Dark side_2015
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This document summarizes a research study that analyzed the links between criticisms of ISO 14001 environmental certification and environmental/business performance. The study developed hypotheses based on resource-based, institutional, and transaction cost theories that symbolic or superficial adoption of ISO 14001 ("wannabes") would be less associated with improvements than comprehensive adoption ("movers and shakers"). Analysis of survey data from 652 facilities found that movers and shakers were more strongly associated with reducing environmental impacts and positive business performance, supporting the hypotheses, while wannabes saw weaker or no associations. The study contributes new evidence that symbolic adoption may not lead to intended outcomes and implications for public policy encouraging certification.
Dark side_2015
- 2. Certification MEANS: • Voluntary programs • Third-party monitoring • Public disclosure is optional
- 4. Introduction (1/2) Since 1996 more than 250,000 organizations worldwide have certified their EMS to ISO 14001 Research focused on its benefits: Delmas (2001; 2002) Darnall (2006); Darnall & Edwards (2006) Potosky and Prakash (2005) Russo (2009) …
- 5. Introduction (2/2) What about its disadvantages??? Drawing on RBV, TI and TCT, we discusses the negative side of ISO 14001 What about profitability and symbolic adoption of ISO 14001???
- 6. 1) To review theoretically main criticisms of ISO 14001 2) To analyze the links between the criticisms of ISO 14001 and… Environmental performance Business performance Objectives
- 7. Resource-based View (1/2) Competitive advantage as an outcome of the development of valuable organizational capabilities (Barney, 1991; Wernerfelt, 1984) ISO 14001 represents an intangible and valuable resource due to the development of: commercial skills organizational skills stakeholders-related skills But… what about environmental skills?? IMPROVEMENTS IN ENVIRONMENTAL PERFORMANCE
- 8. CRITICISM 1 Since the standard is processes-focused (instead of performance-focused), ISO 14001 adoption could be not usually associated with the development of abilities that allow organizations to achieve significant reductions in environmental impacts Resource-based View (2/2)
- 9. The influence of institutions exerts on organizations and persuade them to behave according to several formal and informal rules (DiMaggio y Powell, 1983; Meyer and Rowan, 1977). The ISO 14001 adoption is mainly motivated by normative pressures signaling, legitimation. But… what about symbolic adoption??? Institutional Theory (1/2)
- 10. CRITICISM 2 The exclusive purpose of legitimate business practices could generate a superficial or symbolic adoption Institutional Theory (2/2)
- 11. Signaling: activities that attempt to demonstrate that the firm owns specific features that are otherwise hidden to external parties (Spence, 1973) Asymmetric information: when the information about a transaction between a supplier and a buyer is not provided equally (Akerlof, 1970) ISO 14001 is considered as a way to solve the problems of asymmetric information by means of signaling. But … ISO 14001 as a reliable sign?? Transaction Cost Theory (1/2)
- 12. CRITICISM 3 Symbolic adoption affects negatively the legitimacy of ISO 14001 as a signal, especially when this symbolic adoption is not accompanied by improvements on environmental performance Transaction Cost Theory (2/2)
- 13. Our Classification Ferrón, Darnall and Aragón (Forthcoming) Resource-based View Low comprehensive High comprehensive Institutional Theory & Transaction Cost Theory High Visibility Wannabes (symbolic approach) Movers and Shakers Low Visibility Passivists Backroom Operators
- 14. Hypothesis 1 • Symbolic adoption is strongly associated with wannabes • Backroom operators are mainly focused on legal environmental requirements • Movers and shakers are interested not only in appearing environmentally responsible, but also in effectively being
- 15. Compared to passivists, movers and shakers are more likely to be associated with reductions on environmental impacts than wannabes or backroom operators Hypothesis 1
- 16. Hypothesis 2 • Due to their less comprehensive adoption, wannabes could not benefit from the internal improvements of ISO 14001 • As backroom operators are not certified firms, they could not benefit from the reputational advantages of ISO 14001 • Movers and shakers have developed both the efficiency-related abilities as well the reputational skills
- 17. Compared to passivists, movers and shakers are more likely to be associated with positive business performance than wannabes or backroom operators. Hypothesis 2
- 18. Data: OECD Survey (response rate = 24.7%) n = 652 facilities Dependent variable H1: Reductions on negative environmental impacts (i.e., environmental performance) Dependent variable H2: Business performance Explanatory variables: Wannabes, Backroom Operators, Movers and Shakers (Passivists is the reference category) Control variables: size, country, sector Instrumental variables: STAKEHOLDERS’ INFLUENCES + other control variables. Method (1/3)
- 19. Method (2/3) Empirics: Multivariate probit estimation H1 Eq. 1: (prob reduction on environmental performance = 1) = ƒ (Wannabes, BRO, M&Sh, control variables, εi1 ) Eq. 2: (prob Wannabes = 1) = ƒ (Stakeholders’ influences, control variables, εi2 ) Eq. 3: (prob Backroom = 1) = ƒ (Stakeholders’ influences, control variables, εi3 ) Eq. 4: (prob Movers = 1) = ƒ (Stakeholders’ influences, control variables, εi4 )
- 20. Method (3/3) Empirics: Multivariate probit estimation H2 Eq. 1: (prob positive business performance = 1) = ƒ (Wannabes, BRO, M&Sh, control variables, εi1 ) Eq. 2: (prob Wannabes = 1) = ƒ (Stakeholders’ influences, control variables, εi2 ) Eq. 3: (prob Backroom = 1) = ƒ (Stakeholders’ influences, control variables, εi3 ) Eq. 4: (prob Movers = 1) = ƒ (Stakeholders’ influences, control variables, εi4 )
- 21. Results Use of Natural Resources Wastewater effluents Air pollution Business Performance Wannabes .937 .418 .249 .329 Backroom operators .364 .338 -.162 -.096 Movers & Shakers 1.618*** 1.334*** 1.243*** .583** Use of Natural Resources Wastewater effluents Air pollution Business Performance Wannabes BRO M&S Wannabes BRO M&S Wannabes BRO M&S Wannabes BRO M&S Internal Stakeholders .247* .026 .369*** .256** .041 .353*** .245** .035 .318*** .242* .030 .330*** Value chain Stakeholders -.045 -.007 .129* -.072 .019 .110 -.041 .025 .041 -.044 .008 .149* External Stakeholders .069 .199* -.074 .082 .188** -.055 .057 .181** -.032 .080 .235** -.132* Regulatory Stakeholders -.026 .006 .011 -.021 .001 .017 -.024 .003 .015 -.020 .007 .006 Hypothesis 1 is supported Hypothesis 2 is supported
- 22. For Academia: Novelty!! Symbolic adoption is not related to positive business performance For Managers: What about updated version of ISO 14001?? Under symbolic adoption, trust on certifiers?? Contributions
- 23. Regulators are encouraging firms to certify their environmental practices BUT … … our findings show that certification may not be enough to improve environmental performance Implications for Public Policy Even, in some instances, regulators are reducing environmental fines if firms adopt these VEPs
- 24. The weaknesses of external audits Other criticisms of ISO 14001 which are not directly related to firms, such as voluntary programs under corruption environments ???? Future Research
- 25. Please!! Comments and Suggestions are welcome Vera Ferrón Vílchez University of Granada (Spain) http://veraferron.wordpress.com