Grantee Research Project Results
2001 Progress Report: Voluntary Environmental Standards: Furthering Moral Suasion While Preventing Moral Hazard
EPA Grant Number: R827918Title: Voluntary Environmental Standards: Furthering Moral Suasion While Preventing Moral Hazard
Investigators: King, Andrew A. , Shaver, James Myles , Radner, Roy R. , Terlaak, Ann , Barnett, Michael , Lenox, Michael , Perkins-Rodriguez, Susan
Institution: Dartmouth College , University of Minnesota , University of Wisconsin - Madison , Duke University , New York University
Current Institution: Dartmouth College , Duke University , New York University , University of Minnesota , University of Wisconsin - Madison
EPA Project Officer: Hahn, Intaek
Project Period: September 1, 1999 through October 1, 2001 (Extended to January 27, 2003)
Project Period Covered by this Report: September 1, 2000 through October 1, 2001
Project Amount: $236,390
RFA: Decision-Making and Valuation for Environmental Policy (1999) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
The objective of this research project is to examine attempts by industry to regulate their own behavior, and to determine: (1) why firms choose to form or join such initiatives; (2) how voluntary regulations have influenced behavior in their industries; and (3) how these decisions and behavioral changes differ among the various types of voluntary regulation and industry structure. As part of this project, the effectiveness of common voluntary regulations are being analyzed, and more general models of voluntary regulations are being developed. Our empirical findings and validated models are being used to propose heuristics for managers and policymakers.
Progress Summary:
We have made progress in developing theories of industry self-regulation and empirically exploring the effect of important examples of industry self-regulation on environmental and financial performance. As highlighted below, our progress includes publications, presentations/outreach, thesis progress, awards, and the addition of a new team member.
Publications
· Nine working papers were completed.
· Three papers were submitted to research journals.
· Four papers were accepted for publication in peer-reviewed journals.
Presentations/Outreach
· Andrew King facilitated a discussion at the World Bank on sustainability
and industry standards.
· Andrew King also organized a seminar at World Resources Institute's
Bell conference on sustainability and industry standards.
· Ann Terlaak's research was selected and presented at two prestigious
conferences, one at the Wharton School, and the other at the Danish Research
Unit on Industrial Development.
Thesis Progress
· Ann Terlaak and Mike Barnett advanced to degree candidacy. Ann expects
to defend her dissertation on September 5, 2002. Mike will defend his dissertation
in the summer of 2003.
Awards
· Andrew King received the prestigious Pioneer Award from the World Resources
Institute.
· Ann Terlaak received the most prestigious award in her field for research
leading to a thesis, the INFORMS Dissertation Proposal Award.
Team Members
· Susan Perkins-Rodriguez (NYU) was added as a new team member and quickly
became a productive member.
During the reporting period, we initiated three new research directions; each of these are championed by a Ph.D. student, and supervised by a project team member.
Ann Terlaak's research received a tremendous amount of attention during the year. Her research uses a signaling model to predict when firms will join and benefit from International Standards Organization (ISO) 9000. She tests this model using her own data and data developed by the team. She has developed theories and evidence for when ISO 9000 improves financial performance, operational efficiency, and environmental performance. For her work, Ann received the INFORMS Dissertation Proposal Prize. She will join the faculty at the University of Wisconsin. Andrew King is her principal advisor.
Mike Barnett's research is perhaps the most far reaching of any team member. One part of his thesis uses data from the Internal Revenue Service (IRS) to investigate when firms form (and contribute to) cooperative industry associations, and he investigates whether and when these associations influence the performance of the industry. Another part of his thesis investigates a basic driver for industry self-regulation and collective action. Using accident data from the Environmental Protection Agency (EPA) and public newspapers, he explores when a chemical accident at one firm causes negative abnormal returns among related firms. Mike is testing whether participation in industry self-regulation initiatives moderates the financial effect of such accidents. By measuring when reputation is a "commons," Mike hopes to better understand when industry self-regulations will form. Andrew King and Michael Lenox are his advisors.
Susan Perkins-Rodriguez is the newest team member. In her research, she investigates firm location and processing decisions. She hypothesizes that different underlying geographic conditions give rise to different agglomerations of firms. These agglomerations act as a kind of self-regulation that affects environmental performance, knowledge spillovers, and financial performance. Andrew King and Michael Lenox are her team contacts and advisors.
