*4.2. Energy E*ffi*ciency Practices*

#### 4.2.1. What Importance Does Energy Efficiency Have for Corporate Strategy of the SMEs?

As indicated above, the environment of an enterprise represents important frame of reference, which appears to be particularly crucial in terms of the strategic approach on energy efficiency. The case study research showed a clear link between the meanings of energy efficiency for an enterprise and the strategic approaches an enterprise makes in this respect. In one studied SME, for example, it became apparent that a positive external image, in particular, was interpreted as the most important function of all undertaken and planned efforts. Accordingly, the enterprise concentrates particularly on measures that are salient and can be distinctively presented to the outside world (e.g., photovoltaic system, e-mobility).

Nevertheless, the case study research indicated that embedding energy efficiency into corporate strategy has a positive effect on implementing technology and practices regardless of the dominant orientation. In the course of the survey, the SMEs were, therefore, asked about the importance of energy efficiency for their corporate strategy. For almost half of the surveyed SMEs, energy efficiency occupies a high (33%) or very high priority (16%) for the corporate strategy. On the other hand, only 13% of the enterprises surveyed consider energy efficiency having a low priority for their general corporate strategy, whereas 6% assume a very low priority. Considerable differences were observed regarding the enterprise size and energy demand. Both appear to have a positive effect on the embedding of energy efficiency in the corporate strategy. This result can certainly be explained by the prevalence of energy managemen<sup>t</sup> systems according to the international standard ISO 50001, which are quite common, especially in larger or more energy-intensive enterprises in Germany [72], and explicitly require the definition of explicit strategic energy goals and policy.

#### 4.2.2. What Importance Do Di fferent Energy E fficiency Practices Have for the Enterprises?

The case study research indicates that the implementation of a broad range of practices—ranging from technical investments to raising awareness measures—proved to be particularly e ffective in establishing energy e fficiency within the enterprises and tapping the energy e fficiency potentials adequately. The fieldwork revealed that the enterprises undertake a variety of measures in di fferent contexts: Simultaneously, sequentially, and sometimes even unintentionally. In the course of the specific "energy e fficiency history" of the enterprises, the focus on particular practices necessarily changes over time. Thus, an issue can be treated in di fferent contexts with di fferent measures. The interplay of di fferent practices that may emerge over time can be well illustrated by an example of the case study research.

A medium-sized engineering company draws its attention to its compressed air supply and starts problematizing the technical equipment. The enterprise first turns to compressed air generation, invests in new compressors, and starts monitoring energy consumption. After attending a regional information event, a maintenance employee suggests that the piping system should be checked for leakages and optimized. Top managemen<sup>t</sup> decides to redesign the compressed air system and commissions a service provider. Although the enterprise can report a significant reduction in energy consumption, the managemen<sup>t</sup> is not su fficiently satisfied. At a production meeting, the records of savings and energy consumption of the compressed air supply are discussed. The practical use of compressed air becomes a focal point, and the enterprise begins to inform production employees about the sensitive use of compressed air. Half a year later, the results of energy consumption show hardly any di fferences, and top managemen<sup>t</sup> wonders why the measures for raising awareness have little e ffect and what further measures are appropriate. Under the impression that the employees are ignoring the previous measures, the company changes its approach. The quality manager is instructed to formulate working rules for the use of compressed air. At the same time, the technical team is instructed to look for ways to automate the use of air-operated machines.

As the example above indicates, the exploitation of energy e fficiency potentials requires a broad spectrum of energy e fficiency measures over time. Within the scope of the survey, the SMEs were asked what type of energy e fficiency practices they implemented in the last three years, what measures they were currently focusing on, what measures they plan for the future (in the following three years), and which ones they do not plan to carry out at all. In the past, the SMEs mostly focused on technical-investment measures, and in the future the focus will also be placed on technical measures. Measures for raising awareness have had a high priority for SMEs and will also be held as important in the near future. Furthermore, the current focus was mostly drawn to such measures, and all other types seemed to have considerably less importance for the enterprise (Figure 6).

