules change over time, are often violated, and are frequently inconsistent. But most actions in an organization are not the result of decisions in which alternatives are considered in terms of their consequences for prior objectives—most actions involve finding an appropriate rule and using it. Rules in organizations specify routines. Without routines, it would be hard to accomplish many of the things that are done easily within modern organizations.3 Organizations generally solve problems and respond to environmental demands by applying existing routines rather than by developing new ones (Allison, 1971; Halperin, 1974; Hall, 1976; Perrow, 1981).

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ORGANIZATIONS AND ENERGY CONSUMPTION 110 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, Rules are broadly adaptive, but there is no guarantee that they reflect optimal, or even acceptable, solutions when new problems arise (Altman, 1971; and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Watney, 1974). Some activities reflect professional standards or traditions rather than an organization’s specific work situation (Rohr, 1981). Sometimes a routine that has developed historically continues to be used even when more useful routines are known to exist (Baran et al., 1980). Sometimes a rule is insensitive to situational factors (Argote, 1981). Sometimes existing rules make risky or novel projects difficult (Chakrabarti and Rubenstein, 1976). Furthermore, appropriate rules are not always followed. Individuals do not always know their organization’s routines accurately (Sproull, 1981b), nor do they always observe them (Ellsberg, 1972; Britan, 1979; O’Reilly and Weitz, 1980; Sproull, 198 1b). Managers sometimes do not correctly perceive the environment, and thus select the wrong rule (Wohlstetter, 1962; Starbuck et al., 1978; Perrow, 1981), and they sometimes fail to set the goals required for rules to function (Mowery et al., 1980; Lowenthal, 1981). Although rules and routines are stable in the short run, they change.4 When rules change, the change is likely to be local to the problem area (Cyert and March, 1963; Perrow, 1981) and not rationalized with the rest of the organization’s procedures (Hall, 1976). The most obvious organizational rules are those associated with budgets, which represent plans and agreements. Organizations use budgets and rules about them to manage expenditures. They can be made somewhat flexible and somewhat contingent on uncertain future events, such as revenues, and they may be renegotiated to some degree, but budgets function as routines for delegating expenditure authority. They are rarely underspent, relatively rarely overspent by much. Expenditures that can be fit into a current budget require less organizational consultation and approval than those that cannot. As a result, the real availability of funds for a project in an organization depends on such things as the stage of the budget cycle, the departmental location of the project, and the amount of slack in the budget. Many organizational investments relevant to energy consumption involve asking whether there is money in the budget for the project, rather than what its return on investment or payback period might be. Other relevant rules for understanding organizational behavior with respect to energy efficiency are accounting rules and rules of architectural and engineering design. Decisions on capital investment, including investment in energy-efficient equipment, depend on an assessment of the relative value of alternative investment opportunities, and that assessment follows standard accounting procedures for determining and allocating costs and returns. For example, the relations among initial capital costs, costs of maintenance, and costs of operation in the accounting of project costs can be important to a decision. So-called life-cycle accounting, in

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ORGANIZATIONS AND ENERGY CONSUMPTION 111 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, which operation and maintenance costs play a significant role, ordinarily increases the likelihood that energy-efficiency considerations will be important. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Similarly, engineering standards, design specifications, and building codes that emphasize BTU/cost ratios or other energy considerations increase attention to such factors. Rules such as these, which emphasize energy considerations, have the effect of making energy more visible to critical personnel in the organization, as discussed in Chapter 3. Avoidance of Uncertainty Organizations value certainty; they try to avoid uncertainty. When consequences are uncertain, managers are likely to delay action. Thus, Webster (1971) found that the expected profitability of an innovation is a less significant factor in a firm’s adoption decision than the degree of perceived risk. It is possible to interpret the behavior as risk aversion, but the main point is not that organizations avoid risk in choosing among alternatives; rather, in their effort to reduce error in projecting possible outcomes, they will even change the nature of the alternatives before them. Managers do this partly by emphasizing short-run responses to short-run feedback rather than trying to make long-run forecasts or to base action on them. They also seek to gain control over critical resources in the environment through contracts that ensure reliable supplies and through vertical integration. They try either to control the suppliers of vital resources or to buffer their dependence on them through inventories. It appears to be true that organizations, particularly successful organizations, will characteristically be willing to trade some expected value in order to sustain control and avoid the risk of an unfavorable outcome. Organizations make efforts to control the uncertainty that exists because of their dependence on other organizations (Emerson, 1962; Blau, 1964; Thompson, 1967; Jacobs, 1974; Pfeffer and Salancik, 1978). For example, there is evidence that purchasing decisions in organizations are made in a way that minimizes uncertainty, subject to a budget constraint, rather than in a way that involves explicit trade-offs between risk and cost (Dickson, 1966; Lehmann and O’Shaughnessy, 1974; Kiser and Rao, 1977; Corey, 1978). Their efforts to avoid uncertainty in their environments include such broad strategies as vertical and horizontal integration, diversification, interlocking directorates, joint ventures, and interorganizational coordination.5 In a similar fashion, organizations seek to avoid uncertainty internally through incremental decision rules (Lindblom, 1959; Padgett, 1980a, 1980b), by following rules (Cyert and March, 1963), by building inventories of inputs and outputs (Thompson, 1967), by loose coupling (March and Olsen, 1976; Weick, 1976), and by organizational slack (Cyert and March, 1963; Lowe and Shaw, 1968; Schiff, 1970; Schiff and Lewin, 1968; March, 1981).

