Article

Racing to the Bottom? Trade, Environmental Governance, and ISO 14001

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Abstract

Globalization critics argue that international trade spurs a race to the bottom among national environmental standards. ISO 14001 is the most widely adopted voluntary environmental regulation which encourages firms to take environmental action beyond what domestic government regulations require. Drawing on a panel study of 108 countries over seven years, we investigate conditions under which trade linkages can encourage ISO 14001 adoption, thereby countering environmental races to the bottom. We find that trade linkages encourage ISO 14001 adoption if countries' major export markets have adopted this voluntary regulation.

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... Most recent studies (Lim et al., 2015) argue that the effect of aid is conditioned by other external flows such as trade or Foreign Direct Investments (FDI), and find a positive effect of aid on environmental protection which tends to be reversed for high values of these external flows. However, this finding relies on the "california effect" assumption (Prakash and Potoski, 2006) for which there is no real consensus in the literature. Moreover, the contrasted findings on aid seem to be associated to quality of aid data, as pointed out by Tierney et al. (2011), for who all aid studies have been driven by too little information because of incomplete data on foreign aid. ...
... Using a sample of 88 countries over the 1980-2005 period, they find that aid is Chapter 2. CO 2 mitigation in developing countries: the role of foreign aid 17 associated with superior environmental protection in the recipient country, at low levels of exports receipts and FDI inflows from developed countries; moreover, this positive effect tends to diminish or to be even reversed as these flows increase. This happens because aid frees these countries of their dependence on these flows and thus, of incentives for high environmental protection; this lies on the somewhat heroic "California effect" hypothesis (Prakash and Potoski, 2006) and is totally challenged in the context of "pollution haven" hypothesis 3 (Eskeland and Harrison, 2003). ...
... There are two competing arguments on how the former could affect pollution in exporting countries: the "pollution haven" hypothesis (Eskeland and Harrison, 2003) which suggests that trade openness leads to an increase in pollution in developing countries through a relocation of dirty industries from the developed countries; and the "California effect" hypothesis (Prakash and Potoski, 2006) which suggests the opposite effect (Frankel and Rose, 2005). Exporting toward markets with stringent environmental standards could lead developing countries to adopt these standards at home for instance (Perkins and Neumayer, 2012). ...
Thesis
The observed effects of climate change over the last decades highlight the urgency of mobilizing enough resources to slow it down and mitigate its effects. In the case of developing countries, some suggest that development aid has an important role to play. However, the political ambitions of decision-makers should not be in competition with environmental ones. This thesis examines the existing links between foreign aid, political cycles and environmental degradation, through three empirical chapters. Chapter 2 studies the link between foreign aid and CO2 mitigation in 112 developing countries. It shows that the effect of aid depends on the donor, with multilateral aid more likely to reduce pollution than bilateral aid for which there is no effect. Nevertheless, a bilateral aid specifically targeted toward environment contributes to decrease the level of pollution. This later impact is non-linear, a pollution-reducing effect is only observed for important amounts of environmental bilateral aid. Chapter 3 studies the factors associated with environmental bilateral aid to recipient countries over the 1990-2013 period. The objective is to assess whether the environmental bilateral aid is motivated by non-environmental factors such as donors’ economic and political interests. Three kind of variables that might influence environmental aid allocation are examined: the environmental and non-environmental needs and merits of recipient countries, and the economic and political interests of donors. Environmental needs and merits variables include vulnerability to extreme climate events and the stringency of climate policy. The results show that while vulnerability to climate change seems to be a key determinant of environmental aid, its allocation is poorly linked to recipients’ climate mitigation policies. It finds weak evidence of association between donors’ interest variables and environmental aid on average. However, an heterogeneity analysis allows to go deeper into all the relations above, and unveils that some donors are more sensitive to environmental variables, while others rather seem focused on their economic and political interests. Chapter 4 explores how elections impact climate change policy and environmental degradation, using a sample of 76 democratic countries from 1990 to 2014. The findings indicate election years are characterized by an increase in CO2 emissions, even though the effect weakens over the recent years. It also reveals that this effect is present only in established democracies, where incumbents engage in fiscal manipulation through the composition of public spending rather than its level. Higher freedom of the press and high environmental preferences from citizens reduce the size of this “political pollution cycle”.
... However, there remain cross-country differences in terms of environmental regulations and their enforcement, largely due to scientific uncertainties about the consequences of pollution and disagreements about the costs vs. the benefits of environmental protection schemes. In this context, the adoption of private regulatory standards has been popular, arising both from corporate self-interest (a desire to exploit market-based advantages) and institutional pressures (Kolk, 2016, Prakash & Potoski, 2006. Nonetheless, the implications on the environment from the adoption of specific environmental standards remain contested. ...
... Broadly, studies show that regulatory arbitrage can be reduced through formal governmental regulations or voluntary, self-regulatory action by firms. Potoski and Prakash argued across a series of papers (see for example, Potoski & Prakash, 2013, Potoski & Prakash, 2004, Prakash & Potoski, 2007, Prakash & Potoski, 2006 that the diffusion of ISO environmental standards has challenged the pollution haven hypothesis. Private regulatory arrangements have attracted considerable academic and policymaking interest, as a wide range of company-sponsored regulatory arrangements have proliferated (Mayer & Gereffi, 2010). ...
Article
Full-text available
Multinational enterprises operating global value chains are being increasingly pressured to source from suppliers that adopt green private standards. Likewise, public policymakers are also pressured to reduce national pollution levels to contribute to sustainable development initiatives. In this context, while there is extensive debate on how domestic, country-specific environmental regulations interact with private standards (adopted by firms) in reducing national pollution levels, less is known about the role of international trade policies, which have recently embraced an array of sustainability issues. Our paper seeks to extend our understanding of the extent to which ISO environmental certifications affect a country's level of emissions of greenhouse gases and air pollutants, and whether the European Union's environmental protection (EP) standards-as mediated through trade agreements-condition this response. Prior research provides mixed evidence on the impact of the adoption of ISO-14001 on pollution reduction. Based on prior literature and using institutional theory and environmental stewardship perspectives, we expect that membership of trade agreements with EP provisions would complement the effect of ISO-14001 uptakes in reducing national pollution levels. Our arguments and results emphasize the complexity between private and public regulations on pollution reduction.
... Following this seminal idea, some scholars consider that, to a large extent, the diffusion of VESCPs in developing countries is driven by the international trade relations and the role of environmentally aware consumers. Prakash and Potoski (2006) found that, if key export markets have widely adopted ISO 14001, trade can help disseminate this certification and counter a possible environmental race to the bottom. Marcoux and Urpelainen (2012) find out that this effect is relevant only in those countries where the domestic adoption levels are low enough compared to the global average. ...
... Effectively, by adopting VESCPs such as FT and CN managers can reinforce the company's business model through two complimentary mechanisms: (i) increased reputation and image leads to product differentiation, increased sales and product prices, domestically but especially in international markets, in coherence with the postulates of the NRBV; and (ii) the social and environmental recognition of the firm, which reinforces the company's resilience and survival (Ortiz de Mandojana and Bansal 2016) and the necessary 'license to operate' (Bansal and Clelland 2004). The last argument is especially relevant for those multinational companies operating in developing countries (Hart 1995) and domestic companies exporting to markets with high social and environmental standards, which is in line with the principle of trade-based diffusion of VESCPs (Prakash andPotoski 2006. Marcoux andUrpelainen 2012;Wu and Ma 2016;Gamso 2017Gamso , 2018. ...
Article
Voluntary environmental and social certifications represent a channel by which firms can contribute to sustainable development. Using qualitative and quantitative methods, we explore the motivations and obstacles that Costa Rican companies face when adopting Carbon Neutral (CN) and Fairtrade (FT) certifications. CN is a domestic certification aimed at reducing or offsetting carbon emissions and fighting climate change. FT is a well-known international label that guarantees compliance with environmental and social standards. We conclude that ethical and environmental reasons influence the managers’ decision, along with economic and strategic incentives, such as improving the image of the company and the relationship with stakeholders. High investment and certification costs are ranked as the most difficult obstacles to overcome. By exploring the differences between both certifications, we find out that increasing sales, market shares or prices are more important motivations for the FT companies than for CN ones.
... However, there remain cross-country differences in terms of environmental regulations and their enforcement, largely due to scientific uncertainties about the consequences of pollution and disagreements about the costs vs. the benefits of environmental protection schemes. In this context, the adoption of private regulatory standards has been popular, arising both from corporate self-interest (a desire to exploit market-based advantages) and institutional pressures (Kolk, 2016, Prakash & Potoski, 2006. Nonetheless, the implications on the environment from the adoption of specific environmental standards remain contested. ...
... Broadly, studies show that regulatory arbitrage can be reduced through formal governmental regulations or voluntary, self-regulatory action by firms. Potoski and Prakash argued across a series of papers (see for example, Potoski & Prakash, 2013, Potoski & Prakash, 2004, Prakash & Potoski, 2007, Prakash & Potoski, 2006 that the diffusion of ISO environmental standards has challenged the pollution haven hypothesis. Private regulatory arrangements have attracted considerable academic and policymaking interest, as a wide range of company-sponsored regulatory arrangements have proliferated (Mayer & Gereffi, 2010). ...
