ABSTRACT
This chapter contributes to research on organizations and the natural environment by integrating market and institutional arguments to identify why firms behave in an ecologically responsive manner. Institutional theory provides a rich, complex view of organizations. It is claimed that organizations are influenced by regulative, normative, and cognitive pressures arising from external sources or from within the organization itself. Government policies and programs have selectively mitigated many environmental problems. Many organizations seek to enhance their legitimacy in order to become accepted. Market-based rationales are well equipped to explain ecological responsiveness for at least two reasons: environmental strategies have been shown to give firms a competitive advantage; and new market opportunities from responding to the natural environment are created through changes in market forces. The chapter provides example of a set of institutional forces that interact with market forces, and also provides example of market forces that interact with institutional forces.