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ORGANIZATIONS AND ENERGY CONSUMPTION 112 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, One obvious implication for energy decision making is that organizations will be attentive to issues of energy efficiency only after they have protected and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. themselves as much as possible from energy dependence. For example, a study of major retail chains showed that chains were more likely to take energy management steps when they believed their energy futures were uncertain and when they lacked trust that government programs would help them (Mills, 1981). Organizations also will be more sensitive to the possibility of a supply cutoff than to price changes. A study of energy conservation among thirty-two firms found that firms in the New York City area, which had experienced acute shortages of natural gas, were significantly more likely to have made investments in energy conserving technologies than were similar firms in the Allentown, Pennsylvania area (Hsu, 1979). Organizations are also sensitive to energy-related disruptions of business operations. Among retail chains, for example, firms that had experienced shortened hours, employee and customer inconveniences, and other disruptions as a result of energy conditions did more to manage energy in their operations than firms that had not experienced such disruptions (Mills, 1981). Organizations probably will be responsive to energy options that make their own supplies of energy relatively independent of others—for example, the cogeneration of heat and electricity—even if the options are not particularly good in terms of a cost- benefit analysis. As energy costs increase, managers will look for possible mergers or other forms of organizational arrangements that give them greater immediate control over their own supplies. If energy shortages seem likely, they will try to build their inventories and will probably build them to levels that are not justified by standard decision analysis. Scarcity of Attention Attention is as scarce a resource in organizations (Simon, 1971, 1973) as it is for individuals. An organization can be viewed as a collection of problems looking for solutions and a collection of solutions looking for problems to which they might be applied. Problems and solutions seek attention from decision makers. It is a commonplace observation that action is more likely in an organization if it can command the attention of high-level managers (Chakrabarti and Rubenstein, 1976; Hsu, 1979). But since decision makers have limited time and capacity for attention, not all alternatives are considered; not all information is gathered; not all available information is considered; not all values are made conscious. So, the process by which attention is allocated is a key part of any decision. One way attention is allocated is by routines. For example, in developing budget decisions, routines lead organizations to focus on budget base and increment (Kamlet and Mowery, 1980), on estimated revenue (Larkey and

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ORGANIZATIONS AND ENERGY CONSUMPTION 113 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, Smith, 1981), or on budget targets (Padgett, 1981). “Garbage can” decision routines (Cohen, March, and Olsen, 1971) connect problems and solutions on the and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. basis of their simultaneity, rather than their substance. Routines for the gathering of data tend to accumulate so much information that important pieces are not noticed (Wohlstetter, 1962; Turner, 1976; Perrow, 1981). Information of importance is likely to be overlooked if it is not attended to on the basis of standard organizational rules (Ellsberg, 1972; Neustadt and Fineberg, 1978) or standard rules of professional practice (Dearborn and Simon, 1958; Perrow, 1981). Attention is also influenced by the ways in which managers allocate their time and attend to information. Managers tend to communicate orally rather than in writing (Mintzberg, 1973; Keegan, 1974; Lyles and Mitroff, 1980; Sproull, 1981a) and appear to respond to attention requests more in terms of the source (Cohen and March, 1974) or the medium (Sproull, 1981a) of the request than its content. As a result, the network of oral contacts among acquaintances is an important form of environmental scanning (Keegan, 1974; Tushman and Scanlon, 1981). Managerial attention is brief, frequently interrupted, and as likely to be initiated by others as by the manager (Dubin and Spray, 1964; Mintzberg, 1973; Cohen and March, 1974; Sproull, 198la). Managers are most certain to attend to disruptions and emergencies. Managers attend to information sources selectively, recording information from trusted sources (Pettigrew, 1972; Neustadt and Fineberg, 1978) and ignoring information from unfamiliar or untrusted sources (Wohlstetter, 1962; Turner, 1976). They focus on familiar aspects of complex stimuli, ignoring less familiar features (Dearborn and Simon, 1958; Turner, 1976). Managers use relatively simple models for identifying problems (Pounds, 1969; Sproull, 198 1b) and for evaluating decision alternatives (Cyert et al, 1958); they are influenced by broad organizational expectations and beliefs (Mintzberg, 1978; Starbuck et al., 1978) and by personal goals (Pettigrew, 1972). In any organization there are energy problems looking for solutions, and there are energy solutions, including conservation, looking for problems, but energy must compete for attention with other problems facing the organization and other solutions being offered. Thus, the amount of attention devoted to energy efficiency depends on the number and salience of other, competing issues that demand attention and time. The salience of energy (and other issues) depends on several organizational factors. For example, it depends on conspicuousness, indicated by the amount of money devoted to it or the number of functions it affects. This, in turn, depends in part on the ways in which organizational accounts are organized and the kinds of scorecards that are kept on organizational performance. Salience also depends on routines: standard operating procedures dictate much of the allocation of attention. Finally, attention depends on the