Article
Full-text available
Multinational enterprises operating global value chains are being increasingly pressured to source from suppliers that adopt green private standards. Likewise, public policymakers are also pressured to reduce national pollution levels to contribute to sustainable development initiatives. In this context, while there is extensive debate on how domestic, country-specific environmental regulations interact with private standards (adopted by firms) in reducing national pollution levels, less is known about the role of international trade policies, which have recently embraced an array of sustainability issues. Our paper seeks to extend our understanding of the extent to which ISO environmental certifications affect a country’s level of emissions of greenhouse gases and air pollutants, and whether the European Union’s environmental protection (EP) standards – as mediated through trade agreements – condition this response. Prior research provides mixed evidence on the impact of the adoption of ISO-14001 on pollution reduction. Based on prior literature and using institutional theory and environmental stewardship perspectives, we expect that membership of trade agreements with EP provisions would complement the effect of ISO-14001 uptakes in reducing national pollution levels. Our arguments and results emphasize the complexity between private and public regulations on pollution reduction.
... In the race to the bottom, governments lessen their environmental criterion to avoid losing businesses to countries with more "business-friendly" regulations (Jinyoung and Wilson 1997;Mcnally 1998). Developed country governments, in a "race to the bottom," hypothesis deregulates the rigidity of existing environmental policy, which can create a process of "ecological dumping" (Prakash and Potoski 2006;Sheldon 2006). The race to the bottom argument presumes that the regulatory behavior of a state is dependent on the regulatory decisions of other states. ...
... *Statistical significance at the 10% level; **statistical significance at the 5% level; ***statistical significance at the 1% level Surprisingly, institutional quality has a significant positive association with the ecological footprint in all quantiles, and the coefficient increases in quantile to quantile. In the 5th quantile, the coefficient is 1.484, and in the 90th quantile, it reaches to 1.904, which is quite relevant to the race to the bottom hypothesis (Konisky 2007;Prakash and Potoski 2006). Our result is pertinent to Charfeddine and Mrabet (2017) and Sabir et al. (2020), who found that political institutions and government stability have not been accompanied by a reduction of environmental stress. ...
Article
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This study examines the impact of foreign direct investments on ecological footprint along with other explanatory variables of 92 countries from the year 2001 to 2016. Here, we applied the panel quantile regression model to meet the purpose of our study as it considers unobserved country heterogeneity, unlike other statistical methods. The study reveals that foreign direct investment has a positive relationship with the ecological footprint in each quantile except one, which proves the constancy of the pollution haven hypothesis. Moreover, we also tried to detect the impact of economic growth, manufacturing value-added, the percentage of world exports, and institutional quality on the ecological footprint in this study. The findings of this study also reveal that economic growth and manufacturing value-added are negatively associated with the ecological footprint. With respect to the percentage of world exports and institutional quality, we found a positive relationship with the ecological footprint. From the result of our study, different policy implications have been proposed for host countries and foreign investors on improving the economy through foreign direct investment with minimal ecological footprint.
... Within the cross country diffusion literature, another stream examines ISO 14001 adoption behavior of developing country firms in the context of debates on globalization and global economic integration (e.g., Prakash and Potoski, 2006;Prakash and Potoski, 2007;Berliner and Prakash, 2013;Berliner and Prakash, 2014). While this literature is not necessarily focused on developing countries explicitly, their findings have significant implications for understanding ISO 14001 adoption behavior among developing country firms. ...
Conference Paper
Voluntary environmental initiatives (VEIs) by firms are often viewed as important for environmental management in developing countries such as India with weak regulatory institutions and poor enforcement of environmental laws. Past research shows that while VEIs may not be able to fully substitute for strong regulation, they could be useful complements to reduce environmental degradation in developing countries. In India, new government initiatives such as "Make in India" are geared towards significantly increasing the manufacturing output in the next few years. In this context, our paper studies the adoption of a widely employed VEI-the ISO 14001 standards certification-among the Indian manufacturing industries. Using the theoretical framework of Earnhart, Khanna, and Lyon (2014) on the drivers of corporate environmental strategies in emerging economies, we hypothesize that the likelihood of adoption of ISO 14001 standards among Indian manufacturing industries is a function of internal firm characteristics, input and output market pressures, and regulatory pressure. We test our hypotheses using a survey of 1000 (large, medium, and small) manufacturing firms across the country, conducted under the aegis of the World Bank in 2016. Results show that internal firm characteristics such as large size and firm innovation have a positive association with the likelihood of adopting ISO 14001 standards. Output market pressures, such as exporting to foreign markets, also positively impact the likelihood of obtaining ISO 14001 certification. In particular, exporting to China, which is ranked first in the number of ISO 14001 adoptions, has a statistically significant impact on probability of adoption. There is no evidence, however, that predominantly consumer-facing firms, another potential indicator of output market pressure, are more likely to adopt ISO 14001 standards. We also find state-fixed effects, potentially capturing the variation in both formal and informal regulatory pressure across states. Thus, consistent with other research in developing countries, we find that pressure to meet the environmental standards of countries to which firms in developing countries export their products acts as a strong incentive to adopt VEIs such as ISO 14001 standards. The lack of evidence that consumer-facing firms are no more likely to adopt ISO 14001 standards potentially indicate that firms in India do not yet find the green consumer markets large enough to adopt VEIs.
... Here, it is the standards setters and the degree to which they share information and adapt rules at the international level that shape regulation, harmonization and the degree to which standards are barriers to trade (Mattli and Büthe 2003). Alternatively, there is some evidence that trade networks, and the pressures of export demand, can shape adoption of new standards to harmonize exporting and importing markets, even if that means more standards/regulation (Prakash and Potoski 2006). (Naoi 2009). ...
Thesis
Full-text available
The post-World War II global economy is characterized by two broad phenomena: liberalization of tariff barriers that restricted trade across a broad swath of industries and countries, and the expansion of global direct investment and the rise of supply chains in goods trade. However, the secular decline of tariffs has not meant universal liberalization. In some industries, tariffs and tariff-like policies still restrict trade. In others, measures that are unlike tariffs have either become more prominent as tariffs fell or have risen to provide alternate protection. Work in political science and economics has advanced a wide variety of explanations for the transition from tariffs to non-tariff measures generally, or for the presence or absence of specific non-tariff trade instruments in particular. A more limited body of work has examined the substitution across policy instruments, but has not attempted to generalize beyond the policies under consideration. We assert that part of the limitation in this work arises from the traditional dichotomy of tariffs versus non-tariff measures. To resolve this shortcoming and advance the discussion of trade politics and trade agreements, this dissertation advances a new framework for considering trade-distorting policies that apply both at- and behind-the-border. Policies are categorized according to how they apply costs - according to the location of a good's production, the content in or process of production, or the firm that produces it. Policies that raise costs indiscriminately are also considered. We explain the logic of this typology and the distributive consequences of each policy. Then, we explain the distributive consequences of imposing these policies in a single-country and two-country interaction. From these distributive outcomes, we introduce a theory of protection-seeking where firms in a given industry lobby for levels and varieties of protection that serve their interests in light of the preferences of other politically-salient firms. Industry characteristics like foreign investment, product differentiation, industry concentration, and firm efficiency all work to shape the types of trade-distorting instruments which industries may obtain from responsive governments. With this lobbying logic established, we test that theory against data from the United States in 2012. Comparing industry characteristics against the presence or absence of the four types of policies across more than 3000 types of products, we find support for some implications of the lobbying theory, but also find areas for further inquiry. This dissertation contributes to the wider discussion of evolving protectionism in political economy through clarification, by advancing a new logic of protection- or liberalization-seeking coalitions that considers multinational firms, and through an investigation of the "contours" of protection in the United States, a critical power in the global goods and investment market. In doing so, it moves the discipline closer to understanding the deep links between global investment flows and the politics of global trade and trade policy.
... In areas from taxation to banking and environmental policy, the focus of this article, the effectiveness of policy efforts is often dependent upon international policy coordination (e.g., Abbott and Snidal 2001;Webb 1995). Our results show that the influence of other countries does not necessarily result in races to the bottom (e.g., Plümper et al. 2009;Prakash and Potoski 2006;Vogel 1995). Rather, positive actions by others can induce individuals to support further policy action to lock in these gains. ...
Article
When considering public support for domestic policies that contribute to a global public good, such as climate change mitigation, the behavior of other countries is commonly regarded as pivotal. Using survey experiments in China and the United States we find that other countries’ behavior matters for public opinion, but in a contingent manner. When citizens learn that other countries decrease their emissions, this leads to support for further domestic action. Yet, support for reciprocal behavior is not a necessary consequence of other countries increasing their emissions. Responding in-kind to emissions increases abroad depends upon the home country’s past behavior and who the other country is. Our results imply that the international context remains important, despite global climate policy now relying more on unilateral action and polycentric governance. They also show, however, that we need to pay greater attention to contingent effects of countries’ positive and negative behavior in this area.
... FDI does not only move towards a conducive tax climate but also targets countries with weak environmental laws (Cole et al., 2006;Prakash and Potoski, 2006). One channel of strengthening environmental laws is through the tax system. ...
