The role of organizational capabilities in cleaner technology adoption: an analysis of the response of the pharmaceutical manufacturing sector in Ireland to IPC licensing regulations

In introducing integrated pollution control licensing, regulators hope to achieve economic advantages as well as environmental benefits. The licensing is used as a vehicle for encouraging firms to adopt cleaner technology, potentially allowing firms to achieve economic advantages through process efficiencies and reduced environmental control costs. In Ireland, the regulatory approach has been to require firms to make managerial changes in the belief that this is a necessary precursor to the take‐up of new technology. This paper examines how the pharmaceutical manufacturing sector has responded to environmental regulations that require cleaner technology adoption and managerial changes. Quantitative indicators are developed using data reported to the Irish Environmental Protection Agency. Analysis shows that firms were differentially able to implement both cleaner technology and the mandated managerial processes. The implications for policy are that regulatory instruments designed to stimulate cleaner technology may not be sufficient to promote change in firms, given that the influence of these instruments is mediated by the role of firm‐specific, experience‐based organizational capabilities.