Diffusing Environmental Management Practices within the Firm: The Role of Information Provision

Abstract

Why are some firms more successful in adopting profitable environmental management practices than others? A key role of corporate managers is to encourage subsidiaries to adopt innovative practices. We examine the conditions under which corporate managers use information provision to encourage subsidiaries to adopt advanced environmental management practices. Focusing on the distribution of expertise across subsidiaries, we propose that corporate managers are more likely to elect an information provision strategy when subsidiaries (i) possess moderate levels of related expertise, (ii) exhibit significant heterogeneity in this expertise, and (iii) are more diversified and less concentrated. We study the diffusion of pollution prevention practices by firms in the information and communication technology sector in the United States and find empirical support for our four hypotheses. These findings promote a greater understanding of which firms adopt advanced environmental management practices and when firms adopt information provision strategies to encourage knowledge transfer within the organization.