Self-Regulatory Institutions for Solving Environmental Problems: Perspectives and Contributions from the Management Literature

Executive Summary:

What role can business managers play in protecting the natural environment? Academic research on when it might "pay to be green" has advanced understanding of how and when firms achieve sustained competitive advantage. The focus of such research, however, has begun to change in light of limits to available "win-win" opportunities and to gaps in regulation. This paper, intended as a book chapter, reviews current literature and explores the potential of self-regulatory institutions to solve environmental problems. Key concepts include:

• Firms have created self-regulatory institutions to mitigate the risk of common sanctions and to address information asymmetries regarding production and employment practices.
• Some self-regulatory institutions appear to reduce asymmetries in information, others to facilitate coordinated investment in solutions to common problems.
• Future research needs to identify the factors that lead some, but not all, self-regulatory institutions to be effective routes to solving environmental problems.
• The literature reviewed here is proving valuable to scholars who study the self-regulation of standards, knowledge sharing, and open-source software development.