TY - JOUR
AU - Kollman, Kelly
AB - Abstract What role do international business norms play in regulating the behavior of firms? Despite growing acceptance of the constructivist claim that norms play an important role in international life and an increased interest in private authority by international relations (IR) scholars, surprisingly little research in the field has explored the extent or mechanisms by which norms influence the behavior of firms. I argue this oversight has more to do with the bias in political science against viewing firms as social or socializable institutions than with the applicability of constructivist theory to firms or markets. To make this argument I examine the spread of sustainability norms across transnational business networks and illustrate how theories of socialization developed by IR constructivist scholars can help explain the rapid spread of these norms and the effects they have on corporate environmental governance. The paper ends with a call for more research on the effects of international business norms and makes several suggestions for how to counteract the bias in political science against doing so. What role do international business norms play in regulating the behavior of firms? Despite growing acceptance of the constructivist claim that norms play an important role in international life and an increased interest in private authority among international relations (IR) scholars, surprisingly little research in the field has explored the extent or mechanisms by which norms influence the behavior of firms. Indeed with the notable exception of seminal work by John Ruggie (1982), more recent constructivist scholarship has been slow to apply its insights to international political economy topics. Part of the reason for this oversight I argue is that political scientists traditionally have held a somewhat myopic view of business actors as simple profit seekers. The profit motive is of course important for understanding firm behavior, but it is not the only norm that shapes firms' actions. This view has been reinforced by many constructivist scholars who have sought to distinguish between international advocacy nongovernmental organizations (INGOs) and transnational business actors by defining the former as motivated by principled beliefs and the latter as motivated by the instrumental pursuit of profit maximization. As a result, most political scientists have assumed that the motivations behind firm behavior need little or no explanation and that the overarching interests of these actors change very little over time. Using the example of environmental business norms, this paper seeks to illustrate how norms disseminated across transnational business networks can act as regulators of firm behavior. The paper's case study examines the spread of sustainability and environmental management norms to transnational firms (TNCs). Anticipating the increased market value of a green image, a number of business-dominated organizations created international voluntary codes, most prominently ISO 14001, that contain a common set of environmental norms and related management practices. Although participation rates in these schemes are still fairly modest, the norms of environmental care contained in them have quickly become the lingua franca of corporate environmental managers across the globe. I use evidence from a content analysis of approximately 100 transnational corporations’ environmental policies to illustrate the norm cascade that has resulted from the promotion of environmental management system (EMS) codes. Drawing on interviews with firm managers in Germany and the UK, I then argue that the internalization of these norms by managers has resulted in significant, if subtle, changes in firm practices.2 Additionally, many of the new private regimes that have been created by environmental INGOs such as the Forest Stewardship Council's (FSC) sustainable forestry certificate also rely on these EMS norms and the business community's acceptance of them. While many scholars and environmentalists alike criticize business dominated schemes like ISO 14001 and praise the more stringent INGO schemes like the FSC certificate, these critics fail to acknowledge the extent to which the latter scheme relies on the normative foundations laid by the former. The paper proceeds as follows. The next section describes the constructivist turn in IR and outlines a generalized theory of socialization that has been developed by key proponents of the approach. I then argue that the way these very same scholars define business actors has prevented their insights about the importance of normative socialization from being applied to markets and market actors. Section three introduces the case study and shows how the creation of voluntary environmental management codes has led to the dissemination and at least partial internalization of new management norms via a process that looks very similar to the socialization process described by constructivists. The final section offers conclusions and discusses the bias in political science against taking firm-level data seriously. The paper ends by suggesting some ways to counteract this bias. The Constructivist Approach Constructivists contend that the rationalist view of human (or international) society contained in the two dominant theoretical frameworks of IR scholarship, neo-realism and neo-liberal institutionalism, obscures important social processes. The two “neos,” along with other proponents of rational choice, hold that society is nothing more than the aggregation of individual action aimed at interest maximization. This view, according to constructivists, is problematic for at least two reasons. First, it undervalues the role that social structures play in shaping human behavior. Human beings and human societies, constructivists posit, do not come into the world with fully formed and fixed identities, wants or perceptions of needs. Many, if not all, human preferences are the result of socialization processes that occur from interactions with our surrounding environment. Structures therefore are not mere hoops through which interest-maximizing actors must jump but rather they help constitute the very nature of individual actors. Second, constructivists hold that ideas and norms make up an important part of the social structures that shape human identities and desires. The focus of the neo-realists on material instruments of power and the neo-liberals on material wealth leaves little room for ideational structures in their explanations (Ruggie 1999; for a counter view see Barkin 2003). Constructivist scholars are a much less coherent group when it comes to agreeing on the epistemological approaches that should be employed to analyze the influence of ideational structures on international life. Indeed several distinct strands of constructivist thought have developed over the past 20 years. At one pole are the postmodern constructivists such as Richard Ashley (1984), and feminist scholar Spike Peterson (1992) who reject the possibility of gaining objective knowledge about the social world and instead focus on linguistic constructions of power relations. At the other end of the spectrum lie the empirical constructivists such as Martha Finnemore and Kathryn Sikkink (1999) and Thomas Risse and Sikkink (1999) who treat identities and norms as intersubjective structures of meaning that exist outside the individual and can be analyzed using scientific methods. Most of these scholars draw on Weberian notions of social science and meld interpretive methods with empirical analysis of documents, speech, and institutions. Another group of scholars occupy the constructivist middle ground by adopting the linguistic focus of the postmodernists but having a slightly more optimistic view about the accumulation of knowledge through such analysis. This group includes the legal constructivism of Friedrich Kratochwil (1989) and Nicholas Onuf (1989) as well as the narrative analysis of such feminist scholars as Ann Tickner (1992) (for an overview of typologies of constructivist scholarship see Ruggie 1999; Adler 1997; Geller and Vasquez 2004).3 This paper draws on, critiques and seeks to add to the empirical constructivist literature. The reasons for this are simple. I, like the empirical constructivists, seek to utilize evidence from documents and interviews to adjudicate between different theories. Additionally, these scholars have done the most to develop the theories of socialization that describe how the international arena can shape the interests and identities of the actors who participate in it. Finally, the empirical norms scholars have also done a great deal to enhance our understanding of the role that nonstate actors play in global governance. What is strange is that by and large these scholars have failed to apply their insights about socialization to the behavior of TNCs, a point to which I will return after outlining constructivist theories of international socialization. Theories of International Socialization Unsatisfied with sociological accounts of international norm diffusion, a number of empirical constructivists developed theories to describe how participation in international society influences state identities and desires. Using the human rights regime and its interrelated set of prescriptive norms as a case study, Risse and Sikkink (1999:29–35) have created a framework to describe how states can be persuaded into changing their domestic policies via a multi-stage “spiral model” of socialization (see Figure 1). In the human rights regime this process includes the interaction of transnational human rights NGOs, intergovernmental organizations, domestic political actors, and target governments. The resulting socialization process occurs in five progressive steps: (1) state norm violation, (2) denial of norm legitimacy, (3) tactical concession, (4) acknowledgment of the “prescriptive” status or legitimacy of norms, and (5) institutionalization of norm consistent behavior. 