Choosing strategic responses to address emerging environmental regulations: size, perceived influence and uncertainty

Abstract

How companies respond to impending regulations is a signifi cant aspect of corporate strategy. Regulations, especially environmental regulations, are expanding quickly and increasingly important to fi rm success. The threat of impending environmental regulation forces companies to choose levels of strategic responses on a continuum from passive to active. Using practitioner oriented research and existing theoretical models of corporate response, this study fi nds that the type of strategic response is negatively related to size, positively related to state uncertainty and negatively related to effect/response uncertainty. Based on existing literature and the results of this study, the paper suggests that simplifying the uncertainty construct could lead to more defi nitive fi ndings in future research. The study results also suggest that a curvilinear relationship may exist between managerial perception of infl uence and level of strategic response.Most importantly, the fi ndings could have a signifi cant impact on fi rm decision making regarding environmental investments. For example, it is hoped that fi rms will be able to use the fi ndings of this study to further understand and anticipate their competitors' decisions. Practitioners may also benefi t from the conclusions on uncertainty in that they may be able to more cleanly parse the types of uncertainty immersed in impending environmental regulations. Finally, fi rms may be better able to understand decisions by their own managers and their competitors' managers in terms of their perceived infl uence over the regulatory process.

Analysing emission intensive firms as regulatory stakeholders: a role for adaptable business strategy

“…The cluster results suggest that fi rms are acutely aware of the positive and long term importance of low emission technologies and investments (Clemens et al, 2008). Firms highlighted the close relationship between the AETS and investment strategies that include low emission technologies projects.…”

“…Industry strategists appear to exhibit an expectation that any emission trading system will smooth regulatory uncertainty through the combination of low emission investment incentives and transitional cost management mechanisms (e.g. accelerated asset depreciation) (Oliver, 1991;Antes, 2006;Fowler and Hope, 2007;Clemens et al, 2008;Krozer and Nentjes, 2008).…”

“…This is seen as important for workable policy formulation. Second, the analysis of responses allows us to observe the policy infl uencing strategies used by the fi rms (Clarkson, 1995;Frooman, 1999;Clemens et al, 2008). The interdependence between governments and industry is seen as an important moderator of public policy determinations.…”

A Sustainable Industry-Environment Model for the Identification of Urban Environmental Risk to Confront Air Pollution in Beijing, China

“…Moreover, a trading mechanism-based (TM) can adjust the scale and structure of emissions to improve the efficiency of production at the extreme, leading to greater system benefit. Therefore, an optimized industry-environment strategy with an emission-permit trading mechanism (IEST) is desirable for coordinating the relationship between the development of the economy and the protection of the environment in Beijing, reducing the environmental risk and damage to public health [5,6].…”

Development of a parametric matrix based on GSCM literature

“…Though environmental policies can be adopted without many variations from previous research works, the implementation of GSCM does vary in strategies to be adapted due to differences in one industry to another, country to country and product to product. This led to consider Green as onerous (Hanna, 1996;Clemens et al, 2008;Handfield et al, 2002). Some of the barriers to adopt green embrace (i) lack of clarity for the green initiatives, (ii) lack of goal setting by leaders, (iii) attitude barrier because it is perceived to incur high cost and reduce SCM efficiency, (iv) fear for coordination / cooperation among the players of SC, (v) lack of control on the supplier methods, (vi) top management strategy misaligned with green initiatives, etc.…”