Global standards and the environmental performance of industry

In this paper we examine the emergence of firm-based global environmental standards as an approach to managing the environmental performance of complex global production networks. Firm-based global environmental standards exist when a firm defines a uniform set of process and product environmental performance requirements that must be adhered to by all of a firm's facilities around the world, even if these firm-based standards exceed the requirements of local and national environmental regulations. We identify increasingly stringent end-market environmental regulation, as well as growing concern over the need to protect a firm's reputational capital and operating legitimacy, as two key drivers of the adoption of firm-based environmental standards. Our analysis suggests, however, that firms are responding to these external drivers in part because of the characteristics of global production networks-a production form that depends on the ability to produce from any manufacturing plant to any end market. The paper examines the impact of firm-based environmental standards through case studies of a cement plant in Thailand and an electronics manufacturing plant in Penang, Malaysia. In line with the literature on new institution economics, the case studies demonstrate that Firm-based standards are providing a platform for learning and innovation within the firm.