1 View largeDownload slide Spiral Model of Socialization Risse and Sikkink (1999). 1 View largeDownload slide Spiral Model of Socialization Risse and Sikkink (1999). Risse and Sikkink posit that three different logics of norm compliance are contained in this model. An instrumental logic of norm recognition governs the early stages as state actors are forced by pressure from INGOs and powerful states to pay lip service to human rights norms without truly internalizing them. The deeper norm compliance of the latter stages results from the more communicative processes of social learning as domestic policymakers are persuaded through argumentation that acting in accordance with human rights norms is the proper thing to do. In the final stages of the model, a rules-guided logic takes over as human rights norms become institutionalized in the standard operating procedures of a state's bureaucracies. There is nothing inevitable about this socialization process in Risse and Sikkink's model. States may complete one or two of the spiral's stages without ever progressing to the later stages of norm internalization and institutionalization; progression depends on how much pressure the international community can bring to bear on a state and how a norm is received domestically. In an earlier work, Finnemore and Sikkink (1999:256–265) describe a similar process they call a norm “life cycle” in which they elaborate how entrepreneurs use international organizations as platforms to develop and disseminate new principled ideas, something the Risse and Sikkink model takes as a given. If a norm reaches what they call a “tipping point” in terms of the number of states that adhere to it, less coercion and usually less time is needed to persuade additional states to comply with its strictures. Based on previous quantitative work of international norm cascades they note that a tipping point is often reached when one-third of existing states adopt the norm. Taken together these two works thus attempt to spell out how states can be socialized into redefining their interests through their participation in the international arena, a key claim of the constructivist literature (see Klotz 1995; Katzenstein 1996; Brysk 2000; Wendt 1999).4 Business Actors and Constructivism While states, transnational advocacy networks of INGOs and intergovernmental organizations are given a prominent role in these socialization theories, transnational market actors are conspicuously absent in these accounts either as socializers or socializees. The rare appearance of business actors in the research agendas of IR constructivists is as strange as it is noticeable. Many of the antecedent literatures upon which constructivists draw contain numerous accounts of the role norms play in international economic life and their impact on firms. Ruggie's (1982) early work on economic regimes examines the influence of ideas and norms on the construction of the postwar international economic system. Although a few other IR constructivists have used foreign economic policy (Abdelal 2001) or international financial institutions (Finnemore 1996) as case studies, as a whole these scholars have contributed surprisingly little to the study of IPE (for similar critiques see Jervis 1999; Blythe 2003). Additionally, many of the sociologists that constructivists cite extensively, including the organizational theories of James March and Johan Olsen (1984) and Paul DiMaggio and Walter Powell (1983) as well as the world polity school, use firms as objects of study and highlight the social side of market actors (Thomas, Meyer, Ramirez, and Boli 1987; Boli and Thomas 1999). Nor is it the case that IR scholars simply feel firm behavior lies outside the parameters of what properly should be included in the study of politics. The much ballyhooed concept of “governance without government” has led to a burgeoning literature on private authority and governance. Indeed these scholars often do examine how social learning and/or the use of norms within business networks affect the behavior of firms. In a recent article, Susan Sell and Aseem Prakash (2004:143) critique constructivists’ definitions of business actors and argue that both business and NGO networks are “driven by their normative ideals and material concerns.” Authors such as Virginia Haufler (1999, 2001), Benjamin Cashore (2002), and Hevina Dashwood (2005, 2007) have similarly emphasized the role that business norms play in private regulatory schemes such as ISO 14001, FSC, and the International Council on Mining and Metals that have proliferated in the age of globalization. Even these authors, however, downplay the ability of international norms and socialization processes to influence business actors’ definitions of their interests. Sell and Prakash highlight instances where ideas and normative frames are used to promote these actors’ material interests.5 Haufler demonstrates that norms can change firms’ behavior, but her account of how this happens relies heavily on state power to validate norms and enforce business compliance with them. Cashore's work focuses on how firms in different countries come to chose among and grant authority to different certification schemes for sustainable forestry. His partially rationalist account of how this legitimation occurs ignores the preceding process by which TNCs have come to view private certification itself as a legitimate form of corporate environmental management. Dashwood, whose work has the most in common with the argument developed in this article, posits that corporate responsibility norms do shape firm policies and behavior but that the adoption of such norms by individual firms has more to do with internal firm dynamics and national socio-political factors than with the transnational dissemination of global norms. As such, even these authors are reticent to employ constructivists’ insights about how international socialization processes can lead firms to redefine their interests in the absence of direct state mandates. The reason for the neglect of business actors in the work of IR constructivists and the underrepresentation of normative socialization theory in the private authority literature partially seems to lie in how prominent constructivists themselves have sought to categorize different nonstate actors. Both Risse-Kappen (1995:8) in his widely read book on transnational relations and Margaret Keck and Sikkink in their even more widely read book, Activist Beyond Borders (1998), define transnational business actors by their instrumental, material motivations. These instrumental motives distinguish business actors from transnational advocacy networks, which are characterized by their shared principled ideas and values (Keck and Sikkink 1998:29–30). Ironically, this definition has meant that these very same authors’ insights about the socializing effects of the international arena are difficult to apply to markets or firms. This omission is potentially a serious one. The insights of constructivist theory can add a great deal to political scientists’ understanding of why firms act the way they do and how their behavior is regulated. As will be elaborated below, rationalist interpretations of firm behavior have a difficult time fully explaining why business actors’ commitments to norms of corporate social responsibility have increased over time, why firms undertake actions like charitable giving and participation in voluntary codes when no measurable material benefits seem to result from such behavior or why vague overarching principles like corporate social responsibility and sustainability have been translated into an increasingly narrow set of management principles to which a growing number of TNCs adhere. This paper seeks to add to recent calls by prominent IR scholars such as Ruggie (2004) and Mark Blythe (2003) for a better understanding of TNC behavior and more cumulative work on “economic constructivism.” International Environmental Management Codes (ISO 14001) and the Socialization of Firms The Case Study ISO 14001 is an international, voluntary code in which firms, industrial sites, non-profit and government organizations (from here on firms) can participate. The scheme is global in scope and is currently the world's largest voluntary EMS code in terms of participation. Like many of the EMS codes that have proliferated since the 1990s it is based on the principle of making “continuous improvement.” Participating firms seek to make good on this pledge by setting specific environmental improvement targets that include a timetable for completion. They then create a management system within the organization to insure that all employees are doing what is necessary to meet the stated environmental goals. In addition firms must carry out periodic internal audits of their management system to assess progress towards these goals and also so new targets can be set. Finally, in order to become certified as a participant in the scheme, organizations must hire an independent, third party certifier to insure that individual sites meet the requirements of the ISO 14001 standard. If the organization successfully fulfills these requirements, then it is allowed to use a participation logo in certain forms of non-product advertisements such as letterhead (ISO 2005). ISO 14001 is a good case for examining the influence of international environmental business norms for several reasons. First, as a large, generic, and global scheme, most firms will potentially have been exposed to the set of principles, norms, and