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ORGANIZATIONS AND ENERGY CONSUMPTION 114 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, structure of interests and power in the organization. Organizations attend to things that are on the agendas of active, well-organized interests, and those and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. interests can be either external to an organization or a part of it. If there is a subunit whose survival and growth depends on bringing energy solutions, that person or group will help to discover an energy problem in the organization and make it salient to others. Diffusion and Imitation Organizations imitate other organizations. A large fraction of the innovations introduced in any organization are copies of what is being done elsewhere. This includes most changes in standard rules of “good practice”—for example, good engineering practice, good accounting practice, or good managerial practice—for which trade and professional associations often provide a not entirely unbiased mechanism for spreading beliefs and procedures from one organization to another. It also includes technical and managerial innovations, which decision makers discover and justify by noting what is being done by others. The empirical study of imitation in organizations is complicated by the difficulty of distinguishing imitation from independent, but subsequent, adoption of a practice. Studies of the diffusion of new technologies often show a pattern of adoption that is consistent either with a contagion model or with a normal distribution of independent adoption times.6 There is some more direct empirical evidence for the imitation hypothesis: for example, personal communication among peers in similar positions in different firms speeds the adoption of a practice (Trippi and Wilson, 1974; Czepiel, 1974; but see Webster, 1970). In the flour milling industry, innovations spread more rapidly to mills that are part of groups than to independent mills (Hayward, 1972). Studies of information seeking about innovation indicate that information is often sought through interpersonal channels (Trippi and Wilson, 1974), particularly from vendors and suppliers (Webster, 1970; Ozanne and Churchill, 1978; Mills, 1981). There also appear to be industry opinion leaders who influence adoption decisions (Carter and Williams, 1959; Webster, 1970; Czepiel, 1974). Thus, it appears that imitation among organizations follows a pattern not totally unlike imitation among individuals. It is sensitive to factors of contact (which organizations are connected with which others), transmission (what kinds of information about organizational practices are communicated), source (the credibility of the information provider), and receptivity (what makes something being done in one organization attractive to another). Contagion is particularly likely when it is difficult for an organization to assess the appropriateness of an innovation or when there are ambiguities about objectives. Under those conditions, action is made to seem sensible to one organization by its adoption by others: one would

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ORGANIZATIONS AND ENERGY CONSUMPTION 115 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, expect the relative standing of two organizations to affect the rate at which one imitated the other, and one would anticipate the development of fads in and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. organizational decisions. Policy Principles to Affect Organizational Energy Users It is easy enough to see that any of these features of organizational decision making may lead an organization to invest less in energy efficiency than it should, even from its self-interested point of view. Under such circumstances, public policies might be directed toward overcoming these limits on rationality so that organizations act to improve their own positions, as well as to be in conformity with national policies. In such a situation, everyone gains and no one loses. If a political decision is made to consider energy efficiency a national interest, it would also be possible to induce organizations to undertake energy decisions that are not in their narrowly defined self-interest. In either case, the point is to lead organizations to do things they would not do without interventions. Such problems have traditionally led to various kinds of “carrots and sticks” designed to change behavior. These include taxes, subsidies, regulations, and threats. The major advantage of using taxes and subsidies hinges on their effectiveness in manipulating organizational actors into compliance with public policy objectives in an efficient way. When organizational actions are affected by any of the factors that have been discussed, the timing and form of governmental incentives and regulations may be important considerations in influencing organizational actions, and taxes and subsidies of the usual sort may be much less effective than hoped. In addition, policies within organizations or in professional and trade associations may also be effective. The general principle underlying effective policies is that, to ensure that incentives for energy efficiency influence organizational action, energy efficiency must be interpreted into organizational goals, procedures, and routines. This can be done by assigning responsibility, building energy considerations into accounting and design routines, improving measurements of energy flows, and by using the resources of trade and professional associations. In order to improve energy efficiency in organizations, it is particularly important that high-level managers identify energy efficiency as an important organizational goal; this attracts attention to energy within the organization. To improve energy efficiency, at least one person at a high level in the organization should be made responsible for advocating energy efficiency and measuring progress toward concrete objectives. To the extent that energy objectives can be specified for particular activities, tasks, or subunits within an organization, attention to energy problems will filter down through the organization.

