Determinants of Voluntary Environmentally Sound Technology Adoption and an Assessment of Dynamic Inconsistency in Adoption Decision in Industry in Ethiopia
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Date
2010-05
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A.A.U
Abstract
The assessment of the determinants of the adoption of ESTs and the reasons for not adopting and
continuity are explored in this paper. Towards the first question, four dimensions of possible
determinants were identified. The variables that came out as most significant in the adoption
decision are the ones pertaining to the plant characteristics of the firm. Specifically, the variables
in this category are: the environmental commitment of the firm, the form of ownership of the
firm as either foreigner owned or not and its arrangement as being either public or private, the
technological capability of the firm, the number of years it has been in operation, and the number
of employees. This underlines that the diversity of the firms plays a role in determining the EST
option they adopt and thus imply the need for environmental policy to account for the
heterogeneity of the firms in its design and implementation. This was done using the ordered
probit model following the hierarchical nature of the response variables. Towards the second
question, the heckman pro bit selection model is used and the results explained in the principal
agent framework suggest that the form of management, among other things, does come into play
in determining whether the firm continues with ESTs or not once they are adopted. This suggests
that incentives or more generally the efficiency of mechanism design determines the effective
implementation of a venture embarked upon despite the saving potential promised, and in cases
savings earned, following the adoption of the ESTs. This implies the need for environmental
policy to take into consideration internal management issues for effective realization of
the enviroru11ental policy objectives drawn.
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Determinants of Voluntary Environmentally, Decision in Industry in Ethiopia