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Corporate Strategies |
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Projects More
Sustainability by Means of Convergent or Divergent Environment
Regulations (seed project) Cross National Variation in
Regulation of Environment, Health and Safety
Risks Corporate Strategy, Regulation and Global
Competition
Principal Investigators MIT: K.Oye,
J.Foster, M.Roman ETH: R.Schubert, T.Bernauer UT:
H.Shiroyama Chalmers: F.Norgrem, N.Adler
A major
constraint in effective policy formulation for government and
industry is the lack of understanding of how regulatory regimes and
business strategy can reconcile competing private and public
interests. There is limited knowledge of how to reconcile competing
private interests in sustainable development programs, especially
the market competition objectives of individual businesses. The
evolving policy debate suggests that interest groups may not have a
clear understanding of what their interests actually are, let alone
how best to serve them. In addition, differences in domestic
environmental, health, and safety regulations have resulted in
conflicts in international trade, requiring dispute settlement in
various cases.
The overall goal of the AGS research in
corporate strategies is to analyze various linkages of environmental
regulation and corporate strategies, and to explore mechanisms by
which complementarities between public environmental interest and
private environmental performance may be enhanced to achieve
sustainable development. The research has been carried out through
three related AGS grants, since
1997.
Goals/Objectives "More Sustainability by
Means of Convergent or Divergent Environmental Regulations"/
"Cross National Variation in Regulation of Environment, Health
and Safety Risks" The first and second projects have focused on
the following objectives:
- To investigate under which conditions convergence or
divergence of environmental regulations of different countries or
regions is preferable with respect to global sustainability
- To investigate conditions under which such convergence or
divergence are likely to occur
The research was carried
out with a theoretical impact analysis and case studies that were
region-, sector- and institution-specific.
"Corporate
Strategy, Regulation and Global Competition" The objectives of
this research were as follows:
- To identify the incentives and disincentives motivating
corporate environmental performance for different types of firms,
sectors, and national regulatory regimes
- To assess the differences in environmental performance
resulting from alternative corporate approaches to meeting
externally- and internally- defined environmental standards
- To identify the competitive market consequences of alternative
corporate and regulatory approaches to environmental
performance
- To propose how regulatory instruments might be designed to
create more effective corporate environmental incentives and to
encourage innovative corporate sustainable development strategies
for which there are proven examples.
The research has
involved comparative analysis of firms within six industrial sectors
that represent large, international product
markets.
Findings/Results "More Sustainability by
Means of Convergent or Divergent Environmental Regulations"/"Cross
National Variation in Regulation of Environment, Health and Safety
Risks" This research phase developed case studies on European
water management policy and emission limits, which were analyzed
from an economic and political perspective. Case studies dealing
with pulp production and automotive assembly were also
analyzed.
"Corporate Strategy, Regulation and Global
Competition" During this phase, firm-level case studies have been
conduced within: biotechnology, petroleum refining, paper products,
telecommunications, food processing and distribution, and financial
services.
The research has found two basic strategic paths
that corporations have to gain corporate competitive advantage:
- By engaging regulation as an instrument for companies to
formalize advantages in technology, product quality, marketing and
distribution
- By engaging directly with consumers in national and
international markets to build demand for products and services
that have differentiable environmental properties
These
findings have the following implications for corporations and
regulators:
- For private corporations, promoting improved environmental
performance and more stringent environmental regulation can be
effective instruments of corporate strategy, when taken in
conjunction with technology development programs.
- For regulators, public policy may be strengthened most
effectively when corporations join in coalitions to simultaneously
advance environmental interests and long-term private
interests.
Such findings provide a basis for suggesting
to corporations some key strategic areas in which they can develop
and exploit environmental advantages, such as integrating technology
and product development strategies, supply chain management
strategies, mergers and acquisition strategies, and regulatory
strategies. |
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