In the paper “Green and Competitive: Ending the Stalemate”, Harvard-based academic Michael Porter’s argument focuses on the influx of environmental policies and guidelines and their large bearing on a firm’s ability to compete in the market.
He clearly identifies his belief of a Paradigm Shift from the notion of environmental controls damaging the bottom line to the concept of innovation based on greater productivity, and also states that to gain the edge in today’s competitive world, whoever can develop and improve all aspects of their operations on a constant basis will be the most competitive.
Porter’s main body of his work conveys that properly crafted innovation can serve at least 6 purposes:
1. Regulation identifies resource inefficiencies
2. Regulation raises corporate awareness
3. Regulation reduces uncertainty through investment in the area
4. Regulation creates pressures that innovation and progress
5. Regulation levels the playing field for all organisations
6. Regulation will improve environmental quality
Thus, he explains, innovation offsets occur as companies get smarter about how to deal with negative externalities resulting in reduced compliance costs, and also as products are directly improved and more industry competitive.
To finish, it is clear that throughout his research, the author formulates a ‘Porter Hypothesis’, believing that protecting the natural environment and business performance are not incompatible and that government environmental regulation can act as a trigger to innovation (Porter and the Conventionalists, Eiadat, Y et al, University College Dublin, Ireland).
Further info on Porter and his works: