1 

 

Understanding Styles of Corporate Compliance with Environmental Regulation: Towards a Multidimensional

Conceptual Framework

Carlos Wing-Hung Lo, Ning Liu, Xueyong Zhan Department of Management and Marketing

The Hong Kong Polytechnic University Hung Hom, Kowloon, Hong Kong

Paper prepared for the 11th National Public Management Research Conference

Syracuse University, June 2-4, 2011.

Abstract  This research applies the convergent insights of regulatory compliance and

resource-dependence perspective to build a systematic framework of corporate

compliance style (CCS thereafter). We use environmental regulation as the context

of corporate compliance, and link corporate compliance with the levels of regulatory

certainty and organizational nonmarket capabilities. We further develop a two

dimensional model of CCS, based on which four scenarios of CCS are proposed,

namely formalism, accommodation, referencing and self-determinism. We also

discuss the applicability of our framework in a wide array of regulatory domains.

This study hence extends the traditional compliance studies and provides a new

perspective for the understanding of specific mechanisms that impact compliance

behavioral patterns.

 

 

2 

 

Introduction In recent years, industrial pollution control has been an urgent regulatory task in both

developed and developing countries, and what cannot be ignored is that many polluting

firms are still at the threshold of minimum compliance or even in non-compliance. Thus,

increasing scholarly attention has been paid to the understanding of corporate compliance

with environmental regulations, and existing literature on regulatory enforcement and

corporate management has developed various typologies of organizational responses to the

natural environment (Aragón-Correa & Sharma, 2003; Christmann, 2004; Henriques &

Sadorsky, 1999; Hunt & Auster, 1990) or external demands (Oliver, 1991). One limitation

of existing literate is that the classification of organizational responses is

performance-oriented and often conceptualized as a continuum from non-compliance to

over-compliance. Notably lacking from the literature, nevertheless, is the explicit attention

to (1) whether there exist diversified complying styles in response to regulatory

requirements, and (2) how these styles are formed in different institutional environment.

To investigate the above two research questions, we propose a conceptual

framework of corporate compliance style (hereafter, we use the abbreviation CCS to stand

for corporate compliance style) in the context of corporate environmental management.

The rationale underlines the concept of CCS, as suggested by institutional theory (Meyer &

Rowan, 1977), is that firms are always struggling to make a balance between maintaining

internal efficiency and seeking external legitimacy. Though the question of resolving

conflict between organizational legitimacy and efficiency has been central to institutional

theory since 1970s, it is relatively unfamiliar in the environmental regulatory literature. We

posit in this study that perceived regulatory certainty influences the cost-efficiency of

corporate compliance, while organizational capability influences the extent firms can gain

regulatory legitimacy. Hence under different external and internal conditions,

organizations are likely to form different complying styles towards regulation. .

To propose a generic framework that allows careful consideration of how

distinctive CCSs are formed in different scenarios, we draw upon theories of regulatory

 

 

3 

 

compliance and resource-based perspective. Different from previous performance-oriented

studies that categorize firms based on a single axis of outcome, we argue that regulatory

certainty and organizational nonmarket capabilities are closely aligned in shaping CCS of a

regulated firm. Thus, we focus on the behavioral diversity of regulatees and propose four

scenarios of CCS, namely formalism, accommodation, referencing and self-determinism.

The integrated framework helps us better understand the determinants of corporate

compliance and ultimately the complying performance.

The paper is organized as follows. We start with a general discussion about the

dilemma faced by regulated firms to secure both internal efficiency and external legitimacy.

Based on the review of literature on regulatory enforcement and corporate strategy, we

develop an X-Y framework that integrates the two lines of literature into a set of combined

conditions for corporate compliance. Then we propose four CCS scenarios that are shaped

by different conditions of regulatory certainty and non-market capability. This paper

concludes with a discussion about the research and practical implications of our CCS

framework.

Literature Review The relationship between regulation and corporate compliance has been widely

studied (Burby & Paterson, 1993; Gunningham, Thornton, & Kagan, 2005; May, 2005;

Paternoster et al., 1983; Winter & May, 2001). A substantial theoretical and empirical

literature has investigated the economic, political, social and psychological bases of

corporate compliance (Henriques & Sadorsky, 1999; Shimshack & Ward, 2005; Wang &

Jin, 2007). Regulatory scholarship in recent years has dig deeper into the external

constraints of corporate compliance, such as information availability and transmission

(Darnall, 2010; Koski & May, 2006; Lee, 2010), and regulatory enforcement styles that

affect compliance outcome (Lo & Fryxell, 2003; May & Wood, 2003). In the management

research field, various typologies of organizational responses to the natural environment

(Aragón-Correa & Sharma, 2003; Christmann, 2004; Henriques & Sadorsky, 1999; Hunt

& Auster, 1990) or external demands (Oliver, 1991) have been developed. For instance,

 

 

4 

 

Oliver (1991) posits five increasingly active levels of organizational resistance ranging

from acquiescence to political manipulation to given institutional demands. Table 1

presents three frameworks of general categorization schemes of firms’ approaches towards

natural environment or external demands developed in environmental management

literature and strategic literature.

Table 1 Conceptual Classification of Firms’ responses towards external pressure

Environmental Management Literature

CSR Literature

Strategy Management

Roome (1992) Hunt & Auster

(1990)

Wartick & Cochran

(1985)

Oliver (1991)

Noncompliance Beginner Reactive Acquiescence

Compliance Firefighter Defensive Compromise

Compliance plus Concerned citizen Accommodative Avoid

Commercial and

environmental

excellence

Pragmatist

Proactive

Defy

Leading edge Proactivist Manipulate

However, existing research has remained relatively silent regarding the diversity of

behavioral patterns (rather than performance) of regulated firms during the complying

process. More recently, Lynch-Wood and Williamson (2010) suggested that it is in urgent

need to further understand how regulated firms actually behave, and whether distinctive

compliance orientations were shaped under the synthetic effect from resource availability,

visibility and moral orientation. Given the fact that existing literature has mainly focused

on compliance performance and motivations rather than behavioral process, we do need a

deeper understanding of how regulated businesses differ in selecting complying

approaches.

A central argument of neoinstitutional theory is that “categorical rules conflict with

the logic of efficiency” during the isomorphism process (Meyer & Rowan, 1977). Firms

under environmental regulation have always been trapped in a dilemma that complying

 

 

5 

 

activities satisfying regulatory rules are pure costs from the point of view of efficiency. For

instance, an introduction of latest environmental practice brings an environmental-friendly

reputation in the global market. Nevertheless, the short-term profit or improved

productivity might be hampered. In addition, how these difficulties were dealt with by

regulatees has received little research attention. In this study, we want to address this issue

by studying how firms’ perceived regulatory certainty and non-market capabilities may

determine the adoption of certain CCS in order to alleviate this conflict.