Article
Full-text available
Purpose In this paper, we use empirical models to examine the main channel through which FDI escalates environmental risk. We explore whether countries with “weak” or better still low tax rate attract “dirty” FDI to deteriorate their environment Design/methodology/approach The analysis uses a 40-year panel to show that foreign direct investment (FDI) and tax policy matter in accounting for cross-country environmental risk. Findings Our sample finds support that the tax channel is the main medium through which FDI worsens environmental risk. By discomposing tax policy into low and high regimes, we report that countries that deliberately reform tax policy to bait FDI have higher environmental risk. Social implications A useful lesson from here is that using tax policy to lure FDI amounts to shortchanging capital risk for environmental risk. Originality/value The paper is unique because it identifies tax policy as a channel through which FDI affects the environment in Africa. Other studies overly simplifies the relationship between FDI and its impact on the environment, and it makes it difficult and ambiguous in offering specific policy direction.
... After California adopted more stringent regulation than the rest of the U.S., automakers asked the federal government to adopt uniform standards that would preempt state-level standards (Vogel 1995(Vogel , 1997. These ideas have since inspired work in international political economy on the race to the top versus the race to the bottom in environmental regulation (Prakash and Potoski 2006;Neumayer and Perkins 2005). In this strand of research, trade is the central mechanism of multi-level political change. ...
Preprint
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Opposition from organized business interests can impede policy reform. Under what conditions are firms incentivized to support reform? We argue that in federal systems state policy and politics can have a home state effect on the national preferences of firms and firms’ coalition membership. State policies can force firms to absorb regulatory cost, thus reducing the marginal cost of national policies. In addition, firms heavily regulated at the state level have incentives to strategically align with their state governments. We test our argument by matching original data on the positions of large electric utilities towards the Clean Power Plan and data on ad hoc coalition membership with data measuring state policy stringency and state government positions. Quantitative evidence is consistent with hypotheses: both state policies and state politics influence utilities’ national positions. Elite interviews help clarify different mechanisms. Our findings show how sub-national governments shape national interest group politics.
... Similar to the macro-to micro-level progression of research focused on economic consequences, we argue that the macro-level literature on the trade-environment nexus allows us to derive theoretical arguments and empirical expectations concerning the effects of environmental implications of trade on individual trade preferences. These expectations point in opposite directions, given that one strand of macro-level research argues that trade has positive impacts on the environment, whereas the other claims that economic openness harms the environment (for a summary, see Aklin 2016; Beladi and Oladi 2011;Copeland 2010;Dasgupta et al. 2002;Prakash and Potoski 2006). Building on these macro-level arguments, we argue in the next section that positive environmental implications of international trade are likely to increase public support for international trade. ...
Article
Do environmental implications of international trade influence public support for economic globalization? And under what conditions do environmental considerations shape individuals’ trade attitudes and policy preferences? In this study, we examine the microfoundations of the trade–environment nexus based on survey-embedded experiments in six OECD countries. Our empirical findings demonstrate that environmental implications have a substantial causal effect on public opinion about international trade. Furthermore, our results indicate that citizens are similarly sensitive to both domestic and international environmental implications of trade. These findings suggest that there is probably sufficient public support for green economy policies that take into account the global rather than only national environmental impacts from trade when designing trade policies.
... ), as have environmental ministries, access to environmental information laws, and other basic environmental procedures and frameworks (e.g.,Frank et al. 2000;Tews et al. 2003;Prakash and Potoski 2006). Many scholars do not justify or explain the extent to which the policies examined are faithful representations of other kinds of environmental policies.For example,Frank et al. (2000) study the adoption of environmental ministries and extrapolate from their results to conclusions regarding all of the natural environment. ...
Thesis
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In the face of daunting environmental challenges, leadership in the development of environmental policy may be more important now than ever. While some countries are willing to devote substantial time and resources to working on environmental issues, others lag behind. In this dissertation, I explore what it means to be a policy leader, the state and trajectory of environmental policy leadership globally, and which actors systematically catalyze (or obstruct) environmental policy leadership. I propose that policy leadership is an observable, persistent behavior in which a government is 1) innovative, adopting new policies quickly and 2) influential, inspiring other governments to adopt these same policies. I argue that transnational advocates, such as international NGOs and multinational corporations, are particularly well-positioned to strengthen (or weaken) policy leadership. Providing information, building capacity, and conducting pressure campaigns in multiple jurisdictions at the same time, transnational advocates are uniquely positioned to affect both the spread and uptake of new policies. Using novel data on the adoption of 3,000 environmental policies by 185 countries, I measure leadership in the development of environmental policy over time and assess the role of transnational advocates in policy development. I find that large international environmental NGOs spark environmental policy leadership, particularly in developing countries and on issues related to traditional environmental topics of flora, fauna, and pollution. In contrast, lobbying by multinational corporations in developed countries sharply reduces environmental policy leadership. These results demonstrate the substantial and varied impacts of transnational advocacy on environmental policy leadership. I make three notable contributions in this dissertation. First, I improve on prior conceptualizations of policy leadership, providing a definition that is straightforward to operationalize while speaking to more general understandings of leadership. Second, I develop a novel method for identifying policy adoptions from a compilation of laws and regulations; this generates a new database of environmental policy adoptions that overcomes the geographic and topical limitations of existing datasets. Finally, I contribute the first systematic, quantitative evidence of the impact of transnational advocates on policy change, demonstrating the importance of their activities for environmental policy development. With little time to waste, it is critical to understand why and when governments act as environmental policy leaders, and what can be done to facilitate environmental policy leadership. Through this research, it is clear that accounting for the activities of transnational advocates should be a key component of any attempt to catalyze proactive and meaningful environmental policy change.
... After California adopted more stringent regulation than the rest of the U.S., automakers asked the federal government to adopt uniform standards that would preempt state-level standards (Vogel 1995). These ideas have since inspired work in international political economy on the race to the top versus the race to the bottom in environmental regulation (Prakash and Potoski 2006). 1 In this strand of research, trade is the central mechanism driving multi-level interactions and political change. ...
Preprint
Organized business interests often seek to block public interest regulations, but how they engage depends on institutional context. We argue that in federal systems state policy and politics can have a home state effect on firm preferences and political behavior at the national level. State policies can force firms to absorb regulatory cost, thus reducing the marginal cost of national policies. In addition, firms regulated at the state level have incentives to strategically align with their state governments to avoid future regulatory cost. We test our argument by matching original data on the positions of electric utilities towards the Clean Power Plan and data on ad hoc coalition membership with data measuring state policy stringency and state government positions. Quantitative evidence is consistent with hypotheses: both state policies and state politics influence utilities’ national positions. Elite interviews clarify different mechanisms. Findings underscore how sub-national governments shape national interest group politics.
... These doubts are confirmed by several studies (Aklin, 2016;Kozul-Wright and Fortunato, 2012;Ang, 2009;Dean, 2002), demonstrating that CO 2 emissions increase as a result of trade openness. On the contrary, other studies (Kearsley and Riddel, 2010;Kellenberg, 2008;Prakash and Potoski, 2006) demonstrated that openness in international trade is not associated with increasing CO 2 emissions. Finally, empirical evidence (e.g. ...
Article
A R T I C L E I N F O JEL classification: Q53 Q55 Keywords: Environmental innovations CO 2 emissions Rebound effect Europe ARDL model A B S T R A C T Environmental innovations are key enablers of transition towards greener economies. Despite their importance, empirical studies examining the effect of green technologies on CO 2 emissions are still limited. Using an autoregressive distributed-lag model (ARDL), we analyze the impact of environmental innovations, the consumption of renewable energies, GDP per capita, and degree of economic openness on CO 2 emissions for 15 European countries over 23 years. Our results indicate that, in the long-term, environmental innovations tend to lower CO 2 emissions, whereas in the short-term the observed effect is the opposite, suggesting the existence of a rebound effect. This study recommends introducing new policies that combine tools of environmental economics with those of ecological economy to integrate economic incentives with regulatory changes and encourage individuals to consume differently by favouring products and/or services with a less negative impact on the environment.
... This finding is consistent with the world society perspective which predicts that countries embedded and operating in highly interdependent international systems will be increasingly prompted to adopt and isomorphically acquiesce to legitimate models of international society (Drori et al., 2006;Guler et al., 2002;Meyer, 2010;Meyer et al., 1997). The result is also in line with empirical findings of prior research (Cao and Prakash, 2011;Prakash, 2007;Prakash and Potoski, 2006). Unexpectedly, the effect of CPII was nonsignificant (β = 0.008, p > 0.05), suggesting that CPII does not affect the diffusion of B2B EC in different countries. ...
Article
Using institutional theory, this study offers an integrated framework that describes the diffusion of business-to-business e-commerce within a country. The model specifies the role of national institutional frameworks, international institutional pressures, and market complexity in business-to-business e-commerce diffusion. We test this model using archival, cross-sectional data from 146 countries for the period from 2013 to 2016. The study also compares the roles of these factors in business-to-business e-commerce diffusion across developed and developing countries. The results suggest that national institutional frameworks, international institutional pressures, and market complexity contribute positively to business-to-business e-commerce diffusion and that the influence of these variables varies according to the degree of a country’s development. Theoretical, research, and managerial implications of the study are also discussed.
... Their alliance with foreign firms causes a 'race to the bottom' that compromises workers' employment conditions and environmental protection (Evans, 2008). Admittedly, a growing literature also suggests that international trade facilitates the diffusion of higher environmental standards and encourages the protection of human rights (Blanton & Blanton, 2007;Prakash & Potoski, 2006). In the Chinese case, however, we postulate that the former argument holds true. ...
