Regulatory stringency, green production offsets, and organizations' financial performance

Research output: Contribution to journalArticle

39 Citations (Scopus)

Abstract

Some scholars have argued that environmental regulatory pressures constrain organizations' financial opportunities, while others maintain that environmental regulations can spur product and technology innovations and encourage greater operational efficiencies. Advocates on both sides have evidence in support of their positions. However, considering both perspectives in tandem and recognizing that other factors may be associated with improved financial performance, we may find that neither position is valid, or that both are. Relying on data for manufacturing facilities in seven countries, this study shows that more stringent environmental policy regimes are related to diminished firm profits. Yet organizations that are motivated by a green production focus - defined as enhancing internal efficiencies and new product and technology development - are more likely to improve their environmental performance. They also demonstrate a greater probability of benefiting financially, thereby offsetting the cost of regulation or accruing a net gain.

Original languageEnglish (US)
Pages (from-to)418-434
Number of pages17
JournalPublic Administration Review
Volume69
Issue number3
DOIs
StatePublished - May 2009
Externally publishedYes

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regulation
efficiency
environmental policy
performance
manufacturing
profit
innovation
firm
costs
evidence
Product innovation
Financial performance
Environmental regulation
Factors
Technology innovation
Country studies
Environmental policy
Costs
Technology development
New product development

ASJC Scopus subject areas

  • Sociology and Political Science
  • Public Administration
  • Marketing

Cite this

Regulatory stringency, green production offsets, and organizations' financial performance. / Darnall, Nicole.

In: Public Administration Review, Vol. 69, No. 3, 05.2009, p. 418-434.

Research output: Contribution to journalArticle

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