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Analysis Reducing Toxic Chemical Pollution in Response to Multiple Information Signals: The 33/50 Voluntary Program and Toxicity Disclosures
Abstract
We study firms' responses to two US Environmental Protection Agency (EPA) information-based interventions. First, the EPA disclosed toxicity information on the chemicals listed in the Toxics Release Inventory (TRI). Second, it grouped 17 of the TRI chemicals in the 33/50 voluntary program and challenged firms participating in this program to aggressively reduce their aggregate emissions. Firms therefore faced "twin" signals: focus on the most toxic chemicals, and focus on 33/50 targeted chemicals. We use a novel set of instruments to estimate the causal effects of these twin signals on chemical releases of U.S. manufacturing firms during the life of the 33/50 program (1991-1995), and after the program ended (1996-2013). We examine both "raw" emissions (in pounds) and "weighted" emissions (weighted by toxicity scores) of both 33/50-targeted and non-targeted chemicals. We find that 33/50 program participants reduced weighted emissions of 33/50-targeted chemicals only, with no effects on "raw" emissions or non-targeted chemicals. We also find that these reductions persisted after the program ended in 1995. These results suggest that firms are not unconditional greenwashers or environmental stewards. Rather, firms strategically invest resources to pursue environmental stewardship while taking into account multiple signals from their key sta-keholders such as the EPA.
... Again, previous empirical work has found that cumulative participation in 33/50 better captures program impacts (Bi and Khanna, 2012;Innes and Sam, 2008). This is also consistent with recent work by Hoang et al. (2018) suggesting that the 33/50 Program led to innovations that improved environmental performance not only during the program but afterwards as well. Although both of these features could have been included in the theoretical model, we did not include them in the analysis above since we believe that doing so would complicate the theoretical analysis and notation without changing the basic insights from the model. ...
... year of program participation, since program participants did not leave the program once they had joined. 17 Furthermore, voluntary programs typically provide participants with technical assistance over time and can spur innovation that has an impact over time (e.g., Hoang et al. 2018). Thus, it is likely that the impact of the program on releases depends on a facility's participation status as well as the number of years a facility was in the program. ...
... In this section, we illustrate the importance of accounting for spillovers in the empirical estimation of program impacts, using the 33/50 Program as an example. We focus on the U.S. EPA's 33/50 Program, the first voluntary program initiated by the EPA, because it is one of the most wellstudied voluntary programs (e.g., Bi and Khanna, 2012;Gamper-Rabindran, 2006;Hoang et al., 2018;Innes and Sam, 2008;Khanna and Damon, 1999;Khanna, 2007, 2012). This allows us to compare our results with the previous literature, which did not account for spillovers. ...
Voluntary environmental programs have the potential to impact not only participants but also non-participants, through, for example, the dissemination of information about abatement technologies, thereby creating spillover effects. Standard program evaluation techniques do not accurately estimate program impacts in such cases. This paper presents a theoretical and empirical analysis of spillovers in a VEP. The theoretical model identifies the key distinction between the impact of participation and the impact of the program, as well as the nature of the bias that results from failure to incorporate spillover effects. It also motivates the inclusion of spillovers in both the participation and outcome equations of the empirical model. Using data from EPA’s 33/50 Program, we show that failure to account for spillovers can lead to significant under-estimation of program impacts.
... These quarters signify; PBT (bio accumulative, toxic and persistent) Waste, Corrosive and Hazardous. The corresponding quarter is green shaded, if the chemicals used aren't classified as PBT via the EPA-TRI [39], the reagents used aren't harmful hence are not recorded on the TRI list [40], if the medium pH is among 2 and 12 and if the waste produced is fewer than 50 g. We formed the NEMI pictograms for the developed and the four reported techniques (Table 5). ...
... From the first glance at the pictograms, the proposed method was green as well as the third reported method, meeting three NEMI criteria, with three green shaded quadrants and greener than the other reported methods. The chemicals and solvents used aren't stated as PBT, but methanol, which is used in the developed technique, is on the TRI hazardous list [40]. The method is non-destructive, and the waste produced is fewer than 50 g. ...
This work is dedicated to the greenness estimation of three proposed spectrophotometric techniques [e.g., ratio difference (RD), mean centering of ratio spectra (MCR) and continuous wavelet transform of ratio spectra (CWT)] for the determination of a binary combination named Ofloxacin (OFL) and Ornidazole (ORN). Applying the green analytical chemistry methods to assess the proposed methods has widely attained the analytical community care. The greenness assessment was performed via three evaluation approaches; the “Analytical Eco-Scale”, the “National Environmental Method Index” (NEMI) and “Green Analytical Procedure Index” (GAPI). Following the examination of the zero spectrum of OFL and ORN, it is observed that OFL and ORN spectra are overlapped, so they can be detected by the methods mentioned previously. The ratio difference method was carried out at wavelengths of 294.6 nm and 265.6 nm for OFL, 292 nm and 315 nm for ORN. The linear range was (2–15 µg/mL) for OFL and (3–30 µg/mL) for ORN. The MCR method based on the use of mean centered ratio spectra in dual steps and calculating the second ratio spectra mean centered values at 294.6 nm for OFL and 315 nm for ORN. The continuous wavelet transformation which carried out using MATLAB at wavelengths of 265 nm for OFL and 306 for ORN. These techniques were intended for the binary mixture analysis in bulk powder and pharmaceutical formulations with high recoveries. The developed methods were validated according to ICH guidelines. All techniques were statistically compared to either an official method for OFL or a reported method for ORN and the results indicate that there were not any significant differences.
... Many countries are no longer implementing traditional command and control strategies based on fixed standards, but rather social strategies that leverage market and social mechanisms, information delivery (Delmas 2002;Nysten-Haarala 2015;Lee 2011). Since the 1980s, the implementation of ecological label, environmental certification and voluntary agreement has marked the emergence of VEPs, which have subsequently been widely used worldwide (Hoang and Mcguire 2018;Boiral and Henri 2012;Johnstone 2020). ...