Article
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It remains contested whether Chinese public consultation practices can be called local deliberative democracy or a sort of consultative authoritarianism. Yet, these different evaluations lack an appreciation of regional variations as well as underlying drivers. This study fills this gap by developing a political economy approach and constructing panel data of 36 Chinese cities over 12 years. Our study reveals that the functional purpose of appeasing social conflicts serves a key underlying incentive that drives China’s deliberative turn, yet heavier dependence on foreign investment in a local economy hinders public consultation. Content analysis of 3082 public hearing documents further shows that adoption of public hearings varies by regions with economically and politically advantaged municipalities being more likely to adopt consultative institutions for transparency. This study brings together the scholarship of contentious politics and deliberative politics while offering a nuanced understanding of regional differences of public consultation.
... 33 UNECE (1993), 4. 34 Esty (1994). 35 See, e.g., Prakash and Potoski (2006). offset the cost of compliance. ...
Thesis
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The purpose of this thesis is to contribute to an improved historical understanding of the challenges and complexities involved in constructing systems of governance of motor vehicle air pollution. The specific aim of the study is to explore the development of regulatory vehicle emission standards in Sweden between 1960 and the 1980s as well as to analyze this development within its broader European economic, regulatory and environmental policy context by adopting a transnational approach. The overarching research question concerns the historical dynamics and processes that created obstacles to implementation of stringent vehicle emission standards in Sweden from 1960 through the 1980s. To answer this question, the study focuses specifically on expert, business, and governmental actors’ interaction in the political process in Sweden, seeking to reveal these actors’ motivations, justifications, and power to influence the outcome. The study concludes that one set of difficulties concerned the relationship between vehicle emission standards and international trade, in the sense that stringent emission standards, which in turn are dissimilar from internationally adopted norms, raise trade barriers with implications for trade and foreign relations. The Swedish government, however, implemented stricter standards than those in Europe on three occasions between 1968 and 1982. Both the Swedish and the international car industry were greatly opposed to the Swedish government’s implementation of standards that were more stringent than those adopted in Europe, though the Swedish industry was not opposed to the government’s environmental ambitions as such. On the international arena, since the late 1960s, the thesis shows that the car industry favored international harmonization of technical regulations and lobbied national governments toward this end, while the study further concludes that the Swedish car industry was unsuccessful in its attempts to oppose regulation at home. Another set of challenges was related to the knowledge creation process and the requirement that these standards should reflect technical, economic, and scientific knowledge. The thesis shows how Swedish techno-scientific experts were key actors in the Swedish system of vehicle emission governance, while techno-scientific knowledge was an important tool in justifying Swedish unilateral policies to industrial actors and foreign governments. Still, producing techno-scientific knowledge is a time-consuming process and requires considerable resources. For small countries, the relative costs of producing techno-scientific knowledge are higher than producing it in the immediate political, economic, and technical context – i.e., together with other European countries and car industries. However, the thesis further concludes that the knowledge created in the Swedish system for vehicle emission governance was an important tool for linking standards with other progressive countries: both in terms of implementing goals on air pollution control that were more ambitious than those adopted by most European countries and for coordinating implementation of these standards as well as new fuel infrastructures. This thesis contributes new historical knowledge and perspectives of relevance to several bodies of literature. By displacing the EEC/EU from the center of analysis, the thesis offers the literature on European integration new perspectives. The thesis also adds knowledge regarding the construction of technical standards by shedding light on the role of knowledge creation in developing and implementing standards in a transitional setting. The thesis, moreover, contributes to the literature on the political power of business by closely tracing the car industry’s attempts to influence the regulatory development.
... Some of these corporations participate in "green clubs", in which members commit to voluntary actions associated with reducing plastic waste [25]. Yet the impact of green clubs is notoriously difficult to track, as well as their role in motivating action by industry laggards, or more ambitious effort by industry leaders [26,27]. ...
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Research on pathways to reducing plastic pollution often concludes that greater action is needed by the private sector. Yet the private sector is not a monolithic or homogeneous entity. We compiled a novel library of 2,317 corporate reports from the world's 200 largest companies, by revenue, over a ten-year period (2010-2019) and used text mining tools to identify pronounced regional and sectoral variability in the extent to which plastic waste and pollution is of material importance to corporate operations. The results show a dominant focus on recycling, with far less attention to the other stages of the life cycle of plastic. While green clubs have emerged in recent years to mobilize voluntary actions by companies seeking to position themselves as leaders in this context, we see regional and sectoral gaps in green club membership, as well as a tendency for members to be those companies that already had a history of reporting on plastics issues. This analysis provides a starting point for a more nuanced consideration of the private sector's role in addressing plastic pollution, and suggests sectors and regions for prioritization by policymakers and civil society actors seeking to broaden the range of committed corporate actors.
... Though weakening stringency may threaten reputational benefits associated with external credibility, such actions can still stabilize the institution so long as the benefits of participation continue to outweigh the costs for firms (Lenox 2006). From this perspective, PRIs face pressures that create a "race to the bottom" in which they decrease stringency over time (Prado 2013, Prakash and Potoski 2006, Yue et al. 2013). However, other research points to instances in which PRIs "ratchet up", becoming more stringent over time (see Cashore et al. 2003, Overdevest, 2010. ...
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The forces that threaten to break apart private regulatory institutions are well known, but the forces that sustain them are not. Through a longitudinal inductive study of the Towards Sustainable Mining (TSM) program in the Canadian mining industry, we demonstrate how private regulatory institutions are sustained by strategically manipulating different aspects of an institution's stringency. Our findings show how shifts in external conditions decreased benefits of participation for firms, triggering institutional destabilization. We demonstrate how the interdependent mechanisms of hollowing-actions that ratchet down aspects of stringency associated with high compliance costs-and fortifying-actions that ratchet up aspects of stringency associated with low compliance costs-worked together to stabilize the institution by rebalancing the competing pressures that underpin it. However, these same mechanisms can hinder the ability of these institutions to substantively address the targeted issues even as they become more stringent in some areas. Our study advances research on private regulation by showing how different aspects of stringency can be simultaneously ratcheted up and ratcheted down to sustain private regulatory institutions. Further, in positioning institutional stability as an ongoing negotiation, we elucidate the key custodial role of governing organizations like trade associations in institutional maintenance.
... Hatmanu et al. (2019) took small and medium-sized enterprises as the research object and found that comparatively larger enterprises were more inclined to undertake environmental responsibilities, and for small and medium-sized enterprises in EU 15 countries, as the enterprise age increases, these enterprises may bear less environmental responsibility with the increase of their age. In addition, multinational corporations face global market pressure on environmental issues, and they often pay more attention to environmental responsibility (Hitt et al., 1997;Prakash and Potoski, 2006). ...
Article
There is a certain correlation between Chinese traditional culture and Chinese enterprises' performance of environmental responsibility, but there is little literature on the relationship between them from an empirical perspective. This paper combs and evaluates the relevant literature from three aspects: the evaluation of the economic and social effects of Chinese traditional culture, the influencing factors of corporate environmental responsibility, and the measurement of culture. Based on the literature review, this paper puts forward the following research enlightenment, that is, future empirical research should be carried out from the perspective of the intensity, effect, and heterogeneity of the impact of Chinese traditional culture on enterprises' fulfillment of environmental responsibility, as well as the moderating factors of the relationship between them.
... Similarly, using data on countries' initial adoption year of comprehensive automobile emission standards from a sample of developed and developing countries, Saikawa [20] finds that trade encourages a race to the top in environmental standards and regulation. Prakash and Potoski [21] demonstrate that trade linkages encourage ISO 14,001 adoption if countries' major export markets have adopted this voluntary regulation in a sample of developed and developing countries. By contrast, using surveys on the perceptions of stringency, Busse and Silberberger [22] show that an increase in the net exports of pollution-intensive goods leads to less stringent environmental regulation in a cross-country context. ...
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The intensively debated issue of whether trade globalization leads to a race (climb) to the bottom (top) such that environmental policy stringency is loosened (strengthened) is still far from being uncontroversial. This paper provides new empirical evidence from the standpoint of the North (advanced) countries using both the generalized methods of moment (GMM) and GMM quantile estimators for dynamic panel data models. It first investigates the importance of trade partners and finds, in a sample of OECD countries, that increased trade with the South (developing) countries leads to more stringent environmental regulation whereas heightened trade with the North eases environmental regulation. It then examines whether there exist differences across regimes with different extents of stringency in environmental regulation and finds significant regime-specific effects. Specifically, liberalizing trade with the North weakens environmental regulation stringency in a regime with medium stringency but reinforces it in a regime with high and low stringency. Conversely, expanded trade with the South raises environmental regulation stringency in a regime with medium stringency but deteriorates it in a regime with high and low stringency.
... The environmental practices are always viewed as a significant concern within supply chain management (Cantor et al., 2012). Prakash and Potoski (2006) stated that organizations nowadays engage with high amounts of environmental initiatives and practises that had caused concerns by the organizations due to various challenges associated with the implementation of those practices. The selection of environmental practises ranges from simple initiatives such as waste disposal and replacing the material with the one that is more environmentally friendly to complex initiatives that involve new technology and invention. ...
