Abstract
The public policy literature has paid little attention to evaluating the ability of voluntary environmental programs to generate economic benefits for firms. Yet, given their voluntary nature, provision of economic benefits to firms is a necessary condition for these programs to become effective environmental policy instruments. Additionally, little is known about why firms operating in developing countries would participate in these initiatives.
This paper provides some of the first cross-sectional empirical evidence about voluntary environmental programs established in developing countries. Specifically, the paper focuses on studying hotel participation in the Costa Rican Certification for Sustainable Tourism (CST program). The CST program is probably the first performance-based voluntary environmental program created by a developing country government. Results indicate that hotels with certified superior environmental performance show a positive relationship with differentiation advantages that yield price premiums. Participation in the CST program alone is not significantly related to higher prices and higher sales. The evidence also indicates that participation in the CST program was significantly related to government monitoring, trade association membership and hotels’ focus on ‘green’ consumers.
Similar content being viewed by others
References
Andrews, R. (1998). ‘Environmental regulation and business self-regulation,’ Policy Sciences 31: 177–197.
Arora, S. and T. Cason (1996). ‘Why do firms volunteer to exceed environmental regulations? Understanding participation in EPA's 33/50 program,’ Land Economics 72: 413–432.
Arora, S. and S. Gangopadhyay (1995). ‘Toward a theoretical model of emissions control,’ Journal of Economic Behavior and Organization 28: 289–309.
Bansal, T. and K. Roth (2000). ‘Why companies go green: A model of ecological responsiveness,’ Academy of Management Journal 43 (4): 717–736.
Barney, J. (1991). ‘Firm resources and sustained competitive advantage,’ Journal of Management 17: 99–120.
Barney, J. and W. Hesterley (1996). ‘Organizational economics: Understanding the relationships between organizations and economic analysis,’ in Clregg, Hardy and Nord, eds., Handbook of Organizational Studies. Thousand Oaks: Sage, pp. 115–147.
Belsley, D. A., E. Kuh and R. E. Welsch (1980). Regression diagnostics: Identifying influential data and sources of collinearity. NewYork: John Willey and Sons.
Blake, B. and A. Becker (1998). The New Key to Costa Rica. Berkeley, CA: Ulysses Press.
Bien, A. (2000). Director: Costa Rican Association of Private Reserves. Interview by author, San Jose, Costa Rica.
Boo, E. (1990). Ecotourism: The Potential and Pitfalls. Washington, D.C.: World Wildlife Fund, pp. 25–37.
Bressers, H. and L. O'Toole (1998). ‘The selection of policy instruments: A network-based perspective,’ Journal of Public Policy 18 (3): 213–239.
Cashore, B. and I. Vertinisky (2000). ‘Policy networks and firm behaviors: Governance systems and firm responses to external demands for sustainable forest management,’ Policy Sciences 33: 1–30.
Christmann, P. (1997). Environmental Strategies of Multinational Companies: Determinants and Ejects on Competitive Advantage. Ph. D. diss., University of California, Los Angeles.
Cohen, J. and P. Cohen (1983). Applied Multiple Regression: Correlation Analysis for the Behavioral Sciences. Hillsdale, NJ: Lawrence Erlbaun Associates.
Conner, K. (1991). ‘A historical comparison of resource-based theory and five schools of thought within industrial organization economics: Do we have a new theory of the firm?’ Journal of Management 17: 121–154.
Davies, T. and S. Cahill (1999). Environmental Implications of the Tourism Industry. Washington, D.C.: Resources for the Future.
DeSharzo, J. R. and L. Vega (1999). The Importance of Public Protected Areas in the Development of Tourism in Costa Rica: An Analysis of Visit. Cambridge: Harvard Institute for International Development.
Diericks, I. and K. Cool (1989). ‘Asset stock accumulation and sustainability of competitive advantage,’ Management Science 35: 1504–1511.
DiMaggio, P. and W. Powell (1983). ‘The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields,’ American Sociological Review 48: 147–160.
