General Deterrence and Corporate Environmental Behavior

General Deterrence and Corporate Environmental Behavior* Dorothy Thornton , Neil A. Gunningham, and Robert A. Kagan This research addresses the assumption that “general deterrence” is an important key to enhanced compliance with regulatory laws. Through a survey of 233 firms in several industries in the United States, we sought to answer the following questions: (1) When severe legal penalties are imposed against a violator of environmental laws, do other companies in the same industry actually learn about such “signal cases”? (2) Does knowing about “signal cases” change firms’ compliance-related behavior? We found that only 42% of respondents could identify the “signal case. But 89% could identify some enforcement actions against other firms, and 63% of firms reported having taken some compliance-related actions in response to learning about such cases. Overall, we conclude that because most firms already are in compliance (for a variety of other reasons), this form of “explicit general deterrence” knowledge usually serves not to enhance the perceived threat of legal punishment but as reassurance that compliance is not foolish and as a reminder to check on the reliability of existing compliance routines. In press, Law & Policy,2004 * This work was supported by the U.S. Environmental Protection Agency’s STAR Grant Program and the Center for the Study of Law and Society at University of California, Berkeley. The authors are also grateful to Manuel Vallee and Peter Younkin, who conducted the bulk of the survey interviews and provided other equally excellent research support. Address correspondence to Professor Neil Gunningham, REGNET, University House, Australian National University, Canberra ACT 0200, Australia. neilg@coombs.anu.edu.au, or to Professor Robert A. Kagan, Center for the Study of Law and Society, University of California, Berkeley, CA 94720. rak@uclink4.berkeley.edu

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