Regulatory Certainty  Corporate compliance can be treated as a decision problem constrained by

regulatory uncertainties. Khanna (1997) noted that “...not only does the state intervene

extensively in business operations, but companies also have a hard time predicting the

actions of regulatory bodies”. Indeed, most decision problems are not deterministic but

involve decision making under uncertainty or complexity (Williamson, 1975). Regulatory

uncertainty has been commonly considered when assessing the regulations’ benefits and

cost (Jaffe & Stavins, 2007). From economists’ perspective, regulatory uncertainty affect

corporate compliance effort ranging from minimal compliance that saves room for future

regulatory trimming (Baumol & Oates, 1988), to over-compliance in anticipation of tighter

future regulations (Arora & Cason, 1995) or in fear of unintentional noncompliance (Heyes,

1998). Management scholars, who treat environmental uncertainty as a fundamental

challenge to business decisions, have investigated its effects on organizations for many

years (Lawrence & Lorsch, 1967; Miles & Snow, 1978; Miller, 1993; Milliken, 1987). A

few empirical studies have examined the relationship between regulatory uncertainty and

organizational actions (Cook et al., 1983; Hoffmann & Trautmann, 2006; Hoffmann,

Trautmann & Hamprecht, 2009; Koski & May, 2006). Previous studies suggest that

environmental uncertainty is a significant factor that affects organizations’ conformity or

resistance to institutional demands and expectations (DeHart-Davis & Bozeman, 2001;

Oliver, 1991). However, existing studies of organizational perceptions of uncertainty are

usually conducted in the context of specific act, and they focus primarily on the

relationship between organizational perceptions and regulatory effectiveness. For instance,

 

 

6 

 

among the very few studies about the antecedents of complying styles, Edelman and

Petterson (1991) investigated how ambiguity of EEO/ AA law affects affirmative action

officers’ working style in employment issues. On the other hand, most of the prior

researches mainly studied newly promulgated regulation or those possible in the future,

such as greenhouse gas issues. Some research attention had turned to investigate whether

and how uncertainty of environmental regulations of CO2 emission will influence business

strategies on investment (Patino – Echeverri et al., 2008). Nevertheless, we still know little

about whether and how regulatory uncertainty influences corporate compliance behavior,,

and thus this issue deserves continuing attention (Scheytt et al., 2006).

A low level of regulatory certainty may stem from several aspects. Firstly,

regulatory information it not effectively transmitted to regulated firms (Koski & May 2006;

Lee, 2011), and thus even the existing regulation and its enforcement might be perceived as

unclear by regulatees. Furthermore, regulation sometimes is ambiguous or complex, and it

is difficult for firms to determine which regulation they are subject to (DeHart-Davis &

Bozeman, 2001) and whether they understand it in a right way. Secondly, regulations

changes overtime, which also leads to regulatory uncertainty (Cook et al., 1983; Hoffmann

et al., 2008). Lastly, the lack of coordination among different regulatory agencies (Cook et

al., 1983) as well as contradictory regulatory system itself may create uncertainty.

In this study, we define regulatory certainty as business decision makers’

perception of explicitness of formal regulations, policies and its enforcement. Following

Hoffmann and others’ classification of regulatory uncertainty (2008), in our study

organizations’ perception of regulatory certainty includes basic directions, implementation

process and interdependence. Since firms’ decisions are driven by their perception rather

than reality (Ashill & Jobber, 2010; Hambrick et al., 2005; Hoffmann et al., 2009), we

focus on the perceptual aspect of regulatory certainty in our discussion.

Nonmarket Capabilities   Corporate compliance can be also studied through the natural-resource-based view

(NRBV) of firm (Hart, 1995; Wernerfelt, 1984). The fundamental principle of the NRBV

perspective is that the basis for competitive advantages lies primarily in the application of a

 

 

7 

 

bundle of valuable resources and capabilities (Barney, 1991; Sharma & Vredenburg, 1998).

In other words, the resource-based view addresses the fit between what a firm is capable of

and what it has the opportunity to do (Russo & Fouts, 1997). Resources can be generally

grouped into three types, namely tangible, intangible and personnel-based (Grant, 1991).

Regarding regulatory compliance, tangible resources include financial reserves and

physical resources such as pollution control equipments. Intangible resources, or termed as

“non-market capabilities” (Dean & Brown, 1995; Hillman & Hitt, 1999) in organizational

strategy literature, include tacit and non-tacit knowledge and skills that enable firms to

manage the public policy process and achieve favorable policy outcomes (Bonardi,

Holburn, & Vanden Bergh, 2006).

Building on resource-based perspectives, prior studies on corporate political

strategies suggest that nonmarket capabilities are unevenly distributed among firms and

that firms with such nonmarket capabilities should be more effective in influencing public

policies (Baron, 2003; Bonardi, Holburn, & Vanden Bergh, 2006; Hansen & Mitchell,

2000; Hillman et al., 2004; Keim & Baysinger, 1988). Furthermore, organizational

capability in terms of political acumen to influence public policies (Russo & Fouts, 1997)

is inimitable and valuable to neutralize, promote, or otherwise manage external

constituencies. Hence, we posit that the non-market capabilities a firm possesses may

influence its approaches to secure regulatory legitimacy.

Non-market capabilities in terms of relationship with politics and bureaucrats can

both work for and against compliance. On the one hand, firms with high level of

capabilities will be in a good position to gain political attention, and sufficient regulatory

information channels could greatly reduce the information searching cost during

compliance process. For instance, Wang et al. (2003) found that in China firms from the

private sector appear to have less bargaining power than state-owned enterprises with local

environmental authorities pertaining to the enforcement (collection) of pollution charges.

Hence companies with a high level of these resources are supposed to enjoy a higher level

of discrepancy in choosing the specific complying approach. On the other hand, a close

 

 

8 

 

relationship or dependence on government and agencies also suggest that organizations

might need to satisfy additional political need during the process of compliance.

An Integrative View   In recent corporate environmental studies, some combinative views have emerged

(Bansal, 2005; Child & Tsai, 2005; Delmas & Montes-Sancho, 2010; Etzion, 2007). For

instance, Bansal (2005) found that institutional and resource-based factors contribute

differently in different stage of corporate sustainable development. Delmas and

Montes-Sancho (2010) complemented the corporate political strategy literature with

institutional theory to analyze the determinants of participation in voluntary programs. The

investigation of corporate compliance may also be addressed within a framework that takes

account both regulatory perspectives and corporate strategy viewpoints. However, the

integrative influence of the above two on corporate compliance has not received sufficient

research attention. Among the very few studies, Aragón-Correa and Sharma (2003)

suggest that environmental uncertainty moderates the relationship between the

organizational resources/capabilities and proactive environmental strategies. Rugman and

Verbeke (1998) developed a resource-based perspective on the impact of environmental

regulation on firms. They further categorized the impact of regulation on firms into

“conflicting” and ”complementary”, and managerial response into “static” and “dynamic”.

Nevertheless, this work only studies the corporate strategy implications of formal

environmental regulation instead of various informal ones.

An integrative framework that embraces the above two literature may be necessary.

Researchers such as Oliver (1991) and Hoffman (2001) suggest that corporate behavior is

often shaped by the strategic interplay between internal and external constraints. On the

one hand, environmental state uncertainty is found to widen the gap between

resource-based action and action in response to institutional pressure (George et al., 2006).

On the other hand, RBV theorists stress the organizational necessity of adapting to

environmental uncertainty as well as managing resource flows (Pfeffer & Salanick, 1978).

