Why do Firms Participate in Voluntary Environmental Programs? A Meta-Analysis of the Role of Institutions, Resources and Program Stringency

We meta-analyze research on why firms join voluntary environmental programs (VEP) to assess the impact of program stringency, or the extent to which they have rigorous, enforceable standards on these decisions. Stringency creates trade-offs for firms by impacting programs’ effectiveness, legitimacy, and adoption costs. Most research consider singular programs and lack cross program variation needed to analyze program stringency’s impact. Our meta-analysis addresses this by sampling 127 studies and 23 VEPs. We begin by identifying common institutional and resource-based drivers of participation in the literature, and then analyze how program stringency moderates their impacts. Our results suggest that strictly governed VEPs encourage participation among highly visible and profitable firms, and discourage it when informal institutional pressures are higher, and firms have prior experience with other VEPs or quality management standards. We demonstrate that VEP stringency has nuanced effects on firm participation based on the institutional and resource-based factors facing them.