... Implementing VEPs will improve corporate environmental management ability and better respond to MERs. Governments enact MERs that require firms not to exceed fixed pollution standards, and government regulations significantly affect energy and emissions performance (Hoang et al. 2018;Ma et al. 2018). VEPs can encourage companies to voluntarily reduce environmental negative influence beyond what MERs require (Carmin et al. 2010;Darnall and Carmin 2005), which weaken the negative impact of MER on corporate environmental behavior. ...
There is a long-lasting debate on whether environmental regulation fosters or hinders corporate green innovation. To address this debate, this study differentiates two types of regulations: mandatory environmental regulations (MERs) and voluntary environmental programs (VEPs), and explores whether MERs and VEPs, separately and jointly, affects corporate green innovation. This study also investigates the moderating effect of organizational slack on the focal relationship. With the data of top 100 listed companies in China, the results show that MERs significantly negatively affect green innovation, while VEPs significantly positively influence green innovation, and VEPs mitigate the negative impact of MERs on green innovation. Moreover, organizational slack strengthens the positive relationship between VEPs and green innovation, while no significant moderating effect on the MER–green innovation relationship. These findings provide guidance for corporate green innovation under mandatory regulations and voluntary programs.
... In general, these additional services are not what would be typically expected of MNEs utilising the host nation as a pollution haven. However, it is recognised that companies are not "unconditional greenwashers or environmental stewards" but instead follow "multiple signals from their key stakeholders" [69], highlighting the importance of the regulatory frameworks and community feedback. ...
Of the significant foreign investment by Japanese multinationals within South-East Asia, the Philippines is a key recipient and location for the establishment of subsidiaries. While foreign investment is thought to bring significant benefits to host nations, the Philippines is considered ecologically vulnerable with extensive pollution and environmental challenges. Within national contexts of this nature, debates ensue about manufacturing multinational enterprises using emerging markets or developing nations as pollution havens when their environmental regulations are less stringent than those of the home nation. This study adopts a case study approach to explore the behaviour of Japanese multinationals operating in the Philippines with respect to environmental regulations. The study’s findings indicate that the firms demonstrated environmental management practices at a level beyond requirements set by local laws and regulations, with supplementary benefits to the surrounding local communities. These results indicate that the Philippines’ environmental regulations could be strengthened or tightened up with little negative impact on the investment of Japanese manufacturing multinational enterprises. With scant research conducted at the organisational level, our research findings contribute to a multinational management perspective on pollution haven/halo research, providing an additional dimension alongside the macroeconomic and large-scale environmental effects.
... Research conducted in Zhou et al. (2020), which accounts for potential information spill-over effects between participants and non-participants, shows that the policy was effective in reducing emissions as non-participants learned from participants. On the other hand, estimates from Hoang et al. (2018) indicate that the policy did not succeed in lowering general emissions, although firms shifted away from chemicals most toxic to human health. ...
The limited microeconometric evidence on the efficacy of environmental Negotiated Agreements (NAs) is an obstacle to both their introduction and effective design. We help fill this gap by providing evidence on the impact of the second Climate Change Agreements (CCAs) on business electricity consumption and employment. The CCAs are NAs offering a reduction on the Climate Change Levy (CCL), an energy consumption tax, in exchange for commitments to improve energy efficiency. We use the novel changes-in-changes method to account for heterogeneity in treatment effects. Our results indicate that the second CCAs yielded improved outcomes compared to the counterfactual of full CCL with an average reduction of − 4.81% in electricity consumption. They also reveal the importance of allowing for heterogeneity, as the impact on electricity consumption at the identified deciles varied between − 9.33 and 12.54%. This is a marked difference from the first CCAs which were found to increase consumption. The heterogeneity in treatment response is corroborated when extending the study to two large industrial sectors in the sample and when studying firms selecting differing target reporting methods. Confirming the findings from earlier studies of the first scheme, our results indicate a non-statistically significant reduction in employment, about − 4.6% on average, for the second CCAs.
... At the same time, the research model of collecting empirical evidence to prove research hypothesis is beginning to emerge in the field of greenwashing [15,68], indicating that the research is beginning to transit from a nascent stage to a development stage in this field. In 2017-2019, the research on the consequences of greenwashing is incorporated into a unified analytical framework, e.g., "corporate environmental performance" [69], "pollution" [70], "firm value" [71], "innovation" [54], "green economy" [72] and "tax avoidance" [73], which further enriched and improved the form and content of research in this field. In addition, its research methods in the field of greenwashing have gradually expanded from empirical methods to multiple research methods such as "partial least square" [58], "evolutionary game" [54] and "case study" [32], which from the side indicates that the research has started to mature gradually in the field of greenwashing. ...
As environmental protection changes from a purely social benefit to a social benefit mixed with an economic gain, the marketing strategy practice of corporate greenwashing is starting to become a popular research topic. However, the total number of existing review articles on greenwashing research is relatively small, and there are deficiencies in quantitative research and generalizability, scientificity and systematization. This paper attempts to bridge these gaps by combining systems theory with bibliometrics and using visualization techniques to analyze the evolution of knowledge structures and hotspots in greenwashing. Based on this, this paper takes the literature on greenwashing in the Web of Science core set database from 2004–2022 as a research sample and uses CiteSpace 5.8.R3 to conduct a descriptive statistical analysis and carve a visual map to reveal the evolution pattern of research in the field of greenwashing in a comprehensive and systematic way. The findings show that greenwashing research is prevalent in developed countries and continues to attract more scholars globally, focusing on the interpretation of greenwashing definitions and concepts, influencing factors, consequences and governance models. Finally, this paper introduces the system governance theory and improves organizational isomorphism theory to further generalize the existing research framework on greenwashing and provides an outlook on the future direction of greenwashing research from three perspectives: greening screening research, impact research and governance research.