This research hence highlights the necessity to investigate not only the relative importance

 

 

9 

 

of organizational and public policy forces, but also how the forces reinforce each other, and

the processes by which they effect change.

Based on the review of existing literature, we argue that corporate compliance is

constrained by two major factors. First, corporate compliance behavior is influenced by

perceptions of external regulatory environment. Upon several features of external

environment, perceived regulatory certainty might be the most important element that

shapes compliance patterns while others such as regulatory severity may have more to do

with compliance outcomes. Second, firms’ complying decisions are based on their

resource availability. There is no doubt that different environmental resource endowment,

in particular the so called non-market capabilities could facilitate or inhibit certain

compliance decision-making. Other internal factors, such as top management attitude and

commitment, are more likely to influence ultimate performance rather than the working

style formed during the complying process. We will further analyze the impacts of the

levels of regulatory certainty (RC) and non-market capabilities (NC) on CCS. To make it

simple, we assume that there are two levels for each dimension: low and high.

• Low RC

Literature on corporate environmental decision-making facing uncertainty falls

into two categories. Some researchers argue that decision makers facing a high level of

uncertainty apply a wait-and-see strategy and delay investments until they have better

planning reliability (Marcus, 1981; Yang, 2005). This stream of literature is contrasted by

an increasing number of studies (Arag´on-Correa & Sharma, 2003; Doh & Pearce, 2004;

Hoffmann, Trautmann & Hamprecht, 2009), arguing that decision makers do not

necessarily postpone investment decisions in the light of uncertainty and can even benefit

from investments if they gain a first-mover advantage.

When the regulatory certainty level is low, adapting to new situations becomes

increasingly difficult and costly. Organizations would found it difficult to make decisions

and hence may wait and see until there are explicit models or signals to follow. According

to institutional theory, firms are likely to mimic others’ behavior under this circumstance

 

 

10 

 

(DiMaggio & Powell, 1983). Milliken (1987) further indicates that an imitating behavior is

likely to take place when response uncertainty is perceived by decision-makers. Our

proposition hence is consistent with this argument that a referencing style is likely to form

when perceived RC is low. When a firm has low level of nonmarket capabilities, a better

approach is to refer to the behavior of peer companies. Firms with fewer resources are

more likely to adopt a referencing compliance style, due to fewer channels to available

options. However, if firms possess sufficient nonmarket capabilities to comply, they are

more likely to respond to the demand of external identities such as politicians and

bureaucrats. Accommodation compliance style can be similar to the modes of strategic

thinking of “muddling through” (Lindblom, 1959) or “garbage can model” (Cohen et al.,

1972), as the emergence of demanding identities is non-normal and may vary among areas

and industries. Through this differentiation it is expected to make a distinction between a

passive imitation approach and an adaptable way in response to environmental regulation.

• High RC

For firms with limited nonmarket capabilities, an optimal solution to gain

regulatory legitimacy is to rigorously follow what the regulation on book explicitly

requires. Nevertheless, if firms are equipped with a high level of resources/ capabilities to

deal with environmental issues, they have greater freedom. Thus, they could be either more

innovative in complying with regulations or more likely to utilize their resources to evade

regulation. In this way firms are capable of shifting among different approaches to gain

legitimacy at their freedom while avoiding unnecessary cost from certain environment.

• Low NC

In certain regulatory environment, firms with limited resources only need to follow

formal regulatory rules and treat them as complying benchmarks. Using traditional

procedures and routines to control uncertainty and ambiguity has been has been perceived

as an institutional response to risk (Bozeman, Reed, & Scott, 1992). When perceived

regulatory certainty is low, firms will follow peer practices to reduce transaction cost in

compliance. An information cascade is likely to occur if less informed companies choose

 

 

11 

 

to follow others’ behavior because they think the others are more knowledgeable

(Bikhchandani, Hirshleifer, & Welch, 1992).

• High NC

For firms with sufficient resources, they might be actively engaged in satisfying

closely related external identities’ demand (or labeled as formal regulation) on

environmental protection if perceived regulatory certainty is low. Nevertheless, they may

have more discretion in making complying decisions if perceived regulatory certainty is

high. Otherwise it might be safer to respond to explicit environmental demands from the

external environment. Both compliance styles portray a flexible approach towards

regulation. The difference is that the former one stresses an “always free” style while the

latter emphasizes a “firefighter” compliance style that deals with emergent demands from

time to time. Some studies of Chinese managers suggest that they share a common concern

for security and are likely to avoid proactive and risk-taking decisions when faced with

uncertain environments (Adler et al., 1992; Tan & Litschert, 1994). Previous studies on

deregulation found that increased complexity and dynamism will result in companies’

selection of shorter-term and less risky strategies (Birnbaum, 1984).

CCS: Definitions and Scenarios In the regulation literature, regulators’ features have been widely studied in terms

of regulatory policy making and enforcement style (Kagan, 2001; Kagan & Axelrad, 2000;

Kelman, 1981; Lo & Fryxell, 2003; May, 2004; McAllister, 2010; Melnick, 1983). The

regulatory enforcement literature, for instance, contains a wide variety of works to

examine whether and how distinctive enforcement styles of regulators influence regulatory

effectiveness (Bardach & Kagan, 2002; Lo & Fryxell, 2005; McAllister, 2010; Van Rooij,

2010). Regarding the response to enforcement, regulated businesses are also likely to form

different styles or approaches during the compliance process. One of the pioneering works

that conceptualize the nature of organizational responses to regulation is Cook and others’

theory building paper in 1986, integrating adaptation and mutual selection perspectives

 

 

12 

 

(Cook et al., 1983). A hierarchical ordering of organizational responses at institutional,

managerial and technical levels is classified in this study. Nevertheless, there are very

limited researches on whether regulatees differ in their behavioral patterns in complying

with environmental regulations. Through an operationalization of firms’ compliance styles

toward environmental regulation, this study tries to explore how this concept can be

adapted to be more analytically useful in understanding the process of corporate

compliance.

Corporate Compliance Style Defined  Firms in a wide range of sectors are regulated by government agencies that

establish, monitor, and enforce administrative rules on an array of policy dimensions

(Buchholz, 1990). Compliance is a process through which regulated actor abides by law. It

is also something normative that there should be compliance, and the goal of relevant laws

and enforcement is to ensure regulated actors should be aware of and take steps to comply

with laws and regulations. With managerial attention being focused on seeking the best

possible solution, only the complying approach that is in line with organizational situation

will be selected (Etzion, 2007; Oliver, 1991). Moreover, regulated firms establish codified

or uncodified practices that reflect prior managerial approaches to comply (Boddewyn &

Brewer, 1994). Hence in this study we define CCS as the general approach that regulated

actors form during the complying process.

The proposed four categories of CCSs below are supposed to capture most of the

typical compliance patterns that have been identified in the existing literature

(Aragón-Correa & Sharma, 2003; Christmann, 2004; Hansen & Mitchell, 2000; Henriques

& Sadorsky, 1999; Oliver, 1991). With the essential goal of being legitimate in an

economic way, companies differ in their styles (approaches) in dealing with environmental

regulation, ranging from simply following rules on book, to being independent and

discretionary in making environmental decisions. This categorization assumes that firms

need to maximize its profit while seeking legitimacy through regulatory compliance. Table

2 provides a summary of the main characteristics and corresponding cases of the

 

 

13 

 

conceptualized four CCSs, namely formalism, accommodation, referencing, and

self-determinism. Details of each scenario will be discussed in the following section.

