Andrew A. King

Industry Self-Regulation Without Sanctions: The Chemical Industry's Responsible Care Program

Industry self-regulation, the voluntary association of firms to control their collective action, has been proposed as a complement to government regulation. Proponents argue that the establishment of such structures may institutionalize environmental improvement, while critics suggest that without explicit sanctions such structures will fall victim to opportunistic behavior. In a study of the Chemical Manufacturer Association’s Responsible Care program we investigate the predictions of these two contradictory perspectives. Our findings highlight the potential for opportunism to overcome the isomorphic pressures of even powerful self-regulatory institutions and suggest that effective industry self-regulation is difficult to maintain without explicit sanctions.

Exploring the Locus of Profitable Pollution Reduction

In this paper, we explore the locus of profitable pollution reduction. We propose that managers underestimate the full value of some means of pollution reduction and so under exploit these means. Based on evidence from previous studies, we argue that waste prevention often provides unexpected innovation offsets, and that onsite waste treatment often provides unexpected cost. We use statistical methods to test the direction and significance of the relationship between the various means of pollution reduction and profitability. We find strong evidence that waste prevention leads to financial gain, but we find no evidence that firms profit from reducing pollution by other means. Indeed, we find evidence that the bene fits of waste prevention alone are responsible for the observed association between lower emissions and profitability.

Does It Really Pay to Be Green? An Empirical Study of Firm Environmental and Financial Performance: An Empirical Study of Firm Environmental and Financial Performance

Summary Previous empirical work suggests that firms with high environmental performance tend to be profitable, but questions persist about the nature of the relationship. Does stronger environmental performance really lead to better financial performance, or is the observed relationship the outcome of some other underlying firm attribute? Does it pay to have cleanrunning facilities or to have facilities in relatively clean industries? To explore these questions, we analyze 652 U.S. manufacturing firms over the time period 1987–1996. Although we find evidence of an association between lower pollution and higher financial valuation, we find that a firms fixed characteristics and strategic position might cause this association. Our findings suggest that “When does it pay to be green?” may be a more important question than “Does it pay to be green?”

Incumbent Entry into New Market Niches: The Role of Experience and Managerial Choice in the Creation of Dynamic Capabilities

Increasingly, technological innovation creates markets for new products and services. To survive, firms must respond to these new markets. How do firms develop the capabilities necessary to succeed in such changing conditions? Some suggest that experience with previous entry builds such capabilities. Others suggest that capabilities arise from experience producing and selling to existing markets. The role of managers is also debated. Some argue that experience with existing markets causes managers to miss entry opportunities. Others argue that managers enter new markets when their firm possesses the experience needed to compete effectively. In this paper, we explore these issues by investigating entry patterns in the disk-drive industry. We investigate the effect of experience in existing markets and experience with previous market entry. We find that experience in previous markets increased the probability that a firm would enter a new market. We show that this experience had greater value if the firm entered the new market. We infer that managers chose to enter these markets to obtain this increase in value.

11 Postcards from the Edge

Environmental issues, while of growing interest, have been outside the main focus of business scholarship. This position on the periphery may have been a good thing. It allowed scholars of business and the environment to consider unusual theories and evaluate overlooked phenomenon. In doing so, they have created a body of research providing new insights into two topics of mainstream interest: (a) the sources of competitive advantage and (b) the origin and function of self-regulatory institutions.

Innovation from differentiation: pollution control departments and innovation in the printed circuit industry

Theory predicts that managers will create specialized boundary-spanning departments to insulate a firm from changing surrounding conditions. Theory also predicts such insulating structures will inhibit adaptation. The author has found that in response to changing water-pollution regulation, top managers indeed created specialized pollution-control departments to insulate the existing process, but some of these departments acted not as insulators but as conduits for information and thereby helped both to improve the efficiency of the production process and to reduce pollution. The special role of these departments allowed unique access to and perspective on information from inside and outside the organization and gave them an incentive to use this information to improve core processes. Thus, this research suggests that pollution-control departments may belong to a class of boundary spanners that represent a special case for organizational design. >

Self-Regulatory Institutions for Solving Environmental Problems: Perspectives and Contributions from the Management Literature

Scholars of management have long considered how institutions can help resolve market imperfections and thereby improve human welfare. Most previous research has emphasized the use of for-profit firms. Such institutions cannot effectively address many environmental problems, however, because environmental problems often transcend firm boundaries. As a result, management scholars have begun to explore the use of more distributed institutional forms. In this article, we review the emerging scholarship on the formation and function of self-regulatory institutions.