... Similarly, D'Amico et al. [37] found that the introduction of ad hoc legislation as purely voluntary only affects the contents of quantitative environmental disclosures, which are unsuitable for a highly industrialized developed country. Hoang et al. [38] study firms' responses to two US Environmental Protection Agency (EPA) information-based interventions, and point out that firms are not unconditional greenwashers or environmental stewards. Rather, firms strategically invest resources to better pursue environmental stewardship while taking into account multiple signals from their key stakeholders, which includes the EPA. ...
The literature shows that a firm’s environmental information disclosure is affected by internal and external factors. However, it is unclear whether internal control positively impacts a firm’s green information disclosure. We collected data from the period 2010–2016 from either environmental reports or the environmental section of social responsibility reports of A-share listed companies in the heaviest polluting industries of the Chinese capital market, 1603 companies in total, and established an evaluation index for measuring firm greenness. Our research indicates that the level of internal control was positively correlated to the firm’s greenness level, and deficiencies in internal control were negatively correlated to the firm’s greenness level, indicating that high-quality internal control improves company green information disclosure. Pertaining to property rights, the internal control of state-owned enterprises had a significant effect on improving the level of environmental information disclosure. Among five elements of internal control, the internal environment, information and communication elements had a significant positive impact on firm greenness. Compared with samples with uncorrected major deficiencies in internal control, rectified companies’ environmental information disclosure was greener. These findings provide empirical evidence for a comprehensive understanding of the non-financial reporting goals of firm internal control, and will become a useful reference for firm green governance decision-making.
... In response to the Bhopal disaster, the US Congress enacted the Emergency Planning and Community Right to Know Act that compelled facilities to share information about industrial hazards with local communities. Further, Section 313 of this Act created the Toxics Release Inventory (TRI) system which required facilities above a certain size to report their annual release of specified toxic chemicals (Hamilton, 1995;Hoang, McGuire, and Prakash, 2018). The Bhopal disaster also led to massive litigation and an arrest warrant for Union Carbide's President Warren Anderson. ...
Environmental clubs have proliferated across sectors and issue areas. We examine the diffusion of the chemical industry’s Responsible Care® (RC) program. Much of the work on the diffusion of clubs has focused on the demand side: why firms join these clubs despite the costs of doing so. There is some work focusing on the supply side: why actors establish or create a new club. However, there is virtually no work examining why national-level industry associations decide to subscribe to an existing global environmental club in order to make it available to their members.
Industry organizations in 17 lower and middle-income countries have joined RC, comprising 25 percent of RC members. We ask, in the context of developing countries, what motivates national associations to join RC? Drawing on an original dataset of RC global diffusion in 195 countries (1985–2017), we estimate a Cox proportional hazards model of the risk of joining RC. We find that RC adoption is more likely when a country exports chemicals to other countries that have joined RC (the California effect) and is unaffected by the total volume of its chemical trade. Thus, while exposure to global markets per se may not influence RC adoption, incentives change considerably when countries’ key importers signal their support for these environmental practices. This is because importing firms often realize that because they have joined Responsible Care, NGOs and stakeholders expect them to demand that their overseas suppliers adopt the same sort of environmental policies and work place safety practices. In addition, peer pressure and learning matter: RC adoption is more likely when countries in close physical vicinity (e.g., within 500 miles) have joined the club. Finally, domestic factors play a role as well: both the level of democracy and the size of the economy encourage national associations to join RC.
... For instance, Clarkson et al. (2011) investigated the impact of mandatory disclosure on pollution emissions reduction. Kube et al. (2019), Vidovic and Khanna (2007), Khanna and Damon (1999) and Hoang et al (2018) examined the effects of a "voluntary" information disclosure program on environmental performance. In contrast, there is little empirical evidence on the effectiveness of "management-based regulation". ...
... voluntary program, 7 the EPA challenged participating firms to aggressively reduce their aggregate emissions of 17 highly toxic chemicals. Evaluations of the program has shown that substantial reductions of the targeted chemicals were achieved because it targeted firms with the greatest reduction potential (Hoang, McGuire, and Prakash 2018). Growing pressure from consumers has also incentivized major brands, health care providers, and retailers to evaluate alternatives to chemicals of concern and to develop lists of restricted substances to guide suppliers in avoiding these chemicals (see. ...
The European Union (EU) regulation on the registration, evaluation, authorization, and restriction of chemicals, known as the REACH Directive, is intended to improve the protection of human health and the environment through the better and earlier identification of the intrinsic properties of the thousands of chemicals commonly used in the EU. This article presents an overview of the technical and economic challenges of toxic substance control and discusses how REACH has addressed the challenges of chemical regulation. The article identifies a number of barriers encountered in implementing REACH, including the fact that critical data concerning the toxicological properties of chemicals is missing from about 90 percent of the 184 REACH registration dossiers examined. The article also discusses how the information generated by REACH could be used to develop complementary policies, such as risk-based taxation, to better reflect the external effects of harmful chemicals and to provide further incentives for the development of products and processes that minimize the generation and use of hazardous substances. The article concludes by highlighting key insights and guidance for industry, policymakers, and academic researchers that can be derived from this examination of the economics of toxic substance control and REACH
An energy audit is a popular policy instrument for improving energy efficiency in facilities. However, it is unclear whether they serve to improve energy efficiency, because even under energy audits, several barriers to energy efficiency exist. Additional practices such as information provision, target setting, or reward by governments can make energy audits more effective. This study investigates the complementarity of energy audits and these practices by focusing on the Emission Reduction Program, an energy audit unique to Japan. Using municipality-level data, we show that target setting, inspection of planning, information provision, reward, and designating the department responsible for tackling climate change, complementarily reduce CO2 emissions via facilities under the Emission Reduction Program. Our results suggest that energy audit is more effective in reducing CO2 emissions when combined with additional policy instruments.