notions of best practice contained in it. The question is to what extent are these norms being incorporated into firm policies and what effects do they have on how firms define their interests. Second, ISO 14001 was published and is maintained by the International Standards Organisation, which is dominated by business actors. Indeed ISO 14001 has been criticized by some governments and numerous environmental NGOs for being weak and failing to include mandatory performance criteria in its definition of continuous improvement. In this way ISO 14001 represents a hard test for the influence of business norms. The standard seeks to do a lot with very little in the way formal performance mandates or enforcement mechanisms. The purpose of this case study is threefold. First, I examine the extent to which the core norms contained in ISO 14001 have cascaded across transnational business networks and whether firms are granting these norms prescriptive status within their policies. Second, I examine how and to what extent individual firms internalize these norms. Finally, I try to gauge how rhetorical commitment to and at least partial internalization of these norms affect firm behavior. I utilize three different kinds of evidence to address these questions. First, I use documents and interviews with environmental consultants, firm managers, and national representatives of environmental bureaucracies to trace the development and dissemination of EMS norms since ISO 14001 was published in 1996.6 I supplement this evidence with a content analysis of top TNCs’ environmental policies to determine if firms are incorporating EMS norms into corporate management policies. To examine the internalization process of these norms and how this process affects firm behavior, I utilize data from interviews with 16 environmental managers from EMS-certified, chemical firms in the UK and Germany, eight in each country.7 These interviews were conducted in 2000–2001 and were originally used for a related project that examined the convergence of corporate environmental management practices in the chemical sector. In these interviews, which generally took place on-site and were semi-structured in nature, I sought to uncover the motivations different firms have for participating in EMS schemes, what firm managers felt their organization learned through participation and how much they had actually changed as a result. In the sections that follow, I utilize this evidence to illustrate how the dissemination of EMS norms across transnational business networks has changed the normative foundations of markets and increasingly the management practices of firms. As such, I use this case to illustrate how the application of Risse and Sikkink's spiral model can help us interpret and understand the manner in which firms and business actors have reacted to the advent of international EMS norms (see Figure 2). The case study sections are structured according to the different stages of this model. This evidence should be seen as a plausibility probe for a constructivist account of the evolution of corporate environmental governance practices. The purpose of the essay is not to rigorously test the hypothesis that business norms matter—although it seeks to put a convincing case forward—but rather it seeks to illustrate the “value-added” of applying a constructivist framework to business norms and to call for more work on this topic by IR scholars. 2 View largeDownload slide Spiral Socialization and Norms of Environmental Care. 2 View largeDownload slide Spiral Socialization and Norms of Environmental Care. The Early Development of Environmental Business Norms: Norm Violation and Denial of Responsibility Industry and business organizations were generally caught off guard by the new environmental consciousness and subsequent government response that swept most western democracies in the early 1970s. As a result they were slow to react to these new norms of environmental care (Schreurs 2002; Kollman 2003). Indeed the nature of how this environmental concern was framed in the early 1970s made it very difficult for business to react in a positive manner. Much of the early rhetoric used by the environmental movement in the 1970s derived from the Club of Rome report entitled The Limits to Growth, which argued that at current rates of consumption, resource use, and population growth the earth's carrying capacity would be outstripped in a number of decades. The only way to avoid this catastrophe, the authors argued, was to limit rates of consumption and population growth (Meadow, Meadows, Randers, and Behrens 1972). Critics of the bestselling Limits to Growth, including many business actors, pointed out that the study failed to take technological advances into account when predicting the future (Nordhaus 1973; for an overview see Conca and Dabelko 2004). As Risse and Sikkink's spiral model of socialization would predict, business actors’ response to this new environmentalism was often one that denied both their responsibility for what they termed “externalities” as well as the seriousness of the problem. These critiques foreshadowed key elements of the new concept of environmental care that emerged in the 1980s, sustainable development. This paradigm, which was popularized in by the UN World Commission on Environment and Develop report entitled Our Common Future (1987), defined environmental care in a way that encouraged economic development while at the same time calling for a reorientation of the global economy. Technology and human inventiveness were to be used to overcome harmful resource use patterns and pollution emissions. While difficult to operationalize because of its vagueness, the norm was endorsed by a wide range of actors who had been left on the sidelines by the limits to growth concept. While it quickly became clear that business actors, environmental NGOs, and development NGOs all define sustainable development differently, they all could sign on to its broad goals. The shift to the sustainable development norm, of course, was not the only reason for business actors’ new found interest in environmentalism. By the late 1980s, it had become clear that firms and markets could no longer ignore increasingly stringent environmental regulations or the negative public reaction to well publicized environmental industrial disasters. Major TNCs such as Sandoz, Shell, Exxon, and Union Carbide all faced significant attacks on their reputations, share values, and revenues as a result of serious environmental disasters in the 1980s and early 1990s. These developments and the new focus on sustainable development helped alter business actors’ perceptions about corporate environmental management and convinced many in the community that they needed to make at least tactical concessions to the demands of environmentalists. Voluntary environmental codes were part of these initial overtures. ISO 14001: Tactical Concessions to the Prescriptive Status of EMS Norms Business associations created a number of green voluntary corporate codes in the run up to and wake of the1992 Rio Summit. Some of the most prominent of these initiatives include the chemical industry's Responsible Care®, the Coalition for Environmentally Responsible Economies (CERES) Principles, the EU's Eco-Audit and Management Scheme (EMAS) and ISO 14001 (see Haufler 2001). Most of these initiatives include a code of behavior based on the sustainable development norm and outline a set of environmental auditing practices that are designed to ensure the implementation of these principles. Unlike the private codes sponsored by environmental groups such as the FSC's sustainable forestry scheme, the business dominated schemes listed above are largely process oriented and do not call on participating firms to meet concrete environmental standards either for their products or for their manufacturing processes. These initiatives demonstrate that business actors have become increasingly willing to engage with environmental norms, but largely on their own terms. The drafters of ISO 14001, in particular, sought to graft the new norms of environmental care onto ingrained business practices. EMS standards were modeled on a well-known quality management system standard that ISO itself had created in the 1980s. By the time ISO 14001 was published in 1996, this quality management standard was widely used in international markets to ensure product reliability across long supply chains. ISO 14001, like the EU's EMAS scheme, borrowed the “continuous improvement” norm as well as the idea of a management system, internal auditing, and third-party certification from the quality standard and applied them to environmental management. How ISO 14001 defines environmental improvement has proven more controversial. Environmental groups have sought to create EMS schemes, like the FSC certificate, that add specific environmental performance standards such as sustainable forest yields and bans on GMOs to requirements for an EMS. During the negotiation of ISO 14001, however, the definition of continuous improvement in environmental performance was watered down considerably in part because of American negotiators’ concerns about liability issues and the imposition of uniform standards [Interview German Environmental Consultant 1999; Interview Department of Environment, Transport and the Regions (UK) 1999]. The ISO negotiators resisted both environmental NGO and European governmental pressure to create a more stringent EMS standard. Not only is no reference made to a best available technology (BAT) standard as in the EU's EMAS scheme, but it is also not clear if continuous improvement refers to actual environmental performance or to improvements in the management system. Despite the controversy over