Final Report: Organizational Structures, Citizen Participation, and Corporate Environmental Performance

EPA Grant Number: R828826
Title: Organizational Structures, Citizen Participation, and Corporate Environmental Performance
Investigators: Grant, Don
Institution: University of Arizona
EPA Project Officer: Hahn, Intaek
Project Period: June 1, 2001 through May 31, 2002
Project Amount: $35,123
RFA: Corporate Environmental Performance and the Effectiveness of Government Interventions (2000) RFA Text |  Recipients Lists
Research Category: Environmental Justice

Objective:

The overall objective of this research project was to determine how the ownership status of a regulated facility affects its environmental performance, and the implications this may have for the effectiveness of community-based forms of regulation. The specific objectives of this research project were to: (1) establish whether absentee-owned plants and subsidiaries have higher levels and rates of emission than other plants; (2) establish whether these effects are compounded when facilities are larger or older; and (3) establish whether larger, older, absentee-owned plants and subsidiaries are more or less likely to reduce their emissions in response to states’ right-to-know programs.

To achieve these objectives, a data file was constructed that includes indicators of manufacturing plants' toxic releases, their organizational characteristics (including measures of absentee ownership and subsidiary status), the environmental policies of their respective states (including right-to-know programs), and other relevant factors (e.g., the sociodemographic makeup of surrounding neighborhoods). Data on plants' toxic releases, organizational characteristics, and states' right-to-know programs come, respectively, from the U.S. Environmental Protection Agency’s (EPA) Toxics Release Inventory, the Dun and Bradstreet Company, and the National Conference of State Legislatures.

The unit of analysis is the facility and the data file, consisting of 2,033 cases. The data file was limited to the chemical industry for two reasons. First, the chemical industry is responsible for a disproportionate share of toxins emitted by American businesses. Second, by confining our analysis to a single industry, one can rule out the possibility that the observed effects of ownership type and other factors are artifacts of sectional location. Data also were collected for the year 1990 because for this year there were especially good data available on organizational characteristics, state-level regulatory policies, and the population characteristics of facilities' surrounding communities.

The purpose of the study was not to suggest that using chemicals per se leads to pollution, but that organizational forms like absentee ownership may influence how effectively facilities manage their chemicals (i.e., the proportion of chemicals they release to the environment). Hence, our dependent variable, emission rate, was operationalized as the ratio of annual pounds of chemicals released onsite (weighted by their toxicity) to the annual pounds of chemicals used and stored onsite (also weighted by their toxicity). We used the weighting scheme developed by the U.S. EPA's Office of Pollution Prevention and Toxics that adjusts chemicals emitted to the air, land, water, or underground by their toxicity.

Analyses of the determinants of plants' emission rates were conducted using a random effects model, available in LIMited DEPendent models (LIMDEP), which specifies that plants belonging to the same firm have a shared error term. The particular version of the random effects model used had an unbalanced design (i.e., it accounts for the fact that there is not the same number of plants in each firm). The results of our analysis have been presented in a conference paper, a published article, and two additional articles have been submitted for publication.

Summary/Accomplishments (Outputs/Outcomes):

Findings suggest that the ownership status of a plant conditions its environmental performance. For example, the average amount of toxins released by absentee-owned facilities or those with out-of-state headquarters (1.2 million toxic pounds) is nearly three times more than plants with in-state headquarters (407,000 toxic pounds), and 15 times more than single location enterprises (80,000 toxic pounds). Results also indicate that because of several relevant factors, plants that are subsidiaries have significantly higher emission rates. We found that the effects of ownership status and, in particular, absentee ownership are compounded when plants are larger. Finally, our analyses revealed that in 1990, states’ right-to-know programs significantly were more likely to reduce the emission rates of large and absentee- owned plants.

Prior research has demonstrated that ownership status has economic effects. This research also shows that ownership status has environmental consequences. It improves on past research that looks at sector differences in pollution by specifying which organizational factors influence emission rates within a specific sector. Connecting the U.S. EPA emissions data with other information on business characteristics has pioneered a significant new possibility for secondary research. More generally, the study's findings support the premise of the Corporate Environmental Performance and the Effectiveness of Government Interventions program, which states that organizational forms matter for emission outcomes and also condition the success of new "regulation through information" approaches. At the same time, results suggest that further research is needed to determine whether the same patterns uncovered in 1990 hold 10 years later when the list of chemicals tracked by the U.S. EPA had been greatly expanded.


Journal Articles on this Report : 1 Displayed | Download in RIS Format

Other project views: All 3 publications 2 publications in selected types All 2 journal articles
Type Citation Project Document Sources
Journal Article Grant D, Jones AW, Trautner MN. Do facilities with distant headquarters pollute more? How civic engagement conditions the environmental performance of absentee managed plants. Social Forces 2004;83(1):189-214.
abstract available  
R828826 (Final)
  • Abstract: Social Forces
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  • Supplemental Keywords:

    organizations, environmental performance, toxic releases, absentee ownership, right-to-know., RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Sustainable Industry/Business, Corporate Performance, Economics and Business, Social Science, citizen participation, ownership status, community involvement, toxic release inventory, plant emissions, public reporting, organizational structure, right-to-know programs, environmental behavior, motivators