DiMaggio, P. and W. Powell (1991). 'The new institutionalism in organizational analysis,’ Chicago: University of Chicago Press.
Gentry, B. (ed.) (1998). Private Capital Flows and the Environment: Lessons from Latin America. Cheltenham, U.K.: Edward Elgar.
Harrison, K. (1995). ‘Is cooperation the answer? Canadian environmental enforcement in comparative context,’ Journal of Public Policy Analysis and Management 14 (2): 221–244.
Harrison, K. (1999). ‘Talking with the donkey: Cooperative approaches to environmental protection,’ Journal of Industrial Ecology 2 (3): 51–72.
Hart, S. (1995). ‘A natural resource based view of the firm,’ Academy of Management Review 20: 986–1014.
Hartman, R. S. (1988). ‘Self-selection bias in the evaluation of voluntary energy conservation programs,’ Review of Economics and Statistics 70: 448–458.
Heckman, J. (1979). ‘Sample selection bias as a specification error,’ Econometrica 47 (1): 153–161.
Heckman, J. (1978). ‘Dummy endogenous variables in a simultaneous equation system,’ Econometrica 46 (6): 931–959.
Henriques, I. and P. Sadorsky (1996). ‘The determinants of an environmental responsive firm: An empirical approach,’ Journal of Environmental Economics and Management 30: 381–395.
Highley, C.J. and F. Leveque (eds.) 2001. Environmental Voluntary Approaches: Research Insights for Policy-Makers. Itally: Fundazione Eni Enrico Mattei.
Hoffman, A. (1999). ‘Institutional evolution and change: Environmentalism and the U.S. Chemical Industry,’ Academy of Management Journal 42: 351–371.
Howard, J., J. Nash and J. Enrenfeld (2000). ‘Standard or Smokescreen? Implementation of a voluntary environmental code,’ California Management Review 42 (2): 63–77.
Howlett, M. (1991). ‘Policy instruments, policy styles, and policy implementation: National approaches to theories of instrument choice,’ Policy Studies Journal 19 (2): 1–21.
Howlett, M. and M. Ramesh (1995). Studying Public Policy: Policy Cycles and Policy Subsystems. New York: Oxford University Press.
Howlett, M. and M. Ramesh (1993). ‘Patterns of policy instrument choice: Policy styles, policy learning and the privatization experience,’ Policy Studies Review 12 (1): 3–24.
ICT (1995). Strategic Sustainable Development Plan for the Costa Rican Tourism Sector, 1995–1999. San Jose, Costa Rica.
ICT (1999). Costa Rican Institute of Tourism: Annual Report of Statistics,1999. San Jose, Costa Rica.
INCAE (2000). Tourism in Costa Rica: A Competitive Challenge. Costa Rica.
Jaffe, A. B., S. R. Peterson and P. R. Portney (1995). ‘Environmental regulation and competitiveness of U.S. manufacturing,’ Journal of Economic Literature 33: 132–163.
Jennings, P. and P. Zandbergen (1995). ‘Ecologically sustainable organizations: An institutional approach,’ Academy of Management Review 20: 1015–1052.
Jones, C., C. Inman, L. Pratt, N. Mesa and J. Rivera (2001). ‘Issues in the design of a green certification program for tourism,’ in T. Panayotou (2001), Environment for Growth in Central America. Cambridge, MA: Harvard University Press.
Khanna, M. (2001). ‘Non-mandatory approaches to environmental protection,’ Journal of Economic Surveys 15 (3): 291–324.
Khanna, M. and L. Damon (1999). ‘EPA's voluntary 33/50 program: Impact on toxic releases and economic performance of firms,’ Journal of Environmental Economics and Management 37: 1–25.
Khanna, M., W. H. Quimio and D. Bojilova (1998). ‘Toxics release information: A policy tool for environmental protection,’ Journal of Environmental Economics and Management 36: 243–266.
King, A. and M. Lenox (2000). ‘Industry self-regulation without sanctions: The chemical industry responsible care program,’ Academy of Management Journal 43: 698–716.