how to define continuous improvement, many of the codes that were developed in the 1990s including the EU's EMAS, ISO 14001 and the FSC forestry certificate all contain a similar structure. All make use of the continuous improvement norm and all rely on improvement programs, management systems, internal auditing, and third party certification to ensure improvement takes place. Studies like Cashore, Graeme Auld, and Deanna Newsom's recent widely cited book, Governing Through Markets: Forest Certification and the Emergence of Non-state Authority (2004), that seek to explain why firms in certain countries chose the FSC label over weaker competitor codes, tend to de-emphasize how much was already agreed upon by firms and environmental NGOs before this competition between sustainability codes began. The publication of ISO 14001 did a great deal to strengthen a fledging transnational network of business actors that has sought to promote and disseminate corporate environmental sustainability norms across borders. This network, which has played a key role in persuading TNCs to grant EMS norms prescriptive status within their organizations, includes the environmental managers of major transnational corporations, environmental consultants and the third-party certifiers of the codes. With the proliferation of EMS codes in the 1990s this network began promoting the more specific norms of continuous improvement, target setting, transparency, environmental auditing, and certification as a way of improving sustainability. In addition to increasing demand for environmental consultants and certifiers, the international scope of the EMS standards, and ISO 14001 in particular, has helped the larger consultancy firms such as KPMG, Det Norske, and Lloyds to expand into foreign markets more easily. A 2006 study conducted by the UK Department of Business Enterprise and Regulatory Reform (2006:1) estimated the global environmental goods and services market was worth $5.48 billion in 2005 and projected that the sector would grow another 45% by 2015. The significance of this network in establishing the prescriptive status of EMS norms within firms becomes immediately apparent when talking with environmental managers of these firms. During interviews with the managers of EMS-certified chemical firms in Germany and the UK, the importance of consultants and the supply chain for the establishment of EMSs was reiterated time and again. As one British manager put it when asked about the influence of this network, “there is a virtual mafia of people who deal in [environmental management]” (Interview British environmental manager 2000). The environmental managers themselves talk, email, and meet regularly to exchange information about environmental issues. In the late 1990s and early 2000s it was clear that much of this conversation centered around continuous improvement, management systems, and certification. Large TNCs, which have become increasingly concerned about the environmental performance of firms along their far-flung supply chains, often play a more proactive role in these exchanges. Of the 16 firms that I interviewed in the UK and Germany, 14 said they sent out questionnaires to their suppliers asking them if they had gained ISO 14001 certification. Additionally, all five of the large TNCs interviewed carried out occasional, on-site audits of their suppliers’ EMSs. The external consultants play a similarly important role in the creation of site EMSs. Barring two exceptions, all the firms interviewed in Germany and the UK had hired outside consultants to help them develop their management system and to gain certification. Many of the managers reported that these consultants were intimately involved in drafting and implementing key elements of the management system including the internal monitoring procedures, work instructions, and management handbooks. In many cases both the German and British firms used identical checklists for the implementation of their EMS that had been created by transnational consultancy firms. Additionally, almost two-thirds of the firms used certification firms that were accredited to carry out EMS certification in most European countries and often beyond. The existence of this transnational network helps explain why British and German firms, which traditionally have had very different styles of environmental corporate governance, have created quite similar EMS systems that are devoted to continuous improvement, a functioning internal management system and auditing procedures (Kollman 2003). Using a mix of both normative and material incentives, this network has been very successful at disseminating EMS norms and notions of best management practices to firms across borders. The result is that the core EMS norms have now been given prescriptive status—that is they have been incorporated into firm policies and are now part of the firm's discursive practice—within a growing number of TNCs across the globe (for certification growth rates see Table 1). In this way, it has acted very much like the transnational advocacy networks of INGOs described by scholars such as Risse and Keck and Sikkink. 1 EMAS and ISO 14001 Adoption Rates Year EMAS Certifications ISO 14001 Certifications 12/1996 n/a 1,491 12/1997 1,269 4,433 12/1998 2,316 7,887 12/1999 2,775 14,106 12/2000 3,417 22,897 12/2001 3,912 36,765 12/2002 3,796 49,462 12/2003 3,110 66,070 12/2004 3,067 90,569 12/2005 3,259 111,162 12/2006 3,325 129,199 Year EMAS Certifications ISO 14001 Certifications 12/1996 n/a 1,491 12/1997 1,269 4,433 12/1998 2,316 7,887 12/1999 2,775 14,106 12/2000 3,417 22,897 12/2001 3,912 36,765 12/2002 3,796 49,462 12/2003 3,110 66,070 12/2004 3,067 90,569 12/2005 3,259 111,162 12/2006 3,325 129,199 Sources: International Standards Organisation. (2006) The ISO Survey: Fourteenth Cycle (2005) Highlights. Available at: http://www.iso.org/iso/survey2005.pdfhttp://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf; International Standards Organisation. (2007) The ISO Survey: Fifteenth Cycle (2006) Highlights. Available at: http://www.iso.org/iso/survey2006.pdfhttp://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf; European Commission Environment Directorate. EMAS Statistics and Charts. Available at: http://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf. View Large 1 EMAS and ISO 14001 Adoption Rates Year EMAS Certifications ISO 14001 Certifications 12/1996 n/a 1,491 12/1997 1,269 4,433 12/1998 2,316 7,887 12/1999 2,775 14,106 12/2000 3,417 22,897 12/2001 3,912 36,765 12/2002 3,796 49,462 12/2003 3,110 66,070 12/2004 3,067 90,569 12/2005 3,259 111,162 12/2006 3,325 129,199 Year EMAS Certifications ISO 14001 Certifications 12/1996 n/a 1,491 12/1997 1,269 4,433 12/1998 2,316 7,887 12/1999 2,775 14,106 12/2000 3,417 22,897 12/2001 3,912 36,765 12/2002 3,796 49,462 12/2003 3,110 66,070 12/2004 3,067 90,569 12/2005 3,259 111,162 12/2006 3,325 129,199 Sources: International Standards Organisation. (2006) The ISO Survey: Fourteenth Cycle (2005) Highlights. Available at: http://www.iso.org/iso/survey2005.pdfhttp://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf; International Standards Organisation. (2007) The ISO Survey: Fifteenth Cycle (2006) Highlights. Available at: http://www.iso.org/iso/survey2006.pdfhttp://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf; European Commission Environment Directorate. EMAS Statistics and Charts. Available at: http://ec.europa.eu/environment/emas/pdf/5_5articles_en.pdf. View Large To show just how widespread rhetorical commitment to EMS norms has become since their publication just over 10 years ago, I have carried out a content analysis of the environmental policies of a wider group of TNCs. The 89 firms represented in the content analysis were chosen randomly from the New York Stock Exchange's World Leaders Index as it stood in June 2004.8 This particular index, which is maintained by Dow Jones Indexes, was created to track the performance of the top 200 transnational corporations listed on the NYSE. As such, it contains a sample of transnational corporations that have headquarters in numerous different countries. It should be noted that the large TNCs that populate the World Leaders Index are more likely to engage environmental consultants and gain EMS certification than smaller, less internationally oriented firms. Although the results may not be representative of all firms across the globe, it does lend insight into how important EMS norms are becoming. Additionally, as discussed above, these large TNCs have a great deal of influence within the sectors in which they compete and often persuade firms in their supply chains to improve and systematize their environmental management via an EMS. The results of the analysis are summarized in graph 1. The bar graph is divided into four sections. The first set of columns records the percentage of firms analyzed that publish an environmental report, principles, and/or policy. The next set of columns represents the core norms and environmental management practices promoted by EMS codes. This set of seven norms includes firm commitments to maintaining legal compliance at all times, making continuous improvement in environmental management and/or performance, performing to standards that are beyond compliance, setting improvement programs with specific targets, systematically monitoring the firm's environmental impacts and progress towards improvement goals, increasing environmentally-related employee training and engaging in a dialog with key stakeholders by increasing transparency. As such, this set of norms and best management practices focuses on the norms and sets of best management practices that make up the heart of ISO 14001 and other EMS standards. Graph 1. View largeDownload slide NYSE World