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Green Clubs and Voluntary Governance: ISO 14001 and Firms' Regulatory Compliance

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  • Matthew Potoski
  • Aseem Prakash

Abstract

Voluntary programs have become widespread tools for governments and nongovernmental actors looking to improve industry's environmental and regulatory performance. Voluntary programs can be conceptualized as club goods that provide nonrival but potentially excludable benefits to members. For firms, the value of joining a green club over taking the same actions unilaterally is to appropriate the club's positive brand reputation. Our analysis of about 3,700 U.S. facilities indicates that joining ISO 14001, an important nongovernmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 is effective because its broad positive standing with external audiences provides a reputational benefit that helps induce facilities to take costly progressive environmental action they would not take unilaterally.

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  • Matthew Potoski & Aseem Prakash, 2005. "Green Clubs and Voluntary Governance: ISO 14001 and Firms' Regulatory Compliance," American Journal of Political Science, John Wiley & Sons, vol. 49(2), pages 235-248, April.
    • Handle: RePEc:wly:amposc:v:49:y:2005:i:2:p:235-248
    DOI: 10.1111/j.0092-5853.2005.00120.x
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    References listed on IDEAS

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    1. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, October.
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