The relatively low importance of organizational, information-, and competence-related practices becomes even more distinct when considering the size of the enterprises. The smaller the enterprises are, the less they seem to value these measures. Additionally, the percentage of measures being not planned is noticeably higher the smaller the enterprises are. Fewer measures were implemented and will not likely be carried out in the future, particularly in micro-enterprises A similar picture appears when looking at the energy demand of the SMEs. The more energy-intensive the enterprises are, the more important the measures, other than technical investments and awareness measures, are. Organizational measures have particularly been a focal point of more energy-intensive enterprises in the past. Financial incentives by the governmen<sup>t</sup> for the implementation of an energy audit or an energy managemen<sup>t</sup> system (such as ISO 50001) might be a plausible explanation for this peculiarity.

**Figure 6.** Importance of different types of practices.

#### 4.2.3. What Importance Does Energy Management Have for the SMEs?

Energy managemen<sup>t</sup> is often regarded as synonymous with the norm ISO 50001. The case studies showed that such a classification is not necessarily tenable. Although five of the 10 enterprises investigated within the case study research operated an energy managemen<sup>t</sup> system according to the standard ISO 50001, this does not mean that the remaining enterprises did not practice energy management. On the contrary, the case studies show that those enterprises successfully conduct energy managemen<sup>t</sup> without committing themselves to a standardized system. They embed energy efficiency issues in their corporate strategy, set up energy efficiency goals, appoint energy managers, digitize and monitor their energy consumption, plan and implement measures, train their employees, and research possible technical measures and their financing. The difference only lies in the formal structure. For example, in one case, a company did not appoint a formal energy team in the enterprise, ye<sup>t</sup> an informal network of people regularly meets to discuss energy efficiency issues. In another case, employees are aware of general premises regarding energy efficiency decisions or energy saving behavior, and ye<sup>t</sup> no energy policy has ever been documented. It is also noteworthy that those SMEs do not aspire to implement a standard energy managemen<sup>t</sup> system in the future at all. Due to a lack of personnel resources and administrative and certification costs, an implementation is not a goal or viable option, especially for small SMEs.

The analysis of the individual cases indicates that the implementation of a formal managemen<sup>t</sup> system does not necessarily guarantee effectiveness. For example, in one case, the enterprise has established formal responsibilities and an explicit energy policy, although a lack of authority to take action and employees who are unfamiliar with energy issues constrain the implementation of measures. In addition, the implementation of an energy managemen<sup>t</sup> system can cause unintended effects. In one case, energy efficiency was mostly perceived by members of the enterprise as a forced external expectation due to the implementation process of ISO 50001. During the interviews the respondents either directly ("our management/competitors'/the customers' expectations forced us to implement ... ") or rather vaguely ("we had to do it") referred to strong expectations instead of providing hardly any other motivation. This finding allows the interpretation that complying with the paragraphs of the norm and pleasing the auditors became the dominant frame of reference for interpreting energy efficiency issues, despite diametrical intentions of the top management. Additionally, and despite the rational intent of top managemen<sup>t</sup> to institutionalize energy efficiency within the enterprise, another unintended issue became apparent in the same case. When asked about energy efficiency issues or measures, almost all interviewed persons referred to the designated energy manager, while the interviewed energy manager complained about the lacking support, especially of the production personnel, despite the establishment of an energy team consisting of such members. Roughly speaking, energy managemen<sup>t</sup> became reduced to the face of the energy manager, who, in turn, go<sup>t</sup> overwhelmed by the responsibility of managing everything on his own. The observations and interviews within the scope of the case study research indicate that those enterprises without formal energy managemen<sup>t</sup> sometimes take much more e ffective measures and establish energy managemen<sup>t</sup> effectively within the organization.