Leader Firm Environmental Policies. Graph 1. View largeDownload slide NYSE World Leader Firm Environmental Policies. The third set of entries, which is a much less coherent grouping, represents norms and management procedures that are not central to the EMS standards but are mentioned regularly by firms in their policies. This set includes firm commitments to using performance standards such as best available techniques, best available technology, best practice, at source environmental improvements (as opposed to additive solutions); commitments to employing standardized evaluative practices such as environmental impact assessments and life cycle analysis as well as broader normative commitments to greening their supply chain, guiding product stewardship, contributing to sustainable development, and minimizing environmental impacts. The fourth category represents the wide range of environmental problems highlighted by firms. Almost two-thirds of the 89 firms publish either an environmental report or a broader corporate responsibility report that includes information on corporate giving and labor practices as well as environmental management. Almost three-quarters of the firms have drawn up and publish a corporate environmental policy. This result mirrors larger studies that have documented strong growth rates in corporate environmental reporting since 1990, which is often attributed to schemes like ISO 14001 and other voluntary codes (ENDSdirectory 2006). The policies examined for this study are heavily influenced by the EMS norms originally introduced by ISO 14001 and the EU's EMAS scheme in the mid 1990s. Although only about one-third of the firms state that they have gained ISO 14001/EMAS certification, 50% pledge to making continuous improvement in environmental and/or management performance. Similarly, 50% claim that they have erected EMS to deal with their environmental impacts. The other core norms of the EMS standards also make a strong showing in the policies. Over 40% of the firms in the analysis commit themselves to setting concrete targets for improvement, almost 50% state that they monitor their environmental impacts and/or progress towards these improvement goals. Half of the firms in the analysis also vow to publish the results of their environmental audits and/or their environmental impacts more broadly and over a quarter of the firms state that it is their policy to go beyond the standards contained in law when appropriate. These results confirm what many environmental managers I interviewed insisted, namely that the influence of EMS norms is far greater than certification rates would imply. Overall these results show that EMS norms have been widely disseminated across transnational business networks over the past decade. Although the content analysis does not directly measure change in corporate policies over time, as the ‘continuous improvement” norm has only been linked with corporate environmental management since the mid 1990s, we can assume that these firms’ pledges of adhering to this norm and ensuring compliance through improvement plans, auditing, and external certification are new and represent a change in corporate policy. Using the criteria developed by other studies of norm diffusion, the continuous improvement norm appears to have reached a tipping point. Finnemore and Sikkink (1999:261) note that most studies have identified the tipping point of a norm as having been reached when approximately one-third of states in the system comply with the norm. It is difficult to directly apply this standard to TNCs, as we do not know the exact number of TNCs that exist in the world and unlike with the relatively small number states, it is not possible to analyze the entire population. However, the sample taken here is from the international index of one of the world's largest stock exchanges and as such gives us insight into the content of TNCs’ environmental policies. Further the numbers recorded in the content analysis, 40%–50% adoption of core EMS norms, is far above the 33% noted by state scholars as a tipping point.9 The process that has led to the adoption of EMS norms by TNCs looks very much like Risse and Sikkink's “spiral of socialization” with the exception that the main players in the process are firms, transnational markets, and business actors instead of states and INGOs (see Figures 1 and 2). As the model predicts, TNCs and supporting business organizations have moved from a position of denying responsibility for the environment to engaging in a dialog with governments and environmental INGOs about their environmental impacts. This dialog and process of social learning have led many managers of large TNCs to grant EMS norms prescriptive status within their firms’ policies. The norms found in these policies clearly are ones of weak sustainability. They rely on interpretations of sustainable development that center on eco-efficiency and win-win situations rather than on more radical interpretations that call for a fundamental overhaul of the industrial-capitalist system. Weak or not, however, they represent a greater commitment to corporate environmental care than that existed 20 years ago. The Internalization and Institutionalization of EMS Norms in Firms What does this norm cascade tell us about how EMS norms actually affect firms’ definitions of their interests and ultimately their behavior? Norm institutionalization is obviously very difficult to measure and assess, but in many ways is the crucial stage of the spiral model. Like many constructivist scholars, I use in-depth analysis of qualitative data to establish levels of norm commitment. Having documented the frequency with which TNCs incorporate EMS norms into firm policies, I now turn to evidence gathered from interviews with the environmental managers of 16 German and British firms in the chemical sector. More specifically, I looked for four different kinds of commitment to the “continuous improvement” norm during these interviews: (1) the extent to which managers remained committed to the norm despite the conviction that EMS certification had not brought measurable financial gains, (2) whether the firm was committed to having their EMS re-certified in the future, (3) how continuous improvement was demonstrated in their current improvement programs, and (4) the extent to which they encourage their suppliers to implement an EMS dedicated to continuous improvement. The continuous improvement norm was by far the most commonly mentioned of the core EMS norms by firm managers during interviews in both countries, and the one to which managers seemed to have the deepest commitment. In most cases, this conviction is part of a larger sense that environmental care and reducing the firm's environmental impact is a core part of the business and necessary for survival. In fact, only one of the sixteen managers was convinced that participation in ISO 14001 and their firm's commitment to continuous improvement could be justified with a straightforward cost–benefit analysis. This manager believed that the continuous improvement process resulted in cost saving efficiencies that far outweighed the costs of EMS certification. Almost all of the other environmental managers interviewed, however, felt that EMS certification had resulted in more costs than measurable financial benefits thus signifying a deeper commitment to the norm. Despite this conviction, most managers took a pragmatic approach to justifying their participation in an EMS scheme that combined a commitment to environmental care with a sense that such care has become a business necessity. Normative motivations mesh with material motivations. What business norms such as continuous improvement seem to do is to convince managers that certain actions are necessary to the firm's long term survival even if these end up costing the firm money in the short term. These two quotes, the first from a British manager and the second from a German manager, are typical. Neither felt EMS certification could be justified in terms of cost savings alone. “We are always after continuous improvement…We see it as improving our business.” (Interview British environmental manager 2000) “We were of the opinion that people were going to be more sensitive about the topic of the environment and we wanted to stay on top of this issue. The thinking was this [EMS certification] was an investment in the future.” (Interview German environmental manager 2000; translation by author) Two other managers, again one German and one British, seemed to have a more absolutist commitment to reducing the environmental impact of their firm's activities. The first was a small German firm whose two environmental managers claimed that being a good environmental citizen was simply “the right thing to do” no matter what the consequences for their firm's bottom line. They insisted that economic factors would not interfere with this commitment. However, because the firm competed in a niche organic market, they admitted that maintaining their environmental reputation was an immediate business necessity. The second case, which involved the manager of a medium-sized British chemical firm, was more interesting as this firm did not compete in a niche environmental market. The ethical undertone of the manager's understanding of “continuous improvement” comes across very clearly in the following statement: We actually do a lot of cost-benefit analyses on environmental improvements but I would still say the capital investment that we have made far outstrips the returns. But I don't believe in it. It's a coupling of the economic and ethical. It's ethical production. It sounds like a flight of fancy but it's true. We reconcile this commitment to continuous improvement [with the profit motive] by the