Ruihua Joy Jiang and Pratima Bansal - Oakland Universitysbafaculty.oakland.edu/Directory/jiang12/intellcont/JMS 2003-1.pdf · Ruihua Joy Jiang and Pratima Bansal Richard Ivey School

Seeing the Need for ISO 14001

Ruihua Joy Jiang and Pratima BansalRichard Ivey School of Business, The University of Western Ontario

Many firms worldwide have adopted environmental managementsystems, and some have taken the extra step and had their systems certified for theinternational standard ISO 14001. While institutional pressures and market demandoften motivate firms to adopt an EMS, the reasons why they certify for ISO 14001are less clear. In this study, we interviewed members of the Canadian pulp and paperindustry who had either an EMS or ISO 14001 certification to understand why theymay have become ISO 14001 certified. We found that task visibility andenvironmental impact opacity lead to differences in a firm’s approach to ISO 14001certification in the absence of coercive pressures.

INTRODUCTION

When ISO 14001 was officially published in September 1996, scholars hadexpected that firms, especially those in developed economies, would quickly adoptit. This standard for an environmental management system (EMS) was expectedto confer the legitimacy that comes from being certified with an ISO standard andimprove firms’ environmental performance. However, North American firms oper-ating in similar industries have not responded in the same way to the standard.Some corporations have readily embraced the standard and pushed assiduouslytowards certification in all their plant facilities. Others have been much less recep-tive to the standard and some even discouraged their subsidiaries from seeking cer-tification. More interestingly, multinational firms with multiple subsidiaries andfacilities have responded differently to ISO 14001 in their different sites. Varia-tions in response to the ISO 14001 lead to a question: under what circumstanceswould managers see the need for ISO 14001 certification?

While the question of ‘why firms are environmentally responsible’ has beeninvestigated (e.g., Bansal and Roth, 2000), relatively little attention has been given

Journal of Management Studies 40:4 June 20030022-2380

© Blackwell Publishing Ltd 2003. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA.

Address for reprints: Ruihua Joy Jiang, Richard Ivey School of Business, The University of WesternOntario, London, Canada N6A 3K7 ([email protected]).

to the reasons for the voluntary adoption of ISO 14001. Given that many of thebenefits of environmental responsibility can be accrued through an EMS, it is notclear why firms would incur the extra time and expense to certify for ISO 14001.To answer this question, we developed theory grounded in data (Glaser andStrauss, 1967). From in-depth interviews of environmental managers in 16 Canadian pulp and paper companies, we found that while market demand andinstitutional pressures pushed firms towards the implementation of an EMS, twocontextual factors – task visibility and environmental impact opacity – were instru-mental in pushing firms towards ISO 14001 certification.

We distinguish two situations regarding ISO 14001 certification. One is whenfirms face direct pressures from their ‘dominant’ and ‘definitive’ stakeholders(Mitchell et al., 1997), such as supply chain pressure or customer demand. In thissituation, ISO 14001 is really not ‘voluntary’ but necessary based on market pres-sures. The other situation is when institutional forces favour attention to environ-mental performance in general, but do not demand firms to certify for ISO 14001.We focus on the latter situation because it is more interesting theoretically andexplains why firms have differential rates of adoption.

In the following sections, we first describe an EMS in general and ISO 14001in particular. Then, we discuss the rationales for corporate environmental prac-tices based on previous research on organizations and natural environment. In theMethodology section, we describe our research context, the Canadian pulp andpaper industry and the method we applied in collecting and analysing the data.Testable propositions are then developed by applying grounded theory. We con-clude with a discussion of the implications of the findings and offer future direc-tions for research.

ENVIRONMENTAL MANAGEMENT SYSTEMS AND ISO 14001

An EMS is expected to induce corporate environmental responsiveness because itestablishes appropriate organizational structures. While EMSs vary considerablyamong firms, there are some common elements. An EMS requires that a firmidentify general environmental goals and targets and develop an environmentalpolicy. The firm must identify its environmental impacts as well as relevant envi-ronmental regulations imposed by various levels of governments and other localauthorities. It also needs to set up management and operational control, moni-toring and measurement procedures and programmes for its environmentalimpacts. Meanwhile, employee training programmes are also necessary to ensurethat employees are aware of any established environmental policy and objectives,as well as the environmental aspects of their own activities. Moreover, the wholeprocess requires a structured documentation system so that a paper trail will beleft to facilitate both management review and auditing. Finally, an EMS often

1048 R. J. Jiang and P. Bansal

© Blackwell Publishing Ltd 2003

involves auditing, either of the system or of the firm’s environmental performance.While many firms engage in internal auditing, some firms prefer external audit-ing because they do not have the internal capabilities or they seek external validation.

ISO 14001 is the EMS standard developed by the International Organizationfor Standardization (ISO). It requires a similar set of procedures and structures asthe typical EMS we described above. However, while an in-house EMS can befully customized to meet the needs of the organization, for ISO 14001 certifica-tion the EMS must be certified by a third-party registrar and so the firm mustadhere to all of the elements stated above.

External auditing and third party certification incur costs. According to an esti-mate by the Global Environmental and Technology Foundation (GETF), the initialimplementation and certification could cost firms between $24,000 and $128,000,depending on the size of the facility and the procedures. Moreover, maintainingthe system could cost about $5,000 to $10,000 annually (GETF, 1996). If a firmalready had a sophisticated in-house EMS, the additional costs of certifying andmaintaining ISO 14001 could be considerably lower. The estimated costs do not seem to present too high a hurdle for firms, and some firms that are experi-encing financial difficulties have become certified (Bansal, 2002). Moreover, ISO14001 certified firms may attract customers that they would not have otherwise,such as General Motors and Ford, that are requiring ISO 14001 certification oftheir major suppliers. The higher revenues could offset the costs of ISO 14001certification.