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Purpose- The study aims to investigate the employee perceptions of organizational support for environmental behaviours and its impact on innovative environmental behaviours and frequency of involvement in upstream oil and gas supply chain management. The study also examines a new area where environmental work culture has been introduced as a facilitator on the relationship between employees’ perceptions and engagement in supply chain management. Design/methodology/approach- Self-administered questionnaires were used for collecting data from supply chain managers in Production Arrangement Contractor (PAC) and Service Provider Company in Kuala Lumpur. Partial least square was used for data analysis. Findings- The findings reveal that supervisory support for environmental initiatives and environmental training is positively related to employees’ perception of organizational support for environmental behaviours, while rewards provided by the organization for environmental behaviours is not associated with it. The employees’ perceptions of organizational support for environmental behaviours have a significant impact on employees’ engagement in environmental behaviours in both forms of employees’ frequency of involvement and employees’ innovative environmental behaviours. The findings also show that environmental work culture moderates positively the impacts of organization's support practices (supervisory support for environmental initiatives, and rewards provided by the organization for environmental) on employees’ perception of organizational support for environmental behaviours. Originality/value- The study critically examines the possible impact of enablers of engagement in environmental behaviours and how employees’ perceptions of organizational support reflect their engagement towards environmental behaviours of the organizational practices. The findings are useful for supply chain management practitioners in terms of exerting environmental behaviours and facilitating employees’ environmental behaviours in the upstream oil and gas supply chain management sector.
... In particular, with growing economic integration among countries, there has been increasing concern regarding multinational firms' environmental strategies, as well as their impact on the environment and ecological systems in emerging economies (Li & Zhou, 2017;Vogel, 1997;Wheeler, 2001). Research on foreign direct investment (FDI) has shown that foreign firms, especially those from advanced economies, take enhanced environmental actions and perform better than local firms in emerging economies (Ning & Wang, 2018;Prakash & Potoski, 2006). Multinational firms are required to meet diverse stakeholder demands in different locations (Kostova & Zaheer, 1999), which prompts them to invest in environmentally friendly operations and to incorporate them into their core practices on a wide scale. ...
Article
The literature on foreign direct investment offers rich evidence that foreign firms outperform their local peers in emerging economies from an environmental perspective. However, it remains unclear whether local firms can learn from the environmental excellence of foreign firms to undertake cleaner production, which helps protect the host country’s natural environment. This environmental spillover effect may offer critical support to the pollution halo effect; however, it has received insufficient empirical attention. By analyzing firm-level panel data on environmental performance in China and augmenting them with data from the input–output table, we investigate whether and how foreign firms improve local firms’ environmental management. Our findings present evidence that the presence of foreign firms in the same industry in the same city lowers the pollutant emission intensity of local firms, corroborating the environmental spillover effect. We also discuss two mechanisms for this spillover: community- and industry-based institutional channels. Furthermore, we find that environmental spillovers are stronger among small and medium-sized enterprises and in areas with higher levels of existing pollution.
... On one hand, there is policy diffusion by regulatory competition. Policies are supposed to be diffused between pairs of countries that have strong ties, such as having high bilateral trade, due to a competition mechanism (Prakash and Potoski 2006;Baccini et al. 2013). Saikawa (2013) states that adoption by an importing country puts pressure on the exporting country to adopt the policy as well. ...
Chapter
In 2005, renewable energy policies were present in 43 countries. Ten years later, this number had tripled. This policy diffusion phenomenon can be explained from several perspectives. Literature has documented the main sociopolitical aspects of this process, yet there is room to explore the economic drivers behind it, such as income, energy prices, financing, trade, foreign direct investment, and lobbying. This chapter focuses on the Brazilian wind sector, where international competition might have played a major role. The goal is to identify the economic triggers behind this policy diffusion process within the period 2005–2015.
... This article emphasizes the relationship between CS and SUGO as a dimension of measurement. Business policies and organizational planning are environmentally conscious, and environmental advantages are factored into basic business activities (Prakash & Potoski, 2006;Welford, 1996). These papers examine the relationship between CS and SUGO reasonably. ...
Article
Sustainable performance is essential to stakeholders. Organizations have invested resources to attain competitive advantage, and finally, they get success. But organizations fail to achieve sustainable performance despite having substantial resources. Thus, scholars have realized the need for sustainability governance (SUGO) as an alternative solution to resolve these challenges. The need for this empirical study has arisen due to a lack of validated measurements. The objective of this study is to evaluate and validate the SUGO and its dimensions. To validate the suggested model, this study uses a mixed-method approach. Content analysis (Nvivo-11) describes dimensions in qualitative research, and it explains that all measurements and items are valid and reliable. In addition, partial least squares (PLS)-based structural equation modelling (SEM) (SmartPLS-3) is used to analyse the data collected in the quantitative survey. The results show that all hypotheses are statistically significant, and measurements reflect the SUGO. Furthermore, the results prove that SUGO is a second-order construct, containing four key dimensions: corporate sustainability, knowledge integration, stakeholder collaboration and performance incentive. Finally, the implications of outcomes are argued in the context of theory and practice and suggest further research direction.
... The methods and models provided by these two papers are still widely used today, and many studies have confirmed their research conclusions. For instance, Prakash and Potoski (2006) and Bhupendra and Sangle (2015) indicated that innovative capabilities have promoted the successful implementation of pollution prevention, pollution control, and clean technology strategies. Johnstone et al. (2017) and Valentin and Elena (2020) found that the advancement of environmentally sound technology in production is conducive to reducing the discharge of pollutants and improving the efficiency of pollution control, thereby helping to suppress environmental pollution. ...
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Haze pollution is one of the most concerning environmental issues, and controlling haze pollution without affecting economic development is of immense significance. Using the panel data composed of PM2.5 concentration and other data from 278 cities in China between 2003 and 2016, this paper empirically investigates the impact of urban innovation on haze pollution and its transmission mechanism. Based on the fixed effect model, the research finds that increasing urban innovation significantly reduces haze pollution. Even after dealing with possible endogenous problems, the result still holds. Energy consumption and industrial agglomeration are two important transmission channels through which urban innovation affects haze pollution. Furthermore, time heterogeneity analysis shows that the negative effect of urban innovation on haze pollution increases with time. Spatial heterogeneity analysis shows that urban innovation has a more significant mitigation effect on haze pollution in eastern cities than in central and western cities in China. This paper indicates that technological innovation, as the main driving force for development, can provide vital support to China to improve the ecological environment.
... What about the regulatory functions, which seek to correct market failures? While governments have deregulated and privatized some sectors, environmental regulations have not been scaled back, notwithstanding the claims made in the "race-to-the-bottom" literature (Prakash and Potoski 2006a). The governance problem is the state did not keep pace with an increasing demand for new federal regulations, especially in climate change. ...
... Since the late twentieth century, globalization and market liberalization have generated and drawn attention to new connections, risks, and ethical tradeoffs for consumers and firms. Trade and capital-account liberalization, the growth of multinational corporations, and the extension of supply chains across borders have caused consumers and investors to worry they may be complicit in moral transgressions abroad, including inhumane labor practices, environmental despoliation, and corruption (Locke, Amengual, and Mangla 2009;Prakash and Potoski 2006). Consumers also fear contamination at multiple nodes in supply chains (Gereffi, Humphrey, and Sturgeon 2005): unsafe ingredients during production, mislabeling during packaging, and spoilage during warehousing. ...
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In Islam, the extension of religious regulation and certification to new product types and economic sectors—“halalization”—has become widespread. There are now Islamic mortgages, halal ports, halal refrigerators, halal blockchain, and shariah-compliant cryptocurrencies. Yet classical secularization theory says religious authority cannot regulate modern economic activity. So what explains halalization? I point to an elective affinity between fiqh (Islamic jurisprudence) and twenty-first-century markets. Contemporary fiqh offers widely respected religious jurists who issue fatwas certifying products. Entrepreneurs empanel the jurists on certification boards, allowing fiqh to function as a regime of voluntary regulation layered atop secular state law instead of conflicting with it. Indeed, secular liberal markets provide ideal conditions for halalization and religious meaning-making through consumption. Case studies of Islamic finance and halal logistics show how entrepreneurs assuage consumers’ religious anxieties—and generate new ones—in the context of globalization and liberalization in secular markets.
... The combination between innovation and environmental compliance can strengthen export capacity. International trade also motivates firms to comply with global environmental standards, particularly in trading with countries where these standards are more stringent (Prakash and Potoski, 2006). For example, a decline in export volume is viewed as the signal of increasing in the probability of hazard of Danish manufacturing enterprises. ...
Thesis
This thesis aims to examine the impacts of environmental performance on economic performance of firms which apply to Vietnamese SMEs. In addition, this thesis also develops a theoretical model of tax on firm’s emissions, bribery, and political connection. Chapter 2 examines the synergy effects of environmental compliance, innovation, and export activities on firm TFP. This study finds that the synergy of environmental compliance and product innovation is complementary in explaining firm’s TFP. In addition, the impact of the synergy of export activities and environmental compliance may be influenced by innovation. Chapter 3 presents the impact of these synergies on firm’s survivability. This work reveals that the synergy between environmental compliance and export activities is complementary in enhancing firm survival. The latter may be also affected by separated environmental compliance. Chapter 4 investigates the impact of environmental compliance on firm’s productivity convergence. Its findings indicate that environmental compliance may not directly affect this convergence. This impact may become to be significant if this compliance is accompanied by innovation. Finally, in Chapter 5, we develop a theoretical model of the relationship between emission tax, emissions and willingness to commit bribery and to maintain political connection of firms. The result points out that firm’s political connection canaffect emission tax efficiency. Furthermore, the impacts of tax on bribery and political connection are non-monotonous, depending upon the nature of audit and penalty mechanism, sensitivity of firm’s profit and political connection costs.