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ORGANIZATIONS AND ENERGY CONSUMPTION 116 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, Procedures such as separate budgeting of energy costs and life-cycle accounting for energy-using capital investments build energy concern into the and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. organization by routinizing it. Other rules and routines in areas such as architectural and engineering design can have the same effect. Energy efficiency can be used as a criterion of effectiveness in measuring and allocating organizational resources. For example, in planning budgets, a separate category of capital outlays for energy efficiency can be created. Or, in evaluating the productivity of labor, the advantage of energy savings can be assessed. To identify potentials for energy efficiency and to measure progress, organizations need devices and indices for monitoring energy expenditures. They should keep simple, cumulative records of the data generated, make these records readily retrievable, and statistically evaluate the payoffs of past investments in energy information and energy-saving measures and technologies. With small computers, even a fairly small organization can evaluate its expenditures and investments, taking into consideration external factors such as weather, prices, and competitors’ behavior. Trade and professional associations are valuable sources of information on effective ways of saving energy. These groups are in a good position to tailor information to their members’ needs; they are also highly credible and can quickly spread new ideas to places where they are most likely to be applicable. Trade associations and associations of public officials can assist their members in improving energy efficiency by establishing regular networks within the associations within which organizational representatives concerned with energy can interact. They can also gather, digest, and distribute brief reports about successful energy-efficiency efforts of well-respected firms or agencies. Such procedures would assist the process of social diffusion. The U.S. government is the largest organizational energy user in the country. As such, it can implement many of the above suggestions. It can, for example, assign more resources to managing its own energy use, delegate responsibility for energy efficiency to high-level officials in each department, and set specific goals for energy saving in each agency. The federal government should work to develop ways organizations can improve their energy efficiency. A research effort would begin as part of a drive to improve energy efficiency in government operations. It might initially focus on the effects on organizational energy use of engineering decisions, accounting and monitoring systems, and the organizational status accorded energy management. Policies found to be effective in federal agencies are often adaptable in state and local government agencies and in organizations in the private sector. The research effort might be broadened to include cooperative work with private sector organizations so that further transfer of learning will occur. The federal government can take

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ORGANIZATIONS AND ENERGY CONSUMPTION 121 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, be expected from individual metering or about the net distribution of costs between owners and residents that is likely to result. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. Other programs and policies have also received attention. For example, utilities and commercial groups have developed certification programs (McClelland, 1982) to help building owners advertise energy-efficient buildings to potential renters. In a slack rental market, this may reward the owners of energy-efficient buildings with higher rents or lower vacancy rates. In a suburban area of Atlanta, Georgia, where much new housing is being constructed, virtually all new buildings are receiving certification by Georgia Power, and most are advertising energy efficiency to attract renters.7 Local ordinances have also been proposed to require that buildings be brought up to an energy standard at resale. These ordinances make sense in that enough money for upgrading a building is usually available at the time of resale, but the ordinances are vigorously opposed by real estate interests as an impediment to transactions. Each of these proposals has some possibilities, but also problems. In the tight rental housing markets of many cities, it may be possible to pass energy costs along to renters with little fear of lower occupancy rates. Where there are rent control ordinances, a pass-through provision is often needed to prevent bankruptcy among building owners and the ment of housing stock. Owners are also frequently constrained by lack of capital, and find energy investments expensive when short-term debt financing costs are included (Office of Technology Assessment, 1982). Most owners of rental housing are small businesses with limited access to cash or credit. In addition, the poor condition of the rental housing industry makes it a poor risk for lenders. And many owners do now expect to recoup energy investments when selling a building (Bleviss, 1980). It is difficult to generalize because of the extreme diversity in the rental housing industry. Conditions of housing markets and local ordinances vary greatly (Bleviss, 1980), and the behavior of owners varies with their situations. One study (Neels, 1981) found that buildings partly occupied by their owners used about 25 percent less energy than buildings with absentee owners in 1978, and an even greater discrepancy was projected for the future. The same study found that buildings owned by corporations and partnerships used 9 percent less energy than buildings owned by sole proprietors. The differences were attributed to increased expenses for labor and repairs among owner-occupants and to better information among “professional landlords.” The importance of access to capital may also vary greatly—the limited research to date conflicts with regard to the importance of this factor as a barrier to investment. Diversity presents a problem in another way. There is a great variety in the residential housing stock—especially among multifamily buildings—so accurate information is not available on the energy savings that can be expected from particular investments. Data are scarce, but an evaluation

