Industry Self-Regulation Without Sanctions: The Chemical Industry's Responsible Care Program

Industry self-regulation, the voluntary association of firms to control their collective action, has been proposed as a complement to government regulation. Proponents argue that the establishment of such structures may institutionalize environmental improvement, while critics suggest that without explicit sanctions such structures will fall victim to opportunistic behavior. In a study of the Chemical Manufacturer Association’s Responsible Care program we investigate the predictions of these two contradictory perspectives. Our findings highlight the potential for opportunism to overcome the isomorphic pressures of even powerful self-regulatory institutions and suggest that effective industry self-regulation is difficult to maintain without explicit sanctions.