ABSTRACT
Traditionally, environmental regulatory barriers have posed a specific set of threats that restrict the strategies of firms engaged in international business. The classic threat is from foreign environmental regulations that deny access to the large, lucrative export markets. Such regulatory barriers have been particularly formidable when they moved to higher levels, were backed by powerful coalitions of protectionist industries and environmental groups in the foreign market, and administered by a trade dispute system in large national governments over which outside firms from smaller countries had little control. In such situations the time and expense of litigation and lobbying, even with the full support of one’s home government, could be an enormous competitive disadvantage for a firm. The major alternative response, available primarily to those large firms with vast resources and long time horizons, was to produce at home to meet the stringent regulations in the large export market (Vogel, 1995), calculating that these high and ever rising regulations would keep one’s competitors, foreign and domestic, at bay.