Article
ISO 14001 certificates have achieved wider diffusion in all regions of the world implementing the Environmental Management System (EMS). However, research on characterizing and forecasting the diffusive process is concentrated in Europe and some countries in the other regions. Thus, Africa, Asia and Oceania are regions that do not have characterization and forecasts for their countries and industrial sectors. This information is important in the decision-making of the stakeholders regarding the expectations of adopting or not the EMS in the countries and sectors that make up the region. As a result, the work characterized the main countries and industrial sectors in these three regions, simulating a diffusive scenario for a period of two years. For this, ISO 14001 certifications data from 1999-2017 were obtained from the ISO Survey. Based on these data, the annual relative growth rate (RGR) was calculated, because it permits more equitable comparisons between organisms, once represents this adoption over time in an S-curve pattern is ideal for ISO certification diffusion behavior. In addition, ARIMA models were used to forecast the number of certifications as an alternative to locations where data on the number of companies is not available. Therefore, it was observed an increase in the number of certifications above 90% for all regions. However, this growth is concentrated in a few countries within each region, with highlights for South Africa, China, India and Australia. These countries had high RGR at the beginning of the period with a reduction to close to zero, and negative in some countries, over time. Thus, future scenarios pointed to a growth trend for China and India, while South Africa and Australia would remain stable. These forecasts indicate that the Chinese Construction and Information Technology sector in India is expected to increase EMS adoption by companies. Finally, Africa, Asia and Australia are regions with growth potential for ISO 14001 due to the concentration of certifications in some countries, which allows expansion to others, in addition to maintaining growth in the countries with the highest values.
Article
A wave of recent scholarship has breathed new life into the study of reputation and credibility in international politics. In this review article, the authors welcome this development while offering a framework for evaluating collective progress, a series of related critiques, and a set of suggestions for future research. The article details how the books under review represent an important step toward consensus on the importance of reputation in world politics, elucidating scope conditions for when reputational inferences are likely to be most salient. The authors argue that despite the significant accomplishments of recent studies, the scholarly record remains thin on the psychology of the perceiver and is instead focused on situational factors at the expense of dispositional variables and is rather myopically oriented toward reputation for resolve to the exclusion of other important types. Despite its contributions, the new literature still falls short of a full explanation for how actors draw inferences about reputation. These remaining theoretical challenges demand scholarly attention and suggest a role for psychology in filling some of the gaps.
Article
In 2013, India became the first country in the world to make corporate social responsibility (CSR) mandatory for highly profitable corporations. This research takes an interpretative phenomenology approach to examine the experiences of CSR managers who navigate societal and political pressures surrounding implementation of the regulation. Thus, the article offers both insights from practice to the theoretical academic debate of the benefits of voluntary versus mandatory mode of CSR, and practical recommendations.
Chapter
This chapter scrutinises the loose grouping of studies on Environmental Economic Geography and reveals their great potential. Although current literature is fragmented and poly-vocal, the ongoing theoretical development of economic geography on regional development, globalisation, innovation, institution, and transition can be well linked with environmental studies. This chapter further reviews the continuous efforts from some economic geographers to develop a coherent EEG. On this basis, this chapter posits four pillars for the conceptual foundation of EEG, namely context-dependence, border-crossing, multi-scale, and co-evolution. These four pillars help to ground EEG on the theoretical foundation of economic geography, representing the locational, relational, institutional, and evolutionary perspectives. These four pillars also propose a research agenda for EEG, which consists of four geographical questions regarding the spatiality, horizontal interdependency, vertical interdependency, and evolution of the environment-economy interactions.
Chapter
This chapter identifies some game-theoretic insights concerning several key issues of business ethics typically occurring in emerging economies. The chapter explicates four elements in this sequence: nature of game theory, characteristics of emerging economies, fundamentals of business ethics, and key business ethics issues. The chapter emphasizes useful insights of game theory rather than undertaking formal modeling (examples are noted in references). Game theory assists reasoning about strategic scenarios for businesses. A multinational entity operates within layers of institutions and norms from the international to the national and sub-national levels. Such institutions and norms help structure the complex environment within which a multinational entity operates. The approach in this chapter is to inquire into certain specific decision scenarios available in the extant literature as instances of important classes of decision problems and to suggest game-theoretic responses. These scenarios concern long-term sustainable business models, corporate values, and corporate reputation.
Article
The trade liberalization of environmental goods (EGs) would represent an opportunity for achieving the “triple-wins” outcome regarding trade, the environment, and development. This study focuses on the environmental outcome by investigating the relationship between imports of EGs and pollution intensity. Considering that most of the prevailing defined EGs can have both environmental and non-environmental end uses (i.e., the multiple-end-uses problem), we first classified EGs into type A EGs that are mainly intended to address a certain environmental issue but can be put into some non-environmental end uses, and type B EGs that only have environmental end uses. Then by using a novel panel dataset covering 269 prefecture-level cities in China from 2003 to 2013, we proved that total imported EGs and imported type A EGs do not inevitably benefit the environment. In contrast, an effect of imported type B EGs on reducing pollution intensity (especially PM2.5 intensity) exists. There are two possible influencing channels: factor substitution and technology upgrading. Cities subject to more environmental incentives are more sensitive to the factor substitution channel, while cities with more advanced absorptive ability have a more potent response via the technology upgrading channel. Finally, we determined that total imported EGs can improve the proportion of eco-industry and high-tech industries. This effect may yield environmental benefits in the future.
Article
International trade's impact on the pollution reduction, especially varied reduction effects dealing with global or local pollutants has not been thoroughly researched empirically. We explored effects of international trade participation on both the carbon dioxide emission intensity and sulfur dioxide emission intensity with a panel data of 179 major countries during 20 years when globalization thrived. Carbon dioxide causing climate change is a global concern. While sulfur dioxide is one major air pollutant causing local health problems. Empirically, international trade participation mainly reduces carbon dioxide emission intensity but not sulfur dioxide emission intensity. Also, trade in goods form is more effective than in service form. However, international trade participation does little to improving a country's overall technology level, implying that regulation enhancement under international norm is the main mechanism. Compared with developed countries, developing countries can reduce both kinds of pollutant emission intensities more effectively by participating into international trade. A case study of China's entering into World Trade Organization (WTO)'s impact on pollutant reduction can provide more evidence. Also, developing countries with higher industrialization level experiences a bigger improvement in cleaner production. And developing countries with higher democratization level pay more attention to reduce local environmental concerns.
Article
Being one of the primary soft-voluntary environmental policy instruments, ISO 14001 has been studied from a number of diverse perspectives and disciplines. Nevertheless, it is only few assessments that have attempted to shed light on variations in the diffusion ISO 14001 certification among countries in terms of national factors and macroeconomic conditions that may stimulate relevant implementation patterns. We employ a 1999–2017 annual time-series that yields a panel dataset of 33 countries, out of which 27 are OECD countries, complemented by the BRIICS. Applying the appropriate static and dynamic econometric specifications, the EKC hypothesis is not rejected in all the cases in static and dynamic specifications. Our turning points are in all cases within the sample ranging from $20,812 to $52,023.
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Haze pollution is one of the most concerned environmental issue, it is of great significance to control haze pollution without affecting economic development. Using the panel data composed of PM2.5 concentration and other data from 278 cities in China between 2003 to 2016, this paper empirically investigates the impact of urban innovation on haze pollution and its transmission mechanism. Based on the fixed effect model, the research finds that the increase of urban innovation significantly reduced haze pollution. The result still holds after dealing with possible endogenous problems. Energy consumption and industrial agglomeration are two important transmission channels through which urban innovation affects haze pollution. Furthermore, time heterogeneity analysis shows that the negative effect of urban innovation on haze pollution increases with time. Spatial heterogeneity analysis shows that urban innovation has a greater mitigation effect on haze pollution in eastern cities than in central and western cities in China. This paper indicates that technological innovation as the main driving force for development, can provide strong support for China to achieve the aims of improving the ecological environment.
Article
Innovation and diffusion of renewable energy technologies is critical to meeting the demands of climate and environmental policies. An emerging body of literature shows that innovators respond to aggregate global demands for climate change mitigation technologies. Indeed, innovation and trade in renewable energy technologies has accelerated as countries throughout the globe have introduced more stringent environmental regulations to confront the climate crisis. Yet most of this research, while it does consider trade and competitiveness, fails to explicitly incorporate the foreign demand inducement effect—that is, foreign climate and environmental policies can induce innovation from innovators in other countries. In this study, we argue that trade acts as an important channel whereby foreign environmental regulatory stringency signals are conveyed to induce domestic renewable energy innovation. Based on a sample of 32 countries over 16 years, we find strong empirical evidence that foreign environmental regulations, weighted by bilateral trade, have significant innovation inducement effects across borders. Hence, our findings fill a critical gap in the literature by empirically exploring the interplay of green industrial policy, global political economy, trade, innovation, and development.
Article
Corporate social responsibility (CSR) has steadily grown in importance. We show government regulation on corporate reporting of CSR, aimed to spur its growth and increase transparency, has grown in tandem. Such reporting regulation is more readily observable than CSR itself and can be used as a proxy for the latter. We show that larger economies with higher institutional capacity find it easier to develop reporting regulations, and that international influences and local pollution increase concerns are important contributing factors. We show that such regulation also increases CSR, even after accounting for common unobserved factors that may affect both.
