Abstract

Stories of firms that exceed local compliance requirements in their environmental performance appear routinely. However, we have limited theoretical explanations of what propels these firms to exceed compliance. Our theory suggests that global competitive and institutional pressures lead multinational firms to develop highlevel, environmental management systems (EMS) that make them more competitive. For economic and other reasons, select firms make the choice to rationalize their collective environmental performance to the highest common denominator rather than the lowest. Regulations around the world differ widely and are a moving target in many settings. The need to comply with such myriad, shifting rules leads to firms creating EMS to help stay ahead of regulations worldwide. Using institutional and internationalization theories as our basis, we offer a propositional model concerning global competitive/institutional pressures and their effects on corporate environmental performance. We conclude the paper with a discussion of the implications of the model.