#### *4.3. Interface between the Enterprise and Its Members*

4.3.1. What Importance Does the Everyday Behavior of the Employees Have for Energy Conservation and Energy E fficiency?

The case studies showed that the everyday behavior of the employees is perceived as an important influencing factor for improving energy e fficiency. Throughout every interview with managemen<sup>t</sup> sta ff and personnel charged with energy e fficiency tasks, the impact of everyday behavior was valued as a vital factor in achieving energy savings. In one extreme case, the energy savings were even almost exclusively attributed to changes in employee behavior. Accordingly, within the scope of the survey, the SMEs were asked how they consider the behavior of the employees in the enterprise to contribute to the success of energy savings. Almost two-thirds of SMEs (63%) consider the importance of energy-saving behavior to be important. On the other hand, only 13% of the SMEs surveyed rate the importance of employee behavior as rather or completely unimportant. No considerable di fferences regarding enterprise size and energy demand could be observed.

4.3.2. Who Is Perceived as Responsible for Energy E fficiency and Energy Conservation within the SMEs?

As part of the questionnaire survey, the enterprises were queried as to which organizational actors in the enterprise are responsible for energy saving and energy e fficiency. Throughout the entire sample, owners and managemen<sup>t</sup> are seen to be most responsible (Figure 7). Di fferences could be observed according to enterprise size and energy demand. Both factors seem to have a positive e ffect on the perceived distribution of responsibility. This circumstance might be attributed to the fact that larger and more energy-intensive SMEs more likely employ dedicated personnel (e.g., energy manage or environmental manager). However, the data give evidence that the lower the energy demand and the size of the SMEs are, the greater the centralization of responsibility is perceived to be.

**Figure 7.** Responsibility for energy saving and energy e fficiency in the SMEs.

4.3.3. How Do the SMEs and Their Leaders Attempt to Raise Awareness among Their Workforce?

As the case study research shows, the top managemen<sup>t</sup> of the enterprises oftentimes puts a lot of effort into defining energy e fficiency goals, structures, and processes as well as narratives as to why investments, changes, and new practices are necessary. Energy e fficiency, therefore, proves to be a

demanding managemen<sup>t</sup> task from the perspective of top management. Hence, top managemen<sup>t</sup> usually either tries to outsource this task (e.g., to a designated energy manager) or to involve key persons in support. These key persons act as energy e fficiency agents within the organization and oftentimes play an important role to the organizational institution of energy e fficiency. These agents do not necessarily have to be explicitly appointed energy managers. The case studies showed that the top managemen<sup>t</sup> of the SMEs usually searches for individual personnel aware and interested in mediating, communicating, and spreading energy e fficiency issues within the enterprise. Oftentimes, these persons act only informally—as informal energy managers or as an energy team.

However, both formally and informally appointed energy e fficiency personnel usually require a wide set of skills and knowledge, ranging from technical, economic, and social skills as well as to knowledge about legal requirements and external actors. Considering the complexity of energy efficiency in the context of industrial organizations, this finding seems rather obvious. Less obvious seems another aspect, which was frequently expressed by the interviewed members of the investigated SMEs. From their points of view, the integrity of those in charge with managing and spreading energy efficiency within the enterprise is valued even more highly than their competences. In other words: Whoever is in place has to walk the talk.

In the context of the case study research, it was investigated which strategies the SMEs pursue in order to promote and enforce energy-saving behavior within the enterprise. Four di fferent strategic approaches were identified: (1) Raising awareness (e.g., creation of consciousness by trainings, empowerment, or speech); (2) motivation (e.g., promotion of self-interest by sanctions, incentives, or job roles); (3) regulation (e.g., establishment of conformity by formal or informal work rules); and (4) automation (e.g., avoidance of human risks by technical measures). These approaches represent "ideal types" [73], which do not occur in pure form in the enterprises. Rather, the enterprises mix and complement, for example, raising awareness practices with formal rules or automation measures. In addition, it was not necessarily possible to determine which typical approach would be the most effective—the individual competencies, qualifications, and corporate cultures (meaning general norms, beliefs, ideas, and routines) considerably shape what is feasible.