Chapter
Climate change governance is in a state of enormous flux. New and more dynamic forms of governing are appearing around the international climate regime centred on the United Nations Framework Convention on Climate Change (UNFCCC). They appear to be emerging spontaneously from the bottom up, producing a more dispersed pattern of governing, which Nobel Laureate Elinor Ostrom famously described as 'polycentric'. This book brings together contributions from some of the world's foremost experts to provide the first systematic test of the ability of polycentric thinking to explain and enhance societal attempts to govern climate change. It is ideal for researchers in public policy, international relations, environmental science, environmental management, politics, law and public administration. It will also be useful on advanced courses in climate policy and governance, and for practitioners seeking incisive summaries of developments in particular sub-areas and sectors. This title is also available as Open Access on Cambridge Core.
Thesis
The embarkation of private armed guards on commercial ships in Somalia has provided a unique opportunity to test the bounds of international law. The phenomenon was new. Until that point shipowners had been reticent to carry weapons or engage the services of those carrying weapons. The legal and practical risks of such carriage or engagement outweighed the potential benefits they offered to defend vessels. Somalia, however, was genuinely peculiar. While shipowners had contended with piracy before, for example in the Straits of Malacca, Somalia represented a potent combination of a failed State with a large, difficult-to-patrol and strategically vulnerable coastline. Shipowners began to engage the services of private maritime security companies (PMSCs) and their privately contracted armed security personnel (PCASP) to safeguard the passage of vessels through the Gulf of Aden, adjacent to Somalia, which is also the second busiest shipping lane in the world. By 2011 it was estimated that up to 50% of vessels sailing through the Gulf of Aden were using the services of armed guards. This new phenomenon gave rise to particular concerns under public international law regarding the law of the sea (and the safety of life at sea in particular) and international human rights protection. These concerns reverberated into private domestic legal concerns as shipowners, marine underwriters and indemnifiers became alarmed at the potential vulnerability of their commercial arrangements on the grounds of illeg- ality and public policy, in addition to their potential liability stemming from the use of force. While international law did have some norms relevant to the embarkation of armed guards, targeted regulation was lacking. Applicable rules had to be distilled from a variety of legal worlds: international and domestic, public and private. Member States of the International Maritime Organization (IMO) were slow to respond to this phenomenon. Many States were reticent to cooperate on regulatory initiatives out of fear that such initiatives would be seen to condone the use of guards. Despite this, shipowners and PMSCs did not stop embarking armed guards due to the lack of regulation. Rather, some PMSCs took advantage of the lack of regulation to cut corners and contract on terms that were arguably a prima facie violation of the law of the sea (in particular the role of the shipmaster). The use of armed guards off the Somali coast has tested the ability of the law of the sea framework enshrined in the United Nations Convention on the Law of the Sea (UNCLOS) to respond to the use of force at sea. A lack of targeted governmental regulation motivated the shipping and insurance industries to develop regulatory initiatives including: the ISO 28007-1:2015 Guidelines for PMSCs Providing PCASP on Board Ships (ISO 28007:2015), the GUARDCON Contract for the Employment of Security Guards on Vessels and the 100 Series Rules as to the Use of Force (100 Series RUF). These instruments incorporate international norms concerning the law of the sea and human rights law into commercial shipping and insurance arrangements. This dissertation examines both the public international law framework and the role of private ordering in this context. The following research questions are addressed: 1. Who is responsible for the acts of PCASP at sea and why? 2. How does private ordering contribute to the governance of PCASP at sea? This dissertation argues that, despite public international law having the substantive norms necessary to address the embarkation of armed guards at sea, it is undermined by the prominent and problematic doctrine of flag State jurisdiction over vessels. The result has been gaps in the enforcement of international law giving rise to a practical impunity being enjoyed by armed guards in terms of their conduct. The industry initiatives have a unique role to play alongside public international law in helping to close these enforcement gaps. Despite this, the potential of these industry initiatives is weakened by the difficultly of measuring their effectiveness given the lack of transparency over how they are enforced in practice. Their potential is further undermined by a lack of dispute resolution options to effectively redress harm caused by armed guards. While industry contributions to regulation have great promise, they would be strengthened through stronger reporting requirements and the adoption of current proposals to allow arbitration of human rights violations committed at sea.
Article
The purpose of this study is for the author to summarize approaches and methods for assessing availability, identifying forms and types of relations between characteristics of environmental quality and international trade, and also to test the gravity theory of trade as such a method (on the example of the Republic of Belarus).The author has investigated modern economic works devoted to the study of the influence of trade liberalization on environmental pollution, the pollution haven hypothesis, the environmental Kuznets curve, the Porter hypothesis, etc., as well as the studies aimed at confirming or refuting these hypotheses, has systematized modern approaches to assessing the relations between trade and environmental indicators.Based on the panel data for the period from 1995 to 2019, the author has constructed the gravity models of trade (separately for export and import) of the Republic of Belarus with the EAEU partner countries and neighboring countries (Lithuania, Latvia, Poland, Ukraine), taking into account the environmental impact (the carbon dioxide emissions as the proxy variable of pollution). The simulation results have confirmed the theoretical provisions of the gravity theory. In addition, a significant effect of an increase in carbon dioxide emissions of countries – trade partners of the Republic of Belarus on its imports has been revealed.
Thesis
This dissertation presents three studies that reimagine the definition and role of international law to address transnational health threats and social inequalities. The first chapter assesses opportunities for traditional international laws to promote global health, specifically examining when and why global health treaties may be helpful. Evidence from 90 quantitative impact evaluations of past treaties was synthesized and an analytic framework was developed. The second chapter builds on this work by evaluating a broad range of opportunities for working towards global collective action on antimicrobial resistance, including those that involve building institutions, crafting incentives and mobilizing interests. This chapter argues that their real-world impact will depend on strong accountability relationships. The third chapter takes this dissertation beyond traditional Westphalian notions of collective action by exploring whether new disruptive technologies can theoretically provide the same global regulatory effects on health matters as state-negotiated international laws. As a first move, this chapter presents a relatively simple machine-learning model that automatically quantifies the relevance, scientific quality and sensationalism of news media records, and validates the model on a corpus of 163,433 news records mentioning the recent SARS and H1N1 pandemics.
Book
Die wirtschaftliche Entwicklung und der Wohlstand der Gesellschaft sind eng mit dem Handel und Außenhandel verknüpft. Dies trifft auf ein kleines Land wie Österreich in besonderem Maße zu. Wie wichtig der Außenhandel für die österreichische Wirtschaft, für die Schaffung von Arbeitsplätzen und für die Teilhabe weiter Teile der Gesellschaft an Wohlstand und Lebensqualität ist, wird in diesem Bericht vorgestellt. Die daran geknüpften Herausforderungen werden ebenfalls benannt und leiten über zu den Themen, die in der Mainstream-Ökonomie wenig beachtet werden, viele Menschen aber stark bewegen. Dazu zählen Fragen wie, ob Handel nicht per Saldo mehr Arbeitsplätze vernichtet oder zur Senkung von Standards der Qualität der Arbeitsplätze, der Lebensmittel oder der Umwelt beiträgt. Der Güterhandel ist über weite Strecken mit negativen Umwelteffekten verbunden. Wie hoch sie sind, ist zwar nicht allgemein bekannt, wird in der ökonomischen Literatur aber breit diskutiert. In der vorliegenden Arbeit werden die Befunde der Literatur zu diesen Themen zusammengetragen, gesichtet und im Hinblick auf eine Außenhandelsstrategie hin bewertet.
Article
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Firms are increasingly responding to social and environmental issues in highly complex and heterogeneous organizational fields that transcend national boundaries. Yet, we still have a limited understanding of how these fields are structured and the implications of structural variation on how issues are addressed over time. We advance theory in this area by arguing that issue fields are characterized by varying settlement constellations that structure these fields. We develop a typology of three settlement constellations—unified, fragmented, and bifurcated—and describe their impact on field structure and the challenges they raise for addressing field-defining issues. We then theorize the evolution of fields with different settlement constellations and explain how and why constellations sustain over time as well as when they may change. Our paper helps advance theory on organizational fields, private regulation, and firm responses to social and environmental issues. More broadly, our paper highlights the unique position of organizational and institutional scholars to examine complex social and environmental issues or “grand challenges”.
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Cambridge Core - International Trade Law - Global Business Regulation - by John Braithwaite
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Contents BOLI JOHN THOMAS GEORGE M. Part One: 1. BOLI JOHN THOMAS GEORGE M. 2. BOLI JOHN LOYA THOMAS A. LOFTIN TERESA Part Two: 3. FRANK DAVID JOHN HIRONAKA ANN MEYER JOHN W. SCHOFER EVAN TUMA NANCY BRANDON 4. BERKOVITCH NITZA 5. KIM YOUNG S. 6. FINNEMORE MARTHA Part Three: 7. LOYA THOMAS A. BOLI JOHN 8. BARRETT DEBORAH FRANK DAVID JOHN 9. CHABBOTT COLETTE 10. SCHOFER EVAN BOLI JOHN
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Voluntary programs have become widespread tools for governments and nongovernmental actors looking to improve industry's environmental and regulatory performance. Voluntary programs can be conceptualized as club goods that provide nonrival but potentially excludable benefits to members. For firms, the value of joining a green club over taking the same actions unilaterally is to appropriate the club's positive brand reputation. Our analysis of about 3,700 U.S. facilities indicates that joining ISO 14001, an important nongovernmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 is effective because its broad positive standing with external audiences provides a reputational benefit that helps induce facilities to take costly progressive environmental action they would not take unilaterally.