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ORGANIZATIONS AND ENERGY CONSUMPTION 122 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, of data primarily from commercial buildings (Office of Technology Assessment, 1982) showed that actual energy savings varied enormously, and were often as and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. much as 50 percent more than or 80 percent less than predicted. Until more reliable information is available for building owners, underinvestment in energy efficiency is an understandable strategy for avoiding wasted expense. Still, because many rental housing units are highly energy inefficient, it is in the interest of both owners and occupants to devise ways to share the costs and savings. Some model contracts are being developed in commercial buildings that allow owners to pass through a portion of the capital improvement costs that will benefit occupants.8 In multifamily housing, this procedure may prove less attractive because of mistrust between owners and occupants or because of lack of technical sophistication. However, the development of such procedures may be a ripe area for exercise of the skills of individuals and groups that have arbitrated labor disputes or mediated consumer or environmental disputes. Operators of Energy-Using Equipment Some large apartment buildings and many commercial buildings are operated by someone who is neither the owner nor an occupant. Truck and bus drivers and airline pilots are in a comparable situation in that they operate large energy-using machines although someone else pays for the fuel. The interests of such intermediaries may differ from those of owners and occupants or clients. Building operators or managers, for example, are motivated to minimize malfunctions of equipment or other sources of complaint. For example, a building operator may run an inefficient furnace in preference to risking a shutdown for repairs during business hours. Or a building engineer may regulate temperature to minimize complaints. This means plenty of heat in winter and plenty of cooling in summer —enough to keep down the complaints. And it will probably mean too much heat and cooling if occupants can adjust to the conditions by opening windows without notifying the engineer. This brief overview suggests special problems in achieving energy efficiency in buildings in which there are three interested parties—owners, operators, and clients. The other side of this argument is that professional building operators may use energy more efficiently because of superior technical knowledge. For operators to make use of this knowledge, however, it may be necessary to build in incentives for them to use energy efficiently. Organizational Energy Users and “Embodied Energy” Individuals use energy indirectly when organizations use energy to provide consumer goods and service. Organizations make energy decisions for

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ORGANIZATIONS AND ENERGY CONSUMPTION 123 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, individuals and households when they choose equipment and processes to use in manufacturing, construction, and agriculture. This energy use is “embodied” in and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. the automobile, building, or food product when it is purchased. When markets are highly competitive and energy accounts for a substantial portion of a product’s price, purchaser demand will be relatively responsive to the cost of embodied energy. But when such conditions are not met, it is more difficult for purchase decisions to influence producers’ decisions about embodied energy. The energy costs of producing a soft-drink container or a bomber are significant, but because the markets allow purchasers limited choice, legislation and regulation seem to be the only effective ways to improve energy efficiency. And the costs of embodied energy in many other commodities are miniscule for the purchaser. The energy costs are often significant to the producers, but, for reasons mentioned in the discussion above of organizational energy users, organizations do not always make economically rational choices about their energy use. A telling example of embodied energy concerns the use of energy for making or transforming energy. The “fuel adjustment” provision common in utility regulation allows utilities to automatically increase gas or electric rates when there is an increase in the cost of fuel to the utility. This arrangement gives the utility virtually no incentive to cut fuel costs, and, because the utility has a monopoly, the customers must pay. The pass-through creates an incentive for the ultimate purchaser of energy to cut energy use, and such a response in turn lowers the utility’s demand for fuel. But this course of events does not provide the utility with an incentive to make its operating practices more energy efficient. As long as regulatory practice allows utilities to pass on fuel cost increases and requires them to pass on any fuel savings to the customer, their incentive to save on these expenses is severely limited. The power of utilities to pass on costs to users has occasionally resulted in the discouraging situation of customers paying more for energy because they have used less. As a direct result of decreased demand, some large electric utilities have sought—and received—rate increases to maintain their guaranteed rate of return against fixed capital and labor costs. This can cancel or reverse the financial benefits of energy savings for customers who have made small savings. It is true that these rate increases may be smaller than would have resulted if customers had not cut energy use, because conservation may allow a utility to forgo construction of new and expensive plants. But this point escapes most customers because they generally measure the effects of their conservation activities by their utility bills and not by what a bill would have been without the conservation effort (Kempton and Montgomery, 1982). An economic incentive remains but many utility customers do not perceive it. The utilities are left with a credibility problem, and their customers may give up on any conservation efforts.