fact that you can convince your multinationals to come back and keep coming back. (Interview British environmental manager 2000) The rhetoric of this particular firm seemed to be backed up by the fact that it had won several prestigious environmental prizes from outside organizations including the Royal Society for Encouragement of Arts, Manufacturers and Commerce (RSA) Better Environment Award in the UK. In only a few cases did the lack of obvious financial benefits from EMS participation put these firms off. Of the 16 interviewed, only one was seriously considering not being re-certified to ISO 14001 or EMAS when their current certification expired.10 A second was more doubtful about long-term participation given the costs but was going through the re-certification at the time of the interview. The large majority of the firms interviewed, however, were committed to remaining in the scheme and sought to justify their participation using softer criteria like long-term market viability and reputation gains. The answers to the question of how continuous improvement is demonstrated in firms’ environmental improvement programs yielded more mixed results. One British manager admitted that his firm was coming to the end of all the cost saving improvements that could be made at his site. At the suggestion of their outside auditors, the second improvement program this firm put together contained much less ambitious goals than the first. This was the same firm that was questioning its future participation in ISO 14001. Most of the managers, however, seemed to take their improvement plans seriously and were able to describe in detail how continuous improvement was operationalized at their site. Still many of the improvement plans seemed to be centered on better monitoring or better employee training and did not specify many concrete performance improvements. These modest goals reflect the process-focus of ISO 14001 and EMAS. Finally, and as noted above, 14 of the 16 firms encouraged their suppliers to implement an EMS dedicated to continuous improvement in environmental management. Clearly these managers did not think that EMS commitments were a throw away exercise of pure greenwash. They were convinced enough of its merits to make EMS implementation and a commitment to continuous improvement a criteria by which to assess their business partners. Although most of the managers were under no illusions that having an EMS guaranteed the environmental soundness of an individual supplier, many expressed the view that certification to ISO 14001 or EMAS was an important and positive signal. This action both reflects the commitment these managers have to EMS norms and demonstrates how the legitimacy of these schemes is increased within transnational markets. In most cases managers demonstrate a level of commitment to EMS norms that would indicate at least partial internalization of these norms. Further, this level of internalization appears to have changed how environmental managers define corporate environmentalism. Compliance with government regulation is no longer enough. It is an important starting point but by no means the sole purpose of environmental management. Corporate environmentalism is now defined in more proactive terms and with the notion that improving environmental management brings the firm tangible, if non-quantifiable benefits. Although these commitments to using EMS systems as a way of improving performance are far-reaching, they are also vague and ill-defined. It is precisely this vagueness that allows managers to define continuous improvement in the way they see fit. The conviction that continuous improvement should be made is coupled with the conviction that firms and not governments or environmental NGOs should be the ones to determine the content of these improvement goals. Not surprisingly, the profit motive does act as a counterweight to a firm's commitment to continuous improvement. The Impact of EMS Norms on Firm Behavior As hinted at above, the impact that EMS norm dissemination has on individual firm behavior is often subtle and is largely related to management practices rather than actual environmental performance. The influence also varies significantly from firm to firm depending on its size, its nationality, and numerous additional internal factors specific to each firm. Despite these variations, almost all of the environmental managers with whom I spoke reported that three aspects of their environmental management practices had improved as a result of their participation in EMAS/ISO 14001. All felt that the monitoring of their environmental impacts had become more comprehensive and systematic; all felt that the environmental training on site had improved; those that were asked agreed that the setting of specific targets and the third-party review of those targets helped environmental managers gain the resources they need from the senior management to reach these goals. In some cases, the managers, usually those working at small firms, reported that these changes had been significant and had dramatically changed their firm's environmental practices. More often the managers felt that the changes had been made at the margins. These improvements are, of course, self-reported by firm managers who may have incentives to overstate the effectiveness of their EMSs as well as their efforts to curb environmental harm. If, however, the implementation of EMS standards did nothing to change firms’ environmental practices, I would expect to hear different things from different managers. The fact that managers in both Germany and the UK, which traditionally have had very different approaches to corporate environmental governance, highlight the same improvements suggests that EMS implementation is changing environmental management practices in similar ways. A clear pattern can be found in the statements given by the environmental managers in the two countries. The existence of this pattern in the responses of German and British environmental managers strongly implies that a transnational learning process is taking place. Although these management improvements are modest in scope, it seems clear that the spread of EMS norms has subtly shifted and broadened managers’ definitions of their firms’ environmental interests. These findings seem to be supported by an increasing number of studies that have found ISO 14001-certified firms and firms with comprehensive EMSs tend to pollute less and comply better with environmental regulation than firms without certification or an EMS (Anton, Deltas, and Khanna 2004; Potaski and Prakash 2005; Prakash and Potaski 2006; Dasgupta, Hettige, and Wheeler 2000; King, Lenox, and Terlaak 2005). A few studies, however, have found the opposite and report that EMS certification does little to improve firms’ environmental performance (Andrews, Amaral, Darnall, Gallagher, Edwards, and Huston 2003;Dahlstrom, Howes, Leinster, and Skea 2003). Socialization theories can go a long way in explaining these contradictory findings. Constructivists have long argued that norms do not determine behavior but rather set the parameters of what is considered appropriate conduct for actors with certain identities. Socialization processes occur over long stretches of time and never completely determine outcomes. EMS codes have caused firm managers to internalize new norms of environmental care and as a result firms are making real changes in management practices. That these processes have not yet led to rapid, dramatic or consistent improvements in firm environmental performance is in keeping with what we know about how socialization occurs. The rhetorical commitment of managers to EMS norms, however, can lead to more dramatic changes in firm practice under the right circumstances. The INGO-sponsored codes such as the FSC sustainable forestry scheme attempt to link the continuous improvement norm to specific best practice/BAT standards. The inclusion of performance standards in these codes makes them more effective tools of environmental governance. Indeed it is the lack of performance standards that has garnered ISO 14001 so much criticism. This criticism overlooks, however, the extent to which schemes like FSC rely on ISO 14001 to create a general acceptance of self-regulation and a commitment to going beyond legal standards. Without ISO 14001, the more stringent codes would have no accepted norm or management practices on which to piggyback their performance standards. Studies like Cashore, Auld, and Newsome's (2004) work on the outcomes of national competitions between the FSC and other less stringent forestry labels contributes to our understanding of how domestic structures shape the reception of these global norms. The authors tend to downplay, however, the importance of the transnational socialization processes related to ISO 14001 that have precipitated these changes to national corporate forestry practices. By engaging firms in a dialog about their pledges to make continuous improvement in environmental performance, NGOs can push firms to explain the gaps that exist between their rhetoric and practice. In the long run socialization theory suggests that this dialog can lead to a deeper commitment to these norms of environmental care. EMS norms have now been around for just over a decade. It seems unlikely that increasing commitment to them will lead to radical change in environmental performance in most economic sectors. However, the modest improvements in management practices and organizational culture that do seem to result from the internalization of EMS norms primes firms to respond to demands for greater change should their sector come under pressure to do so. This is more likely to occur in sectors like forestry, where consumer awareness of the sector's