Opportunities for Self-Regulation
Models of self-regulation
Empirical analysis of self-regulation

Improving Environmental Decisions
Decision-making
Conflict management

Environmental Performance Benchmarking
Auto product analysis
Industrial performance database

BES researchers are supported by the Stern School of Business, and by grants and Fellowships from the NSF, EPA, and AT&T.
 
 

MANAGING THE PROFITABLE AND ENVIRONMENTAL FIRM

Diffusing DfE Practice within Firms

As environmental costs increase, more firms are trying to design products and processes to avoid these costs. To aid in environmentally conscious design, government and industry have developed design-for-environment (DfE) tools and practices. Unfortunately, evidence suggests that few firms are adopting these practices and techniques. This research investigates the adoption of design for environmental practices. It uncovers the current state of adoption and the major barriers to further adoption. It reveals how some firms overcame these barriers. Since the subject of DfE adoption is relatively unexplored, we chose to use multiple methods to investigate the adoption, implementation, and exploitation of DfE. The research was divided into four parts: 1) an exploratory survey, 2) case studies, 3) a period of theory development, and 4) a theory-testing survey. This research extended existing theories of technology diffusion by considering the adoption of design-for-environment practices. Since these practices are hard to observe, adoption is not easily mandated by management. Instead, the adoption and use of DfE practices require change to organizational structures.

 Download a recent paper from BES on the subject
For more information contact Prof. Michael Lenox

Learning From Waste

Several business scholars have argued that it is possible for firms to reduce their costs while also lessening their adverse environmental impact. But why should this be? Why have firms not already acted to reduce these costs, regardless of their concern for the environment? BES associates are investigating why firms might systematically have missed opportunities for cost reduction and why environmental activities might reveal these opportunities. We have found that companies that utilize environmental personnel as unique sources of information about production processes are in a superior position to support innovation.

Download a recent paper from BES on the subject.
For more information contact Andrew King
 

Managing in a Multinational Environment

Depending upon whom you believe, multinational firms are either catalysts for heightened environmental performance or purveyors of environmental destruction. The debate is often emotional. If there is one thing more disturbing than the belief that businesses cause irreversible harm to the environment, it is that foreigners, who suffer minimal consequences, control the businesses that inflict the greatest harm. Much of this debate has focused on the potential for firms to seek safe haven from environmental regulation by locating in nations with lax environmental standards. As stringent environmental regulation becomes more international, the focus of the debate may switch to the environmental performance of foreign-owned firms in highly regulated states, and little research has yet to investigate this issue. This project is filling this need by investigating the conduct of foreign-owned firms in the United States.

Download a paper on the performance of foreign firms in the U.S.

Arguments can be made on both sides of the question of whether a stringent, global corporate environmental standard represents a competitive asset or liability for multinational enterprises (MNEs) investing in emerging and developing markets.  This paper seeks to answer this question by analyzing the global environmental standards of a large sample of US-based MNEs in relation to their market performance.

 Download a paper on how international firms use standards to improve their environmental and financial performance.

For more information contact Professor Myles Shaver, Andrew King, or Bernard Yeung
 

Evidence of Profitable Pollution Prevention?

Ten years ago researchers began to discover that environmental actions could lead to profit. Now researchers are trying to uncover why and how often this happens. BES researchers are mapping the extent and contingencies of Greening benefits through focused studies of industry sectors (see Learning from Waste), and large scale cross-industry studies. In one study, BES researchers are investigating whether accidents affect the stock price of offending firms and/or the industry to which they belong. BES researchers are also investigating the effectiveness of current environmental measures used by financial analysts. Lastly, BES researchers are also investigating the conditions under which environmental improvement leads to financial performance.

Download a paper testing the link between pollution reduction and financial performance.

Download a paper testing whether is profitable to reduce pollution or control it at the "end of the pipe".