Organizational response to environmental regulation: punctuated change or autogenesis?

Theory predicts that when faced with threatening new conditions, managers often attempt to preserve the status quo by creating a buffer between the organization and the outside world. This paper presents evidence that in response to new water pollution regulation, managers indeed created buffers of technology and personnel, but in some organizations this very equipment and personnel initiated a process of incremental change that led to better environmental protection, more efficient production, and in a few cases, entirely new product and production strategies. For public policy, this research suggests that environmental regulators should allow companies time and flexibility to learn and experiment. For organizational theory, this research suggests a link between punctuated-equilibrium models of organizational dynamics (Tushman and Romanelli, 1985) and theories of self-organizing systems (Drazin and Sandelands, 1992). That is, management may respond to external changes by attempting to preserve the status quo, but in so doing influence internal deep structures that then cause organizations to gradually evolve to different behaviours and shapes. Copyright

The Judgment of Garbage: End-of-Pipe Treatment and Waste Reduction

Many scholars have argued that systems for treating waste impede organizations from preventing waste in the first place. They theorize that end-of-pipe EOP treatment diminishes the incentive to avoid creating waste in the production process and obscures the information necessary to devise prevention techniques. This prediction has been widely accepted, influencing both policy and practice, despite both a lack of supporting empirical evidence and the existence of a counterprediction. In this paper, we use data describing U.S. manufacturing establishments from 1991 to 2005 to test the connection between EOP treatment and waste reduction. Our findings show that EOP treatment is associated with an initial jump in reported waste, followed by ongoing reduction. We analyze these results by exploring mechanisms that may drive this relationship. For practitioners, our paper provides critical guidance about strategies for reducing waste. For scholars of environmental management, our paper provides new insight on when facilities accomplish “source reduction” of process waste. For broader management theories of operations and organizational design, our analysis provides new insight on boundary conditions for extrapolation from existing theories. Finally, our paper provides new guidance for the formulation of effective regulatory policy. This paper was accepted by Christian Terwiesch, operations management.

Governance for the Environment: Self-regulatory institutions for solving environmental problems: perspectives and contributions from the management literature

What role can business managers play in finding solutions to environmental problems? For many years, the business management literature proposed that managers could help their fi rms discover win/ win opportunities that protect the environment while simultaneously increasing profi ts (Porter and van der Linde 1995b ; Hart 1995 ). Th is is an attractive suggestion, for it implies that environmental protection can be accomplished with little pain, and that environmental problems are caused not by defects in our institutions but by failures in our insight or perception. Th e literature on when it might “pay to be green” has advanced our understanding of how and when fi rms achieve sustained competitive advantage. What this literature has failed to do, however, is demonstrate that “win/win” opportunities will be suffi cient to bring about meaningful environmental improvements. “I used to think that all we needed was a few managers to ‘get it,’ ” remarked Matt Arnold, founder of the Management Institute for the Environment and Business. “Now I think that the problem goes much deeper.” 1 If managers who “get it” cannot fi nd ways to profi tably protect the environment, then, given the magnitude of today’s environmental problems (UNEP 2002 ; Worldwatch Institute 2006 ), the rules of competition must be changed to make environmental responsibility more profi table. North ( 1991 , p. 97) defi nes these rules, which he terms “institutions,” as the “humanly devised constraints that structure political, economic, and social interaction.” Institutions come in many forms: formal or informal, private or public, centralized or decentralized (North 1981 ; Ingram and