Academic journal article Management International Review

Why Do Firms Engage in National Sustainability Programs and Transparent Sustainability Reporting? Evidence from Mexico's Clean Industry Program

Academic journal article Management International Review

Why Do Firms Engage in National Sustainability Programs and Transparent Sustainability Reporting? Evidence from Mexico's Clean Industry Program

Article excerpt

Abstract:

* To evaluate global and domestic corporations on their sustainability engagement, numerous metrics have been developed at the national and international levels.

* In this paper, we assess whether the largest 448 foreign and local firms operating in a particular country engage in local sustainability initiatives (i.e., Mexico's Clean Industry Program). The paper also assesses the degree of sustainability reporting (transparency towards sustainability) by the 267 local firms.

* Using an Institutional Theory rationale, we find that type of industry (dirty vs. clean), regional home, and engagement in global sustainability initiatives--i.e., The UNGC--best explain the firm's decision to follow local sustainability initiatives.

* We find that the type of industry and affiliation to a national sustainability program are highly related to transparent sustainability reporting for large Mexican firms.

Keywords: Sustainability' Business and the environment. Developing market firms * Institutional theory * Liability of foreignness

Introduction

We live in an era of heightened environmental concern with numerous growing pressures. For example, the debate on climate change has moved from one of possible human culpability to one of almost certain human causality. Causal factors aside, the act of changing course now so that humanity may enjoy a bountiful future strikes at the heart of the sustainable development issue (from here on sustainability), where large and influential corporations are expected to respond to the challenge. Thus, in this paper, we seek to understand why some of these corporations are quicker to adjust to the internal and external pressures associated with maintaining a sustainable future.

Understanding these pressures has not been easy. More than a decade ago, in the special issue of the Academy of Management Review on ecologically sustainable organizations, Gladwin et al. (1995) only focused on what the concept meant for business organizations. Nevertheless, Starik and Rands (1995) in that same volume did directly address the complicated pressures issue through their 'multilevel-multisystem perspective' that can be best described as a web of multiple strings. Their complicated web of levels and systems represents the interrelated pressures that ecologically sustainable organizations must now face across numerous national settings. Perhaps, as Starik and Rands (1995) envisioned, the sustainability concept is much more complex in its implementation than in its almost straightforward definition.

About the latter (the definition), The Brundtland Report (1987) defines sustainability as the efforts geared towards "meeting the needs of the present (generation) without compromising the ability of future generations to meet theirs." About its implementation, to deal with this inter-generational challenge of appropriating the earth's natural resources, international organizations must manage within a maze of myriad pressures. This maze can be thought of as the context, the milieu, or the setting for sustainability. Regardless of the term applied to the sustainability challenge facing business organizations, context or milieu does matter.

Context (1) may include geography, such as varying units of analysis at the international, national, and sub-national (regional) levels. For example, the United Nations Global Compact (UNGC) is a voluntary supranational pact comprised of willing organizations who commit to ten operating principles within these categories: the environment, human rights, labor, and transparency (see Table 1). Gladwin et al. (1995) suggest that firm adherence to these normative principles should develop into an ecological mindset toward sustainability; different from the one found in non-UNGC corporations. To this end, several business researchers have established the UNGC as a normative influence (e.g. …

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