Policy Uncertainty and Corporate Involvement in Government-sponsored Voluntary Environmental Programs

This study combines insights from the policy uncertainty literature and neo-institutional theory to examine firm responses towards a government-sponsored voluntary environmental program (VEP) during 2004-2012 in Guangzhou,... [ view full abstract ]

This study combines insights from the policy uncertainty literature and neo-institutional theory to examine firm responses towards a government-sponsored voluntary environmental program (VEP) during 2004-2012 in Guangzhou, China. We found that in a transitional policy environment, firms that join a government-sponsored VEP under higher policy uncertainty are likely to be those that have faced stronger targeting pressure from government. Compared with those that enroll under moderate or high policy uncertainty, firms that enroll under low uncertainty are more likely to adhere to program obligations. Participants’ effort is also affected by their prior surveillance experiences and peer efforts within the same regulatory jurisdiction, especially for firms joining under either low or high policy uncertainty. Finally, peer efforts within the same industry encourage participants’ effort regardless of the policy uncertainty level at the time of enrollment.