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.

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