However, the case studies showed that raising awareness among the employees is the most important strategic approach to foster energy e fficiency decisions and energy-saving behavior. Actions for raising awareness usually mark the starting point for actions in the enterprises to address energy e fficiency issues. The focus of how the enterprises attempt to shape the individual behavior and decision making of its members might shift over time. For example, an enterprise perceives the undertaken raising of awareness measures as ine ffective and decides to set up rigorous work rules instead. In another case, formal work rules seem not to work su fficiently and the company theorizes that monetary incentives might generate more self-interest and motivation among its employees to save energy. In a rather extreme cases, the focus shifts solely to the automation of processes, as no other strategy has proven e ffective in the past. Mainly relying on automation, therefore, represents an avoidance strategy.

Top managemen<sup>t</sup> and key personnel often spend a lot of time and e ffort situating attention on energy issues among the workforce. Occasionally, they feel themselves becoming "energy educators" within the enterprise. At the same time, top managemen<sup>t</sup> often experiences encouraging energy saving among the employees to be a daunting task. Actions for raising awareness are sometimes perceived as "Sisyphus work", as one managing director described it graphically. Similarly, many of the interviewed top managemen<sup>t</sup> personnel or energy managers (formal and informal) complained of the challenging nature of raising awareness for energy-saving behavior. From their points of view, those tasks are frequently associated with high a ffectivity (e.g., incomprehension, frustration, annoyance). Through formal speech, discussion, and storytelling, they facilitate knowledge, values, and beliefs about energy e fficiency issues. Drawing attention to energy issues in everyday interactions proves to be particularly important to establish an alert energy e fficiency climate. However, not every enterprise or manager is willing or able (e.g., due to lack of time, competence, or patience) to perform

these educational tasks. In their defense, the enterprises often claim the lack of competent personnel as an obstacle to raising awareness ambitions. Additionally, the extent to which raising awareness measures might succeed depends strongly on the individual characteristics attributed to the "energy educators" in charge. As mentioned above, not only do they have to demonstrate su fficient knowledge (e.g., technical, practical, social knowledge), but the employees' perception of integrity seems to be equally important.

#### *4.4. Interface between the Enterprise and the Environment*

#### 4.4.1. Regulative: How Do the SMEs Perceive External Imperatives for Energy E fficiency?

Undoubtedly, increasing energy e fficiency represents a rising political and social expectation, which is an expectation that can be perceived by enterprises as a manifest regulative demand (such as large enterprises by statutory energy audits) or rather latent imperative (such as political or medial discourse by spreading values, ideas, and beliefs). While practical or legal imperatives were hardly mentioned, more di ffuse imperatives became particularly evident during the interviews in the course of the field research. The need for increased energy e fficiency was frequently expressed as a rather vague expectation an industrial organization has to live up to nowadays. More concrete, the interview partners referred to the expectations of customers, national policies, or the local communities as reasons for an increased attention on energy e fficiency issues.

As part of the questionnaire survey, the enterprises were asked to which external actors they attribute the demand for energy e fficiency. As Figure 8 shows, the SMEs largely attribute the demand for energy e fficiency to national and global political actors, followed by the society as a whole and industry associations at a distance. Hardly any noticeable di fferences in answering could be identified regarding the size of the enterprises or their energy demand.

**Figure 8.** The attribution of the external imperative for energy e fficiency.

Even more important than finding out to which actors the expectations are attributed is the question of their acceptance. As far as the participating SMEs of the case study research is concerned, the acceptance was usually positively rated. Nevertheless, in such a face-to-face setting the risk of a socially desirable response is certainly significantly higher than in anonymized questionnaire survey. As part of the questionnaire survey, the SMEs were further asked how the expectation for energy e fficiency is perceived by the enterprises. Most enterprises perceive the general imperative for energy e fficiency positively (39.2%) or rather positively (30.6%). Only about 4% of the SMEs perceive this imperative as negative. In terms of enterprise size or energy demand, no significant di fferences between the enterprises could be observed.