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Confronting Consumption places consumption at the center of debate by conceptualizing "the consumption problem" and documenting diverse efforts to confront it. In part 1, the book frames consumption as a problem of political and ecological economy,. emphasizing core concepts of individualization and commoditization. Part 2 develops the idea of distancing and examines transnational chains of consumption in the context of economic globalization. Part 3 describes citizen action through local currencies, home power, voluntary simplicity, "ad-busting", and product certification. Together, the chapters propose "cautious consuming" and "better producing" as an activist policy response to environmental problems. The book concludes that confronting consumption must become a driving force of contemporary environmental scholarship and activism. ***Winner of the International Studies Association's Harold and Margaret Sprout Award for best book on international environmental affairs
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1. Introduction PART I: ECONOMIC AND CORPORATE STRATEGY 2. The Analytic Framework of Capture 3. Corporate Strategy and Environmental Regulation: Corporate Strategy Perspectives 4. Corporate Strategy and Environmental Regulation: Baptist/Bootlegger Coalitions R S5RT II: COMPLEX INSTITUTIONAL RESPONSIVENESS: NAFTA'S POLITICAL EXPERIENCE 5. Trade and Environment Institutions: The NAFTA Regime 6. Environmental Institutions in Action: The CEC 7. Firm Responses to Trade and Environment Regulation PART III: CASE STUDIES OF COMPLEX INSTITUTIONAL RESPONSIVENESS 8. MMT and Investment Dispute Settlement 9. The Agriculture Disputes 10. Trade and Environment Regimes in Operation: The North American Auto Industry PART IV: CONCLUSIONS 11. Implications for Firm Strategy and Public Policy Bibliography
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We use panel data on ISO 9000 quality certification in 85 countries between 1993 and 1998 to better understand the cross-national diffusion of an organizational practice. Following neoinstitutional theory, we focus on the coercive, normative, and mimetic effects that result from the exposure of firms in a given country to a powerful source of critical resources, a common pool of relevant technical knowledge, and the experiences of firms located in other countries. We use social network theory to develop a systematic conceptual understanding of how firms located in different countries influence each other's rates of adoption as a result of cohesive and equivalent network relationships. Regression results provide support for our predictions that states and foreign multinationals are the key actors responsible for coercive isomorphism, cohesive trade relationships between countries generate coercive and normative effects, and role-equivalent trade relationships result in learning-based and competitive imitation.
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At the July 1996 Ministerial Meeting on Sustainable Development, the environment ministers of the Asia Pacific Economic Corporation's (APEC's) 18 members agreed to promote ISO 14000, which involves voluntary action by industry to establish environmental management systems (EMSs) and to commit to ongoing improvements in environmental performance. This article analyzes the potential role of the ISO 14001 EMS and related standards in the context of the economies of APEC. It summarizes the genesis and content of the standards and then focuses on aspects that are particularly salient within the APEC context: performance, information generation, and market access. It concludes that ISO 14001 alone will not necessarily lead to improvement in environmental outcomes in the region. The final section explores some options for incorporating ISO 14001 as one element of a larger framework for environmental protection, international cooperation, and sustainable development in APEC.
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Systems of private regulation based on certification have recently emerged to address environmental issues in the forest products industry and labor issues in the apparel industry. To explain why the same regulatory form has emerged across these fields, the author uses a historical and comparative case study approach, closely examining early moments and paying attention to “roads not taken.” Two types of factors led to the initial emergence of private certification: (1) social movement campaigns targeting companies and (2) a neo-liberal institutional context. The analysis shows specific ways in which these factors led states, nongovernmental organizations, and companies to build or support certification associations.
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List of tables and figures Preface 1. Introduction 2. Politics, policy and performance 3. Market integration and domestic politics 4. Economic policy 5. Economic performance 6. The 1990s and beyond Notes References Index.
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Social Scientists rarely take full advantage of the information available in their statistical results. As a consequence, they miss opportunities to present quantities that are of greatest substantive interest for their research and express the appropriate degree of certainty about these quantities. In this article, we offer an approach, built on the technique of statistical simulation, to extract the currently overlooked information from any statistical method and to interpret and present it in a reader-friendly manner. Using this technique requires some expertise, which we try to provide herein, but its application should make the results of quantitative articles more informative and transparent. To illustrate our recommendations, we replicate the results of several published works, showing in each case how the authors' own conclusions can be expressed more sharply and informatively, and, without changing any data or statistical assumptions, how our approach reveals important new information about the research questions at hand. We also offer very easy-to-use Clarify software that implements our suggestions.
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Political scientists are often called upon to estimate models in which the standard assumption that the data are conditionally independent can be called into question. I review the method of generalized estimating equations (GEE) for dealing with such correlated data. The GEE approach offers a number of advantages to researchers interested in modeling correlated data, including applicability to data in which the outcome variable takes on a wide range of forms. In addition, GEE models allow for substantial flexibility in specifying the correlation structure within cases and offer the potential for valuable substantive insights into the nature of that correlation. Moreover, GEE models are estimable with many currently available software packages, and the interpretation of model estimates is identical to that for commonly used models for uncorrelated data (e.g., logit and probit). I discuss practical issues relating to the use of GEE models and illustrate their usefulness for analyzing correlated data through three applications in political science.
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Environmental management systems (EMSs) are intended to formalize procedures for managing and reducing environmental impacts. Construction firms typically do not have comprehensive and certified environmental management systems. This paper discusses the elements of environmental management systems, the relationship to the ISO 14001 standard, and the importance for construction firms to implement an EMS. A case study of a certified environmental management system for a construction firm is presented. Benefits and costs of such systems are identified. The paper concludes that construction firms should begin to work towards implementing more complete environmental management systems, although fully certified systems are not essential.
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Increasing attention to environmental management has raised many new dilemmas for firms. How can managers deal with environmental issues in a competitive situation that is international and heterogeneous? What are the strategic and financial implications of environmental management? How can they cope with regulation, considering the choices which range from compliance to voluntary initiatives? And how do other firms organise their environmental management and communicate with stakeholders? This book examines these different topics, without dogma or prescription. It demonstrates the complexity of an area in which there are often no right or easy answers. The Economics of Environmental Management: 7 shows the links between the main functional areas of a business and environmental management; 7 examines regulation and self-regulation in different countries and worldwide; 7 pays specific attention to multinational enterprises; 7 gives an international state of the art on environmental management systems and standards (especially ISO 14001 and EMAS); on environmental reporting and verification; and on environmental management accounting; 7 contains international case examples and a wealth of annotated references to paper and electronic sources.
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Environmental Management Systems (EMSS) represent a new generation of voluntary “beyond compliance” environmental policies that neither set substantive goals nor specify final outcomes. As a result, many stakeholder groups are lukewarm toward them. Since 1993 two major supranational EMSs—ISO 14001 and the European Union's Environmental Management and Audit Scheme (EMAS)—have been introduced. Firms receive formal accreditation after their EMS has been certified by outside verifiers. This accreditation can potentially bestow monetary and nonmonetary benefits on these firms. Firm-level EMS adoption patterns in the United Kingdom, Germany, and the United States vary, thereby suggesting that national contexts influence firms' responses to them. In Germany and the U.K. a significant number of sites have become either ISO 14001 or EMAS certified, while the take-up of ISO 14001 in the U.S. (EMAS is available only to European sites) has been less enthusiastic. This article begins with the hypothesis that firms in countries with adversarial economies— where regulators and business are on less than friendly terms—are less likely to adopt EMS-based programs. This hypothesis explains why ISO 14001 take-up has been relatively high in the U.K. and relatively low in the U.S. However, it cannot explain (1) the high rate of take-up of both ISO 14001 and EMAS in Germany, where the stringency of environmental legislation has been a contentious issue between the government and industry and (2) why EMAS has been more popular in Germany than in the U.K. This article argues that the original hypothesis, while largely correct, is underspecified. To better explain the cross-national differences in EMS adoption, one must take into account the type of adversarial economy (adversarial legalism versus prescriptive interventionism) and the nature of the policy regime (procedural versus substantive).
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We examine some issues in the estimation of time-series cross-section models, calling into question the conclusions of many published studies, particularly in the field of comparative political economy. We show that the generalized least squares approach of Parks produces standard errors that lead to extreme overconfidence, often underestimating variability by 50% or more. We also provide an alternative estimator of the standard errors that is correct when the error structures show complications found in this type of model. Monte Carlo analysis shows that these "panel-corrected standard errors" perform well. The utility of our approach is demonstrated via a reanalysis of one "social democratic corporatist" model.
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We examine the relationship between the temporal and spatial aspects of democratic diffusion in the world system since 1946. We find strong and consistent evidence of temporal clustering of democratic and autocratic trends, as well as strong spatial association (or autocorrelation) of democratization. The analysis uses an exploratory data approach in a longitudinal framework to understand global and regional trends in changes in authority structures. Our work reveals discrete changes in regimes that run counter to the dominant aggregate trends of democratic waves or sequences, demonstrating how the ebb and flow of democracy varies among the world's regions. We conclude that further analysis of the process of regime change from autocracy to democracy, as well as reversals, should start from a “domain-specific” position that dis-aggregates the globe into its regional mosaics.