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ORGANIZATIONS AND ENERGY CONSUMPTION 124 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, As a general rule, organizational energy use is not inefficient, so production processes are not often greatly wasteful of energy. But past procedures are often and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. routinized and may not readily change with economic conditions. Also, when an organization has no incentive to save energy, as with some utilities, or when customers lack the market power to provide an incentive for energy-efficient operation, the problem becomes significant. It has not been considered appropriate for government to intervene in the private sector by regulating industrial processes; for public-sector organizations, however, intervention is acceptable and much more likely. Providers of Public Goods and Services Political units make decisions for energy users without necessarily treating them as energy decisions. They may create needs for energy services or provide means of meeting needs at different levels of energy intensity. For example, the political decisions to invest billions in limited-access highways, to offer tax incentives to homeowners, and to develop centralized water and sewer systems, have had major long-range energy implications. These policies have encouraged suburbanization and have made detached suburban homes relatively inexpensive and convenient to reach by automobile. But a dispersed settlement pattern creates a transportation need that is hard to fill except by private automobiles. It also increases heating and cooling needs in comparison with attached city dwellings. The trend toward suburbanization has further limiting effects on energy choices: as dwellings and workplaces disperse and inner-city populations decline, mass transit systems are used less and therefore become less energy-efficient and more expensive. As a result, transit services are cut, making even more people dependent on the automobile. In this way, past political decisions, such as those to invest in public highways rather than public transit, have significantly changed the environment in which people choose where to live and corporations choose where to build plants and offices. Those decisions have made some choices attractive and effectively foreclosed others, with far-reaching energy implications. Local political decisions that do not involve expenditures can also indirectly influence energy use: zoning practices, building codes, and land-use plans can influence the placement and construction of buildings in ways than constrain choice both by individuals and organizations. This may be a potent form of influence on energy use, as evidenced by the effects of a passive solar building code in Davis, California (Dietz and Vine, 1982): the code has changed building practices in Davis and some of the surrounding area, and has resulted in a greater saving in energy than could have been achieved by the new construction—so, adoption of the Building code may have changed the behavior of the occupants of existing buildings.

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ORGANIZATIONS AND ENERGY CONSUMPTION 125 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, In the past, decisions about building codes, highways, and the like were usually made without energy being considered explicitly. The decisions were and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. governed by the interests of developers, lending institutions, labor unions, industries, prospective home buyers, suburban motorists, and so forth. Energy was cheap and the interests of energy users as a group were rarely represented. It remains to be seen whether these conditions have changed enough over the last decade to significantly alter the politics of local decisions that make subtle but important choices for energy users. It is certainly still the case that energy costs to individuals are not a major concern of those interests that have traditionally shaped local decisions about public goods. Engineers, Designers, and Architects The technical experts who create buildings and machines do not always have energy use as their main concern, but their decisions build energy-using characteristics into their products. In the design of refrigerators, for example, considerations of energy efficiency conflict with a desire to produce a product with the greatest possible food storage area given the outside dimensions of the appliance. That is, goals of good engineering conflict with marketing goals. The manufacturer makes the final decision, and in the past often chose marketing goals over engineering goals, leaving engineers to design relatively energy- inefficient products. In building design, an esthetic decision must be made about whether building occupants should be insulated from weather or should experience it. Until fairly recently, architects always made this choice one way, and, as a result, energy inefficiency was built into glass-enclosed buildings. Costs of energy are, of course, involved in design decisions concerning appliances, buildings, and automobiles. Past decisions were predicated on low costs, and higher costs are a force for change. But other influences also operate within the design and engineering professions. Architecture, for example, has always had vogues, epochs, waves, and so forth. The entry of energy efficiency into architecture can be described in the language of art history: it was embraced initially by an avant-garde (generally young), mocked and repudiated by an establishment, but gradually penetrated the profession. This history ran parallel to rising energy prices, but had a dynamic of its own: the rapid adoption of energy conservation by architects was probably aided by the fact that it was a new objective for a profession that values innovation. Similarly, it is arguable that the history of energy efficiency in automobiles and appliances partly reflects status distinctions within the engineering profession. In the United States, high technology has had most of the status and has attracted a large share of the most creative engineers. The engineers in lower-technology and therefore lower-status jobs, such

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ORGANIZATIONS AND ENERGY CONSUMPTION 126 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, as those designing refrigerators or automotive drive trains, could not compete with marketers for influence over organizational decisions. As a result, the U.S. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. public has come to the point where it associates good low-technology engineering (as in cars) with foreign countries. Recent concern about energy conservation may be restoring some dignity and influence to low-technology engineers. Lending Institutions Banks and other lenders influence energy use by their willingness to make funds available at favorable rates for energy-efficient improvements in equipment and by their willingness to offer mortgage money for energy-efficient new structures. Bankers’ beliefs about the effects of energy efficiency on the quality of mortgage investments are also important. They are more likely to make loans for energy efficiency if they believe it increases resale value, attractiveness to renters, or the ability of the owner to make loan payments. Such considerations have led the Federal Home Loan Mortgage Corporation to consider energy conservation among its criteria for purchasing loans on the secondary market. This criterion may eventually affect the energy efficiency of housing through the behavior of primary lenders. Standard-Setting Organizations Standard-setting organizations, which are mainly voluntary in the United States, standardize a variety of energy-related products and services. Many interests, often conflicting, are represented in such organizations. Thus, when the American Society of Heating, Refrigeration, and Air-Conditioning Engineers devises standards for building construction, some organizations represented in the society stand to gain because changed standards will increase demand for their products, while others stand to lose. In the past, the organizations that set standards for heating, cooling, and lighting in buildings usually set standards to increase the comfort of building occupants. Such standards also promoted sales for the organizations whose representatives set the standards. Energy efficiency was not a serious consideration in standard-setting at that time. Now, with energy users more concerned about costs, it may be appropriate to reexamine standards based on comfort to see if they are warranted. These standards have changed greatly in the last few decades: standards today require twice as much lighting in buildings and a narrower band of temperatures in workplaces than a generation ago. The expectations of building occupants have changed at the same time as the standards: many workers expect air-conditioned workplaces in climates where very few had them in 1960.

