The determinants of company response to environmental regulation

The impact of governmental regulatory action on the economic performance of mining companies has been the focus of a great deal of attention by industry commentators and academic scholarship alike. The influence of environmental regulation on the strategic objectives of mining firms is less well understood, however. This article investigates what influences the way mining companies react to environmental approvals regulation. It presents the results of a recent cross-national survey of Australian and Canadian mining companies into the effect of a range of possible determinants on company response to environmental approvals regulation. Possible influences included both external pressures (stakeholder pressure, jurisdictional culture and market characteristics) and internal pressures (organizational culture, organizational learning, the influence of individuals within firms and company size). While cross-national comparison revealed some differences with respect to the influence of particular pressures, on balance the results suggest that for mining companies in both countries, internal pressures exert the greatest influence on company response. These results contradict a prevailing view in the literature, which suggests that external factors, particularly stakeholder groups, exert the most influence on the environmental responses of firms. The article concludes that the existing emphasis on external pressures to explain corporate environmental behaviour should be supplemented by a focus on the internal dynamics of firms.