Responding to Public and Private Politics: Corporate Disclosure of Climate Change Strategies

The challenges associated with climate change will require governments, citizens, and firms to work collaboratively to reduce greenhouse gas emissions, a task that requires information on companies' emissions levels, risks, and reduction opportunities. This paper explores the conditions under which firms participate in this endeavor. Building on theories of how social activists inspire changes in organizational norms, beliefs, and practices, we hypothesize that shareholder actions and regulatory threats are likely to prime firms to adopt practices consistent with the aims of a broader social movement. We find empirical evidence of direct and spillover effects. In the domain of private politics, shareholder resolutions filed against it and others in its industry increase a firm's propensity to engage in practices consistent with the aims of the related social movement. Similarly, in the realm of public politics, threats of state regulations targeted at a firm's industry as well as regulations targeted at other industries increase the likelihood that the firm will engage in such practices. These findings extend existing theory by showing that both activist groups and government actors can spur changes in organizational practices, and that challenges mounted against a single firm and an industry can inspire both firm and field-level changes.social movements theory; institutional change theory; private politics; activist shareholder resolutions; climate change; environmental sustainability

Institutional Pressures and Organizational Characteristics: Implications for Environmental Strategy

A broad literature has emerged over the past decades demonstrating that firms' environmental strategies and practices are influenced by stakeholders and institutional pressures. Such findings are consistent with institutional sociology, which emphasizes the importance of regulatory, normative and cognitive factors in shaping firms' decisions to adopt specific organizational practices, above and beyond their technical efficiency. Similarly, institutional theory emphasizes legitimation processes and the tendency for institutionalized organizational structures and procedures to be taken for granted, regardless of their efficiency implications. However, the institutional perspective does not address the fundamental issue of business strategy necessary to explain the persistence of substantially different strategies among firms that are subjected to comparable levels of institutional pressures. In this chapter, we present current research arguing that such firms adopt heterogeneous sets of environmental management practices despite facing common institutional pressures because organizational characteristics lead managers to interpret these pressures differently.

Managerial practices that promote voice and taking charge among frontline workers

Process-improvement ideas often come from frontline workers who speak up by voicing concerns about problems and by taking charge to resolve them. We hypothesize that organization-wide process-improvement campaigns encourage both forms of speaking up, especially voicing concern. We also hypothesize that the effectiveness of such campaigns depends on the prior responsiveness of line managers. We test our hypotheses in the healthcare setting, in which problems are frequent. We use data on nearly 7,500 reported incidents extracted from an incident-reporting system that is similar to those used by many organizations to encourage employees to communicate about operational problems. We find that process-improvement campaigns prompt employees to speak up and that campaigns increase the frequency of voicing concern to a greater extent than they increase taking charge. We also find that campaigns are particularly effective in eliciting taking charge among employees whose managers have been relatively unresponsive to previous instances of speaking up. Our results therefore indicate that organization-wide campaigns can encourage voicing concerns and taking charge, two important forms of speaking up. These results can enable managers to solicit ideas from frontline workers that lead to performance improvement.

Extending Producer Responsibility: An Evaluation Framework for Product Take-Back Policies

Manufacturers are increasingly being required to adhere to product take-back regulations that require them to manage their products at the end of life. Such regulations seek to internalize products' entire life cycle costs into market prices, with the ultimate objective of reducing their environmental burden. This article provides a framework to evaluate the potential for take-back regulations to actually lead to reduced environmental impacts and to stimulate product design changes. It describes trade-offs associated with several major policy decisions, including whether to hold firms physically or financially responsible for the recovery of their products, when to impose recycling fees, whether to include disposal and hazardous substance bans, and whether to mandate product design features to foster reuse and recycling of components and materials. The framework also addresses policy elements that can significantly affect the cost efficiency and occupational safety hazards of end-of-life product recovery operations. The evaluation framework is illustrated with examples drawn from take-back regulations promulgated in Europe, Japan, and the United States governing waste electrical and electronic equipment (WEEE).

Operational Failures and Problem Solving: An Empirical Study of Incident Reporting

Operational failures occur in all industries with consequences that range from minor inconveniences to major catastrophes. Many organizations have implemented incident reporting systems to highlight actual and potential operational failures in order to encourage problem solving and prevent subsequent failures. Our study is among the first to develop and empirically test theory regarding which reported operational failures are likely to spur problem solving. We hypothesize that problem solving activities are especially likely to follow reported operational failures that provoke financial and legal liability risks. We also hypothesize that management commitment to problem solving, enacted through managers' communication and engagement practices, can encourage frontline workers to conduct problem solving. We test our hypotheses in the health care context, in which the use of incident reporting systems to highlight operational failures is widespread. Using data on nearly 7,500 reported incidents from a single hospital, we find support for our hypotheses. Our findings suggest that frontline workers' participation in problem solving is motivated by some inherent characteristics of the problems as well as by particular management practices.

How Firms Respond to Mandatory Information Disclosure

Mandatory information disclosure regulations seek to create institutional pressure to spur performance improvement. By examining how organizational characteristics moderate establishments' responses to a prominent environmental information disclosure program, we provide among the first empirical evidence characterizing heterogeneous responses by those mandated to disclose information. We find particularly rapid improvement among establishments located close to their headquarters and among establishments with proximate siblings, especially when the proximate siblings are in the same industry. Large establishments improve more slowly than small establishments in sparse regions, but both groups improve similarly in dense regions, suggesting that density mitigates the power of large establishments to resist institutional pressures. Finally, privately held firms' establishments outperform those owned by public firms. We highlight implications for institutional theory, managers, and policymakers.information disclosure, institutional theory, environmental strategy, mandatory disclosure, environmental performance.

Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California

We study how government green procurement policies influence private-sector demand for similar products. Specifically, we measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and investments in green building expertise by local suppliers. These findings suggest that government procurement policies can accelerate the diffusion of new environmental standards, which require coordinated complementary investments by various types of private adopter

Public Procurement and the Private Supply of Green Buildings

We measure the impact of municipal policies requiring governments to construct green buildings on private-sector adoption of the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) standard. Using matching methods, panel data, and instrumental variables, we find that government procurement rules produce spillover effects that stimulate both private-sector adoption of the LEED standard and supplier investments in green building expertise. Our findings suggest that government procurement policies can accelerate the diffusion of new environmental standards that require coordinated complementary investments by various types of private adopter

Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate Effective Self-Policing?

Administrative agencies are increasingly establishing voluntary self-reporting programs both as an investigative tool and to encourage regulated firms to commit to policing themselves. We investigate whether self-reporting can reliably indicate effective self-policing efforts that might provide opportunities for enforcement efficiencies. We find that regulators used self-reports of legal violations as a heuristic for identifying firms that are effectively policing their own operations, shifting enforcement resources away from voluntary disclosers. We also find that firms that voluntarily disclosed regulatory violations and committed to self-policing improved their regulatory compliance and environmental performance, suggesting that the enforcement relief they received was warranted. Collectively, our results suggest that self-reporting can be a useful tool for reliably identifying and leveraging the voluntary self-policing efforts of regulated companies