Exploring the Locus of Profitable Pollution Reduction

Management Science, Vol. 48, No. 2, pp. 289-299

Posted: 7 Oct 2010

See all articles by Andrew A. King

Andrew A. King

Questrom School of Business- Boston University

Michael Lenox

University of Virginia - Darden School of Business

Date Written: 2002

Abstract

In this paper, we explore the locus of profitable pollution reduction. We propose that managers underestimate the full value of some means of pollution reduction and so under exploit these means. Based on evidence from previous studies, we argue that waste prevention often provides unexpected innovation offsets, and that onsite waste treatment often provides unexpected cost. We use statistical methods to test the direction and significance of the relationship between the various means of pollution reduction and profitability. We find strong evidence that waste prevention leads to financial gain, but we find no evidence that firms profit from reducing pollution by other means. Indeed, we find evidence that the benefits of waste prevention alone are responsible for the observed association between lower emissions and profitability.

Keywords: Environmental Strategy, Waste Prevention, Information Economics

Suggested Citation

King, Andrew A. and Lenox, Michael, Exploring the Locus of Profitable Pollution Reduction (2002). Management Science, Vol. 48, No. 2, pp. 289-299, Available at SSRN: https://ssrn.com/abstract=1687957

Andrew A. King

Questrom School of Business- Boston University ( email )

Boston, MA 02215
United States

Michael Lenox (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://faculty.darden.virginia.edu/LenoxM/index.htm

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