A logic of corporate environmentalism: "Beyond-compliance" environmental policymaking in Baxter International Inc. and Eli Lilly and Company
The neoclassical theory treats firms as unitary actors and explains their policies as passive responses to market signals and/or governmental regulations. Consequently, it does not sufficiently explain why firms adopt "beyond-compliance" policies. These policies are more stringent than prevalent laws and regulations and are often predicted not to generate quantifiable profits. My puzzle is: why do firms adopt such policies at all, and why only in some cases, and not in all?
To explore this puzzle, I employ a new-institutionalist perspective. Instead of treating firms as unitary actors, I view them as composite actors, as units of collective action. In the new-institutionalist tradition, I identify three theories of firm behavior: efficiency-, power-, and leadership-based. These represent three kinds of intra-firm processes: consensual (efficiency), imposed (power), and induced cooperation (leadership). Employing these theories, I examine processes of environmental policymaking in two firms--Baxter International Inc. and Eli Lilly and Company--during 1975 to mid 1996. I focus on ten cases, four common to both Baxter and Lilly (Underground Tanks, EPA's 33/50 program, ISO 14000, and Environmental Audits), and one each that is idiosyncratic to them (Responsible Care to Lilly and "Green Products" to Baxter).
The theoretical implications of my research are: (1) beyond-compliance policies of firms can be explained only by analyzing the preferences and strategies of individuals constituting these firms; (2) to examine social processes, we need multiple theories linked by a common framework; and (3) a greater focus on leadership is required in the study of political economy. Policy implications of my research are: (1) firms are less likely to adopt environmental policies that require significant organizational changes; and (2) firms are more likely to adopt policies that are encouraged by external actors with abilities to significantly influence firms' business environments.
0617: Public administration
0768: Environmental science