Four Scenarios of CCS: A 2×2 Model Previous research normally perceive organizations’ willingness and capability as

the conditions of either compliance (May, 2005) or resistance (Olive, 1991). In other words,

organizations need to balance with conflicting external constituents, as well as

inconsistencies between institutional expectations and internal organizational efficiency.

For instance, Oliver (1991) identified five institutional factors that determine the choice of

corporate strategy towards institutional requirements, including cause, constituents,

content, control, and context. Nevertheless, very limited attention has been paid to the

interactions of these factors. In this study, we posit that the interwoven condition of

perceived regulatory certainty and internal capacity determine the specific CCS that an

organization can adopt. More specifically, we develop a four scenario model of CCS based

on the considerations of firms’ perceived regulatory certainty and nonmarket capabilities

possessed (see Figure 1). In each scenario we suppose that the corresponding CCS is in an

organization’s best interest under specific conditions.

 

 

14 

 

Table 2 Four scenarios of corporate compliance style in environmental

regulation

 

Figure 1: An Integrative Model of CCSs

 

 

 

 

 

Formalism Accommodation Referencing Self-determinism

Features

Rule compliance: adhering to rigid on-book formal rules and procedures and use them as sole compliance benchmark.

Political compliance: actively respond to and deal with concrete demands of political and bureaucratic powers.

Learning compliance: either conscious or unconscious imitation of others’ complying behaviors.

Discretionary compliance: an organic and independent either satisfy or evade regulations

Y 

XNonmarket Capabilities (NC)

Regulatory Certainty 

(RC) 

Formalism        

(I) 

Self‐determinism

(II) 

Reference       

(III) 

Accommodation    

(IV) 

 

 

15 

 

Scenario I———Formalism: NCLRCH 

In this scenario, a company perceives a high level of regulatory certainty and a

low level of nonmarket capabilities. Under this circumstance, regulated companies

simply follow what the regulation asks, but they are less likely to be innovative or to

integrate informal regulatory requirements as investments for the latter is not

affordable. For instance, Paulsson and von Malmborg (2004) report that in the case of

the European Emission Trading Scheme, “ambiguous government policies are

claimed to prevent the companies from making long-term strategies on climate

change mitigation”. For firms without access to other information sources, existing

laws and regulations offers clear benchmarks for legitimacy seeking, and hence a safe

choice to stay at least in minimum compliance with limited investment.

We argue that a rigid compliance style named “formalism” is likely to be

shaped under this condition. Formalism refers to a “go by the numbers” approach that

adheres to rigid formal rules and procedures, and firms use them as sole compliance

benchmarks, which is the simplest compliance approach, in particular under

command-and-control environmental policies. For instance, a formalistic complying

firm simply equips pollution abatement devices to assure its COD discharge is below,

or for most of the time close to the standard. Overall, firms in a formalistic

compliance style will set their goals strictly based on the explicit regulatory language

without other considerations. Furthermore, their environmental strategy is most likely

to focus on how to better satisfy regulatory standards in a cost-efficient way.

Scenario II ———– Self­determinism: NCHRCH 

Sirmon et al. (2007) argued that environmental uncertainty in terms of

dynamism will affect firms’ resource management in a series of ways, such as

bundling resources to build capabilities and leveraging capabilities to provide value to

customers. When perceived regulatory certainty is high, firms with high level of

nonmarket capabilities are likely to choose either innovative approaches or evasion

by utilizing its resources. Because clearly defined regulation and policies as well as

their enforcement provide very clear boundaries for the regulated companies, firms

 

 

16 

 

under this circumstance are more flexible to optimize their resources than their

lack-of-resources counterparts to meet regulatory standards.

We posit that a discretionary compliance style named “self-determinism” is

likely to be formed under the above condition. Self-determinism refers to the use of

more organic approaches to comply with or evade from environmental regulation.

Prior research has stressed the importance of organizational discretion and

decision-making autonomy in organization-environment relations (Cook, 1977;

Oliver, 1991). For instance, MNCs were found to adapt their subsidiaries’

environmental conducts to local conditions (Vernon, 1998). Both greater complying

efforts such as environmental innovations and evasion of regulations such as Walley

and Whitehead (1994)’s view that firms reject environmental pressures may coexist

under this circumstance.

In contrast to the other three styles, organizations under this category are more

active in promoting their own interest. On the one hand, companies under this

category might adopt modern procedures that affiliated by current technology but less

employed by competitors inside the industry. For example, joining ISO14001 has

been demonstrated as a business favorable environmental approach for firms to

pollute less and better comply with governmental regulations (Prakash & Potoski,

2006). On the other hand, previous studies have shown that some organizations do

transfer their businesses to loosely regulated countries to avoid complying cost

(Eskeland, 2003), or lobby and influence legislation for favorable public policy

decisions (Hansen & Mitchell, 2000; Schuler et al., 2002). The “escape” tactic that

Oliver (1991) proposed could be classified as one type of this style, that organization

reduces the extent of being inspected and scrutinized.

Several other patterns of self-deterministic CCS could be identified in existing

literature. Industrial self-regulation as a private decentralized institution (Barnett &

King, 2008; Prakash & Potoski, 2006) could be regarded as an extensive form of

self-determinism at industrial level. Prior studies suggest that companies construct

systems of private regulation in response to incentives, risks, and uncertainties in the

 

 

17 

 

market (King, Lenox, & Barnett, 2002) as well as dealing with negative spill-over

effect inside the industry (Barnett & King, 2008). In international business studies,

MNCs are also found to behave differently from ordinary companies when under

multinational regulations. For example, Christmann’s survey results show that

instead of exploit cross-country differences in environmental regulations,

multinational enterprises standardize different environmental policy dimensions in

response to pressure from different external stakeholders (2004).

Scenario III—— Referencing: NCLRCL 

From the transaction cost view, uncertainty and information impactedness

lead to transaction cost (Williamson, 1975). During the complying process, for

instance, due to “physical asset specificity”, transaction cost can be incurred if

regulatees install certain pollution equipments while regulators required updated

technologies in a short period. Consequently, firms with low level of nonmarket

capabilities cannot afford the transaction cost if they have a low level of regulatory

certainty. One way to reduce the transaction cost is to imitate what others are

responding to regulations.

As proposed by institutional theory (DiMaggio & Powell, 1991), mimicry

behavior is likely to happen when external environment is uncertain. Meanwhile,

firms may be more inclined to imitate others for clues when there is a lack of

nonmarket capabilities to receive signals from political identities or satisfy those

demands, and a deliberate imitation is more likely to take place than unconscious

mimicry behavior in corporate compliance. This would allow firms that lack

resources to yield a viable solution towards environmental regulation while

minimizing search costs and costs of experimentation.