We explore how activists' public and private politics elicit different organizational responses. Using data on U.S. petroleum companies from 1982 to 2010, we investigate how climate change activists serving as witnesses at congressional hearings and engaging in firm protests influenced firms' internal and external responses. We find that public politics induced internally focused practice adoption, whereas private politics induced externally focused framing activities. We also find that private and public politics had an interaction effect: as firms faced more private political pressure, they were less likely to respond to public political pressures; similarly, as firms faced greater public political pressure, they were less likely to respond to private political pressures. The results suggest that activists can have a significant impact on firm behavior depending on the mix of private and public political tactics they engage in. We discuss the implications of our study for social movement research, organization theory, and nonmarket strategy.
This article explores when and why firms participate in overt corporate-sponsored social activism. To shed light on this question, I empirically explore the emergence and implications of a new strategic phenomenon in non-market strategy – the corporate-sponsored boycott – in which firms voluntarily cooperate with contentious social movement organizations to sponsor boycotts that protest the contested social practices of other companies or entities at higher orders of market organization, such as industries, transnational regulators, or states. Using a longitudinal database that tracks the social movement challenges faced by 300 large companies between 1993 and 2007, I provide evidence that overt corporate-sponsored activism is used by companies that are chronically targeted and losing ground to activists, especially when those companies are facing a reputational deficit. Further, I find that participation in overt corporate-sponsored activism is associated with significant decreases in the number of activist challenges targeting a firm in the future, suggesting that the tactic may effectively defend a firm from contentious threat by allowing firms to co-opt allies within the activist population. I discuss implications of these findings for social movement research, non-market strategy, and the study of corporate social responsibility.
Policy design and public management should be tightly connected, so implemented public policies achieve intended outcomes. Yet policy designers often pursue their activities with limited awareness of how citizens and service managers experience current public programs. A focus on creating public value offers a way to tighten the connection between policy design and public management. Recent discussions of public value have emphasized three aspects of public management: delivering services, achieving social outcomes, and maintaining trust and legitimacy. Within those discussions, the efforts of policy designers have been underplayed. We explore the implications of the public value approach for policy design. Pursuit of public value calls for policy designers to listen closely to stakeholders, engage them in creative conversations, and draw on their situated expertise to guide policy development. We consider how explicit treatment of public value creation as a policy goal can improve the fit between original policy intentions and the delivery of public services. Our augmented model of public value creation offers both a new direction for empirical studies of the nexus between public policy and public management and a new perspective on what it means to be an effective policy designer.
Although many recent studies have emphasized the multiplicity of institutional logics and the competition among them, how some institutional logics become prioritized over others in shaping organizational decisions is undertheorized. Drawing on panel data of 118 industrial facilities across 34 communities in Texas and Louisiana, we show that the saliency of different kinds of community logics significantly affects environmental practices-specifically, toxic waste emissions-of facilities in a community. Our results show that community logics not only have direct effects but also have indirect effects by filtering organizational reactions to broader field-level institutional logics. We theorize how community logics can amplify or dampen the influence of broader field-level logics and discuss the implications for the study of institutional complexity, social movements, and values in the configuration of institutional logics.
This paper focuses on investigating the role that sustainability entrepreneurship may have in engendering a shift in the practices and operations of contemporary capitalism. Sustainability entrepreneurs are increasingly seen as being in the vanguard of a shift to a new form of capitalist development that can help to address fears over global warming, climate change and their associated negative environmental impacts. Such developments can be set within a wider popular and academic discourse of ecological modernisation, at the heart of which is a relatively optimistic view of the potential for technological change to lead to solutions for environmental problems. This paper focuses on a subset of sustainable entrepreneurs termed ecopreneurs who seek to combine business practice with sustainable development and so transform their business sectors. The paper suggests that work on sustainable entrepreneurship could be substantially improved by an engagement with the literature on transition management in science and technology studies and makes some suggestions as to how such a research agenda could be advanced.
This article reviews the key role that case study methods have played in the study of international relations (IR) in the United States. Case studies in the IR subfield are not the unconnected, atheoretical, and idiographic studies that their critics decry. IR case studies follow an increasingly standardized and rigorous set of prescriptions and have, together with statistical and formal work, contributed to cumulatively improving understandings of world politics. The article discusses and reviews examples of case selection criteria (including least likely, least and most similar, and deviant cases); conceptual innovation; typo-logical theories, explanatory typologies, qualitative comparative analysis, and fuzzy-set analysis; process tracing; and the integration of multiple methods.
Since the collapse of communism the states of postcommunist Europe and Asia have defined for themselves, and have had defined for them, two primary tasks: the construction of viable market economies and the establishment of working institutions of representative democracy. The variation in political and economic outcomes in the postcommunist space makes it, without question, the most diverse "region" in the world. What explains the variation? All of the big winners of postcommunism share the trait of being geographically close to the former border of the noncommunist world. Even controlling for cultural differences, historical legacies, and paths of extrication, the spatial effect remains consistent and strong across the universe of postcommunist cases. This suggests the spatially dependent nature of the diffusion of norms, resources, and institutions that are necessary to the construction of political democracies and market economies in the postcommunist era. The authors develop and adduce evidence for the spatial dependence hypothesis, test it against rival hypotheses, and illustrate the relationships at work through three theoretically important case studies.
Despite burgeoning research on companies' environmental strategies and environmental management practices, it remains unclear why some firms adopt environmental management practices beyond regulatory compliance. This paper leverages institutional theory by proposing that stakeholders – including governments, regulators, customers, competitors, community and environmental interest groups, and industry associations – impose coercive and normative pressures on firms. However, the way in which managers perceive and act upon these pressures at the plant level depends upon plant-and parent-company-specific factors, including their track record of environmental performance, the competitive position of the parent company and the organizational structure of the plant. Beyond providing a framework of how institutional pressures influence plants' environmental management practices, various measures are proposed to quantify institutional pressures, key plant-level and parent-company-level characteristics and plant-level environmental management practices.
