Public Policy and the Corporate Social Responsibility of Value Chain Management of Environmental Research and Development

Abstract

This paper places environmental research and development (R&D) in the context of the literatures about corporate social responsibility and value chain management. The paper then explains how public policies aimed at improving environmental performance create opportunities for socially responsible corporate investments in environmental R&D. The lesson for sustainable value-chain management is that a company’s managers will find profitable opportunities for environmental R&D when public policy focuses on the environmental performance of the activities in the company’s value chain. Although public policy creates opportunities for profitable R&D, any general expectation that such socially responsible investments that support environmental sustainability will create sustainable competitive advantage for the firm is unwarranted because the investments may be necessary for the firm’s survival (but without such advantage) in the post-policy environment. The paper describes actual corporate behaviour toward environmental R&D and uses the behaviour to corroborate the validity of the theoretical lesson as a guide to socially responsible corporate behaviour.

Keywords: environmental research and development, R&D, value chain, corporate social responsibility, innovation, environmental regulation, sustainable technology development

JEL Classification: L51, M14, O31, O32, O38, Q55, Q56, Q58