4.4.2. Economic–Financial: To What Extent Is the Financing of Measures Considered as an Obstacle by the SMEs?

As discussed above, technical measures have a high priority for the SMEs in general. At the same time, especially investment in capital¬–intensive technical measures (e.g., combined heating and power station) can mean a considerable financial outlay for small enterprises. In the course of the ethnographic field research, the financing of energy-e fficient technology was a broadly discussed topic on many occasions. Either in interviews with decision makers, controlling sta ff, or even in meetings with consultants, which could be observed, the financing of measures was surprisingly never articulated as an obstacle. Although the decision makers usually pointed out that investments must pay <sup>o</sup>ff, mostly between a range of two to five years, the financing was presented as an uncritical endeavor.

In the survey, the enterprises were accordingly asked if the financing of energy e fficiency measures is an obstacle. From the points of view of the SMEs surveyed, the financing of energy e fficiency measures is not a clear obstacle. While about 28% agree that it is, about 35% of the interviewees do not perceive the financing as an obstacle and 37% neither agree nor disagree. No considerable di fferences could be observed regarding the size of the enterprises or the energy demand.

4.4.3. Normative: What Information Sources Do the SMEs Use and How Actively Do They Search for Information?

In the context of the field research, the question of how the participating SMEs obtain information for measures and to which actors and normative guidelines they orient themselves was investigated. From their perspectives, at least basic information on energy e fficiency measures are rather easily available from various sources. On the contrary, the perception of an inflation of information and consulting services prevails among the enterprises. In every SME at least one person reported of being literally bombarded, usually several times a week, with inquiries or advertising, especially from consultancy firms. This abundance oftentimes leads to the fact that most of it is ignored (and must be ignored) and a skeptical view of the trustworthiness of the entire field develops overall. This aspect is closely related to previous experiences with consultants. A wide spread of experiences can be stated – from very good to especially bad experiences. From the points of view of the enterprises, "black sheep" affect the general trustworthiness in the consulting and service industry. Hence, in addition to general qualifications and skills, it is above all the trustworthiness of the actors that the enterprises question and expect. As part of the questionnaire, SMEs were surveyed as to where they gain information on energy efficiency measures (Figure 9). The professional journals are clearly the most important sources of information for SMEs. Information by consultancy firms is more valued by medium-sized enterprises than by smaller enterprises. Subsequently, the enterprises were queried about their research behavior on measures. About one-third search actively, one-third search moderately, and one-third search only rarely. Di fferences with regard to energy demand were hardly noticeable, but clear di fferences regarding the size of the enterprises were. The larger the enterprises are, the more actively information on measures seems to be sought. Around 15% of micro-enterprises do not even look for information on energy e fficiency measures. This result can most likely be explained by lack of human resources in smaller enterprises.

**Figure 9.** Information sources about energy efficiency measures.

4.4.4. Cultural–Cognitive: What Importance Does Energy Efficiency Have for the Environment of the SMEs and to What Extent Does it Influence the Decisions of the SMEs?

In order to capture the influence of external expectations on energy efficiency decisions, the SMEs were confronted with a two-step question. First, the companies were queried as to how they perceive the importance of energy efficiency for their business environment. As Figure 10 shows, customers are most likely attributed to valuing energy efficiency as very important by the enterprises. The importance for the local environment, competitors, owners, and professional groups is perceived considerably lower, but at a similar level.

**Figure 10.** The perception of the importance of energy efficiency for the environment of the SMEs.

Subsequently, the SMEs were asked what influence these external groups and actors would have on the decisions about energy efficiency measures (Figure 11). Customers appear to have the greatest influence on energy efficiency decisions, followed at a clear distance by the local environment, competitors, and the owners.

**Figure 11.** The perception of the importance of energy efficiency for the environment of the SMEs.
