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17. Assessing the Credibility of Voluntary Codes: A Theoretical Framework
Pages 283-302

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From page 283...
... Examples include Coatings Care by the National Paint and Coatings Association, the Coalition for an Environmentally Responsible Economy (CERES) Principles, the development of the ISO 14000 standards of environmental management by the International Organization for Standardization, and the principles and criteria of sustainable forest management developed by the Forest Stewardship Council, a business-nongovernmental organization (NGO)
From page 284...
... Thus, generic codes may reflect the need to carefully balance effectiveness and accountability, rather than suggest deceptive intentions by trade associations. (In this paper, the term "effectiveness" indicates the ability of a trade association manager to customize generic code requirements to the specific operational conditions of individual member firms.)
From page 285...
... Often, law-abiding behavior reflects internalized social norms (Etzioni, 2000; Tyler and Darley, 2000; Cooter, 1996; Tyler, 1990~. Sanctions matter of course, but often it is extralegal sanctions rather than state policing that ensure "compliance" (Posner, 1996, 2000; Bernstein, 1992~: Trade association managers, environmental professionals, top executives, community leaders, environmentalists, bankers, insurers, and large customers all may rely on a variety of extralegal sanctioning mechanisms to ensure the proper implementation of a voluntary code.
From page 286...
... THE PROVISION OF PUBLIC GOODS IN LARGE GROUPS The adoption of a voluntary code by a trade association may be thought of as a collective action problem: Adopting the code requires all industrial firms to take costly measures, such as investing in pollution prevention technologies and implementing environmental management systems. Although the costs of adopting the code and thus of protecting the environment are borne by all industry members, the benefits of providing this public good are enjoyed by a much larger population.6 Under these circumstances, standard economic theory predicts that this public good is unlikely to be provided.
From page 287...
... The diamond traders for their part demonstrate that informal sanctioning mechanisms may be very effective at sustaining common norms, such as honest behavior, even in large groups. In an interview with this author, a representative of the Salvage association an organization on which the marine insurance industry depends to conduct accident investigations claimed that an instance of collusion between a shipowner and a shipyard in Singapore would be common knowledge among marine insurers in London within a week.
From page 288...
... Generally speaking, legal considerations and legal enforcement actions play only a minor role in this trade. Neither the international marine industry nor the international diamond trade may be considered small groups, yet they display a surprising ability to address problems of collective action.
From page 289...
... Earlier I argued that efficient information exchange among industry members is a key requirement for a trade group to credibly implement a voluntary code. If the personal and professional ties among the members of a trade association constitute an SW network, information about individual members is more likely to be common knowledge among all members even if the membership is large and spatially dispersed.
From page 290...
... Information Gathering in Large Groups The credibility of a voluntary code depends to a significant extent on the ability of a trade association to identify "recalcitrant" members those industrial members with a poor record of code implementation. As noted earlier, identifying "defectors" is a difficult task because often codes do not include any monitoring mechanism.
From page 291...
... By contrast, mid-level managers are embedded in networks of professional ties that may include several other firms outside their local community. Unlike top management, their position may allow them to share information about their firm' s deficiencies with their professional peers and with trade association representatives.~3 Efficient information exchange is obviously an indispensable condition for maintaining the credibility of an industry code.
From page 292...
... Finally, how does a trade association deal with noncompliance? It is well known that trade associations usually have a limited sanctioning capacity.
From page 293...
... For example, the recently launched EPA Performance Track program provides recognition and some degree of regulatory flexibility to a selected number of trade associations (Steve Sides, National Paint and Coating Association, personal communication, June, 2001~. Absent such enticements, trade association officials must resort to different strategies.
From page 294...
... Developing a common understanding of what constitutes acceptable interpretations of generic code requirements is key to reconciling conflicting demands for accountability and flexibility, it enables customization of a consensus about differences rather than uniformity a demonstration of the code' s ability to reconcile effectiveness and accountability.~9 Two opposing forces shape this negotiation process: on one end, the interests of the firms represented in these negotiations, and on the other end, the allegiances to criteria of professionalism, technical competence, and impartiality typical of a professional community. The tension between professionalism and the firms' interest may lead to a temporary situation in which the environmental professionals develop a common understanding of what constitutes the proper implementation of the code that differs from the position taken by some of the participating companies.
From page 295...
... Their central position in the industry network confers on them the power to address disputes among member firms over implementation issues, between industry interests and the public sector, and between environmental groups and member firms. In short, they become what some scholars have dubbed "crosscutting ties."2i CONCLUSION In this chapter I have shown that the two dominant approaches to evaluating voluntary codes determining the impact of a code on environmental performance and assessing the code requirements against formal criteria may not provide satisfactory results.
From page 296...
... As a result, they are ill suited to become part and parcel of voluntary agreements. Third, developing an in-depth knowledge of the implementation processes should enable decision makers in the public sector to focus on improving the self-regulatory and learning capacity of a trade association and its members, rather than concentrating on specific elements of the code.
From page 297...
... Accordingly, trade association representatives carefully avoid any talk of "enforcement action." 13 See Canan and Reichman (1993) for a discussion of the role of mid-level managers and engineers in promoting the implementation of the Montreal protocol.
From page 298...
... has shown that a key requirement of a functioning democracy is to have crosscutting ties among the various social and political groups. In his now classic The Strength of Weak Ties, sociologist Granovetter suggests that missing crosscutting ties among ethnic Italian families in a Boston neighborhood account for the inability of this neighborhood to organize against "urban renewal" (Granovetter, 1973:1373-1376; see also Granovetter, 2000:1079)
From page 299...
... Ditz, D.W., and J Ranganathan 1997 Measuring Up: Toward a Common Framework for Tracking Corporate Environmental Performance.
From page 300...
... Vryza 1999 Managing environmental issues across multiple functions: An empirical study of corporate environmental departments and functional co-ordination. Journal of Environmental Management 55(1)
From page 301...
... :368A-374A. National Academy of Engineering 1999 Industrial Environmental Performance Metrics.
From page 302...
... Melnyk 1998 The green supply chain: Integrating suppliers into environmental management processes. International Journal of Purchasing and Materials Management 34(2)


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