Why Do Corporations Obey Environmental Law?

Project Summary for 2001-IJ-CX-0020 The proposed study will explore the extent to which deterrence or cooperative strategies motivate firms and their managers to monitor, dissuade, report, and punish poor environmental performance by facilities and/or employees. The research design will contain three main elements: (1) secondary data analysis of EPA environmental compliance records of companies over a five year time period and Standard and Poor's Industrial Compustat to assess whether firm and industry characteristics are related to compliance levels and whether some legal interventions produce lower recidivism rates than others; (2) interviews with enforcement personnel regarding target selection for investigation, firm monitioring techniques, inspector qualifications and expertise, and perceptions of stragegy effectiveness; and (3) a combined vignette and questionnaire survey of managers in firms that exceed, meet, or fail to meet compliance standards, to learn (a) how corporate managers assess the costs and benefits of environmental compliance/noncompliance, (b) whether some sanction sources and targets are perceived to be more effective than others, and (c) what role normative and extra-legal factors play in facilitating organizational compliance. This research will contribute to an understanding of the nature and costs of the enforcement of environmental laws, the role of social norms, and the relationship of enforcement and norms to organizational compliance with those laws.