Klassen, R. D. and C. P. McLaughlin (1996). ‘The impact of environmental management on firm performance,’ Management Science 42: 1199–1214.
Kollman, K. and A. Prakash (forthcoming). ‘EMS-based environmental regimes as club goods: Examining variations in firm-level adoption of ISO-14001 and EMAS in U.K., U.S. and Germany,’ Policy Sciences.
Kraft, M. E. and N. J. Vig (1997). Environmental Policy in the 1990s (3rd ed.).Washington, D.C.: CQ Press.
Lee, L. and R. P. Trost (1978). ‘Estimation of some limited dependent variable models with application to housing demand,’ Journal of Econometrics 8: 357–382.
Linder, S. and B. Peters (1989). ‘Instruments of government: Perceptions and contexts,’ Journal of Public Policy 9 (1): 35–58.
Lizano, R. (2001). Director: Certification for Sustainable Tourism Interview by author. San Jose, Costa Rica.
Lyon, T. P. and J. W. Maxwell (1999). ‘Voluntary approaches to environmental regulation: An overview,’ in M. Franzini and A. Nicita, eds., Environmental Economics: Past, Present and Future. Hampshire: Ashgate Publishing Ltd.
Maddala, G.-S. (1983). Limited-Dependent and Qualitative Variables in Econometrics. New York: Cambridge University Press.
Margolis, J. and J. Walsh (2001). People and Profits? The Search for a Link between Company's Social and Financial Performance. Mahwah, New Jersey: Lawrence Erlbaum Associates, Publishers.
Meyer, J. and B. Rowan (1977). ‘Institutional organizations: Formal structure as myth and ceremony,’ American Journal of Sociology 80: 340–363.
Mesa, N. and C. Inman (1999). Tourism in Costa Rica: A Competitive Challenge. Costa Rica: INCAE.
Montabon, F. et al. (2000). ‘ISO-14000: Assessing its perceived impact on corporate performance,’ The Journal of Supply Chain Management (Spring): 4–16.
Motta, R., R. Huber and J. Ruitenbeek (1999). ‘Market based instruments for environmental policy making in Latin America and the Caribbean: Lessons from eleven countries,’ Environment and Development Economics 4: 177–201.
National Academy of Public Administration (1995). Setting Priorities, Getting Results: A New Direction for the Environmental Protection Agency. Washington, D.C.: NAPA.
Norberg-Bohm,V.( 1999). ‘Stimulating “green” technological innovation: An analysis of alternative policy mechanisms,’ Policy Sciences 32: 13–38.
Nystrom, A. D. and W. Smith (1996). The Berkeley Guide for Central America (2nd ed.). New York: Fodor's Travel Publications, Inc.
Olsen, R. (1980). ‘A least squares correction for selectivity bias,’ Econometrica 48 (7): 1815–1820.
OTA (1995). Environmental Policy Tools: A User's Guide. Washington, D.C.: U.S. Congress, Office of Technology Assessment.
Palmer, K., W. E. Oates and P. R. Portney (1995). ‘Tightening environmental standards: The benefit-cost or the no-cost paradigm?’ Journal of Economic Perspectives 9: 119–132.
Porter, M. (1980). Competitive strategy. New York: Free Press.
Porter, M. and C. van der Linde (1995a). ‘Green and competitive,’ Harvard Business Review (September-October): 149–163.
Porter, M. and C. van der Linde (1995b). ‘Toward a new conception of the environment-competitiveness relationship,’ Journal of Economic Perspectives 9: 97–118.
Pregibon, D. (1981). ‘Logistic regression diagnostics,’ The Annals of Statistics 9: 705–724.
Rachowiecki, R. (1997). The Lonely Planet Guide: Costa Rica (3rd ed.). Hong Kong: Lonely Planet Publications.
Reed, R. and R. DeFillippi (1990). ‘Causal ambiguity, barriers to imitation, and sustained competitive advantage,’ Academy of Management Review 15: 88–102.