While there is little empirical evidence regarding which types of environmental management systems (EMSs) are associated with greater environmental improvements, governments worldwide are encouraging facilities to adopt them. This research compares the environmental performance of facilities that adopt ISO 14001-certified EMSs, complete (uncertified) EMSs, and incomplete EMSs, across multiple environmental media. We analyze these relationships for manufacturing facilities in seven countries using a two-stage model to control for selection bias. Our findings indicate that the adoption of all types of EMSs is related to improved environmental performance in an international setting. However, ISO 14001-certified EMSs are associated with environmental improvements to a broader array of environmental media. These findings offer important implications about which types of EMSs have greater promise as voluntary environmental governance tools.
This paper re-evaluates the effectiveness of EPA’s voluntary 33/50 program in reducing the releases of 17 high priority toxic chemicals for the 1988-1995 period. Contrary to previous studies that use program participation information at the firm level and find mixed evidence on the effectiveness of the program, our analysis uses participation status at the facility level and shows the importance of undertaking analysis at a disaggregated scale. We find the rate of reduction in releases was significantly higher for program participants than non-participants but the effect is attenuated when estimated using firm level participation data.
Stakeholders who seek to reward or punish businesses for their environmental programs often cannot observe these organizations’ internal policies and operations. To address these informational problems, and signal their beyond-compliance environmental commitments, some businesses are participating in voluntary environmental programs (VEPs). This article examines whether business managers associate the brand value of VEPs – due to their differing program sponsors – with the perceived preferences of their critical stakeholders. Drawing on a novel data set of nearly 300 organizations, we assess business’ participation in 19 government- and industry-sponsored VEPs. We find that managers who recognize the importance of stakeholder influences on their business’ environmental practices are more likely to participate in a VEP but that pressures from different stakeholders are associated with variations in organizations’ participation in either government- or industry-sponsored VEPs.
Voluntary environmental programs (VEPs) have been used as a policy tool in the United States since the early 1990s and come in many forms. Early assessments of VEPs targeting changes in production processes showed that industrial participants improved their environmental performance and VEPs were celebrated as a viable alternative to more traditional regulation. Recent analyses using more sophisticated techniques, however, paint a less favorable picture. On the one hand, firms appear willing to sign up to VEPs, and in some cases, participants may be able to create a shield against future losses in shareholder value. On the other hand, these VEPs targeting production processes appear not to generate significant pollution abatement. The latter finding is particularly disturbing and this article discusses various explanations, including institutional failure and participant motivations. Future research needs to focus on understanding the firm motivation to invest in production-related pollution abatement under a VEP. For policymakers, the research offers a warning on the limited impact to date of VEPs targeting production processes. However, the multitude of other VEPs, such as those which target new product development and changing market demands, merit a closer look to determine the overall potential of VEPs to engender positive environmental change.
What makes organizations so similar? We contend that the engine of rationalization
and bureaucratization has moved from the competitive marketplace to the state and
the professions. Once a set of organizations emerges as a field, a paradox arises:
rational actors make their organizations increasingly similar as they try to
change them. We describe three isomorphic processes--coercive, mimetic, and
normative-leading to this outcome. We then specib hypotheses about the impact of
resource centralization and dependency, goal ambiguity and technical uncertainty,
and professionalization and structuration on isomorphic change. Finally, we suggest
implications for theories of organizations and social change.
We analyze whether third‐party certification has been successful in improving the performance of voluntary pollution abatement in the Responsible Care (RC) program which made certification mandatory from 2005 onward. We use facility‐level panel data from 821 plants between 1996 and 2010, and exploit the change in the program requirements to estimate the causal impact of third‐party certification on participating facility emissions compared to non‐RC plants in the U.S. chemical industry. We address endogenous selection into RC via instrumental variables, and explore heterogeneity in the treatment effect. We find that, on average, there is no statistically discernible effect of third‐party certification on facility emissions, and that this result is robust to a variety of models that correspond to different assumptions related to identification. (JEL Q53, Q58, L60)
This is the first study to evaluate the impact of self-regulation on industrial accidents. We examine Responsible Care in the US chemical manufacturing sector using our author- constructed database of 1,867 firms that own 2,963 plants between 1988 and 2001. Firms’ self- selection into RC is instrumented using pollution-related regulatory pressure on firms that influences their probability of joining RC, but not plant-level accidents. The average treatment effect on the treated indicates that RC reduces the likelihood of accidents by 2.99 accidents per 100 plants in a given year. This 69.3% reduction in the likelihood of accidents, accounting for the plants that participate in RC, translates to back-of-the-envelope avoided losses of 3.8 billion per year. RC also reduces the likelihood of more narrowly-defined accidents, i.e., process safety accidents and accidents related to violations of RC codes, by 5.75 accidents per 100 plants in a given year or by 85.9%.
Institution theory and the resource-based theory of the firm represent two explanations of how organizations adapt to institutional change. These two theories are compared, contrasted, and applied to the context of environmental management. Arguments based on the theories are used to generate hypotheses about the diffusion and efficacy of the ISO 14001 system, a set of voluntary environmental standards. Empirical tests of the factors lying behind adoption of the ISO 14001 standards and whether or not the standards lead to toxic emissions reductions are conducted on a set of 316 electronics facilities located in the United States. Results support the idea that the standards allow facilities to "catch-up" to best practices if they are an especially high producer of toxic emissions. The paper ties the analysis back to current strategic management theories about organizations and institutional change, and then concludes by assessing the value of ISO 14001 versus traditional government regulation from the point of view of professionals and policy-makers.
