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Globalization critics argue that international trade spurs a race to the bottom among national environmental standards. ISO 14001 is the most widely adopted voluntary environmental regulation which encourages firms to take environmental action beyond what domestic government regulations require. Drawing on a panel study of 108 countries over seven years, we investigate conditions under which trade linkages can encourage ISO 14001 adoption, thereby countering environmental races to the bottom. We find that trade linkages encourage ISO 14001 adoption if countries' major export markets have adopted this voluntary regulation. [ABSTRACT FROM AUTHOR]

Recent globalization discussions have revived the issue of regulatory convergence. Convergence advocates point to the structural pressures of the global economy on countries, while the divergence school points to the embeddedness of domestic regulatory institutions. This paper examines cross-national divergence in adoption rates of ISO 14001, an important international nongovernmental environmental regime developed with the cooperation of multinational firms. ISO 14001 offers a process-based system of voluntary regulation instead of an outcome-based system of public regulation that many firms find cumbersome. Our analysis of data from 59 countries suggests that ISO 14001 adoption rates are likely to be higher in countries whose trading partners have adopted this nongovernmental regime, which are embedded in international networks of nongovernmental organizations, whose governments flexibly enforce stringent environmental regulations with a less adversarial and litigious stance towards firms, and where consumers want mechanisms for identifying environmentally progressive firms. [ABSTRACT FROM AUTHOR]