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Business‐oriented environmental regulation: Measurement and implications for environmental policy and business strategy from a sustainable development perspective

Juan J. Martínez Hernández, Patricia S. Sánchez‐Medina and René Díaz‐Pichardo

Business Strategy and the Environment, 2021, vol. 30, issue 1, 507-521

Abstract: Business‐oriented environmental regulation is expected to have a fundamental role in mitigating the adverse effects of human activity on the natural environment. However, its effectiveness and efficiency are not well established. A systematic literature review reveals validity and reliability problems in the measurement of business‐oriented environmental regulation. From a sustainable development perspective, we develop a theoretical framework that aims to enhance the measurement and assessment of this kind of regulation. Our theoretical framework proposes that the goals of business‐oriented environmental regulation must articulate a measurement system in a 3 × 3 matrix: three measurement levels (stringency, response, and outcome—in this cause–effect order) and three sustainability dimensions (environmental, social, and economic—in this constraint order). For each cell, we propose a combination of objective and subjective indicators. This theoretical framework expands existing approaches to business‐oriented environmental regulation measurement by integrating a sustainable development perspective into a measurement framework in a structured theory‐driven manner. Not only will this measurement system be useful for improving environmental policy, but it will also allow companies to improve their business strategy and come closer to complying with environmental regulations in order to effectively contribute to solutions for current environmental problems and help achieve a sustainable development.

Date: 2021
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