Reinhardt, F. L. (1998). ‘Environmental product differentiation: Implications for corporate strategy,’ California Management Review 40 (4): 43–73.
Rivera, J. (1998). ‘Public private partnerships: The tourism industry in Costa Rica,’ in B. Gentry, Private Capital Flows and the Environment: Lessons from Latin America. Northampton, MA: Edward Elgar Press.
Roberts, P. and G. Royston (1997). ‘Integrating transaction cost and institutional theories: Towards a constrained-efficiency framework for understanding organizational design adoption,’ Academy of Management Review 22: 346–373.
Rockwood, C. ( 1998). Fodor's 99: Costa Rica Travel Guide. New York: Fodor's Travel Publications, Inc.
Rondinelli, D and M. Berry (2000). ‘Corporate environmental management and public policy: Bridging the gap,’ The American Behavioral Scientist 44 (2): 168–187.
Russo, M. and P. Fouts (1997). ‘A resource-based perspective on corporate environmental performance and profitability,’ Academy of Management Journal 40: 534–559.
Salomon, L. (1981). ‘Rethinking public management: Third-party government and the changing forms of government action,’ Public Policy 29 (3): 255–275.
Sen, S. and C. B. Bhattacharya (2001). ‘Does doing good always leads to doing better? Comsumer reactions to corporate social responsibility,’ Journal of Marketing Research 38: 225–243.
Segerson, K. and T. Miceli (1998). ‘Voluntary environmental agreements: Good or bad news for environmental protection?’ Journal of Environmental Economics and Management 36: 109–130.
Schneider, A. and H. Ingram (1990). ‘Behavioral assumptions of policy tools,’ The Journal of Politics 52 (2): 510–529.
Sharma, S. and H. Vredenburg (1998). ‘Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities,’ Strategic Management Journal 19: 729–753.
Starik,M. and A. Marcus (2000). ‘Introduction to the special research forum on the management of organizations in the natural environment: A field emerging from multiple paths, with many challenges ahead,’ Academy of Management Journal 43: 539–546.
Van Ravenswaay, E. and J. Blend (1999). ‘Using ecolabeling to encourage adoption of innovative environmental technologies in agriculture,’ in F. Casey et al., eds., Flexible Incentives for the Adoption of Environmental Technologies in Agriculture. Norwell, MA: Kluwer Academic Publishing.
Videras, J. and A. Alberini (2000). ‘The appeal of voluntary environmental programs: Which firms participate and why?’ Contemporary Economic Policy 18 (4), 449–461.
Walley, N. and B. Whitehead (1994). ‘It's not easy being green,’ Harvard Business Review 72 (3): 46–52.
Wehrmeyer, W. and Y. Mulugetta (1999). Growing Pains: Environmental Management in Developing Countries. Shiffield, U.K.: Greenleaf Publishing Limited.
Welch, E., A. Mazur and S. Bretschneider (2000). ‘Voluntary behavior by electric utilities: Levels of adoption and contribution of the Climate Challenge Program to the reduction of carbon dioxide,’ Journal of Policy Analysis and Management 19 (3): 407–425.
Wernerfelt, B. (1984). ‘A resource-based view of the firm,’ Strategic Management Journal 5: 171–180.
White, H. A. (1980). ‘Heteroskedasticity-consistent covariance matrix estimator and direct test for heteroskedasticity,’ Econometrica 48: 817–838.
Wildes, F. T. (1998). Influence of Ecotourism on Conservation Policy for Sustainable Development: The Case of Costa Rica. Ph.D. diss., University of California, Santa Barbara.
Wu, J. and B. Barbock (1999). ‘The relative efficiency of voluntary vs mandatory environmental regulations,’ Journal of Environmental Economics and Management 38: 158–175.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Rivera, J. Assessing a voluntary environmental initiative in the developing world: The Costa Rican Certification for Sustainable Tourism. Policy Sciences 35, 333–360 (2002). https://doi.org/10.1023/A:1021371011105
Issue Date:
DOI: https://doi.org/10.1023/A:1021371011105