Staying Ahead of and Profiting from Environmental Regulatory Uncertainty: Integrated Strategies for Competitive Advantage

California Management Review, Vol. 54, Issue 1, pp. 145-165

31 Pages Posted: 5 Aug 2011 Last revised: 14 Aug 2013

See all articles by Adam Fremeth

Adam Fremeth

University of Western Ontario - Richard Ivey School of Business

Brian Kelleher Richter

University of Texas at Austin - Red McCombs School of Business

Date Written: August 25, 2011

Abstract

We offer two integrated strategies managers can use in the face of regulatory uncertainty vis-à-vis the natural environment. As integrated strategies, they both recognize non-market forces while taking into account market realities. Advocating for Pragmatic, Progressive Policy enables firms to shape future policy around existing environmental strengths; this strategy tips the scale towards a winning position by raising competitors’ costs when competitors have yet to develop identical competencies. Systematically Embracing Advancing Regulation enables firms to satisfy activists who would place pressure on policymakers to force firms to conform to higher environmental standards in other jurisdictions; this strategy tips the scale towards a winning position by allowing managers to adapt to coming regulation at their own pace while leveraging market competencies. We begin by presenting a brief framework that assembles the building blocks necessary to justify when, how, and why our strategies reduce vulnerabilities to regulatory uncertainty. We then present four case studies that highlight how some firms have implemented these strategies. In the analysis of these cases, we illustrate the conditions under which some have been successful at mitigating regulatory uncertainty and some have not.

Suggested Citation

Fremeth, Adam and Richter, Brian Kelleher, Staying Ahead of and Profiting from Environmental Regulatory Uncertainty: Integrated Strategies for Competitive Advantage (August 25, 2011). California Management Review, Vol. 54, Issue 1, pp. 145-165. Available at SSRN: https://ssrn.com/abstract=1905789 or http://dx.doi.org/10.2139/ssrn.1905789

Adam Fremeth

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Brian Kelleher Richter (Contact Author)

University of Texas at Austin - Red McCombs School of Business ( email )

2100 Speedway
B6500, CBA 5.250
Austin, TX 78712
United States
512-232-6751 (Phone)

HOME PAGE: http://briankrichter.com/

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