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Pressure from customers, shareholders, governments and the general public pushes firms to improve their environmental performance — but what about a firm’s competitors? What role does competition between companies play in influencing environmental practices?
Christian Hofer (University of Arkansas), David E. Cantor (Iowa State University) and Jing Dai (Iowa State University) asked the same questions. They looked at the two largest firms in 48 different manufacturing industries from 2006 to 2009 and found that competition within an industry does affect environmental performance.
Specifically, the trio found that businesses are likely to undertake new environmental practices if their rivals had improved their own environmental performance in the previous year. The reason for this is straightforward: environmental performance is a valuable source of competitive advantage and companies don’t want to fall behind…
Source: Hofer, Christian, Cantor, David E. and Jing Dai. (2012). The competitive determinants of a firm’s environmental management activities: Evidence from US manufacturing industries, Journal of Operations Management, 30: 9-84. Summarized by Patrick Shulist and the NBS Team.