The motivations to implement environmental management system (EMS) practices in Indian industries are explored empirically. The study presents a survey of 104 industries from different sectors to identify the main motivational factors and firms' characteristics that determine the adoption of EMS practices by firms. The empirical evidence suggested that the comprehensiveness of the adopted EMS practices is positively influenced by relational motivations as firms consider their image, compliance and prevention of environmental incidents as significant drivers to implement EMS practices. Firms are also expected to adopt EMS practices to stay competitive if other firms are implementing similar EMS practices. However, the results show that Indian firms do not consider innovation and cost saving as a significant motivation to employ EMS practices. The findings also confirm that larger firms are more likely to adopt comprehensive EMS practices compared to small and medium enterprises (SMEs). The results show that compared to the service sector, firms in manufacturing, chemical and agricultural sectors are more likely to adopt comprehensive EMS practices.
This inductive study of five firms in Alberta's oil sands examines how organizations attend to the intertemporal tensions between the short term and long term that are inherent in business sustainability. Grounding our insights in organizational responses to the climate change issue, we find that firms that juxtapose the short term and long term also confront the tension between business and society. These firms are, therefore, more likely to recognize the complexity of climate change and the need for integrated, multidimensional solutions. These insights contribute to prior research in business sustainability.
Coming Clean is the first book to investigate the process of information disclosure as a policy strategy for environmental protection. © 2011 Massachusetts Institute of Technology. All rights reserved.
Although there are many potential points of intersection between institutional theory and contemporary studies of entrepreneurship, these have generally remained distinct literatures, with the connections left more implicit than explicit. We argue that there are a number of benefits to explicitly articulating the links between these bodies of scholarship. In this context, we review work that relates to two key questions we believe are especially likely to benefit from the integration of these literatures-namely, how do institutions affect entrepreneurial choices? And how is entrepreneurship related to changes in institutions? We conclude by considering a number of topics for future research suggested by this integration.
Voluntary programs have emerged as important instruments of public policy. We explore whether programs lacking monitoring and enforcement mechanisms can curb participants’ shirking with program obligations. Incentive-based approaches to policy see monitoring and enforcement as essential to curb shirking, while norm-based approaches view social mechanisms such as norms and learning as sufficient to serve this purpose. The United Nations Global Compact (UNGC), a prominent international voluntary program, encourages firms to adopt socially responsible policies. Its program design, however, relies primarily on norms and learning to mitigate shirking. Using a panel of roughly 3,000 U.S. firms from 2000 to 2010, and multiple approaches to address endogeneity and selection issues, we examine the effects of Compact membership on members’ human rights and environmental performance. We find that members fare worse than nonmembers on costly and fundamental performance dimensions, while showing improvements only in more superficial dimensions. Exploiting the lack of monitoring and enforcement, UNGC members are able to shirk: enjoying goodwill benefits of program membership without making costly changes to their human rights and environmental practices.
For nearly a decade, the United States Environmental Protection Agency (“EPA”) considered its National Environmental Performance Track to be its “flagship” voluntary program—even a model for transforming the conventional system of environmental regulation. Since Performance Track’s founding during the Clinton Administration, EPA officials repeatedly claimed that the program’s rewards attracted hundreds of the nation’s “top” environmental performers and induced these businesses to make significant environmental gains beyond legal requirements. Although EPA eventually disbanded Performance Track early in the Obama Administration, the program has been subsequently emulated by a variety of state and federal regulatory authorities. To discern lessons useful for similar voluntary programs, we report here the findings from a multi-pronged, multi-year research effort assessing business participation in Performance Track. We find no evidence to support the sweeping assertions EPA made about the program’s achievements. Facilities participating in Performance Track simply could not be shown to be top performers. Rather, what most distinguished these participants was a factor distinct from environmental quality, namely their propensity to engage in outreach with government and community groups. Furthermore, drawing on an extensive analysis of business participation in Performance Track and other EPA voluntary programs, we show how Performance Track faced inherent limitations in its ability to induce any dramatic environmental gains, making its model more of a poor substitute for the conventional regulatory system than a plausible means for the system’s transformation.
When the Administrator of the United States Environmental Protection Agency (US EPA) first introduced the 33/50 Program in 1991, the concept of voluntary programs was relatively new to industry. By the time the program ended in 1996, over 1300 companies were hailing the program as a success and were calling for additional voluntary programs to replace regulatory actions wherever possible. The Program experienced successes in establishing government–industry partnerships, reducing pollution, and fostering the development of creative pollution reduction techniques within industry. This paper presents an overview of the 33/50 Program, some examples of the technologies implemented under the Program, the reasons why the 33/50 Program was successful, and how to apply some of the lessons learned under the Program to the development of future voluntary programs aimed at reducing pollution. The lessons learned from the 33/50 Program are universal, and are valuable to consider in the decision between choosing `the carrot' or `the stick' for policymakers around the world, including those in both developed and developing nations.
In this article, we respond to calls by previous researchers to clarify the function of decentralized institutions by analyzing the strategic motives of individual actors. We investigated an important type of decentralized institution, certified management standards, and theorized that firms use these institutions to reduce problems that might arise with exchange partners that lack information or fear opportunism. We tested this theory using the pattern of certification with the ISO 14001 management standard.
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.
Although there are many potential points of intersection between institutional theory and contemporary studies of entrepreneurship, these have generally remained distinct literatures, with the connections left more implicit than explicit. We argue that there are a number of benefits to explicitly articulating the links between these bodies of scholarship.In this context, we review work that relates to two key questions we believe are especially likely to benefit from the integration of these literatures— namely, how do institutions affect entrepreneurial choices? And how is entrepreneurship related to changes in institutions? We conclude by considering a number of topics for future research suggested by this integration.
The governance of natural resources used by many individuals in common is an issue of increasing concern to policy analysts. Both state control and privatization of resources have been advocated, but neither the state nor the market have been uniformly successful in solving common pool resource problems. After critiquing the foundations of policy analysis as applied to natural resources, Elinor Ostrom here provides a unique body of empirical data to explore conditions under which common pool resource problems have been satisfactorily or unsatisfactorily solved. Dr Ostrom uses institutional analysis to explore different ways - both successful and unsuccessful - of governing the commons. In contrast to the proposition of the 'tragedy of the commons' argument, common pool problems sometimes are solved by voluntary organizations rather than by a coercive state. Among the cases considered are communal tenure in meadows and forests, irrigation communities and other water rights, and fisheries.
