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Why Do Firms Engage in National Sustainability Programs and Transparent Sustainability Reporting?

Evidence from Mexico’s Clean Industry Program

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Abstract

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

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

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

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

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Notes

  1. We favor Peng et al. (2009:66) suggestion on the need to treat institutions as independent variables. As a result, “strategic choices… are also a reflection of the formal and informal constraints of a particular institutional framework that managers confront.” That is, firm choice (whether to voluntary adhere to the program or not) might be influenced by factors within an institutional context. In other words, institutional factors or constraints can affect a particular set of firms, within a given geography.

  2. Directive on Waste Electrical and Electronic Equipment (WEEE) #2002/96/EC of 27 January 2003. See: http://www.weeeregistration.com/weee-directive.html.

  3. Before PROFEPA, the environmental charge at the federal level morphed from one agency to and into another, such as the Ministry of Urban Development and Ecology (SEDUE) and SEDESOL (Ministry of Social Development).

  4. A firm may have multiple plants that go through the certification process, but it is a single plant and not the firm that is ultimately certified under the Clean Industry Program in Mexico.

  5. The audit focuses on such environmental issues as water and air emissions, soils, waste (hazardous and non-hazardous), noise, management systems, etc.

  6. Three types of certificates may be earned depending upon the sector. The Clean Industry certificate applies to the manufacturing sector, the Environmental Quality badge is earned in the service, trade, government, and the extractive sectors, and Environmental Quality for Tourism certificate relates to the tourism sector.

  7. Size by employee number varies by industry type, but by and large micro and small plants have fewer than 50 employees, medium-sized facilities have between 51 and 100 employees, and large plants employ more than 100 people.

  8. See the link (reference section) to the third annual report given by this Mexican Ministry.

  9. In some of our hypotheses we will also include some aspects of the regulative pillar, which states that organizational legitimacy can also be achieved by complying with the law. To this end, societal actors comply with regulations on the basis of expediency because compliance avoids sanctions and penalties (Scott 1995). Nonetheless, we do not emphasize this pillar because our argument is not about determining enforceability rates or the interplay between the authority (the law) and the organization. We will do so, however, only where the regulative pillar interjects with the normative one.

  10. See Stevens et al. (2005) for an explanation about the power of roles or ‘codes of conduct.’

  11. Here we refer to the State’s ability to promote the “correct” way of behavior in the absence of legal or other means of coercion (Trevino et al. 2008).

  12. While the CNN-Expansion ranking is a list of the 500 most influential firms in Mexico, we did not include 52 of the firms due to the fact the some firms are ‘double counted’ as they are part of the same Group of Firms. We decided to report the information provided by the Holding Firm.

  13. This same argument was made successfully by Ambos and Schlegelmilch (2008) who restricted their investigation to German MNCs in Germany. Our study is less restrictive as it considers both local and foreign firms, albeit in one location (Mexico).

  14. To this end, Alvarez-Larrauri and Fogel (2008) comment that the Program’s also emphasizes worker safety, an objective that is shared by UNGC’s 10 principles.

  15. The official reports can be obtained at: http://www.profepa.gob.mx/PROFEPA/AuditoriaAmbiental/ProgramaNacionaldeAuditoriaAmbiental/ListadoDeInstalacionesCertificadas.htm.

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Acknowledgements

This research is part of a project on International Business and Sustainable Development, which has been funded by a grant from the Title VIb Program of the United States Department of Education for the period 2008–2010 (Award # P153A080011). We would also like to acknowledge the valuable help provided by the Dean’s office at Central Michigan University and our Graduate Assistants Sarah Strong and Liang Xu.

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Authors and Affiliations

  1. Department of Management, Central Michigan University, Mount Pleasant, USA

    Luis A. Perez-Batres,  Van V. Miller,  Michael J. Pisani &  Jose A. Renau-Sepulveda

  2. Schulich School of Business, York University, Toronto, Canada

    Irene Henriques

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  1. Luis A. Perez-Batres
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Perez-Batres, L., Miller, V., Pisani, M. et al. Why Do Firms Engage in National Sustainability Programs and Transparent Sustainability Reporting?. Manag Int Rev 52, 107–136 (2012). https://doi.org/10.1007/s11575-011-0098-8

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