Effects of coercive regulation versus voluntary and cooperative auto-regulation on environmental adaptation and performance: Empirical evidence in Spain

Summary The question of what types of public environmental policies contribute most effectively to environmental innovation in companies remains open. This study evaluated how managerial perception of public environmental policy inspired the way in which firms act to adapt to challenges related to the natural environment, and the subsequent advancements in environmental performance of the firms. Our empirical analysis was based on data sets of environmental behaviour and the results from 1151 Spanish firms during the period 2002-2005. Our research concluded that each model of environmental public policy inspired different patterns of environmental adaptation by the firms. Voluntary policies, and within them those based on cooperation, were the most stimulating for the adoption of proactive environmental practices, especially those more innovative practices that may even extend beyond legal regulation. The adoption of more advanced environmental innovations by firms submitted to auto-regulation allowed both a superior improvement and a higher level of environmental performance.