Voluntary environmental programs (VEPs) seek to improve the environment by encouraging, rather than mandating, businesses and other organizations to adopt environmentally protective measures. Since the 1990s, VEPs established by industry, government, and nongovernmental organizations have proliferated around the globe, raising the question of how effective these programs are in securing environmental protection, both on their own and in comparison to traditional mandatory regulations. This article reviews the emerging research literature on VEPs, describing the variation in their structures, providing a framework for assessing their impacts, and summarizing what is known about why organizations engage in voluntary environmental action and what effects these programs have on environmental quality.
Self-regulation programs, in which industry associations set membership codes beyond government regulations, are prevalent despite scarce evidence on their effectiveness. We
examine Responsible Care (RC) in the US chemical manufacturing sector, whose membership codes include pollution prevention, using our author-constructed panel database of 3,253 plants owned by 1,748 firms between 1988 and 2001. We instrument for a plant’s parent firm’s self-selection into the program, using: (i) the characteristics of other plants belonging to the same firm in our multi-plant sample; and (ii) firm participation in the industry association before the establishment of RC and sub-industry level RC participation in our full sample. We find that on average, plants owned by RC participating firms raise their toxicity-weighted pollution intensity by 12.6% to 17.1% relative to statistically-equivalent plants owned by non-RC participating firms. This estimated increase is large relative to the yearly 5% reduction in pollution intensity among all plants in our sample between 1988 and 2001. Moreover, RC did not reduce plant-level
pollution. These results caution against reliance on self-regulation programs modeled on the pre-2002 RC program that did not require third party certification and in those sectors that lack independent third party certification.
Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
Voluntary environmental programs (VEPs) are institutions for inducing firms to produce environmental goods beyond legal requirements. A comparative perspective on VEPs shows how incentives to sponsor and participate in VEPs vary across countries in ways that reveal their potential and limitations. Our brief survey examines conditions under which VEPs emerge, attract participants, and improve participants' environmental performance. We focus on the costs and bene-fits for actors seeking to supply (or sponsor) these governance mechanisms as well as the costs and benefits for firms who are considering joining VEPs and adhering to their program obligations. © 2011 by the Association for Public Policy Analysis and Management.
We extend understanding of information-revealing bandwagons by considering a common condition under which adoption of a practice by small organizations, rather than large ones, has a disproportionate influence on future adoption propensities. We hypothesize that when the value of adoption increases with organizational size, smaller adopters have such disproportionate influence because they allow observers better to infer that adoption will be profitable for their own organization. We elaborate the theory by predicting that alternative information sources moderate the influence of smaller adopters. Empirically, we test our theory with longitudinal data on the adoption of the ISO 9000 quality management standard. Copyright © 2007 John Wiley & Sons, Ltd.
This paper analyzes the effect of participation in the Department of Energy's Climate Challenge Program on CO2 emission reduction activity of the largest 50 electric utilities east of the Rocky Mountains from 1995 to 1997. Based primarily on regulatory influence theory of voluntary behavior developed by Lyon & Maxwell (1999), a twostage model was developed and tested in which the first stage predicts voluntarism and the second stage uses the predicted values to test how voluntarism contributes to pollution reduction. Findings show a moderate level of support for regulatory influence theory with firms more likely to volunteer if they were located in states characterized by higher levels of environmentalism and if they were subject to higher levels of direct federal and state regulation. Findings also support previous empirical evidence that larger firms are more likely to adopt voluntarism, while larger, high-polluting utilities voluntarily committed to reduce greater quantities of CO2. Nevertheless, adoption of the program seems to have no effect on reduction levels and those firms predicted to volunteer higher reduction levels were found to reduce CO2 emmissions less. It is hypothesized that the ineffectiveness of the Climate Challenge Program, compared with other voluntary programs, such as the 33/50 Program, may be due to the general weakness of the CO2 regulatory regime in the United States. © 2000 by the Association for Public Policy Analysis and Management.
Do shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR)? Strategy scholars have recently developed a theoretical model that links such activities to shareholder value when a firm suffers a negative event; we test key portions of this theory of the ‘insurance-like’ property of CSR activity. We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance-like protection than other types. We delineate several firm and event specific characteristics that we expect to influence the link between CSR activities and an insurance effect. We then test our model using an event study of 178 negative legal/regulatory actions against firms throughout the 11 years from 1993–2003. We find that participation in institutional CSR activities—those aimed at a firm's secondary stakeholders or society at large—provides an ‘insurance-like’ benefit, while participation in technical CSRs—those activities targeting a firm's trading partners—yields no such benefits. We conclude by considering the implications of our findings for future theorizing and research into the economic value of CSR engagement. Copyright © 2008 John Wiley & Sons, Ltd.
Using detailed data on defect rates and quality costs from twelve plants of a Fortune 500 company, we provide the first direct tests of predictions arising from two sets of dynamic quality-based learning models. We find greater support for quality-based learning models that assume learning is a function of both proactive investments in quality improvement and autonomous learning-by-doing, than for models that assume learning is a function of reactive investments in quality improvement alone. We then extend these two sets of models to examine the impact of individual prevention activities and past nonconformance expenditures on defect rates. We find that benefits from different types of prevention expenditures vary, and that past nonconformance expenditures provide learning opportunities that allow the organization to more efficiently cope with future failures, thereby reducing subsequent nonconformance costs. These important implications are absent in current quality-based learning models, providing an opportunity for future theoretical development.
