A Resource Dependence Perspective on Low-Power Actors Shaping Their Regulatory Environment: The Case of Honda

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The central focus of this paper is a largely unexplored research domain relating to how low-power for-profit actors can shape their political and regulatory environment and create economic opportunities that affect their survival and growth. The paper builds on and extends the concept of “negotiating the environment” and on how organizations create their environment, with an emphasis on low-power actors. Resource dependence theory (RDT) has been very influential in exploring the many ways in which firms can decrease or overcome resource vulnerabilities in their environment with a focus on high-power actors (large companies, resource-rich companies, industrial associations, and political power of highly endowed companies). However, whether and how low-power actors can shape their political, regulatory, and economic environment was not central to RDT analysis, which is the focus of this paper. The empirical context for this research is the emergence and enactment of automobile emissions standards in Japan following the adoption in the United States of the Clean Air Act in December 1970. The focal firm is the Honda Motor Company, which, at that time, was a negligible competitor in the Japanese automobile industry and had no legitimate political or institutional standing. Yet the company was successful in undoing the cartel-like dominance of the two largest Japanese automobile manufacturers and the Japanese Environmental Protection Agency. The focus of this paper is describing the phenomenon and developing new theoretical insights relating to how low-power for-profit actors are able to negotiate their environment.