Environmental Regulations and Corporate Strategy: A NAFTA Perspective

By Alan Rugman; John Kirton et al. | Go to book overview
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Corporate Strategy and Environmental Regulation: Corporate Strategy Perspectives

The preceding chapter developed a framework of twenty different cases where five different governmental levels of environmental regulation interact with four different levels of internationally exposed and involved firms. The resulting twenty cells where the challenge of environmental regulatory protection arises permit different strategic responses on the part of firms affected by those regulations. This chapter explains and documents some of the varying corporate strategic responses firms have available and employ, in order to develop this framework into an explanatory tool.

The focus here is the North American market place, where firms in the United States and Canada have sought to prevent firms located in the other NAFTA countries from gaining market access through the 'capture' of the administration of environmental regulation. Five cases are examined in an effort to discern whether such cases constitute part of a shelter-based strategy by the firm. This is done through an examination of the various corporate and government players involved in each case and the alliances they have formed with environmental groups. The way in which firms have adjusted their strategies to take account of these barriers are identified. Responses range from the aggrieved firm establishing a presence through foreign direct investment in the market from which they are denied access to intensive lobbying on the part of that firm.

This analysis also illustrates the diversity in the range of sectors where these disputes can erupt and the severe impact that such trade-restricting environmental regulation can impose. Such disputes can occur over a similarly diverse range of environmental regulations, notably, as explored here, the broad classifications of: conservation; packaging and labelling requirements; and health and safety regulations. The five cases span the pre- and post-NAFTA period. They vary in the degree to which they employ the new complex instruments of NAFTA (or alternatively the FTA or the GATT), as a means by which to successfully combat the discriminatory application of domestic environmental regulation. In many of these cases, we will argue later in the book, these affected firms may have been better off by mobilizing NAFTA's international institutions in more complex ways than they did to secure the markets they were denied.

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