The referencing CCS we proposed hence refers to either conscious or

unconscious imitation of peer companies’ complying means. This may happen either

when a firm is trying to be consistent with the market or industrial trend in

environmental protection, or simply as a result of its inexperience with certain

pollution control issue. On the one hand, it can be mimicry of model organizations’

 

 

18 

 

proactive behavior according to the institutional theory (DiMaggio & Powell, 1991;

Scott, 1995). On the other hand, organizations may also follow deficient norms in

their institutional environment.

This learning compliance style is defined as “referencing” in our framework.

The referencing approach may be a result of calculated judgments about whom to

follow and when to follow (King & Lenox, 2000; Kraatz, 1998). For instance, at the

early stage of an incentive-based environmental program initiated by the government,

some firms may wait and observe whether peer companies are engaged. By learning

from others’ experiences, firms can reduce the transaction cost in an uncertain

regulatory environment (Bonardi & Kem, 2005; Bonardi, Holburn, & Vanden Bergh,

2006). Nevertheless, sometimes firms are not rationally participating in

environmental actions but simply because others are doing that, and thus they were

following without rational justification (Abrahamson & Rosenkopf, 1993).

Regarding compliance, the former type might be more common in real world since

environmental investments normally need deliberate considerations.

Scenario IV——— Accommodation: NCHRCL  

Organizations are more likely to buffer in public affairs when environmental

uncertainty level is high (Meznar & Nigh, 1995). When perceived regulatory

certainty is low, firms with close relationship with external institutions may probably

choose to reconcile the explicit demands of informal regulators. Previous studies

show that due to the inaccessible and complex regulation, firm-level compliance

agreements are negotiated by sources, the state, and EPA (Landy, Roberts, & Thomas,

1994). However, a high level of nonmarket capabilities allows firms to meet extra

needs of stakeholders such as political leaders, and it is a safe way to stay in

compliance when regulation is vague and uncertain. Prior research has suggested that

firms that have direct experiences with politicians and regulators can better

understand policy makers’ preference (Ring, Lenway, & Govekar, 1990). When

regulatory certainty is low, firms with high level of non-market capabilities are more

 

 

19 

 

likely to actively respond to political or bureaucratic willingness, which is defined as

“accommodation” in our framework.

Firms under the category of accommodative compliance style try to balance

informal regulatory needs that are not stated in the legislation and regulation. For

instance, firms might perceive regulatory agencies, rather than legislators, as the

central point of contact for responding to the requirement of public policies (Holburn

& Vanden Bergh, 2004). Accommodative compliance style is to some extent similar

to the “compromise” strategic response proposed by Oliver (1991), which means that

regulated enterprises actively respond to important external stakeholders such as

politicians and bureaucrats.

A well-established argument in the literature is that regulatory behavior is

influenced by political leaders and constituencies (Scholz, 1991; Van Rooij, 2010;

WorldBank, 2000). Scholz (1991), for example, show how local enforcement efforts

by field officers of the US Occupational Health and Safety Administration (OSHA)

were affected by local partisan politics. If political power is able to influence the

legislation and enforcement process, there is no doubt it could also affect the

perception and hence the compliance approach of regulated business. In one of our

previous studies (Liu et al., 2011), for instance, we found that political intervention in

different forms help strengthen the effect of regulatory threats on corporate

compliance, by alleviating the conflict between organizational legitimacy and

efficiency. The political “bridging” in corporate public affairs activities, such as

adapting to changing political expectations as suggested by Meznar and Nigh (1995),

could be a good example of accommodative complying style.

DISCUSSION AND RESEARCH IMPLICATION In regulatory and organizational studies, researchers respectively recognize

the importance of external environment and internal factors in shaping firms’

compliance behavior. An integration of the two strands of theories may enhance our

understanding of corporate compliance. We argue that these interactions will actually

lead to the development of distinctive corporate environmental compliance styles,

 

 

20 

 

namely formalism, accommodation, reference, and self-determinism. Therefore,

organizations with different levels of perceived regulatory certainty and non-market

capabilities have different compliance styles.

Edelman and Petterson (1991) concluded that compliance should be

understood as a process that evolves over time instead of as a discrete event. Evolving

organizational responses to regulations have been examined in recent literature of

international business study. For instance, MNCs are found to transit from adapting

environmental policies to local country conditions in 1970s and 1980s, to

implementing worldwide uniform environmental conducts since 1990s (Christmann,

2004; Dowell, Hart, & Yeung, 2000). In this study, CCS is formed during the process

of dealing with regulatory demand, and the compliance process is not over-night. In

other words, one should not expect a sudden shift from one scenario of CCS to

another, and an evolutionary perspective towards CCS should also be considered.

Figure 2 presents how possible shifts between different scenarios may take place.

Figure 2: Overtime changes of CCSs 

 

 

 

 

 

 

 

 

 

Y 

XNonmarket Capabilities (NC) 

Regulatory Certainty 

(RC) 

Formalism        

(I) 

Self‐determinism 

(II)

Referencing       

(III) 

Accommodation   

(IV) 

 

 

21 

 

On the one hand, over-time changes could be attributed to shifting regulatory

context. This is to some extent consistent with Hoffman’s 4-stage institutional history

of chemical industry environmentalism from 1962 to 1993, evolving from the

“challenge to the existing institutional order” to “cognitive institution” (Hoffman,

1999). With the progress of industrialization and shifting social consciousness on

environmental protection, corporate compliance style towards environmental

regulation may change correspondingly. Several decades ago, the key focus of the

government and whole society is on economic development. For business, industrial

pollution control is mainly viewed as a total waste of money with no benefits. At this

stage, the general compliance approach (if firms choose to comply) would be

formalism-use the standardized tools and procedures to meet the regulatory

requirement. After a period of rapid urbanization with shifting political and social

consciousness on environmental protection, accommodative or mimicry compliance

style will emerge. For instance, the relocation of a paper company (even though it is

already in compliance) out of a downtown area in urban China is a good example in a

transition from formalism to accommodation in this stage.

On the other hand, transitions between different complying styles may come

from organizational changes. A referencing complying style, for instance, may not

always yield satisfactory outcome, and errors produced during this process will be

identified by decision makers over time. Thus, structural changes of the organization,

such as the privatization of state-owned enterprises, might divert part of the original

non-market capabilities from accommodating political demands to other issues.

Moreover, with the growing need of reducing industrial pollution, legislation and

policy will be further developed correspondingly.

It should also be noted that a single firm may have more than one CCS. Some

firms may be able to attain their goal through use of a single approach, but others may

need more. For instance, one firm might possess both formalism and accommodation

compliance style simultaneously due to the overlap between formal and informal

regulations. A combinative corporate political tactics has been demonstrated in prior

studies (Schuler, Rehbein & Cramer, 2002). Secondly, CCSs are different from

 

 

22 

 

corporate environmental strategies in two ways. First, CCS specifically implies

regulated firms’ behavioral patterns under different institutional scenarios, while

corporate environmental strategies are supposed to be properly crafted to manage

environmental related issues. Second, CCS does not differentiate firms between

“proactive” and “lagging behind” types in environmental protection.

