Corporate Environmental Management in Transition Economies: The Case of Central and Eastern Europe

We use firm-level data to study the adoption of Environmental Management Practices (EMPs) in the most polluting industrial sectors in Bulgaria, Hungary, Lithuania, Poland, Romania, and Slovakia during the 1990 – 1998 period when these countries were in a transition away from a centrally planned economy. Despite the stickiness of a long-established managerial regime and the declines in industrial output during this period, around 42% of the firms in our sample adopted Environmental Plans (EPs) and/or established Environmental Departments (EDs). The analysis reveals that enforcement and public disclosure of the environmental performance of firms are the most important forces behind the implementation of both of these EMPs. Also, but to a lesser extent, export oriented firms and larger firms are prone to adoption. Finally, we use a methodology that clarifies some of the links between different EMPs not addressed in earlier studies. Notably, once a firm has decided to adopt (or not adopt) an ED, additional increases in enforcement do not to lead to EP implementation.

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