Rethinking environmental strategy: The role of regulatory response

An important assumption underlying the prevailing conception of environmental strategy is that mandatory, compliance-driven activities cannot generate unique organizational capabilities and therefore are not strategic considerations. In this paper, we challenge that assumption. Through the interpretive approach of phenomenography, this study investigates variation in regulatory response in the setting of Australia’s carbon regulations. Our findings reveal a significant, qualitative variation in regulatory response that demonstrates how mandatory, compliance-driven activities can generate unique organizational capabilities. We argue that these results require major revisions to our current conception of environmental strategy. Most important, our findings suggest that in order to explain organizations’ environmental strategies more accurately and comprehensively, existing theory of environmental strategy must be re-conceptualized to include both voluntary and mandatory activities