Besides our focus on CCS dynamics in this study, many theoretical and

empirical questions require further investigation. Firstly, empirical tests of the

theories advanced here will be an important step. Meta analysis of existing research,

in-depth case studies as well as longitudinal quantitative explorations could be

employed to examine the evolutionary perspective of CCS. Furthermore, some of the

most interesting questions extended for future research can be loosely grouped as

follows:

Generalization of CCS in Diversified Areas: This framework may also be

applicable in a wide array of regulatory domains, such as tax, workplace health and

safety, product quality problems etc. In fact, learning from other policy settings may

also facilitate different theoretical insights into this integrative model.

Cross-Cultural CCS: Rivera (2009) found an inverted U-shaped policy

process–business response relationship proposed for the U.S. context, and further

posited that this relationship could be moderated by variations in the level of

democracy, system of interest representation, regulatory approach, and national

income. Corporate compliance styles may vary a lot between different cultural

contexts. MNCs are also likely to behave remarkably differently in different countries.

For instance, in analyzing the green strategies of MNCs, Rugman and Verbeke (2000)

found that some enterprises have developed internationally transferable green

capabilities while others only have localized capabilities.

Timing of adopting certain CCS: firms can play a more active role in

adopting different CCSs at different stages of policy implementation. In this research,

we only provide a primary investigation of “when” is the appropriate timing for the

adoption of CCS by integrating regulatory certainty into the model. Future study may

 

 

23 

 

explore the optimal CCS at different stages of policy design and implementation. On

the other hand, at different stages of business growth, organizations may employ

different CCSs towards regulation. For instance, a new entrant to the industry may

adopt formalistic CCS at the first beginning, before move to self-determinism that it is

capable of.

Conclusions In this research, we argue that firms need to maintain internally efficiency and

seek external legitimacy. A diversity of corporate compliance styles exists as a result

of different external and internal conditions. By developing a 2×2 conceptual model

that embraces interactions between perceived regulatory certainty and nonmarket

capabilities, we attempt to take a step forward to examine corporate compliance styles.

Our framework may make several contributions to the existing literature of regulatory

compliance and organizational studies. First, we present a comprehensive picture of

how diversified organizational behavioral patterns coexist in the complying process.

The four scenarios of corporate compliance style are not brand new since most of

these approaches have been studied separately in both regulatory and organizational

studies. A systematic framework to integrate them organically, nevertheless, is still in

absence as far as we know. The second contribution of this paper is that we provide a

better understanding of corporate compliance by utilizing a process perspective

instead of the traditional motivation or performance based viewpoints. A conceptual

framework for predicting the occurrence of alternative complying approaches has

been developed, and it suggests that elements from regulatory perspectives and the

resource-based view of the firm can be integrated into the framework to provide a

comprehensive view of corporate compliance process. Third, this study will shed

some light on future study on the dynamics of corporate regulatory compliance. As

we discussed in previous section, evolving organizational responses to regulations

deserve further attention in both regulatory and management research. The model

developed in this paper mainly present a static picture of organizational behavioral

patterns towards regulation. A longitudinal study may provide a comprehensive

 

 

24 

 

investigation of evolutionary corporate compliance styles during a long period of time.

Future research could also conduct quantitative investigations about how interactions

between perceived regulatory certainty and non-market capabilities impact corporate

compliance.

The practical contributions of this research are twofold. On the one hand,

exploring the effect of both formal and informal regulation on corporate compliance

styles may help environmental policy makers to further understand what kind of

signals the current regulations and policy instruments are sending to polluting firms,

which may help improve the policy design in the future. For instance, Hanson et al.

(2008) found that uncertainty about industrial compliance is an important source of

uncertainty for regulators when choosing regulatory instruments. On the other hand, it

could also be helpful for regulated firms to make better compliance decisions under

both external and internal constraints.

 

 

25 

 

References  Abrahamson, E., & Rosenkopf, L. 1993. Institutional & competitive bandwagons: Using

mathematical models as a tool to explore innovation diffusion. Academy of Management Review, 18: 487-517.

Adler, N. J., Brahm, R., & Graham, J. L. 1992. Strategy implementation: A comparison of face-to-face negotiations in the Peoples Republic of China and the United States. Strategic Management Journal, 13: 449-466.

Arag´on-Correa, J. A., & Sharma, S. 2003. A contingent resource-based view of proactive corporate environmental strategy. Academy of Management Review, 28: 71-88.

Arora, S., & Gangopadhyay, S. 1995. Toward a Theoretical Model of Voluntary Overcompliance. Journal of Economic Behavior and Organization, 28 (3): 289-309.

Ashill, N. J., & Jobber, D., 2010. Measuring state, effect, and response uncertainty: Theoretical construct development and empirical validation. Journal of Management, 36(5): 1278-1308.

Bansal, P. 2005. Evolving sustainably: A longitudinal study of corporate sustainable development. Strategic Management Journal, 26: 197-218.

Bardach, E., & Kagan, R. A. 2002. Going by the Book: The Problem of Regulatory Unreasonableness. Rev. Ed. Philadelphia: Transaction Publishers.

Barnett, M. L., & King, A. A. 2008. Good fences make good neighbors: a longitudinal analysis of industry self-regulatory institution. Academy of Management Journal, 51(6): 1150-1170.

Barney, J. B. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17: 99-120.

Baron, D. 2003. Business and its environment. Upper Saddle River, NJ: Prentice-Hall. Baumol, W., & Oates, W. 1988. The Theory of Environmental Policy. Cambridge:

Cambridge University Press. Bikhchandani, S., Hirshleifer, D., & Welch, I. 1992. A theory of fads, fashion, custom, and

cultural change as informational cascades. Journal of Political Economy, 100: 992-1026. Birnbaum, P. H. 1984. The choice of strategic alternatives under increasing regulation in high

technology companies. Academy of Management Journal, 27: 489-510. Boddewyn, J., & Brewer, T. 1994. International business political behavior: New theoretical

directions. Academy of Management Review, 19: 119–143. Bonardi, J. P., Holburn, G.L.F., & Vanden Bergh, R.G. 2006. Nonmarket strategy

performance: evidence from U. S. Electric utilities. Academy of Management Journal, 49 (6): 1209-1228.

Bonardi, J. P., & Keim, G. 2005. Corporate political strategies for widely salient issues. Academy of Management Review, 30: 555–576.

Bozeman, B., Reed, P., & Scott, P. 1992. Red Tape and Task Delays in Public and Private Organizations. Administration and Society, 24 (3): 290-322.

Buchholz, R. A. 1990. Essentials of public policy for management. Upper Saddle River, NJ: Prentice-Hall.

Burby, R., & Paterson, R. G. 1993. Improving compliance with state environmental regulations. Journal of Policy Analysis and Management, 12: 753-772.

Child, J., & Tsai, T. 2005. The dynamic between firms’ environmental strategies and institutional constraints in emerging economies: Evidence from china and Taiwan. Journal of Management Studies, 42(1): 95-125.

Christmann, P. 2004. Multinational companies and the natural environment: determinants of global environmental policy standardization. Academy of Management Journal, 47 (5):

 

 

26 

 

747-760. Cohen, M. D., March, J. G., & Olsen, J. P. 1972. A garbage can model of organizational

choice. Administrative Science Quarterly, 17: 1-25. Cook, K. 1977. Exchange and power in networks of intro-organizational relations. The

Sociological Quarterly, 18: 62-82. Cook, K., Shortell, S. M., Conrad, D. A., & Morrisey, M. A. 1983. A theory of organizational

response to regulation: The case of hospitals. Academy of Management Review, 8(2): 193-205.

