. "Environmental Constraints and the Evolution of the Private Firm." The Industrial Green Game: Implications for Environmental Design and Management. Washington, DC: The National Academies Press, 1997.
The following HTML text is provided to enhance online
readability. Many aspects of typography translate only awkwardly to HTML.
Please use the page image
as the authoritative form to ensure accuracy.
The Industrial Green Game: Implications for Environmental Design and Management
availability of physical inputs to the economy as a whole could be limited, either through increasing fee or tax structures, or the (more inefficient) use of regulatory bans and limits.
The growing recognition that sustainability will likely require the rapid evolution of appropriate technology, and that corporations are the repository of technological competency in a free-market economy.
Despite the tendency of many environmentalists to distrust technology, achieving sustainability quite likely will require better technology (Allenby, 1993; Elkins, 1993; Graedel and Allenby, 1995). Moreover, the rate of degradation of natural systems (e.g., loss of biodiversity, degradation of agricultural lands, and mining of groundwater) argues that the evolution of environmentally appropriate technology must occur relatively rapidly or social, cultural, and economic systems may not be able to adapt gracefully to an environmentally constrained world. Generally, in free market economies, technology as a broad competency resides in corporation. (There are exceptions, such as the national laboratory system in the United States, but these are relatively rare and tend to focus on specific missions, such as space exploration or military technologies.)
Taken together, the hypothesis of technology as critical to sustainability and the fact that technology generally resides in corporations imply that private firms will be critical to any movement toward sustainability (Allenby, 1994; Organization for Economic Co-Operation and Development, 1992). External and boundary conditions can be changed through incentive-and control-based policies to elicit profit-oriented behavior that evolves technology for sustainability goals. Alternatively, firms can fulfill this function by making sustainability as specified internal goal. The mechanics of accomplishing this are unclear, at best, especially because in many cases sustainability may conflict directly with at least the short-term profit motive. Relying on changes in customer demand patterns for more environmentally appropriate products and services to effect this shift raises the difficult initial question of how to change customer preferences such that they result in firm behavior supporting a sustainable economy.
In practice, of course, a combination of these factors is coming into play. Some customers are demanding environmentally appropriate products, to the extent such products can be defined (which is frequently to a much lesser degree than the public, environmentalists, or industry technologists understand). Some firms are exploring ways to include uncosted externalities (social costs) in their management decisions, at least qualitatively. Governments are establishing regulatory constraints, fee structures, and market information mechanisms (such as ecolabeling or community right-to-know data on release) that, intentionally or not, elicit environmentally preferable corporate behavior. However, these efforts tend to be sporadic, internationally uncoordinated, substance specific, localized