Adopting ISO 14001: Why Some Firms Mandate Certification while Others Encourage It

Since 1996 hundreds of U.S. facilities have certified their environmental management systems (EMS) to ISO 14001. While EMS certification occurs at the facility level, little is known about how parent companies influence facility-level certification, and even less is known about what factors are more influential to the corporatelevel decisions than others. This study begins to understand these issues. It shows that approximately half of the U.S. companies have required ISO 14001 in their facilities, divisions, or subsidiaries. In making their corporate-level decisions, firms that mandated ISO 14001 were more motivated by regulatory and market pressures, and had stronger overall internal capabilities than did firms that merely encouraged ISO 14001. Indeed, there was no single case where firms with less rigid corporate ISO 14001 policies endured stronger external pressures and possessed greater internal capabilities prior to making their corporate decision. These results have important implications for public policy as most government sponsored incentives for EMS adoption are designed for facility participation rather than firm involvement, despite the fact that firms appear to have substantial influence on facility-level decisions. Moreover, because these firms demonstrated greater internal management proficiencies government incentives that attempt to bolster their internal competencies had less effect than did market pressures and compliance pressures, which alone may motivate publicly traded firms to develop corporate policies for ISO 14001. 1 Department of Political Science and Public Administration, NCSU Box 8102, Raleigh, NC 27695-8102, [email protected]. The author acknowledges Daniel Edwards, Jr. for his thoughtful comments and skillful data assistance. All conclusions and any errors are solely the responsibility of the author.