Darnall, N., Potoski, M., & Prakash, A. 2010. Sponsorship matters: Assessing business participation in government- and industry- sponsored voluntary environmental programs. Journal of Public Administration Research and Theory, 20(2): 283-307.

Dean, T. J., & Brown, R. L. 1995. Pollution regulation as a barrier to new firms entry: Initial evidence and implications for future research. Academy of Management Journal, 38: 288-303.

DeHart-Davis, L., & Bozeman, B. 2001. Regulatory Compliance and Air Quality Permitting: Why Do Firms Overcomply? Journal of Public Administration Research and Theory, 11(4): 471-508.

Delmas, M. A., & Montes-Sancho, M. J. 2010. Voluntary agreements to improve environmental quality: symbolic and substantive cooperation. Strategic Management Journal, 31(6): 575-601.

Delmas, M. & Toffel, M. 2008. Organizational Responses to Environmental Demands: Opening the Black Box. Strategic Management Journal, 29(10): 1027-1055.

DiMaggio, P. J., & Powell, W. W. 1983. The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2): 147-160.

DiMaggio, P. J., & Powell, W. W. 1991. The new institutionalism in organizational analysis. Chicago: Univ. of Chicago Press.

Doh, J. P., & Pearce, J. A. 2004. Corporate entrepreneurship and real options in transitional policy environments: theory development. Journal of Management Studies, 41: 645-664.

Dowell, G., Hart, S., & Yeung, B. 2000. Do corporate environmental standards create or destroy market value? Management Science, 46: 1059-1074.

Edelman, L. B., & Petterson, S. 1991. Legal ambiguity and the politics of compliance: Affirmative action officers’ dilemma. Law & Policy, 13(1): 73-91.

Eskeland, G. S., & Harrison, A. E. 2003. Moving to greener pastures? Multinationals and the pollution haven hypothesis. Journal of Development Economics, 70(1): 1-23.

Etzion, D. 2007. Research on organizations and the natural environment, 1992-present: A review. Journal of Management, 33(4): 637-664.

George, E., Chattopadhyay, P., Sitkin, S., & Barden, J. 2006. Cognitive underpinnings of institutional persistence and change: a framing perspective. Academy of Management Review, 31: 347-365.

Gunningham, N. A., Kagan, R. A. & Thornton, D. 2004. Social license and environmental protection: Why businesses go beyond compliance. Law and Social Inquiry, 29 (4): 307-41.

Gunningham, N. A., Thornton, D., & Kagan, R. 2005. Motivating management: Corporate compliance in environmental protection. Law & Policy, 27: 289-316.

Hambrick, D. C., Finkelstein, S., & Mooney, A. C. 2005. Executive job demands: new insights for explaining strategic decisions and leader behaviors. Academy of Management Review, 30: 472-491.

Hansen, L. G., Jensen, F., & Russell, C. 2008. The choice of regulatory instrument when there is uncertainty about compliance with fisheries regulations. American Journal of

 

 

27 

 

Agricultural Economics, 90(4): 1130-1142. Hansen, W. L., & Mitchell, N. J. 2000. Disaggregating and explaining corporate political

activity: Domestic and foreign corporations in national politics. American Political Science Review, 94: 891-903.

Hart, S. L. 1995. A natural resource-based view of the firm. Academy of Management Review, 20: 986-1014.

Henriques, I., & Sadorsky, P. 1999. The relationship between environmental commitment and managerial perceptions of stakeholder importance. Academy of Management Journal, 42(1): 87-99.

Heyes, A.G. 1998. Making Things Stick: Enforcement and Compliance. Oxford Review of Economic Policy, 14 (4): 50-63.

Hillman, A., & Hitt, M. 1999. Corporate political strategy formulation: A model of approach, participation and strategy decisions. Academy of Management Review, 20: 193-214.

Hillman, A., Schuler, D., & Keim, G. 2004. Corporate political activity: A review and research agenda. Journal of Management, 30: 837-857.

Hoffman, A. J. 1999. Institutional evolution and change: Environmentalism and the U.S. chemical industry. Academy of Management Journal, 42: 351-371.

Hoffman, A. J. 2001. Linking organizational and field level analyses: the diffusion of corporate environmental practice. Organization & Environment, 14(2): 133-156.

Hoffmann, V. H., & Trautmann, T. 2006. The role of industry and uncertainty in regulatory pressure and environmental strategy. In: Academy of Management Best Paper Proceedings.

Hoffmann, V. H., Trautmann, T., & Hamprecht, J. 2009. Regulatory uncertainty: A reason to postpone investments? Not necessarily. Journal of Management, 46(7): 1227-1253.

Holburn G. L. F., & Vanden Bergh, R. G. 2004. Influencing agencies through pivotal political institutions. Journal of Law, Economics and Organization, 20: 458-483.

Hunt, C. B., & Auster, E. R. 1990. Proactive environmental management: Avoiding the toxic trap. Sloan Management Review, 31(2): 7-18.

Jaffe, J., & Stavins, R. N. 2007. On the value of formal assessment of uncertainty in regulatory analysis. Regulation and Governance, 1: 154-171.

Kagan, R. A., & Axelrad, L. 2000. Regulatory Encounters: Multinational Corporations and American Adversarial Legalism. Berkeley: Univ. of California Press.

Kagan, R. A. 2001. Adversarial Legalism: The American Way of Law. Cambridge, MA: Harvard Univ. Press.

Keim, G., & Baysinger, B. 1988. The efficacy of business political activity: Competitive considerations in a principal-agent context. Journal of Management, 14: 163–180.

Kelman, S. 1981. Regulating America, Regulating Sweden: A Comparative Study of Occupational Health and Safety Policy. Cambridge, MA: MIT Press.

Khanna, T., & Palepu, K. G. 1997. Why focused strategies may be wrong for emerging markets. Harvard Business Review July/August, 41-51.

King, A., Lenox, M. J., & Barnett, M. L. 2002. Strategic Responses to the Reputation Commons Problem. Pp. 393-406 in Organizations, Policy, and the Natural Environment. Stanford, Calif.: Stanford University Press.

King, A. A., & Lenox, M. J. 2000. Industry self-regulation without sanctions: The chemical industry’s responsible care program. Academy of Management Journal, 43(4): 698-716.

Koski, C., & May, P. J. 2006. Interests and implementation: Fostering voluntary regulatory actions. Journal of Public Administration Research and Theory, 16: 329-349.

Kraatz, M. 1998. Learning by association? Inter-organizational networks and adaptation to environmental change. Academy of Management Journal, 41: 621- 643.

Landy, M.K., Roberts, M.J., & Thomas, S.R. 1994. The Environmental Protection Agency:

 

 

28 

 

Asking the Wrong Questions from Nixon to Clinton. New York: Oxford University Press. Lawrence, P., & Lorsch, J. W. 1967. Differentiation and integration in complex organizations.

