Motivations and Barriers to Corporate Environmental Management

Abstract

This paper integrates two conceptual frameworks, utility maximization and institutional theory, to analyze voluntary corporate environmental management. The utility maximization or economic approach centers on motivations to decrease cost, increase revenue and improve manager utility. Institutional theory emphasizes how external pressures from market and non‐market constituents shape the firm's environmental efforts. We view the two frameworks as complementary and postulate a model that includes both types of influences. Survey data from six major industries consisting of a diverse set of facilities are used to estimate the effects of economic and institutional factors on a facility's use of environmental practices and pollution‐prevention activities. Our results support the hypothesized model, and show that cost barriers, management attitudes toward environmental stewardship, company ownership and external institutional forces, including competitiveness, investor and regulatory pressures, all affect a facility's environmental practices and pollution prevention activities. Findings suggest that a multifaceted policy strategy is needed to advance corporate environmental management across diverse firms. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment

Moving Beyond Profit: Expanding Research to Better Understand Business Environmental Management

“…Studies typically use models including: (1) relevant characteristics of the organization, industry, market, and community; and (2) measures of stakeholder pressures, commonly including customers, environmental interest groups, investors, competitors (or level of competition), and regulators [7,8,10,11,17,21,25,[32][33][34][35][36][37][38][39][40][41][42][43][44][45]. Findings are fairly consistent, identifying a common set of determinants of environmental management and showing that organizations are responding to institutional pressures (also referred to as external motivations).…”

“…For example, a small company and a multinational corporation may respond to customers differently because the multinational corporation may serve a more diverse customer base [7,8,10,11,17,21,25,33,[35][36][37][38][39][40][41][42][43][44][45][46]. Dependent variables typically comprise one of the following: (1) the adoption of one or more EMPs, such as conducting periodic internal audits and modifying processes; (2) participation in formal VEPs sponsored by government agencies, industry, trade associations, or other groups; or (3) certification to a standard, such as ISO 14001.…”

“…Regulatory influences have not typically been measured using composite indices, but when such measures are used in studies of heterogeneous samples, results are less consistent [17,21,88,89]. For example, Jones, 2010 [21] classified organizations as highly, moderately, or lightly regulated based on a collection of specific regulatory attributes such as the number and type of regulatory permits held by the organization.…”

“…These recent findings comparing different types of environmental management are also showing that regulation has different effects on different strategies (e.g., VEPs compared to EMPs). Studies involving such comparisons appear to be limited [17,18,21,35]. Additional research regarding the most effective initiatives for different industries or market segments would be useful for policy design.…”

“…This approach helps address the common refrain that our understanding of business environmental management remains partial due to the lack of a comprehensive framework within which to evaluate factors for respective influence [17,[27][28][29]. Using institutional theory and profit maximization together has identified important, consistent, determinants of environmental management, but our understanding of how these determinants are moderated by motivations other than the pursuit of profit is limited.…”