Poster Paper: What Can Drive Changes in Best Practice? Collaboration, Regulation and the Potential to Shape Firm Best Management Practice Adoption

Friday, November 4, 2016
Columbia Ballroom (Washington Hilton)

*Names in bold indicate Presenter

Ryan Scott, University of Washington

Given gaps between public perception of unconventional gas development (UGD) risks and current scientific evidence regarding such risks, policies that respond to empirical measures while ignoring perceptions and concerns may well lead to dissatisfaction with oil and gas development policy. One method of integrating perception into management is through the adoption of best management practices (BMPs) that provide an avenue for stakeholders to collaborate and deliberate with firms. While there are numerous cases of firms within the State of Colorado adopting such strategies, a major question remains the specific motivations that drive firm selection of such BMPs, including what kinds of motivation can foster the integration of citizen-based knowledge into planning.  In this paper I investigate firm motivations behind the adoption of deliberation-enhancing BMPs, focusing on how a set of theoretical motivations encourage or discourage use of feedback from citizens in adoption of new BMPs.

My research questions are, “Does learning from citizen feedback lead to the adoption of voluntary BMPs? If so, what motivations help to foster the transfer of knowledge into behavior and belief change?” Specifically, I test the hypotheses that legitimacy, coercive pressure, profit seeking , and/or normative pressures enhance the translation of public complaints into firm management practice changes.

Via use of a census of oil and gas wells from the State of Colorado, I evaluate changes in BMPs adopted by individual firms between 2009 and 2015 via use of text similarity. I then control for spatial proximity of wells, company-level characteristics, and lagged time variant characteristics to evaluate how legitimacy, coercive pressures, and normative pressures interact with public complaints in time t-1 to produce changes in BMPs used by a specific company in time t. I measure legitimacy using fines and warnings from the state agency to the company, with greater fines or warnings indicating a lowering of legitimacy. I measure normative pressure by coding the dissimilarity between firm level BMPs and the BMPs of like firms. I measure coercive pressure via assessing similarity of adopted language with agency conditions of permit approval (non-voluntary BMPS) in the prior time period. Finally, I measure the impact of profit maximization on adoption via the productivity of neighboring wells in the prior time period.

Using complaints as the independent variable in this study allows me to assess the role that citizen complaint can play in shaping company behavior, while interacting that variable with motivations allows me to test what (if any) firm motivations are necessary for behavior to change as a result of a stakeholder feedback. This work is pivotal for understanding why firms voluntarily adopt regulation, but also has empirical value for UGD risk management, as it evaluates how motivations for adopting regulations enhance or detract from the ability of firms to integrate stakeholder feedback. This research thus provides critical evidence for the design of BMP programs that are meant to encourage deliberation over risks.