Administrative Science Quarterly, 12: 1-47. Lee, E. 2011. Information, interest intermediaries, and regulatory compliance. Journal of

Public Administration Research and Theory, 21(1): 137-157. Lindblom, C. E. 1959. The science of “muddling through”. Public Administration Review,

19(2): 79-88. Liu, N., Lo, C. W. H., & Zhan, X. Y. 2011. Political Intervention and Corporate

Environmental Compliance: Evidence from China’s Coal-fired Power Plants. Paper presented at the annual meeting of National Conference of Public Administration. Shanghai, China.

Lo, C. W. H., & Fryxell, G. 2003. Enforcement styles among environmental protection officials in china. Journal of Public Policy, 23(1): 811-815.

Lo, C. W. H., & Fryxell, G. 2005. Governmental and societal support for environmental enforcement in china: An empirical study in Guangzhou. The Journal of Development Studies, 41(4): 558-588.

Lynch-Wood, G., & Williamson, D. 2010. Regulation and Criminal Justice: Innovations in Policy and Research. Cambridge University Press, Ch. 6, p. 136.

Marcus, A. A. 1981. Policy uncertainty and technological innovation. Academy of Management Review, 6(3): 443-448.

May, P. J. 2004. Compliance motivations: Affirmative and negative bases. Law and Society Review, 38(1): 41-68.

May, P. J. 2005. Regulation and compliance motivation: Examing different approaches. Public Administration Review, 65(1): 31-44.

McAllister, L. K. 2010. Dimensions of enforcement style: Factoring in regulatory autonomy and capacity. Law & Policy, 32: 61-78.

Melnick, R. S. 1983. Regulation and the Courts: The Case of the Clean Air Act. Washington, DC: Brookings Institution.

Meyer, J. W., and Rowan, B., 1977. Institutional organizations: Formal structure as myth and ceremony. American Journal of Sociology 83(2): 340-363.

Meznar, M. B., & Nigh, D. 1995. Buffer or Bridge? Environmental and Organizational Determinants of Public Affairs Activities in American Firms. Academy of Management Journal, 38 (4): 975-996.

Miles, R. E., & Snow, C. C. 1978. Organizational Strategy, Structure and Process. McGraw Hill, New York.

Miller, K. 1993. Industry and country effects on managers’ perceptions of environmental uncertainties. Journal of International Business Studies, 24(4): 693-714.

Milliken, F. 1987. Three types of perceived uncertainty about environment: state, eff ect, and response uncertainty. Academy of Management Review, 12(1): 133-143.

Oliver, C. 1991. Strategic responses to institutional processes. Academy of Management Review, 16(1): 145-179.

Paternoster, R., Saltzman, L., Waldo, G., & Chiricos, T. 1983. Perceived risk and social control: Do sanctions really deter? Law and Society Review, 17: 457-479.

Patino-Echeverri, D., Fischbeck, P. & Kriegler, E. 2008. Economic and Environmental Costs of Regulatory Uncertainty for Coal-Fired Power Plants. Environmental Science and Technology, 43: 578-584.

Paulsson, F., & von Malmborg, F. 2004. Carbon dioxide emission trading, or not? an institutional analysis of company behavior in Sweden. Corporate Social Responsibility and Environmental Management, 11: 211-221.

 

 

29 

 

Prakash, A., & Potoski, M. 2006. The voluntary environmentalist: Green clubs, ISO 14001, and voluntary environmental regulations. Cambridge, U.K.: Cambridge University Press.

Ring, P. S., Lenway, S., & Govekar, M. 1990. Management of the political imperative in international business. Strategic Management Journal, 11: 141–151.

Rivera, J., Oetzel, J., deLeon, P., & Statik, M. 2009. Business responses to environmental and social protection policies: toward a framework for analysis. Policy Sciences, 42: 3-32.

Roome, N. 1992. Developing environmental management systems. Business Strategy and the Environment, 11: 11-24.

Rugman, A. M., & Verbeke, A. 1998. Corporate strategies and environmental regulations: an organizing framework. Strategy Management Journal, 19: 363-375.

Rugman, A. M., & Verbeke, A. 2000. Six cases of corporate strategic responses to environmental regulation. European Management Journal, 18(4): 377-385.

Russo, M. V., & Fouts, P. A. 1997. A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, 40(3): 534-559.

Scheytt, T., Soin, K.and Sahlin-Andersson, K., & Power, M. 2006. Special research symposium: organizations and the management of risk introduction: Organizations, risk and regulation. Journal of Management Studies, 43: 1131-1137.

Scholz, J. 1991. Cooperative regulatory enforcement and the politics of administrative effectiveness. The American Political Science Review, 85(1): 115-136.

Schuler, D. 1996. Corporate political strategy and foreign competition: The case of the steel industry. Academy of Management Journal, 39: 720–737.

Schuler, D., Rehbein, K., & Cramer, R. 2002. Pursuing strategic advantage through political means: A multivariate approach. Academy of Management Journal, 45: 659–672.

Scott, W. R. 1995. Institutions and Organizations. Sage Publications, Thousand Oaks, California.

Sharma, S., & Vredenburg, H. 1998. Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, 19(8): 729-753.

Shimshack, J. P., & Ward, M. B. 2005. Regulator reputation, enforcement, and environmental compliance. Journal of Environmental Economics and Management, 50(3): 519-540.

Sirmon, D, G., Hitt, M. A., & Ireland, R. D. 2007. Management firm resources in dynamic environments to create value: looking inside the black box. Academy of Management Review, 32(1): 273-292.

Tan, J. J., Litschert, R. J. 1994. Environment-strategy relationship and its performance implications: An empirical study of the Chinese electronics industry. Strategic Management Journal, 15(1): 1-20.

Van Rooij, B. 2010. Greening industry without enforcement? An assessment of the world banks pollution regulation model for developing countries. Law & Policy, 32: 127-152.

Vernon, R. 1998. In the hurricane’s eye: The troubled prospects of multinational enterprises. Cambridge, MA: Harvard University Press.

Walley, N., & Whitehead, B. 1994. Its not easy being green. Harvard Business Review, 72(3): 46-52.

Wang, H., & Jin, Y. H. 2007. Industrial ownership and environmental performance: Evidence from china. Journal of Environmental and Resource Economics, 36(3): 255-273.

Wang, H., Mamingi, N., Laplante, B., & Dasgupta, S. 2003. Incomplete enforcement of pollution regulation: Bargaining power of Chinese factories. Environmental and Resource Economics, 24(3): 245-262.

Wartick, S. L., & Cochran, P. L. 1985. The evolution of the corporate social performance model. Academy of Management Review, 4: 758-769.

 

 

30 

 

Wernerfelt, B. 1984. A resource-based view of the firm. Strategic Management Journal, 5: 171-180.

Williamson, O. E. 1975. Markets and Hierarchies: Analysis and antitrust implications. New York: The Free Press.

Winter, S. C., & May, P. J. 2001. Motivation for compliance with environmental regulations. Journal of Policy Analysis and Management, 20(4): 675-698.

World Bank. 2000. Greening Industry: New Roles for Communities, Markets and Governments. Oxford University Press for the World Bank, New York.

Yang, G. B. 2005. Environmental NGOs and institutional dynamics in China. The China Quarterly, 181: 46-66.