Regulatory agencies, auditing firms, and supply chain partners externally promote change in firms. To this end, they commonly employ two di erent and somewhat contradictory intervention approaches. One approach uses punitive tactics to coerce firms to change, while the other approach uses supportive tactics to encourage change. Using the context of government agencies promoting environmental improvements in firms, we examine whether such punitive (e.g., regulatory inspections with possible sanctions) and supportive (e.g., environmental assistance, improvement recommendations) tactics can be administered in a complementary manner. Using a unique and novel longitudinal data set collected from two state-level environmental agencies in Minnesota, we analyze over 1,000 supportive environmental improvement (EI) projects in combination with intermittent (but currently uncoordinated) punitive tactics. One key finding from our research is that the timing, severity, and relatedness of punitive tactics is critical for directing managerial attention and thus improving the e cacy of supportive tactics (i.e., EI implementation). Contingent on their timing, inspections can increase EI implementation rates by up to 60% but can also reduce implementation rates by up to 50% compared with EIs in facilities that do not experience inspections. Classifying regulatory inspections as (1) either clean or adverse and (2) either related or unrelated allows us to further explain the influence of such punitive tactics on EI implementation. Finally, we provide evidence for a positive e ect of successful EI implementation on long-term environmental compliance.
Bibliographical noteFunding Information:
The authors thank department editor Serguei Netessine, the associate editor, and three anonymous reviewers, whose comments have significantly improved the paper. The authors acknowledge the ongoing support from the Minnesota Technical Assistance Program (MTAP). They would especially like to thank Laura Babcock (Director, MTAP) for her encouragement and insights. The authors thank Andrew Van de Ven, John Gray, and Robert Klassen for their valuable feedback on earlier versions of this paper. They also acknowledge the useful comments received from George Ball and the faculty members at University of Minnesota. Finally, acknowledgements are due for the participants at Production and Operations Management Society 2013, INFORMS 2013, Decision Sciences Institute 2013, and Academy of Management 2013 Conferences, from whose insights this paper benefited immensely.
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- Attention-based view
- Hazard model
- Operations-environmental policy interface
- Sustainable operations