environmental impacts is significant and where process improvements can clearly be tied to a product. In other sectors, the internalization of the business-friendly EMS norms is likely to lead to only modest—but real—improvements in environmental management. Taken together, this evidence suggests that participation in transnational markets and networks has socialized many firms into redefining their environmental interests along the lines suggested by Risse and Sikkink's spiral model (see Figures 1 and 2). Clearly norms of environmental care such as sustainable development and continuous improvement in environmental management are still very contested. But many corporations and business associations have lent these norms prescriptive status within their organizations and have entered into a dialog with key environmental stakeholders about the proper definition of corporate sustainability. As such, most of the firms I interviewed have gone through several stages of the spiral model outlined by Risse and Sikkink and are in the process of both engaging in argumentation about sustainability and internalizing the changing definition of that norm. And although nothing like ingrained, rule-consistent behavior has yet to emerge, the partial internalization of these norms by corporate managers has led many firms to improve their environmental management practices. The Value-Added of a Constructivist Interpretation of Environmental Business Norms To be truly convincing a constructivist interpretation of EMS norms must not only demonstrate that the dissemination and effects of these norms conforms to existing theories of international socialization, but it must also show that these theories give a “value-added” account to more material-rationalist explanations. So what does this constructivist account add to our understanding of the effects and influence that ISO 14001 has on corporate environmental governance? Is the notion of transnational normative socialization really necessary to understand why firms that have been criticized by western governments and transnational NGOs for their environmental impacts adopt relatively weak, voluntary EMS standards? As both the content analysis and interviews with firm managers presented here indicate, rational motivations clearly exist for the adoption and implementation of ISO 14001-compliant EMS systems. Indeed the spiral model developed by Risse and Sikkink utilizes both instrumental and persuasive logics to explain how international norms have effects on target actors. However, several aspects of the rise of EMS codes are difficult to explain without taking the causal effects of norms and socialization processes seriously. Most obviously, only changes in the normative structures of transnational markets and business networks can explain why a large percentage of firms now consider it in their interests to comply with environmental corporate social responsibility norms, whereas 25 years ago almost all TNCs dismissed their environmental impact as an externality. While market access and a TNC's reputation may now partially depend on having an EMS that can deliver continuous improvement in environmental performance, these market advantages only exist because market actors have been persuaded into believing that environmental management is a part of what good firms do. No material benefits came with implementing an EMS until the normative structures of transnational markets had incorporated these new norms of corporate environmental care. It is now rational for firms to take corporate environmental governance seriously, but there is nothing functionally necessary about this demand. Good environmental behavior is rewarded and praised in transnational business networks because the definition of what it means to be a successful firm has changed. The pressure that environmental NGOs place on TNCs and market actors to improve their environmental performance cannot fully explain this change in firms’ definitions of their interests. Transnational business actors have engaged with sustainability norms to a far greater extent than the NGO or regulatory threat to their bottom lines would necessitate. Even in the worst case scenarios such as the Bhopal disaster in India involving Union Carbide or the Valdez oil spill involving Exxon, there is little evidence that high profile environmental industrial accidents lead to long-term financial difficulties for the firms involved. Furthermore, there is growing evidence that the direct targeting of specific firms by environmental NGOs does not lead these firms to change their environmental practices to any great degree and, in fact, may have the opposite effect (Sasser, Prakash, Cashore, and Auld 2006; Dashwood 2007). These findings are also mirrored in the interviews conducted for this study. The initial tactical concessions business actors made to norms of environmental care were clearly the result of NGO, government, and consumer action. But business's subsequent engagement with the sustainable development norm and the proactive creation of voluntary business codes that graft the sustainability norm onto more business-oriented principles such as continuous improvement and third-party auditing demonstrates the extent to which market actors have entered into a very real dialog with environmental stakeholders. Firms are no longer simply reacting to NGO pressure; they are beginning to internalize norms of environmental care albeit in a much weaker form than many NGOs would like. Additionally, there is very little evidence to suggest that firms make significant financial or material gains by implementing an EMS or by gaining EMS-certification despite their increasing popularity. As discussed above, almost all of the managers I interviewed felt that their firm had spent more money erecting the management system and gaining certification than they had gained back in sales, market access or eco-efficiency gains. Many also argued that having a functioning EMS was necessary for the long health and/or survival of the firm. The motivations behind adopting an EMS seem to be driven by a logic of enlightened self-interest and are not purely or even mostly instrumental in nature. Transnational socialization appears to be an important part of this “enlightenment” process. Finally, it is hard to explain why a fairly vague notion of environmental care or sustainability has been translated into a rather narrow set of management practices without taking processes of transnational learning and socialization into account. There are a multitude of actions that firms could take to demonstrate a greater commitment to environmental care. Increasingly, however, they are choosing to demonstrate their environmental credentials by voluntarily erecting management systems dedicated to continuous improvement. It is more plausible to think that this is occurring because firms are learning from each other than to claim that the implementation of these codes is the only functional way to proceed once markets start demanding better environmental management. Even if we argue that EMS codes are a solution to a classic coordination problem, we still have to explain why this particular solution is the one being disseminated. International socialization again seems to be that explanation. Conclusions and a Call for a New Research Agenda For all the self-congratulations constructivists have (rightly) lavished on themselves for breaking into the field of security studies (see Katzenstein 1996), they have been extremely slow to apply these lessons to the study of international political economy. As the case study of EMS norms outlined above demonstrates, however, the socialization theories developed by constructivists are extremely helpful for explaining the effects that norms of environmental care have on business practices. Despite the obvious parallels between theories of state socialization developed by constructivists and the effects of normative frameworks on business actors, these theorists and political scientists in general have been reluctant to apply the idea of socialization to markets actors. The reasons for this reluctance I argue have very little to do with theoretically justifiable differences between business actors, states or other NGOs, but rather are related to a pervasive bias in the field against seeing markets and market actors as social institutions. This bias helps explain why constructivists have only rarely applied their insights to business actors despite the fact that the organizational theorists and world polity scholars from whom they consciously borrow do so frequently. These sociological insights need to be incorporated into all areas of political science and not selectively applied to states and INGOs. Of course, as profit seekers, firms should be treated as analytically distinct from states and other types of nonstate actors, but distinctions that rely on defining away their social nature are unhelpful and inaccurate. This bias has caused many political scientists to adopt unusually high standards of evidence to demonstrate that international norms have effects on business actors. Evidence drawn from firm interviews and policies are routinely dismissed as unreliable at best and deliberately deceptive at worst. As most of the work in the empirical norms literature relies on analysis of actors’ rhetoric and changes they make to policy, the dismissal of such evidence in the case of firms is a heavy blow to arguments of firm socialization. Furthermore, it is not obvious why we should assume that firms are more deceptive than other actors or why their policies should have less effect on their behavior than those of states or other NGOs. This is not to say that analysts of market actors should not guard against attempts at