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Organizational Structures, Citizen Participation, and Corporate Environmental Performance

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This proposed study will address two questions: 1) how does the ownership status of a regulated facility affect its environmental performance?, and 2) what are the implications of this for the effectiveness of community-based forms of regulation? Sociologists have long speculated that absentee-owned plants are more prone to pollute because they are typically managed by outsiders who do not identify with a local community and its natural environment. More recently, they have suggested that subsidiaries may also pose a special threat, since under the Tax Reform Act of 1986, parent companies can create a "liability firewall" between themselves and their most hazardous branches by reclassifying the latter as subsidiaries. Sociologists speculate further that unless the ownership status and other organizational characteristics of regulated facilities are taken into account, community-based forms of regulation, like states' right-to-know programs (mandated under SARA Title III), will have limited effects.

This study hypothesizes that: a) absentee-owned plants and subsidiaries (established after 1986) have higher levels and rates of emission than other facilities; b) the positive effects of facility size and age on emissions (found in other NSF-funded research by the author) are compounded when plants are absentee-owned or subsidiaries; and 3) larger, older, absentee-owned plants and subsidiaries are less likely to reduce their emissions in response to states' right-to-know programs.

Approach:
To test these hypotheses, a data file consisting of roughly 2,000 chemical plants will be constructed, which will include measures of each plant's toxic releases (from the EPA's Toxics Release Inventory), the right-to-know programs of its state (from the National Conference of State Legislatures), and its ownership status and other relevant organizational characteristics (from the Dun and Bradstreet Company). Cross-sectional and panel regression designs will be used to test the effects of ownership status, states' right-to-know policies, and other factors on plants' emission levels and rates in 1990, and between 1990 and 1995.

Expected Results:
The proposed study will be the first to investigate the effects of ownership status and other organizational structures on toxic releases using facility-specific data. Prior research has demonstrated that organizational factors have economic effects; this research will determine whether they also have environmental consequences. Results should guide regulators in deciding which types of facilities to monitor, and the business community in its efforts at self-regulation. Findings should also help local policy makers anticipate how responsive different plants will be to initiatives encouraging citizen participation.

Supplemental Keywords:
chemicals, sustainable development, social science. , Economic, Social, & Behavioral Science Research Program, RFA, Scientific Discipline, Sustainable Industry/Business, Corporate Performance, Economics and Business, Social Science, citizen participation, community involvement, corporate environmental behavior, environmental behavior, motivators, organizational structure, ownership status, plant emissions, public reporting, right-to-know programs

Metadata

EPA/NSF ID:
R828826
Principal Investigators:
Grant, Don
Technical Liaison:
Research Organization:
Arizona, University of
Funding Agency/Program:
EPA/ORD/Corporate Performance
Grant Year:
2000
Project Period:
June 1, 2001 to May 31, 2002
Cost to Funding Agency:
$35,123
Project Status Reports:
For the year 2001
Objective:
The overall objective of this research project is to determine how the ownership status of a regulated facility affects its environmental performance, and the implications this may have for the effectiveness of community-based forms of regulation. Specific objectives include the establishment of: (1) whether absentee-owned plants and subsidiaries have higher levels and rates of emission than other plants, (2) whether these effects are compounded when facilities are larger or older, and (3) whether larger, older, absentee-owned plants and subsidiaries are more or less likely to reduce their emissions in response to states' right-to-know programs.

Progress Summary:
A data file consisting of 2,033 chemical plants was successfully constructed and includes measures of each plant's toxic releases (from the U.S. Environmental Protection Agency's Toxics Release Inventory), the right-to-know programs of its state (from the National Conference of State Legislatures), its ownership status, and other relevant organizational characteristics (from the Dun and Bradstreet Company). Regression analysis was subsequently conducted, the results of which have been presented in a conference paper and three others submitted for publication.

Findings to date generally confirm the idea that ownership status impacts environmental performance. They also suggest ownership status conditions, the environmental effects of organizational characteristics, and citizen-based forms of regulation. For example, with respect to absentee ownership, results indicate that the average amount of toxins released by absentee-owned facilities or those with out-of-state headquarters (1.2 million toxic pounds) is nearly 3 times more than plants with in-state headquarters (407,000 toxic pounds), and 15 times more than single location enterprises (80,000 toxic pounds). The emission rates of absentee-owned plants are particularly high when they also are large. At the same time, findings suggest that absentee-owned plants will emit toxins at a significantly lower rate if located in states that actively promote communities' right-to-know and provide funding mechanisms for such purposes. (Subsidiaries were found to have similar direct and indirect effects, though less substantial.) Hence, the study's findings support the premise of the Corporate Environmental Performance and the Effectiveness of Government Interventions program that organizational forms matter for emission outcomes as well as condition the success of new "regulation through information" approaches.

Future Activities:
We will continue to collect and analyze data to discover and/or confirm results.

Publications and Presentations:

Grant D, Jones A. Are subsidiaries more prone to pollute? Social Science Quarterly.2003, Volume: 84, Number: 1 (MAR), Page: 162-173.

Grant D, Jones A. Does absentee ownership cause environmental degradation: new evidence from the United States Environmental Protection Agency Toxics Release Inventory. American Journal of Sociology.

Grant D, Jones A. The differential effects of right-to-know laws on toxic emissions. Social Problems.

Supplemental Keywords:
chemicals, sustainable development, social science, Economic, Social, and Behavioral Science Research Program, regulatory flexibility analysis, RFA, scientific discipline, sustainable industry/business, corporate performance, economics, business, social science, citizen participation, community involvement, corporate environmental behavior, environmental behavior, motivators, organizational structure, ownership status, plant emissions, public reporting, right-to-know programs. , Economic, Social, & Behavioral Science Research Program, RFA, Scientific Discipline, Sustainable Industry/Business, Corporate Performance, Economics and Business, Social Science, citizen participation, community involvement, corporate environmental behavior, environmental behavior, motivators, organizational structure, ownership status, plant emissions, public reporting, right-to-know programs

Project Reports:

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