Dissertation
This dissertation explores motivations behind setting voluntary greenhouse gas (GHG) emission reduction goals. It seeks to understand how the institutional environment in which firms operate shape their profit-maximizing decisions regarding GHG emissions. Such an environment is populated by various stakeholder groups that exert influence on the firm. Understanding how such groups impact the firm can (1) inform policies that take advantage of institutional arrangements to encourage more aggressive emissions reductions by firms and (2) demonstrate the limits of voluntary approaches in reducing GHG emissions.
The first essay develops a theoretical framework in which corporate social responsibility (CSR) related to climate change is modeled as the proportion of clean inputs firms use in their production processes. Stakeholder groups can have preferences for environmental CSR that impact a firm’s profit function and constraints. The resulting framework demonstrates the various considerations that a firm may have in deciding on a profit-maximizing level of environmental CSR given various characteristics.
The second essay discusses the results of 17 interviews conducted with vice presidents and managers responsible for environmental sustainability initiatives at large U.S. firms on efforts to reduce greenhouse gas emissions and climate policy engagement. To situate the analysis, it develops a framework that sees the firm as a socially embedded creation, where stakeholder groups exert varying levels of influence and provide the context in which the technostructure responds to outside information in the face of uncertainty. This more organic, populated model is distinct from the traditional economic view of the firm as a “black box” in which inputs are simply transformed according to a production function to produce profit-maximizing output. By understanding the firm as socially embedded, the influence and power of groups that have strong preferences for or against environmental protection can be understood. The interviews provide empirical support for this model. Subjects discuss the role of stakeholder groups such as activists, consumers, and workers in the development of the firm’s environmental policy. Different groups can prompt the firm to set greenhouse gas or energy-related goals, and they encourage the firm to re-examine production processes to find new ways to both reduce costs and emissions. Additionally, the socialization of managers to understand the interviews suggest that many firms are preparing for and eventually expect a national price on carbon in the United States, and this suggests that the policy may be less costly than some projections indicate.
The third essay explores the characteristics of firms that joined the U.S. Environmental Protection Agency’s Climate Leaders initiative, a voluntary program through which members set and achieved GHG emissions reductions that operated from 2002 to 2010. Committing to such voluntary goals may seem to contradict the goal of profit maximization for a firm, especially in the case of those that do not make final goods and thus would not rely on membership as a marketing tool. To understand which kinds of firms would tend to join and be active participants in such a program, a panel of S&P 500 members, 87 of which eventually joined Climate Leaders, is analyzed using a panel probit model and survival analysis. Results suggest that firms already engaged in sustainability activities, larger firms, those located in more environmentally friendly states, and those located in areas with cleaner air are more likely to be in the program.
The first essay develops a theoretical framework in which corporate social responsibility (CSR) related to climate change is modeled as the proportion of clean inputs firms use in their production processes. Stakeholder groups can have preferences for environmental CSR that impact a firm’s profit function and constraints. The resulting framework demonstrates the various considerations that a firm may have in deciding on a profit-maximizing level of environmental CSR given various characteristics.
The second essay discusses the results of 17 interviews conducted with vice presidents and managers responsible for environmental sustainability initiatives at large U.S. firms on efforts to reduce greenhouse gas emissions and climate policy engagement. To situate the analysis, it develops a framework that sees the firm as a socially embedded creation, where stakeholder groups exert varying levels of influence and provide the context in which the technostructure responds to outside information in the face of uncertainty. This more organic, populated model is distinct from the traditional economic view of the firm as a “black box” in which inputs are simply transformed according to a production function to produce profit-maximizing output. By understanding the firm as socially embedded, the influence and power of groups that have strong preferences for or against environmental protection can be understood. The interviews provide empirical support for this model. Subjects discuss the role of stakeholder groups such as activists, consumers, and workers in the development of the firm’s environmental policy. Different groups can prompt the firm to set greenhouse gas or energy-related goals, and they encourage the firm to re-examine production processes to find new ways to both reduce costs and emissions. Additionally, the socialization of managers to understand the interviews suggest that many firms are preparing for and eventually expect a national price on carbon in the United States, and this suggests that the policy may be less costly than some projections indicate.
The third essay explores the characteristics of firms that joined the U.S. Environmental Protection Agency’s Climate Leaders initiative, a voluntary program through which members set and achieved GHG emissions reductions that operated from 2002 to 2010. Committing to such voluntary goals may seem to contradict the goal of profit maximization for a firm, especially in the case of those that do not make final goods and thus would not rely on membership as a marketing tool. To understand which kinds of firms would tend to join and be active participants in such a program, a panel of S&P 500 members, 87 of which eventually joined Climate Leaders, is analyzed using a panel probit model and survival analysis. Results suggest that firms already engaged in sustainability activities, larger firms, those located in more environmentally friendly states, and those located in areas with cleaner air are more likely to be in the program.