Constructing the License to Operate: Internal Factors and Their Influence on Corporate Environmental Decisions

53 Pages Posted: 22 Aug 2006

See all articles by Jennifer Howard‐Grenville

Jennifer Howard‐Grenville

University of Oregon - Charles H. Lundquist School of Business

Jennifer Nash

Harvard Business School

Cary Coglianese

University of Pennsylvania Law School

Multiple version iconThere are 2 versions of this paper

Date Written: September 12, 2007

Abstract

Voluntary programs intended to improve corporate environmental practices have proliferated in recent years. Why some businesses choose to participate in such voluntary programs, while others do not, remains an open question. Recent work suggests that companies' environmental practices, including their decisions to participate in voluntary programs, are shaped by a license to operate comprised of social, regulatory, and economic pressures. Although these external factors do matter, by themselves they only partially explain business decision making, since facilities subject to similar external factors often behave differently. In this article, we draw from organizational theory to explain why we would expect a company's license to operate to be ultimately constructed by internal factors, such as managerial incentives, organizational culture, and organizational identity, as these shape both interpretations of the external pressures and organizational responses to them. Using qualitative data from an exploratory study of matched facilities that reached different decisions about participating in a prominent voluntary environmental program, we then report evidence indicative of the role of these internal factors in shaping facilities' environmental decisions. Finally, we offer suggestions for future research that could further develop understanding of how internal organizational characteristics influence environmental management decisions, including those concerning participation in voluntary programs.

Keywords: administrative law, environmental law, organizations, voluntary programs, environmental practices, license, internal factors, managerial incentives, organizational culture, self-monitoring, attitudes, decisions

JEL Classification: K23, K32, L2, L5

Suggested Citation

Howard-Grenville, Jennifer and Nash, Jennifer and Coglianese, Cary, Constructing the License to Operate: Internal Factors and Their Influence on Corporate Environmental Decisions (September 12, 2007). U of Penn Law School, Public Law Working Paper No. 06-33. Available at SSRN: https://ssrn.com/abstract=925660 or http://dx.doi.org/10.2139/ssrn.925660

Jennifer Howard-Grenville (Contact Author)

University of Oregon - Charles H. Lundquist School of Business ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States

Jennifer Nash

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Cary Coglianese

University of Pennsylvania Law School ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-6867 (Phone)

HOME PAGE: http://www.law.upenn.edu/coglianese

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