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Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010
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Stewart Elgie and Mark Cohen - The Porter Hypothesis at 20: Can Environmental Regulation Enhance Innovation and Competitiveness? June 2010

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Stewart Elgie and Mark Cohen Welcoming Address

Stewart Elgie and Mark Cohen Welcoming Address

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  • NOTE: There are so many papers & authors (many of whom are in this room – including ourselves) - - so we are not going to attempt to identify any of them. The Chairs Paper contains many of these citations - - and you are encouraged to suggest additions as we edit the chairs paper and find a suitable publication home.
  • Note: Weak Version versus “Strong Version”
  • NOTE: Stefan will address the criticisms in his discussion of Theory
  • Note two things: The findings on business performance did not separate out based on type of instrument used The findings on business performance did not look at a time lag to allow for innovation to occur and affect production (some studies find this important)
  • NOTE:
  • Transcript

    • 1. The Porter Hypothesis at 20: Overview of the Literature <ul><li>Stefan Ambec </li></ul><ul><li>Toulouse School of Economics &amp; Univ. Gothenberg </li></ul><ul><li>Mark A. Cohen </li></ul><ul><li>RFF &amp; Vanderbilt Univ. </li></ul><ul><li>Stewart Elgie </li></ul><ul><li>Sustainable Prosperity &amp; Univ. of Ottawa </li></ul><ul><li>Paul Lanoie </li></ul><ul><li>HEC Montreal </li></ul>
    • 2. Outline <ul><li>What the Porter Hypothesis Does and Does Not Say </li></ul><ul><li>Developments in Theory </li></ul><ul><li>The Empirical Evidence </li></ul><ul><li>Design of Policies to Enhance Competitiveness </li></ul><ul><li>The Forward Research Agenda </li></ul>
    • 3. What is the Porter Hypothesis? Strict but Flexible Environmental Regulations (market-based) Innovation Business Performance (sometimes) Environmental Performance
    • 4. Why “properly crafted” regulation might lead to + outcomes… <ul><li>Signal to companies about resource inefficiencies &amp; potential technological improvements </li></ul><ul><li>Raise corporate awareness on topics that might otherwise be ‘lost’ in shuffle </li></ul><ul><li>Reduce uncertainty of investments in environmental protection </li></ul><ul><li>Creates pressures that motivate innovation and progress </li></ul><ul><li>Levels the transitional playing field </li></ul>
    • 5. Two Important Notes… <ul><li>Criticism of Porter Hypothesis </li></ul><ul><li>Assumes firms aren’t always profit maximizing. </li></ul><ul><li>If there is low hanging fruit, why don’t firms know about it? </li></ul><ul><li>What Porter did NOT Say… </li></ul><ul><li>Did not say “all regulation leads to innovation…” </li></ul><ul><ul><li>=&gt; Only that “well designed regulation does…” </li></ul></ul><ul><li>Did not say, “innovation always offsets cost of regulation” </li></ul><ul><ul><li>=&gt; He did say that it “often does…” </li></ul></ul>
    • 6. Developments in Theory <ul><li>Firms do not profit maximize </li></ul><ul><ul><li>Risk averse managers </li></ul></ul><ul><ul><li>Bounded rationality </li></ul></ul><ul><ul><li>Present-biased decision makers </li></ul></ul><ul><ul><li>Information Asymmetry : owner versus manager </li></ul></ul><ul><li>Market Failure </li></ul><ul><ul><li>Imperfect competition </li></ul></ul><ul><ul><li>R&amp;D spillovers </li></ul></ul>
    • 7. Empirical Evidence <ul><li>Weak Version =&gt; Regulation-Innovation </li></ul><ul><ul><li>Patents </li></ul></ul><ul><ul><li>R&amp;D investment, technological choice, age of assets </li></ul></ul><ul><ul><li>Yes, generally positive and significant , but often weak </li></ul></ul>
    • 8. Empirical Evidence <ul><ul><li>2. Strong Version =&gt; Firm Productivity </li></ul></ul><ul><ul><li>Cost functions, factor productivity, profits, ROI, Tobin’s Q </li></ul></ul><ul><ul><li>Plant location/pollution haven hypothesis </li></ul></ul><ul><ul><li>Mixed negative and positive results, usually weak. </li></ul></ul>
    • 9. A sample study from OECD survey on 4000 production plants Environmental Policy Environmental R&amp;D Environmental Performance Business Performance (-) (+) (+) (+)
    • 10. Policies to Enhance Competitiveness <ul><li>Environmental Policies </li></ul><ul><ul><li>Performance-based standards </li></ul></ul><ul><ul><li>Market-based instruments </li></ul></ul><ul><ul><li>- Questions about revenue recycling </li></ul></ul><ul><li>2. Industrial &amp; Patent Policies </li></ul><ul><ul><li>Patent policy might enhance R&amp;D </li></ul></ul>
    • 11. Policies to Enhance Competitiveness <ul><li>3. Training </li></ul><ul><ul><ul><li>Especially in SME &amp; developing countries </li></ul></ul></ul><ul><li>4. Organizational &amp; Governance Conditions </li></ul><ul><ul><ul><ul><li>Is this solely purview of private companies? </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Transparency: CDP, GRI </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Makeup &amp; Role of Board of Directors </li></ul></ul></ul></ul>
    • 12. Research Agenda Going Forward <ul><li>First and Foremost: </li></ul><ul><li>Are the Policy Implications Empirically-based? </li></ul><ul><li>Areas we’ve tentatively identified: </li></ul><ul><ul><li>Data &amp; Methodological Issues </li></ul></ul><ul><ul><li>Non-Regulatory Policies </li></ul></ul><ul><ul><li>Longitudinal Studies </li></ul></ul><ul><ul><li>Global Studies </li></ul></ul>
    • 13. Research Agenda Going Forward <ul><li>Data &amp; Methodological Issues </li></ul><ul><ul><li>Proxies instead of actual measures of innovation, productivity, competitiveness </li></ul></ul><ul><ul><li>Lack of comparable industries, time, variables </li></ul></ul><ul><li>How do Non-regulatory Policies Interact? </li></ul><ul><ul><li>Voluntary programs </li></ul></ul><ul><ul><li>Mandatory Disclosure programs </li></ul></ul>
    • 14. Research Agenda Going Forward <ul><li>Longitudinal Studies </li></ul><ul><ul><li>Only a few studies have even lagged key variables </li></ul></ul><ul><ul><li>Has the world changed? </li></ul></ul><ul><li>Global Studies </li></ul><ul><ul><li>Pollution haven hypothesis studies have not distinguished type of regulation </li></ul></ul><ul><ul><li>More comparable data opens opportunities for research </li></ul></ul>
    • 15. Goal of Today’s Workshop <ul><li>Assess What is Known </li></ul><ul><li>=&gt; Innovation </li></ul><ul><li>=&gt; Competitiveness </li></ul><ul><li>=&gt; What are key policy implications? </li></ul><ul><li>Assess What is NOT Known </li></ul><ul><li>=&gt; Prioritize main research questions </li></ul>
    • 16. <ul><ul><li>Questions? </li></ul></ul>

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