For more information contact Andrew King
 

OPPORTUNITIES FOR SELF REGULATION

Models of self-regulation

Effective solution of environmental problems often requires various actors to collectively coordinate their actions in the absence of some overriding governing body. Industry voluntary agreements, public-private partnerships, and transnational global accords all require some degree of self-regulation. If properly constructed, these alternatives may allow more profitable and more effective business action. BES researchers analyze and evaluate the potential for self-interested actors to control their collective behavior.

Commons problems are pervasive.  Research to date has focused on one type of commons, common pool resources, but many emerging cases differ significantly from investigated one.  In common pool resources, industry members are directly influenced by the depletion of some common resource.  In many cases, however, industry members share a common reputation, and it is this reputation that they try to protect.  The BES team is exploring when reputations commons are likely to occur what strategic responses firms might take.

Download a conceptual paper on how companies my collectively or independently respond to cases where they share a collective reputation.

For more information contact Professor Roy Radner, Andrew King, or Mike Barnett.
 

Empirical analysis of self-regulation

Scholars have proposed that associations of firms can voluntarily regulate their collective action to the benefit of the general welfare and so provide an attractive alternative to government regulation. We are now investigating leading examples of such "industry self-regulation" including (a) the chemical industry's Responsible Care Program, (b) the petroleum industry's STEP program, (c) the textile industry's E3 program, (d) the pulp and paper industry's Sustainable Forestry Initiative, (e) the Campaign for Environmentally Responsible Economies (CERES) program, and (f) the International Standards Organization's ISO 9000 and ISO 14000  management standards. Our research is both theoretically and practically important. Industry self-regulation remains a poorly understood phenomenon. Some scholars argue that industries may successfully build social arrangements that change norms of acceptable behavior and facilitate the transfer of welfare enhancing practices. Others argue that unless explicit sanctions exist, firms will act strategically and undermine collective efforts. Whatever their theoretical interpretation, government and insurance companies increasingly seem to believe that industries can successfully self-regulate. As a result, they provide companies that participate in self-regulatory initiatives with tax breaks and reductions in insurance premiums.

Download a recent paper on the environmental implications of Responsible Care
.
Download a recent paper on the financial implications of Responsible Care

Download a recent paper on adoption of ISO 9000

Download a recent paper on the adoption of ISO 14000

For more information contact Andrew King

DECISION MAKING, CONFLICT MANAGEMENT, AND THE ENVIRONMENT

This research focuses on the psychological and social psychological factors that influence behaviors and decisions that affect the environment. As limited natural resources (e.g., clean water, fish, fossil fuels) and environmental waste (e.g., garbage, pollution) are allocated among different actors, there is typically conflicting preferences with respect to how those resources should be allocated. This research explores the cognitive and motivational variables that influence decisions in situations where there is a conflict of interest among various parties with respect to the allocation of environmental resources and burdens. Topics central to this research include intergenerational decisions, asymmetrical social dilemmas, and the dysfunctional effects of environmental standards.

For more information contact Prof. Kimberly Wade-Benzoni

ENVIRONMENTAL PERFORMANCE BENCHMARKING

BES researchers are leading efforts to improve measurement of environmental performance. Andrew King and Mike Lenox have developed a method for scoring the environmental performance of a facility by comparing manufacturing facilities with the production functions of their industry. This approach has now been adopted by leading financial analysts and environmental ratings organizations.

Auto Product Analysis

Professor King has developed a new method for analyzing the performance of automobile companies. Unlike the CAFE measures used by the government, his method distinguishes between the product strategy and capabilities of the companies. He measures capabilities by determining the differential performance of each car the company sells relative to other cars in its class. He measures product strategy by measuring whether the company produces cars in dirtier classes (e.g. SUVs) or in cleaner ones (e.g., sub compacts).

For more information contact Andrew King

Industrial Performance Database

The research team has developed a database of environmental and financial performance from 1987 to 1996 for most manufacturing establishments in the United States. The current sample covers over 38,000 facilities and 20,000 firms between the years 1987 and 1997. These data have been extensively tested and checked. Numerous reporting and processing errors have been corrected.

For more information contact Andrew King