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The Porter
Hypothesis at 20: Can Environmental Regulation Enhance
Innovation and Competitiveness? (Chair's Paper)
By Stefan Ambec, Mark A. Cohen, Stewart Elgie and Paul
Lanoie
June 2010
"Twenty
years ago, Harvard Business School economist and strategy
professor Michael Porter stood conventional wisdom about the
impact of environmental regulation on business on its head by
declaring that well designed regulation could actually enhance
competitiveness. According to Porter (1991), “Strict
environmental regulations do not inevitably hinder competitive
advantage against foreign rivals; indeed, they often enhance
it.” He went on to suggest various mechanisms by which
environmental regulations might enhance competitiveness; for
example reduction in the use of costly chemicals or lower waste
disposal costs. The traditional view of environmental regulation
held by virtually all economists until that time was that
requiring firms to reduce an externality like pollution
necessarily restricted their options and thus by definition
reduced their profits. After all, if there are profitable
opportunities to reduce pollution, profit maximizing firms would
already be taking advantage of those opportunities."
Continue reading the event
Chair's Paper
for a discussion of the Porter Hypothesis and background for the
event. |
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More on the Porter Hypothesis at 20 Conference:
conference agenda and
Michael Porter page at Sustainable Prosperity.
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Industrial Ecology and Competitiveness: Strategic Implications for the
Firm
Daniel C. Esty and Michael E. Porter
Journal of Industrial Ecology 2, no. 1, 1998.
In the emerging field of industrial ecology one of the unsettled questions is
the degree to which design for the environment, closing energy and materials
loops, and other industrial ecology concepts apply at the firm level. In this
article we examine this issue with a particular focus on whether industrial
ecology can guide company strategy and efforts to enhance competitiveness.
We conclude that industrial ecology thinking will often be useful for firms
seeking to improve their resource productivity and thus their competitiveness.
The systems perspective that industrial ecology promotes can help companies find
ways to add value or reduce costs both within their own production processes and
up and down the supply chain. But industrial ecology cannot always be counted
upon to yield competitive advantage at the firm level. In some cases, the cost
of closing loops will exceed the benefits. In other cases, regulatory
requirements do not fully internalize environmental costs, and thus polluting
firms may gain temporary or permanent cost advantages relative to companies that
attempt to eliminate all emissions. Finally, because industrial ecology focuses
attention on materials and energy flows, it may not optimize other variables
that contribute to competitiveness within the corporate setting.
Order
article reprint at Infotrieve
Ranking
National Environmental Regulation and Performance: A Leading Indicator of Future
Competitiveness? (pdf)
Daniel Esty and Michael E. Porter
The Global Competitiveness Report 2001-2002;
New York: Oxford University Press, 2001
This chapter from
The Global Competitiveness Report analyses the differences among countries in environmental performance and
the link between environmental outcomes and national environmental policy choices. The chapter reveals the findings
from an exploration of the question: must environmental quality come at the expense of competitiveness and economic development?
America’s Green Strategy
Scientific American 264, no. 4 (April 1991): 168. Also reprinted in The
Company Leader, a publication of the St. Paul Fire and Marine Insurance Company,
August 1994. Also published in The Earthscan Reader in Business and the
Environment, edited by Richard Welford and Richard Starkey, Earthscan
Publications Ltd, London, 1996.
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Grist: A Strategic Approach to Climate
Michael E. Porter and
Forest L. Reinhart
Harvard Business Review
October 2007
Climate change is now a fact of political life
and is playing a growing role in business competition. Greenhouse gas emissions
will be increasingly scrutinized, regulated, and priced. While individual
managers can disagree about how immediate and significant the impact of climate
change will be, companies need to take action now.
Companies that persist in treating climate change solely as a corporate social
responsibility issue, rather than a business problem, will risk the greatest
consequences. Of course, a company’s climate policies will be affected by
stakeholder expectations and standards for social responsibility. But the
effects of climate on companies’ operations are now so tangible and certain that
the issue is best addressed with the tools of the strategist, not the
philanthropist.
“Toward a New Conception of the Environment-Competitiveness Relationship”
Michael E. Porter and Claas van der Linde
The Journal of Economic Perspectives 9, no. 4, Fall
1995.
Article available at JSTOR (for
participating institutions)
“Green and Competitive: Ending the Stalemate”
Michael E. Porter and Claas van der Linde
Harvard Business Review, September-October 1995.
The lingering belief that environmental regulations erode competitiveness has
resulted in a stalemate. One side pushes for tougher standards, the other tries
to roll standards back. The authors' research shows that tougher environmental
standards actually can enhance competitiveness by pushing companies to use
resources more productively. Managers must start to recognize environmental
improvement as an economic and competitive opportunity, not as an annoying cost
or an inevitable threat. Environmental progress demands that companies innovate
to raise resource productivity--precisely the new challenge of global
competition. It is time to build on the underlying economic logic that links the
environment, resource productivity, innovation, and competitiveness.
Order
article reprint at Harvard Business Online
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よい環境規制は企業を強くする
ポーター教授の仮説を検証する
Well-Designed Environmental Regulations
will Strengthen Companies' Competitiveness: Reviewing the
Porter Hypothesis (April
2008)
Inlcudes translation of “Toward a
New Conception of the Environment-Competitiveness Relationship”, Porter and van
der Linde
Comparative Environmental Politics
Theory, Practice, and Prospects
Edited by Paul F. Steinberg and Stacy D. VanDeveer
The MIT Press
March 2012
Table of contents
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On the
green and innovative side of trade competitiveness? The impact
of environmental policies and innovation on EU exports
Valeria Costantinia, Massimiliano Mazzanti
Research Policy, August 2011
This paper aims at exploring how the export competitiveness of
the European Union has been affected by environmental regulation
and innovation. Starting from the Porter idea that environmental
policies may foster international competitiveness by inducing
technological innovation. We test both the strong and narrowly
strong versions of the Porter hypothesis, in order to understand
if such a virtuous cycle is confined into the environmental
goods sector (respecting the narrow criterion) or it spreads out
through the whole economic system.
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