The Design of Voluntary Environmental Programs: Competition and Incentives to Participate

Why Do Firms Participate in Voluntary Environmental Programs? A Meta-Analysis of the Role of Institutions, Resources, and Program Stringency

“…First, we help clarify how VEP stringency affects firms’ participation. Some researchers have suggested that firms prefer more stringent programs because they send stronger signals to stakeholders about their efficacy, while others have developed evidence that firms prefer lenient programs that have lower adoption costs (Ahmed, 2012; Castka & Corbett, 2016; Fischer & Lyon, 2014; Koehler, 2007; Prakash & Potoski, 2007). Our results suggest instead that stringency’s effect on firm participation in VEPs is nuanced, and contingent on different institutional and resource-based factors.…”

“…Still firms’ decision to participate in VEPs is not always straightforward. Some VEPs have high adoption costs that outweigh their potential competitive benefits (Ahmed, 2012). Others with lower adoption costs are seen as greenwashing tools (Castka & Corbett, 2016).…”

“…Conversely, other research suggests that firms prefer lenient programs because of their lower adoption costs. Ahmed (2012) demonstrates that more lenient VEPs attract participants for this reason, while stringent programs with higher adoption costs fail to provide sufficient participation incentives. Similarly, Fischer and Lyon (2014) demonstrate that, in a competition for participants, lenient VEPs should be able to seize market share away from stringent ones because they provide more optimal competitive benefits.…”

“…A program’s stringency depends on its governance design, which can involve strict environmental performance standards and enforcement mechanisms or lenient standards and weak enforcement, leading to symbolic participation (Carmin et al, 2003; Darnall et al, 2017). To date, scholars have relied mainly on anecdotal evidence to examine the role of VEP stringency, and developed conflicting accounts of how it drives firm participation, with some suggesting that firms favor stringent programs because of their external legitimacy (Castka & Corbett, 2016; Prakash & Potoski, 2007), and others arguing that they prefer lenient programs because of their lower adoption costs (Ahmed, 2012; Fischer & Lyon, 2014; Koehler, 2007).…”

Voluntary agreements to encourage proactive firm action against climate change: an empirical study of industry associations' voluntary action plans in Japan

“…He found that Japanese firms tend to seriously engage in conservation activities because they believe that financial performance in the stock market, of 2 This wide coverage might lead to questions about how industry associations address free riding. According to Ahmed (2012), industries in which free riding is significant are less likely to establish VAPs. In the case of Japanese VAPs, however, there is another motivation for firms (especially large ones) and industry associations to allow relatively small firms to free ride: the so-called regulatory threat (Wakabayashi and Sugiyama, 2007).…”