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

Author

Listed:
  • Bruce Clemens

    (Western New England College)

  • Charles E. Bamford

    (McColl School of Business, Queens University of Charlotte)

  • Thomas J. Douglas

    (Southern Illinois University Edwardsville School of Business)

Abstract

How companies respond to impending regulations is a significant aspect of corporate strategy. Regulations, especially environmental regulations, are expanding quickly and are increasingly important to firm 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 finds that the types of strategic response are negatively related with size, positively related with state uncertainty and negatively related with effect/response uncertainty. Based on existing literature and the results of this study, this paper suggests that simplifying the uncertainty construct could lead to more definitive findings in future research. The study results also suggest that a curvilinear relationship may exist between managerial perception of influence and level of strategic response. Most importantly, the findings could have a significant impact on firm decision making regarding environmental investments. For example, it is hoped that firms will be able to use the findings of this study to further understand and anticipate their competitors’ decisions. Practitioners may also benefit 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, firms may be better able to understand decisions by their own managers and their competitors, managers in terms of their perceived influence over the regulatory process.

Suggested Citation

  • Bruce Clemens & Charles E. Bamford & Thomas J. Douglas, 2008. "Choosing strategic responses to address emerging environmental regulations: Size, perceived influence and uncertainty," Discussion Paper Series 2008-02, McColl School of Business, Queens University of Charlotte.
    • Handle: RePEc:msb:wpaper:2008-02
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    2. Niklas Egels-Zandén, 2014. "Revisiting Supplier Compliance with MNC Codes of Conduct: Recoupling Policy and Practice at Chinese Toy Suppliers," Journal of Business Ethics, Springer, vol. 119(1), pages 59-75, January.
    3. Esben Rahbek Gjerdrum Pedersen & Wencke Gwozdz & Kerli Kant Hvass, 2018. "Exploring the Relationship Between Business Model Innovation, Corporate Sustainability, and Organisational Values within the Fashion Industry," Journal of Business Ethics, Springer, vol. 149(2), pages 267-284, May.
    4. Nigel Martin & John Rice, 2010. "Analysing emission intensive firms as regulatory stakeholders: a role for adaptable business strategy," Business Strategy and the Environment, Wiley Blackwell, vol. 19(1), pages 64-75, January.
    5. Sultan Sikandar Mirza & Tanveer Ahsan, 2020. "Corporates' strategic responses to economic policy uncertainty in China," Business Strategy and the Environment, Wiley Blackwell, vol. 29(2), pages 375-389, February.
    6. Muddassar Sarfraz & Wang Qun & Li Hui & Muhammad Ibrahim Abdullah, 2018. "Environmental Risk Management Strategies and the Moderating Role of Corporate Social Responsibility in Project Financing Decisions," Sustainability, MDPI, vol. 10(8), pages 1-17, August.
    7. Nigel James Martin & John Lewis Rice, 2014. "Influencing Clean Energy Laws: an Analysis of Business Stakeholder Engagement," Business Strategy and the Environment, Wiley Blackwell, vol. 23(7), pages 447-460, November.
    8. López-Gamero, María D. & Molina-Azorín, José F. & Claver-Cortés, Enrique, 2011. "Environmental uncertainty and environmental management perception: A multiple case study," Journal of Business Research, Elsevier, vol. 64(4), pages 427-435, April.
    9. Walid Cheffi & Sonia Abdennadher, 2019. "Executives’ Behaviour and Innovation in Corporate Governance: The Case of Internet Voting at Shareholders’ General Meetings in French Listed Companies," Journal of Business Ethics, Springer, vol. 156(3), pages 775-798, May.
    10. Christopher D. H. Wilson & Ian David Williams & Simon Kemp, 2012. "An Evaluation of the Impact and Effectiveness of Environmental Legislation in Small and Medium‐Sized Enterprises: Experiences from the UK," Business Strategy and the Environment, Wiley Blackwell, vol. 21(3), pages 141-156, March.
    11. Moser, Roger & Kuklinski, Christian Paul Jian-Wei & Srivastava, Mohit, 2017. "Information processing fit in the context of emerging markets: An analysis of foreign SBUs in China," Journal of Business Research, Elsevier, vol. 70(C), pages 234-247.
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    13. Canning, Mary & O’Dwyer, Brendan, 2013. "The dynamics of a regulatory space realignment: Strategic responses in a local context," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 169-194.
    14. Esben Pedersen & Wencke Gwozdz, 2014. "From Resistance to Opportunity-Seeking: Strategic Responses to Institutional Pressures for Corporate Social Responsibility in the Nordic Fashion Industry," Journal of Business Ethics, Springer, vol. 119(2), pages 245-264, January.
    15. David Christopher Sprengel & Timo Busch, 2011. "Stakeholder engagement and environmental strategy – the case of climate change," Business Strategy and the Environment, Wiley Blackwell, vol. 20(6), pages 351-364, September.
    16. Francesca Di Pillo & Vito Introna & Nathan Levialdi & Laura Marchegiani, 2018. "Regulatory Response to Self-production of Energy: A Risk for the Development of Renewable Sources and Combined Heat and Power," International Journal of Energy Economics and Policy, Econjournals, vol. 8(3), pages 121-130.
    17. Guilin Gao & Xueting Zeng & Chunjiang An & Lei Yu, 2018. "A Sustainable Industry-Environment Model for the Identification of Urban Environmental Risk to Confront Air Pollution in Beijing, China," Sustainability, MDPI, vol. 10(4), pages 1-22, March.
    18. Juan J. Martínez Hernández & Patricia S. Sánchez‐Medina & René Díaz‐Pichardo, 2021. "Business‐oriented environmental regulation: Measurement and implications for environmental policy and business strategy from a sustainable development perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 30(1), pages 507-521, January.
    19. Pasi Heikkurinen & Sari Forsman‐Hugg, 2011. "Strategic Corporate Responsibility in the Food Chain," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 18(5), pages 306-316, September.
    20. Pasi Heikkurinen & Tarja Ketola, 2012. "Corporate Responsibility and Identity: from a Stakeholder to an Awareness Approach," Business Strategy and the Environment, Wiley Blackwell, vol. 21(5), pages 326-337, July.
    21. Asghar Afshar Jahanshahi & Alexander Brem, 2020. "Entrepreneurs in post-sanctions Iran: Innovation or imitation under conditions of perceived environmental uncertainty?," Asia Pacific Journal of Management, Springer, vol. 37(2), pages 531-551, June.
    22. Christopher Wilson & Ian David Williams & Simon Kemp, 2011. "Compliance with Producer Responsibility Legislation: Experiences from UK Small and Medium‐sized Enterprises," Business Strategy and the Environment, Wiley Blackwell, vol. 20(5), pages 310-330, July.
    23. Bing Zhang & Hanxun Fei & Yongjing Zhang & Beibei Liu, 2015. "Regulatory Uncertainty and Corporate Pollution Control Strategies: An Empirical Study of the ‘Pay for Permit’ Policy in the Tai Lake Basin," Environment and Planning C, , vol. 33(1), pages 118-135, February.
    24. Hu, Yingde & Bai, Wensong & Farrukh, Muhammad & Koo, Chun Kwong, 2023. "How does environmental policy uncertainty influence corporate green investments?," Technological Forecasting and Social Change, Elsevier, vol. 189(C).

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