The team also continued to synthesize research in the area. Ann Terlaak completed a review of the literature on the link between theories of technology diffusion and the diffusion of industry standards. Mike Barnett conducted a review of the empirical literature on reputation and industry self-regulation. Finally, Andrew King, Mike Lenox, and Mike Barnett continued to work on a general synthesis of several streams of research on collective action and industry self-regulation.
The team began organizing a conference and special issue on industry collective action. The conference is tentatively scheduled to take place at Dartmouth College in Hanover, NH, in July 2003. The team has proposed to The Strategic Management Journal that it publish a special issue of the papers presented at the conference.
Future Activities:
The research team will continue to study six industry self-regulation programs, including: (1) the chemical industry's Responsible Care Program; (2) the petroleum industry's STEP program; (3) the textile industry's E3 program; (4) the pulp and paper industry's Sustainable Forestry Initiative; (5) the International Standards Organization's ISO 14000 environmental management standard; and (6) the International Standards Organization's ISO 9000 quality management standard. These studies will investigate the determinants of membership in these programs and how each affects the performance of member firms and the industry as a whole.
The team also will explore the underlying logic of industry self-regulation by evaluating the degree to which events affect the stock prices of similar firms. Further exploration will be conducted to determine when negative events spill over to other firms in the same industry. In addition, further study will explore how industry self-regulation affects this spillover.
Journal Articles on this Report : 9 Displayed | Download in RIS Format
| Other project views: | All 43 publications | 12 publications in selected types | All 10 journal articles |
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Barnett ML. Waves of collectivizing: a dynamic model of competition and cooperation over the life of an industry. Corporate Reputation Review 2006;8:272-292. |
R827918 (2001) |
Exit |
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Khanna M. Non-mandatory approaches to environmental protection. Journal of Economic Surveys 2002;15(3):291-324. |
R827918 (2001) R827919 (2000) R827919 (2001) R827919 (Final) |
Exit |
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Khanna M, Anton WRQ. Corporate environmental management: regulatory and market-based incentives. Land Economics 2002;78(4):539-558. |
R827918 (2001) R827919 (2000) R827919 (2001) R827919 (Final) |
Exit |
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King AA, Lenox MJ. Lean and green? An empirical examination of the relationship between lean production and environmental performance. Production and Operations Management 2001;10(3):244-256. |
R827918 (2000) R827918 (2001) |
Exit Exit |
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King AA, Shaver JM. Are aliens green? Assessing foreign establishments' environmental conduct in the United States. Strategic Management Journal 2001;22(11):1069-1085. |
R827918 (2001) |
Exit Exit |
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King AA, Lenox MJ. Does it really pay to be green? An empirical study of firm environmental and financial performance. Journal of Industrial Ecology 2001;5(1):105-116. |
R827918 (2001) |
Exit Exit |
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King A, Lenox M. Exploring the locus of profitable pollution reduction. Management Science 2002;48(2):289-299. |
R827918 (2001) |
Exit |
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Lenox MJ, Nash J. Industry self-regulation and adverse selection: a comparison across four trade association programs. Business Strategy and the Environment 2003;12(6):343-356. |
R827918 (2000) R827918 (2001) |
Exit Exit |
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Lenox M, King A. Prospects for developing absorptive capacity through internal information provision. Strategic Management Journal 2004;25(4):331-345. |
R827918 (2001) |
Exit Exit |
Supplemental Keywords:
public policy, decision making, cost benefit, public good, Bayesian, socioeconomic, compensation, conservation, sociological, social science, modeling, analytical, surveys, measurement methods, EPA Regions, petroleum, electronics, printing, voluntary, self-regulation, regulation, environmental standard, moral hazard, industry, responsibility., RFA, Economic, Social, & Behavioral Science Research Program, Economics & Decision Making, decision-making, benefits assessment, business-led environmental management, source reduction, economic benefits, pollution prevention, voluntary programs, voluntary regulations, environmentally conscious manufacturing, compliance costs, cost/benefit analysis, public policy, sustainable development, decision analysis, economic incentives, public-private partnerships, clean technologies, environmental assets, environmental policyRelevant Websites:
http://www.stern.nyu.edu/bes Exit
Progress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.