This study explores the hypotheses that implementing effective total quality management (TQM) programs improves the operating performance of firms. The winning of quality awards is used as a proxy for the effective implementation of TQM programs. Changes in various performance measures for a test sample of quality-award winners are compared against a sample of control firms. Our statistical tests provide strong evidence that firms that have won quality awards outperform the control firms on operating income-based measures. Over a 10-year period, from 6 years before to 3 years after the year of winning the first quality award, the mean (median) change in the operating income for the test sample is 107% (48%) higher than that of the control sample. There is reasonably strong evidence that firms that have won quality awards do better on sales growth than the control firms. Over the 10-year period, the mean (median) change in sales for the test sample is 64% (24%) higher than that of the control sample. We also find weak evidence that firms in our test sample are more successful in controlling costs when compared with the firms in the control sample. In addition, the results indicate that firms in our test sample increased their capital expenditures more than the control sample over the time period prior to winning quality awards. Compared with the control sample, the test sample shows higher growth in both employment and total assets.
Can businesses voluntarily adopt progressive environmental policies? Most environmental regulations are based on the assumption that the pursuit of profit leads firms to pollute the environment, and therefore governments must impose mandatory regulations. However, new instruments such as voluntary programs are increasingly important. Drawing on the economic theory of club goods, this book offers a theoretical account of voluntary environmental programs by identifying the institutional features that influence conditions under which programs can be effective. By linking program efficacy to club design, it focuses attention on collective action challenges faced by green clubs. Several analytic techniques are used to investigate the adoption and efficacy of ISO 14001, the most widely recognized voluntary environmental program in the world. These analyses show that, while the value of ISO 14001's brand reputation varies across policy and economic contexts, on average ISO 14001 members pollute less and comply better with governmental regulations.
Several studies have examined how the ISO 9001 quality management systems standard predicts changes in organizational outcomes such as profits. This is the first large-scale study to explore how employee outcomes such as employment, earnings, and health and safety change when employers adopt ISO 9001. We analyzed a matched sample of nearly 1,000 companies in California. ISO 9001 adopters subsequently had far lower organizational death rates than a matched control group of nonadopters. Among surviving employers, ISO adopters had higher growth rates for sales, employment, payroll, and average annual earnings. Injury rates declined slightly for ISO 9001 adopters, although total injury costs did not. These results have implications for organizational theory, managers, and public policy.
Voluntary environmental programs are codes of progressive environmental conduct that firms pledge to adopt. This paper investigates whether ISO 14001, a voluntary program with a weak sword-a weak monitoring and sanctioning mechanism-can mitigate shirking and improve participants' environmental performance. Sponsored by the International Organization for Standardization (ISO), ISO 14001 is the most widely adopted voluntary environmental program in the world. Our analysis of over 3,000 facilities regulated as major sources under the U.S. Clean Air Act suggests that ISO 14001-certified facilities reduce their pollution emissions more than non-certified facilities. This result persists even after controlling for facilities' emission and regulatory compliance histories as well as addressing potential endogeneity issues between facilities' environmental performance and their decisions to join ISO 14001. © 2005 by the Association for Public Policy Analysis and Management
Much social scientific inquiry seeks to specify the conditions and mechanisms underpinning the flow of social practices among actors within some larger system. Sociology, rural sociology, anthropology, geography, economics, and communication studies all have rich traditions of diffusion research. 1 Virtually everything seems to diffuse: rumors, prescription practices, boiled drinking water, totems, hybrid corn, job classification systems, organizational structures, church attendance, national sovereignty. Whether viewed as a hindrance to structural-functional analysis, 2 the deposited trace of social structure, 3 or a fundamental source of social control and change, 4 diffusion seems critical to social analysis.
Voluntary programs in which manufacturing plants pledge to reduce their emissions beyond the legal requirement have been promoted as a low-cost way to achieve health and environmental protection. The EPA's Industrial Toxics program is evaluated using an author-assembled GIS-database of manufacturing plants in the 48 contiguous states, controlling for mandated reductions in ozone depleting chemicals and changes in reporting of emissions. I find that, controlling for participants’ self-selection into the program, relative to non-participants, participants do not reduce their health-indexed emissions of target chemicals in several key industries. Where reductions are detected in selected industries, participants’ increased off-site transfers to recyclers give reasons to question whether this program truly reduced emissions. Moreover, the program did not reduce emissions in less politically active communities.
This paper examines the motivations for participation in the voluntary 33/50 Program and the program's impact on the toxic releases and economic performance of firms in the U.S. chemical industry. It demonstrates that the benefits due to public recognition and the potentially avoided costs of liabilities and compliance under mandatory environmental regulations provide strong incentives for participation. After controlling for sample selection bias and the impact of other firm-specific characteristics, this paper shows that program participation led to a statistically significant decline in toxic releases over the period 1991–93. The program also had a statistically significant negative impact on the current return on investment of firms, but its impact on the expected long run profitability of firms was positive and statistically significant.
A key enabler of environmental projects is the ability of the project champion to gain commitment to the project from other stakeholders in his or her organization. This paper develops a model of commitment-gaining success that is based on intra-organizational influence theory. The model also includes project payback, customer pressure, government regulation, top management support and the project champion's position in the organizational hierarchy. The model was tested using survey data from 241 environmental professionals describing their attempts to gain the buy-in of purchasing managers, operations managers, industrial engineers and others for environmental projects. The results (obtained from hierarchical regression analysis) show that intra-organizational commitment is positively associated with the project champion's influence behavior—in particular, the champion's use of three influence tactics (inspirational appeals, consultation and rational persuasion) and avoidance of a fourth tactic (ingratiation). Commitment is also positively associated with project payback and with top management support for the environment and negatively associated with environmental regulation. The paper contributes to the OM knowledge base on environmental project implementation by bringing new theory to bear on the topic, by focusing on individual-level, rather than organization-level, variables and by taking a confirmatory, large sample approach which complements extant exploratory research. In addition, the paper contributes to the OM field by evaluating various antecedents to cross-functional integration. The results also provide specific guidance to those who champion environmental projects within their companies.