deception or should not pay attention to differences between words and deeds; of course, they should. But so should analysts of states and advocacy INGOs. To counter this bias, researchers of market actors should pay particular attention to the tools developed by methodologists to increase the validity of their results. To the extent possible, factual claims made by firms should be validated by outside sources. In terms of the claims that firms make about their environmental performance, for instance, researchers could search public records for accidents, fines and convictions for regulatory breeches. They could also check claims against a growing number of independent rating schemes of environmental performance and awards. Additionally, firm rhetoric, policy, and performance should be gauged over time so that these metrics can be judged against what has actually changed rather than against some notion of what firms would do in a perfect world. Researchers should also point out the patterns found across firms in self-reported behavior. If what firm representatives tell researchers has no basis in reality, you would not expect to find patterns of any kind in what they report. Finally researchers should engage in more historical analysis of firm socialization processes. This would allow researchers to examine business norms that are now so institutionalized that critics could not easily dismiss their impact on behavior. Analysts would then be free to engage in careful analysis of how the norm became internalized rather than trying to convince skeptics that it did. The latter research obviously could only act as a supplement to research on contemporary norms. These strategies only represent a beginning. More and better research on the determinants of TNC (political) behavior is needed. If this bias in political science is not overcome, it is likely that we will continue to have a narrow and, at least partially, wrong conception of how and why regulatory compliance with private and even legal norms occurs. Understanding the transnational nature of these socialization processes is likely to become more important in the future. Both public and private international regimes have proliferated over the past decade as a result of market integration and other factors. Consequently there has been an increase in the number and type of business norms being bantered about in the international arena and transnational markets. How this development affects the regulation of business behavior remains largely a mystery to political scientists. Footnotes 1 An earlier version of this paper was presented at the 2006 annual meeting of the International Studies Association held in San Diego. I would like to thank the participants of the ISA panel, Maurizio Carbone, Terry Casey, Matthew Hoffmann, Mo Hume, Karen Wright, Alasdair Young and the three anonymous reviewers for constructively commenting on drafts of this paper. The remaining faults are, as always, my own. 2 The interviews cited in this article, which were conducted from 1999 to 2001, were originally carried out for a larger research project. In total I conducted forty-two interviews for the project, mostly in Germany and the UK. Twenty-six of the interviews were conducted with policymakers and activists who did work on environmental management system codes. These interview partners included members of EU, German and British environmental bureaucracies as well as representatives of environmental consultancies/auditing firms, business associations and environmental NGOs. I also interviewed sixteen firm environmental managers in the UK and Germany. I cite information and quotations from these interviews throughout the article. Because of confidentiality issues, however, I do not reveal specific personal or organizational names when citing information from the interviews, but rather indicate the type of organization for which the interview partner worked. 3 These categories are necessarily fuzzy at the edges and certain scholars’ work straddles the borders of these groups. The work of Thomas Risse, for example, is clearly associated with the empirical constructivist but he incorporates theories of communicative action in IR into his theory of socialization. Ruggie, also firmly in the empirical camp, often advocates the use of speech act theory among other linguistic devices in the study of IR. 4 Both these theories of socialization only touch on a fourth logic of norm compliance that has been more thoroughly developed in organizational theory and sociology, namely that of emulation or mimicry (see DiMaggio and Powell 1983;March and Olsen 1984). While both Risse and Sikkink and Finnemore and Sikkink note the importance of powerful states in international socialization processes, they do not specify whether these powerful states encourage norm compliance through coercion, persuasion or because smaller states are emulating what they consider to be successful examples. Indeed it is difficult to distinguish between these types of motivations empirically. In my interviews with firm managers, the important role large, successful TNCs play in the dissemination of EMS environmental norms comes across very clearly. Although it is clear that smaller supplier firms have, in part, taken their cue from these TNCs, it is less clear if they are doing so for instrumental reasons (more likely to get TNC business), social learning reasons (TNC managers and consultants have persuaded them that norm adoption is the right thing to do) or for emulation reasons (taking cues from successful firms in uncertain circumstances). As I discuss in the case study section, however, at the time of the interviews in the early 2000s, the direct market pressure for EMS certification was quite weak. Further, the language used by most of the managers to describe their commitments to EMS norms came closer to the logic of persuasion than emulation. Although the examples and influence of large TNCs were certainly mentioned, most of managers described their commitment to EMS norms in terms of lessening their environmental impact and the need for continuous improvement through better management. That is they seemed to highlight the importance of the norms themselves and were quite capable of discussing the reasoning behind such new management practices. However, the line between persuasion and emulation is a fine one and more needs to be done to find ways of operationalizing these concepts for empirical research. 5 Neo-Gramscian scholars in IR have made a related but very different argument by positing that a transnational capitalist “ruling class” has created a “world order,” which includes a normative component, to help secure the privileged position of this class. While transnational corporations often play a prominent role in these arguments, the key unit of analysis is the transnational capitalist class more broadly. Similarly these scholars are generally not interested in how norms socialize TNCs, nor are they open to interpretations that suggest firms’ interests can change as a result of normative structures. For an overview of this approach see the essays collected in S. Gill (ed.) Gramsci, Historical Materialism and International Relations (Cambridge: Cambridge University Press, 1994). 6 The ISO 14001 standard was revised in 2004. No significant changes were made to the revised standards, although certain requirements such as legal compliance audits and standards of voluntary reporting have been strengthened slightly. The firms examined in this study were all certified according to the 1996 standard. 7 My British interview partners included managers from the following chemical firms: Autosmart, Imperial Chemical Industries (ICI), BIP (Oldbury), AH Marks, Contract Chemicals, Coalite, Elementis, and Catomance. I interviewed managers from the following German chemical firms: Sto AG, Oscorna, Alligator Farbwerke, Degussa-Huels, Kertscher, BASF, Bayer, and Henkel. I made an effort to interview small, medium, and large chemical firms in both countries. My German pool of interviewees, however, contained a greater number of managers from large firms than my pool of British interview partners. Despite this difference the two pools of managers interviewed are broadly comparable. 8 The NYSE World Leaders is made up of 200 firms. I randomly selected 100 firms from the list and then searched the firm's website for its environmental policy or environmental principles to include in the analysis. Eleven of the 100 firms were excluded from the analysis because either their websites were not in English or German, the link to their environmental policy was no longer available or because the firm had not yet published a new environmental policy after a recent merger. The sample of environmental policies represents firms from thirteen different countries (Canada, France, Germany, Italy, Japan, the Netherlands, Norway, South Korea, Spain, Switzerland, Taiwan, UK, US) and includes the policies of such TNCs as AXA, Aventis, CadburySchweppes, ExxonMobile, Honda, Shell, TD Bank, Telefonica, TelecomItalia, UBS, and Walmart. 9 A study commissioned by the International Institute for Environment and Development reported that the number of companies that have erected an EMS based on the ISO 14001 standard is approximately 10 times greater than the number that actually have gained ISO 14001 certification. 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TI - The Regulatory Power of Business Norms: A Call for a New Research Agenda
JF - International Studies Review
DO - 10.1111/j.1468-2486.2008.00798.x
DA - 2008-08-22
UR - https://www.deepdyve.com/lp/oxford-university-press/the-regulatory-power-of-business-norms-a-call-for-a-new-research-FeRKnUUzFX
SP - 1
EP - 419
VL - Advance Article
IS - 3
DP - DeepDyve
ER -