Green Clubs and Voluntary Governance: ISO 14001 and Firms' Regulatory Compliance

Authors


  • This is a revised version of a paper presented at the 2003 Annual Meeting of the Midwest Political Science Association, and the 2003 Association of Policy Analysis and Management Conference. We thank Trevor Brown, Dan Fiorino, Devin Joshi, Kathryn Harrison, Robert Lowry, Mark Lubell, Erik Lundsgaarde, Peter May, Frank Montabon, Tom Rice, Mark Smith, Michael Ward, Soren Winter, the AJPS editors, and the AJPS reviewers for comments on previous drafts. Matthew Potoski acknowledges financial support from the Iowa State University Institute of Science and Society and the Iowa State University College of Liberal Arts and Sciences. Aseem Prakash acknowledges support from University of Washington's Royalty Research Fund. Sarah Edrington, Joseph Haley, Melissa Homrig, and Jason Stonerook provided excellent research assistance.

Matthew Potoski is Assistant Professor of Political Science, 519 Ross Hall, Iowa State University, Ames, IA 50010 (potoski@iastate.edu). Aseem Prakash is Associate Professor of Political Science, 39 Gowen, Box 353530, University of Washington, Seattle, WA 98195 (aseem@u.washington.edu).

Abstract

Voluntary programs have become widespread tools for governments and nongovernmental actors looking to improve industry's environmental and regulatory performance. Voluntary programs can be conceptualized as club goods that provide nonrival but potentially excludable benefits to members. For firms, the value of joining a green club over taking the same actions unilaterally is to appropriate the club's positive brand reputation. Our analysis of about 3,700 U.S. facilities indicates that joining ISO 14001, an important nongovernmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 is effective because its broad positive standing with external audiences provides a reputational benefit that helps induce facilities to take costly progressive environmental action they would not take unilaterally.

Ancillary