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This chapter is from the book


  1. For example, Allen Kneese and Charles Schultze, Pollution, Prices, and Public Policy (Washington, D.C.: Brookings, 1975); and Robert Dorfman and Nancy Dorfman, Economics of the Environment (New York: W.W. Norton, 1972).

  2. Ray Anderson, Mid-Course Correction (White River Junction, VT: Chelsea Green, 1998).

  3. It is not my intention here to suggest that trade-offs do not exist between corporate economic and societal performance. Clearly, in some situations, command-and-control regulation is the only viable solution. In others, however, it is possible to internalize externalities or even supply public goods in a way that facilitates economic performance. The problem has been blind adherence to the belief that such "win-win" situations are generally not possible.

  4. Again, my intention here is not to suggest that command-and-control regulation does not serve an important purpose. For laggards and criminals, there is no option. However, for those firms seeking to move beyond compliance, such regulation can sometimes limit degrees of freedom and slow the rate of innovation.

  5. Milton Friedman, "The Social Responsibility of Business Is to Increase Its Profits," The New York Times Magazine 13 September (1970): 32–33, 122–126.

  6. My thanks to Paul Tebo at DuPont for this wonderful illustration.

  7. Indeed, the Reagan administration in the United States was bent on reforming—or, better yet eliminating—these regulations.

  8. Clyde Prestowitz, Trading Places (New York: Basic Books, 1988); Barry Bluestone and Bennett Harrison, The Deindustrialization of America (New York: Basic Books, 1982); and Ira Magaziner and Robert Reich, Minding America's Business (New York: Vintage Books, 1982).

  9. Ironically, quality management was an American invention in the first place, but it was rejected in the 1950s by U.S. companies who were making too much money through high-volume, standardized mass production. Proponents such as Deming and Crosby found willing adopters, however, in the struggling companies of post-war Japan.

  10. See, for example, Masaki Imai, Kaizen: The Key to Japan's Competitive Success (New York: Random House, 1986).

  11. Excellent examples include Bill Shore, The Cathedral Within (New York: Random House, 1999); and Mark Albion, Making a Life, Making a Living (New York: Warner Books, 2000).

  12. Michael Porter and Claas van der Linde, "Green and Competitive: Ending the Stalemate." Harvard Business Review (September/October 1995): 120–134; Stuart Hart and Gautam Ahuja, "Does It Pay to Be Green? An Empirical Examination of the Relationship Between Emission Reduction and Firm Performance," Business Strategy and the Environment 5 (1996): 30–37; Michael Russo and Peter Fouts, "A Resource-Based Perspective on Corporate Environmental Performance and Profitability," Academy of Management Journal 40(3) (1997): 534–559; Petra Christmann, "Effects of 'Best Practices' of Environmental Management on Cost Advantage: The Role of Complementary Assets," Academy of Management Journal 43(4) (1998): 663–680; and Sanjay Sharma and Harrie Vredenburg, "Proactive Corporate Environmental Strategy and the Development of Competitively Valuable Organizational Capabilities." Strategic Management Journal 19 (1998): 729–753.

  13. For an excellent and in-depth treatment of greening as business opportunity and strategy, see Forest Reinhardt, Down to Earth (Cambridge, MA: Harvard Business School Press, 2000).

  14. A. Marcus, D. Geffen, and K. Sexton, Reinventing Environmental Regulation: Lessons from Project XL (Washington, D.C.: Resources for the Future/Johns Hopkins University Press, 2002).

  15. Andy King and Michael Lenox, "Exploring the Locus of Profitable Pollution Reduction," Management Science 47(2) (2002): 289–299.

  16. See Nigel Roome and Michael Hinnells, "Environmental Factors in the Management of New Product Development," Business Strategy and the Environment 2(1) (1993): 12–27; and Ulrich Steger, "Managerial Issues in Closing the Loop," Business Strategy and the Environment 5(4) (1996): 252–268.

  17. William McDonough and Michael Braungart, Cradle to Cradle (New York: North Point Press, 2002).

  18. Fiona Murray and Richard Vietor, Xerox: Design for Environment (Boston: Harvard Business School Publishing, 1993).

  19. Personal communication with Dave Buzzelli, Dow Chemical Company, 1996.

  20. Paul Hawken, Amory Lovins, and Hunter Lovins, Natural Capitalism (New York: Little, Brown and Company, 1999),

  21. William McDonough and Michael Braungart, Cradle to Cradle.

  22. This is referred to as the "triple bottom line." See John Elkington, Cannibals with Forks (Gabriola Island, B.C.: New Society Publishing, 1998).

  23. Erik Simanis and Stuart Hart, Monsanto Company (A) and (B): Quest for Sustainability (Washington, D.C.: World Resources Institute, 2000).

  24. Robert Shapiro, Address to Greenpeace's Annual Conference, 1999.

  25. This section is excerpted from Stuart Hart and Sanjay Sharma, "Engaging Fringe Stakeholders for Competitive Imagination," Academy of Management Executive 18(1) (2004): 7–18.

  26. Robert Foster and Sarah Kaplan, Creative Destruction (New York: Currency Books, 2001).

  27. David Korten, When Corporations Rule the World (West Hartford, CT: Kumarian Press, 1995).

  28. Christopher Gunn, Third-Sector Development (Ithaca, NY: Cornell University Press, 2004).

  29. Ann Florini, ed., The Third Force: The Rise of Transnational Civil Society (Washington, D.C.: Carnegie Endowment for International Peace, 2000).

  30. Howard Reingold, Smart Mobs: The Next Social Revolution (Cambridge, MA: Perseus Publishing, 2002).

  31. R. K. Mitchell, B. R. Agle, and D. J. Wood, "Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts," Academy of Management Review 22 (1997): 853–886.

  32. See, for example, Anil Gupta and Eleanor Westney, eds., Smart Globalization (San Francisco: Jossey-Bass, 2003).

  33. Brian Ellison, Dasha Moller, and Miguel Angel Rodriguez, Hindustan Lever: Reinventing the Wheel (Barcelona, Spain: IESE Business School, 2003).

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