Corporate Environmental Behavior and the Effectiveness of Government Interventions PROCEEDINGS OF SESSION IV: EVALUATION OF VOLUNTARY PROGRAMS A WORKSHOP SPONSORED BY THE U.S. ENVIRONMENTAL PROTECTION AGENCY’S NATIONAL CENTER FOR ENVIRONMENTAL ECONOMICS (NCEE), NATIONAL CENTER FOR ENVIRONMENTAL RESEARCH (NCER)

In this paper, we explore the drivers of certification with the ISO 14001 environmental management standard. Scholars and practitioners debate whether ISO 14001 certification signals superior underlying environmental performance or signifies merely the adoption of specific environmental management practices. Our paper helps to resolve this debate by developing a theory of why and when organizations will choose to certify with ISO 14001. We propose that certification with a management standard will be more likely when it is difficult to communicate credibly environmental practices to supply chain partners. We develop hypotheses concerning the type of information that will be communicated through certification. We empirically investigate our hypotheses using a rich longitudinal database. We find evidence that organizations certify with ISO 14001 to reduce information asymmetries with supply chain partners. In particular, we find that geographically and culturally remote suppliers are more likely to seek certification. We do not find evidence that certification serves as a signal of superior environmental performance. Rather, our findings suggest that suppliers use certification to communicate about environmental improvement efforts. In our conclusion, we discuss the implications of our findings for public policy makers and firm managers. (190 words)