The impact of operational characteristics on firms' EMS decisions: strategic adoption of ISO 14001 certifications

Abstract

Abstract Firms choose to seek environmental management system (EMS) certifications such as ISO 14001 for a variety of reasons. In this paper we put forward a hypothesis that firms seek ISO 14001 certifications for their establishments when their operations involve low degrees of complexity. Another hypothesis we consider is that firms facing more uncertainty in their operations (and hence more risk) seek ISO 14001 certifications. These hypotheses have not been yet addressed in the literature and are of particular interest to business managers and policymakers. We empirically test these hypotheses using probit and duration models using matched establishment–firm–industry data for large Japanese manufacturers. Our findings support the first as well as the second hypotheses. This suggests that firms tend to certify more routine and less complex operations first, and that firms use ISO 14001 certifications as an insurance scheme. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.