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ORGANIZATIONS AND ENERGY CONSUMPTION 127 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, There is reason to reexamine the basis of existing standards of comfort. Most of the existing research on human response to temperature in buildings has and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. been conducted in environmentally controlled rooms in ways that do not allow for adaptive responses by occupants (e.g., Stolwijk, 1978). Clothing levels, for example, are usually held constant. This research strategy implicitly defines comfort as a physiologically determined function of temperature, clothing levels, rate of air movement, and a few other physical variables. There is evidence, however, that comfort is a preference that people are constantly choosing, rather than a physiological function. One line of evidence is the variability of up to 13 degrees Fahrenheit among average air temperatures in homes in different Western nations (Schipper and Ketoff, 1982). Another is the experimental research that demonstrates that households given a schedule of slow adaptation to lower temperatures in their homes are as comfortable at 62 degrees Fahrenheit after adaptation as at 65 degrees Fahrenheit before (Winett, Hatcher, Fort, Leckliter, Love, Riley, and Fishback, 1982). As long as standard-setting organizations continue to define comfort as they have, however, the purchasers of buildings are limited in their choices and somewhat constrained in their energy use. They may be purchasing more lighting and larger heating and cooling plants than they need and so using more energy. When standards become incorporated in building codes, building owners and occupants are especially constrained. Thus, there is potential for modifying energy use through changing decisions in standard-setting organizations. Policy for Energy Intermediaries It is unrealistic to attempt to offer general policy recommendations for dealing with intermediaries because there is too much variability among sectors of the energy market. As a first step, the importance of intermediaries as possible agents for change should be emphasized. It is worthwhile to compare the impact on energy use that could be achieved through change by the intermediaries involved in a given area of energy consumption with the magnitude of change within the discretion of ultimate energy users. Policies aimed at actors other than energy users are sometimes highly attractive in terms of potential effectiveness. For example, the potential for energy savings in transportation was much higher from regulating the manufacture of automobiles than from financing mass transit or providing incentives for ride- sharing by travelers (Hirst, 1976). In that particular case, hindsight shows that regulating the manufacturer was politically feasible. The situation has been different in the building industry: the great technical potential for energy savings through more energy-efficient build

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ORGANIZATIONS AND ENERGY CONSUMPTION 128 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, ing practices remains largely unrealized, partly due to the political failure to develop a national set of performance standards applicable at the local level. and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. What is technically attractive may or may not be politically realistic, for reasons that are not well understood. In short, while there is a relatively well-developed body of knowledge that can be applied to developing energy programs for energy users, especially individuals and households, much less is known about how to design and implement policies to change the behavior of manufacturers, lenders, designers, and other intermediaries in the energy field. Part of the problem is that a complex political process is involved in dealing with intermediaries, many of whom are formidable political actors. They can exert great influence when they see an energy proposal, rightly or wrongly, as threatening their interests. There is little reliable knowledge about how to resolve political impasses caused by a divergence of interests between a group of energy users and a group of producers or intermediaries. Sometimes a manufacturer may become convinced to reassess its interests, as the automobile industry seems to have done in the case of fuel- efficient cars. Sometimes energy users’ interests may be successfully mobilized against the interests of an intermediary group, or the balance of forces among affected intermediaries may be such as to promote an energy policy to which one major interest is opposed. But there is no research knowledge that enables predictions of which of these outcomes is likely. Given the limited available knowledge, we emphasize a few relatively simple points. First, intermediaries are often at least as important as energy users for influencing energy use. Policy makers and the public would do well to look carefully at intermediaries as foci for action. Second, intermediaries are political actors with some power to promote or interfere with the implementation of policies that affect them. For those who see a national interest in energy efficiency, there is great potential support as well as strong opposition from intermediaries—finding allies may be politically critical. It should be remembered that intermediaries sometimes reassess their interests. For example, the idea of performance standards or goals for buildings may at first strike architects or builders as unwarranted regulatory interference. But when there is low demand in the market for new construction, a performance standard may look more attractive: it may create a demand for design services and set a target for upgrading old buildings. Because of the special risks associated with energy-efficient innovations for some private-sector intermediaries, they have a disincentive to invest in national goals unless there is a return available for them. Therefore, if a public interest in energy efficiency is accepted, attention must be given to overcoming barriers to change among intermediaries. Third, intermediaries that innovate in energy efficiency have a stake in educating their potential customers to the value of their innovations—

