Leadership Matters

• Author: Susan Summers Raines,Aseem Prakash
• DOI: 10.1177/0095399704272594
• Date: 01 March 2005
• Published date: 01 March 2005
• Subject Matter: Articles

10.1177/0095399704272594ADMINISTRATION & SOCIETY / March 2005Raines, Prakash / LEADERSHIP MATTERS

LEADERSHIP MATTERS

Policy Entrepreneurship in

Corporate Environmental Policy Making

SUSAN SUMMERS RAINES

Kennesaw State University

ASEEM PRAKASH

University of Washington-Seattle

An important feature of the new public management paradigmis the increasing relianceon

voluntary codes rather than coercive mandatory regulation to achievepublic policy objec-

tives. Often, the proponentsof new public management overlook the important contributions

of policy entrepreneurs within regulated firms in popularizing such codes. Focusing on

the environmental policy arena, this article documents that such policy entrepreneurs—

corporate environmentalentrepreneurs—exist in many corporations and significantlyinflu-

ence firms’ adoption of progressive environmental policies. This article uses survey data

from firms in 16 countries to examinethe role of corporate environmental entrepreneursin

the contextof an international voluntary code that seeks to encourage firms to adopt environ-

mentally progressive policies.

Keywords: voluntary environmental programs; ISO 14001; leadership

Governments worldwide face the challenge of meeting citizens’ rising

expectations for the supply of an expanding range of public goods but

without commensurate increases in taxes to finance them (Rosenbaum,

1998). Scholars suggest that such challenges can be met through the adop-

tion of reinventing government and new public management paradigms

(Kettl, 2000; Osborne & Gaebler, 1992). These approaches require a criti-

cal examination of extant regulatory modes and experimentation with new

3

AUTHORS’NOTE: Funding for this project came fromthe National Science Foundation,

Law and Social Sciences division, and Indiana University’s Center for International Busi-

ness, Education, and Research (CIBER).

ADMINISTRATION & SOCIETY, Vol. 37 No. 1, March 2005 3-22

DOI: 10.1177/0095399704272594

© 2005 Sage Publications

policy instruments. The need for a new public management approach is

especially true in the environmental policy arena where most regula-

tions reflect the command-and-control mode (Ayres & Braithwaite, 1992;

Fiorino, 2000; Kettl & Armacost, 2002). This tight-fisted style mandates

performance standards and the use of specific technologies. Although

command-and-control policies have significantly contributed to environ-

mental improvements (Cole, 2000), such policies are often difficult to

enforce (Hale, 1998; Scholtz, 1991) and could create sizeable ineffi-

ciencies (static and dynamic) for firms (Esty & Chertow, 1997; Sexton,

Marcus, Easter, & Burkhardt, 1999).

Several new policy instruments have been created to correct the per-

ceiveddrawbacks of command-and-control policies (Prakash & Kollman,

2004). Market-based instruments aim to discourage pollution by using

price signals (OECD, 1989). These policies encourage firms to internalize

the costs of environmental externalities through various price signals.

Mandatory information disclosure policies, such as the Toxics Release

Inventory program, seek to create market and nonmarket pressures on

firms to reduce pollution by requiring a public disclosure of some aspects

of firms’ environmental performance (Arora & Casson, 1996; Hamilton,

1995; Konar & Cohen, 1997). However, both policy types inadequately

deal with regulatory inflation that is reflected in the increasing scope,

number, and complexity of regulations.

Many jurisdictions may also not have the technical and institutional

capacities to design and enforce them. For example, although tradable

permits for air pollution control have been successful in the United States

(such as sulphur dioxide emission markets established under the Clean

Air Act), they have failed in Poland, Germany, and the United Kingdom

(Tietenberg, 2002).

Policy scholars are beginning to focus on another category of policy

instruments: voluntary codes. These could be designed and enforced by

regulators, nonprofit groups, industry associations, and individual firms

either alone or in some sort of mutual partnership (Gibson, 1999; Haufler,

2001). They could vary in their scope focusing on firms around the globe,

in a given region, within a country, or in a given industry. These codes

encourage firms to adopt environmentally progressive policies that are

often beyond the requirements of extant laws. It is important to note, vol-

untary codes seek to reduce enforcement burden on regulatorsand reverse

regulatory inflation without compromising environmental protection. Al-

though voluntary codes are an important component of new public man-

4 ADMINISTRATION & SOCIETY / March 2005