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The impact of management systems on technical change: the adoption of pollution prevention techniques

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Listed:
  • George Deltas

    (University of Illinois at Urbana-Champaign)

  • Donna Ramirez Harrington

    (University of Vermont)

  • Madhu Khanna

    (University of Illinois at Urbana-Champaign)

Abstract

A firm’s capability to innovate is influenced by its organizational structure. We examine the effect of Total Quality Environmental Management (TQEM) on the adoption of innovative pollution prevention activities over the period 1992–1996, and show that the rate of innovation increases following the adoption of TQEM. However, the effect of TQEM on pollution prevention innovation “wears out” over time. Our analysis indicates that this is likely because pollution prevention undertaken in one year continues to be effective in future years. This, in turn, reduces the incentives for further innovation due to declining marginal returns, rather than because the institutional effectiveness of TQEM weakens. We provide corroborative evidence based on the time profile of pollution prevention of firms that adopted TQEM prior to the start of our sample, and also develop a stylized model with (partial) obsolescence of pollution prevention innovations that matches the empirical regularities we obtain. Our findings shed light on the importance of organizational structure on the pace of technical change.

Suggested Citation

  • George Deltas & Donna Ramirez Harrington & Madhu Khanna, 2021. "The impact of management systems on technical change: the adoption of pollution prevention techniques," Economic Change and Restructuring, Springer, vol. 54(1), pages 171-198, February.
    • Handle: RePEc:kap:ecopln:v:54:y:2021:i:1:d:10.1007_s10644-020-09273-w
    DOI: 10.1007/s10644-020-09273-w
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    More about this item

    Keywords

    Pollution prevention; TQEM; Technical innovation; Organizational structure;
    All these keywords.

    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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