Does Regulation Perform Better Than Self-Regulation? An Analysis of Spanish Environmental Policies

The question of why corporations are subject to different regulatory approaches remains open. In this paper we analyze this problem using Ashbein and Ajzen's theory of planned behavior. We study how management's perception of public environmental policies influences how the corporation acts and the ways in which this environmental approach contributes to environmental performance. This research differentiates among five policy approaches, some of which are focused on mandatory regulation and some on positive and voluntary adjustments made by corporations. An empirical analysis is conducted based on data for 1151 Spanish corporations from 2002 to 2005. We conclude that self-regulation produces the greatest environmental gains, particularly when coupled with a cooperative regulatory approach. These results call into question the public preference for environmental policies based on mandatory standards and technologies (based on either coercion or conciliation) and support recommendations for policies to support self-regulation rather than legal coercion.