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ORGANIZATIONS AND ENERGY CONSUMPTION 129 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, especially those innovations that are invisible to customers and impossible to monitor until after purchase. But intermediaries are rarely skilled educators, and and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. in any event have a conflict of interest when it comes to educating customers about their products. This situation suggests a role for the public sector in educating purchasers of buildings, machinery, vehicles, and other energy- consuming stock about the implications of energy-related innovations for their interests. Fourth, most intermediaries are organizations, and principles of organizational behavior apply. For example, intermediaries are apt to make decisions by following rules. Changes in organizational procedures to increase attention to energy should make a difference. An example is the practice of the Federal Home Loan Mortgage Corporation of considering energy efficiency before purchasing mortgages. Two recent innovations in energy efficiency through intermediaries are particularly worthy of further study, development, and dissemination. Experiments should be done to negotiate agreements to share the costs and benefits of energy-efficiency investments in buildings between owners and occupants. Because arrangements that work in one location are not automatically transferable, we recommend that such pilot projects involve interested parties outside the particular building, such as consumer groups and business associations. This may help spread the word of a successful agreement and also commit the interested observers to trying to adapt any workable agreement to other situations. Evaluations should be done on the effects of existing programs to certify the energy efficiency of multifamily buildings. If these programs show promise, increased efforts to gather performance data on buildings are warranted, so that certification programs can be easily expanded. Notes 1. Organizations in a relatively unfavorable environment are more likely to engage in legally questionable activities (Lane, 1953; Staw and Szwajkowski, 1975); university departments introduce more client-related innovations in courses under conditions of relative adversity (Manns and March, 1978); relatively unsuccessful firms take the lead in the adoption of some specific, extremely important technological improvements (Adams and Dirlam, 1966). Studies of research and development activities in firms similarly suggest that failure may stimulate research and development (Williamson, 1964; Schott and von Grebner, 1974; Kay, 1979). 2. Mansfield’s (1961) study of the introduction of twelve different innovations in four industries did not support the “innovation in the face of adversity” hypothesis. His subsequent work (Mansfield,

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ORGANIZATIONS AND ENERGY CONSUMPTION 130 About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, 1963, 1964) indicates more support for the idea that large, successful organizations tend to innovate sooner than do smaller, less successful organizations. Daft and Becker (1978) in their empirical study of the adoption of innovations in thirteen high school districts obtained results that do not support the and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. notion that failing organizations innovate more than successful organizations. Oskamp (1981) found that larger chemical companies introduced energy conservation earlier than did smaller firms, and Mills (1981) found that large retailing chains had engaged in more energy-management activities than had smaller chains. 3. Rules, routines, and standard operating procedures determine the pace of decisions (Fischer and Crecine, 1980), information flows in decision making (Wohlstetter, 1962; Allison, 1971; Pettigrew, 1972), and the ways in which inputs are combined to make decisions (Crecine, 1967; Allison, 1971; Britan, 1979). 4. For example, change may be the result of crises (Chandler, 1962; Hall, 1976; Johnson, 1978), entry into new product lines (Chandler, 1962), changes in environmental conditions (Ritchey, 1981), or shifts in management ideology (Schiff, 1966). Routines may also change informally as a result of managerial judgment about their appropriateness or efficacy in a given situation (Sproull, 1981b), subordinate perceptions of the expectations of superiors (Ellsberg, 1972), or as a hedge against uncertainty (Larkey, 1979). 5. Williamson (1975) and others have related organizational forms to the problems of forming contracts to manage uncertainty. Pfeffer (1972a) found that Israeli managers who were dependent on the government for sales or financing tended to be more complacent about governmental policies than other managers. Salancik (1979) found a similar result in the United States, though it was affected by the public visibility of the firms involved. It has been argued that intermediate levels of concentration in an industry are distinguished by high levels of uncertainty and have been shown to be associated with the frequency of mergers (Stern and Morgenroth, 1968; Pfeffer, 1972b; Pfeffer and Leblebici, 1973), joint ventures (Pfeffer and Nowak, 1976), interlocking directorates (Pfeffer and Salancik, 1978:166; but see Palmer, 1980), and executive movement across organizations (Pfeffer and Leblebici, 1973). 6. Imitation should imply identifiable innovation leaders within an industry, and Webster (1971) reported some consistency across innovations in the airline industry. However, most studies find that firms that adopt one innovation relatively early are not nec

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About this PDF file: This new digital representation of the original work has been recomposed from XML files created from the original paper book, not from the original typesetting files. Page breaks are true to the original; line lengths, word breaks, heading styles, and other typesetting-specific formatting, however, cannot be retained, and some typographic errors may have been accidentally inserted. Please use the print version of this publication as the authoritative version for attribution. 8. See note 7 above. Colorado, Boulder, 1982. ORGANIZATIONS AND ENERGY CONSUMPTION essarily early adopters of another (Mansfield, 1968; Webster, 1971). 131 7. This information comes from L.McClelland, Institute for Behavioral Science, University of