The Dynamic Between Firms' Environmental Strategies and Institutional Constraints in Emerging Economies: Evidence from China and Taiwan

This paper combines institutional and political perspectives to develop a framework for analysing firms' strategies in relation to demands for environmental protection in emerging economies. The main subjects for an examination of the framework and the issues it raises are three large-scale diversified multinational corporations (MNCs) in the chemicals sector, each with manufacturing in both China (PRC) and Taiwan. They are contrasted with four local firms in the same sector. An accommodation between MNCs' strategies and institutional constraints is achieved through a system of dynamic relationships in which both firms and institutional agents have a stake. Institutions are found to be more pervious to corporate strategic action than has been assumed by recent institutional theory, and with consequences that are not necessarily inimical to local community interests. The study offers new insights into (1) the processes that lead to conformity in corporate environmental practices (isomorphism), (2) the need to extend the normal purview of institutional theory, and (3) the contribution of a political perspective that allows for MNC proactivity. Copyright Blackwell Publishing Ltd 2005.