Like any effective EMS, ISO 14001 is believed to provide a systems approachto environmental issues in a firm. First, it is intended to reduce the firm’s negativeenvironmental impacts both through process control and technological innova-tions. Second, it emphasizes continual improvement, which advocates an attitudeor organizational culture that does not stop with compliance to regulations andrules, but rather seeks to exceed the standards. Third, it requires structuredprocesses for identifying and solving problems, and for making improvements,involving, for instance, requirements for employee training programmes, docu-mentation and auditing processes. Training and paper trails aim to reduce sys-tematic variances in environmental practices. Auditing helps to maintain or raisethe standards and spot opportunities for further improvements. Finally, an EMSencourages employee participation. A formal process of training, a process ofgoing through every link in the business operations and identifying environmen-tal aspects, and a process of seeking improvements in reducing environmentalimpacts, often instils environmental awareness among employees.

Unlike just any EMS, however, ISO 14001 was born with the credibility andauthority that come from being a product of International Organization for Stan-dardization (ISO), whose success with the ISO 9000 series of quality management

Seeing the Need for ISO 14001 1049


standards has established it as one of the most influential standard setters in theworld. In other words, ISO 14001 was likely perceived legitimate from the verybeginning.

REASONS FOR ENVIRONMENTAL RESPONSIBILITY

Prior research on organizations and natural environment focused on institutionalforces such as regulatory, market and social pressures as the drivers behind firms’move towards more environmentally responsible operations (Bansal and Roth,2000). Researchers have recognized the role of regulatory pressure in pushingfirms to be environmentally responsive (Fineman and Clarke, 1996; Lampe et al.,1991; Lawrence and Morell, 1995; Newton and Harte, 1997; Post, 1994). Firmsseek to comply with legislation to avoid legal liabilities, penalties, and fines. Firmsalso proactively or strategically adopt environmentally responsive activities to keepahead of regulatory changes and remain competitive (Aragõn-Correa, 1998;Clark, 1999; Rondinelli and Vastag, 1996). Market pressures from customers andsuppliers, and social pressures from local community, environmental activists, andthe general public further help to induce ecological responsiveness from the cor-porate world (Berry and Rondinelli, 1998; Bucholz, 1991; Fineman and Clarke,1996; Lawrence and Morell, 1995; Starik and Rands, 1995).

Researchers have also explored economic rationales for corporate ecologicalresponsiveness. Bansal and Roth (2000) labelled this as a competitiveness motiva-tion. Often anchored in the resource-based view of the firm, this perspective looks at firms’ ecological responses, like eco-labelling, green marketing, and EMSimplementation, as sources of competitive advantage (Russo and Fouts, 1997;Shrivastava, 1995). Early adoption of these responses were believed to build cor-porate reputation, pre-empt competition, and create value for firms (Hart, 1995;Russo and Fouts, 1997). Ecologically responsive operations have also been reportedto lead to cost reduction, due to lower input and waste, as well as decreased liabilities (Lampe et al., 1991; Porter and van der Linde, 1995).

While previous research on organizations and natural environment providesrationales for general corporate ecological responses, it fails to explain: (1) whyfirms facing similar institutional pressures would respond differently to ISO 14001;and (2) why a firm would adopt a home-grown EMS in one facility, yet certify forISO 14001 in another. Since existing theories could not answer these questions,we applied grounded theory building, seeking to produce theory to further under-stand the mechanisms behind firms’ ISO 14001 certification decisions. Groundedtheory building is appropriate when the nature of the research is exploratory ratherthan confirmatory, and the purpose is theory building rather than theory testing(Glaser and Strauss, 1967; Strauss and Corbin, 1990). We went to the field withoutany preconceived hypotheses or models, and let the theory emerge from carefulanalysis of the data.



METHODOLOGY

Sampling

Given that we are interested in explaining differences in responses among firms insimilar situations, we selected firms within one industry and one country. We chosethe Canadian pulp and paper industry for three reasons. First, the pulp and paperindustry has a significant impact on the natural environment. It was important toselect an industry in which most firms had evaluated ISO 14001 in order to iden-tify the reasons for differential responses to ISO 14001 certification. Second, firmsin the pulp and paper industry produce relatively similar products. For instance,most of the companies own woodland operations, pulp mills, and paper millssimultaneously, and their main products are pulp, Kraft paper, newsprint, print-ing and writing papers, boards, and other paper by-products. This makes the firmsin the sample more comparable and allows us some control for firm-level vari-ances. Third, the forestry industry is connected tightly to its constituents so thatthe institutional aspects will be apparent. The forestry industry, of which pulp andpaper makes up about 75 per cent of total earnings, is the largest net export indus-try and the largest industrial employer in Canada, making it important to regu-lating government bodies, local communities, and the environment-consciouspublic.

The pulp and paper industry includes the following sectors: woodland opera-tions, pulp, paper, converters, and by-products. Woodland operations provide theraw materials, or forestry products, for the processing operations. Pulp manufac-turing produces market pulp from wood. Paper manufacturing transforms pulpinto paper, which includes newsprint, printing and writing papers, specialty papersand boards. Converters make wrapping and packaging containers from pulp,paper, and recycled materials. By-products from these processes can be used forother products such as alcohol, black liquor, chlorines, and turpentine.

Names of the members of Canadian Pulp and Paper Association (CPPA) wereobtained from the CPPA’s website (www.CPPA.org[1]). Of the 39 companies listedin 1999, we were unable to reach 15 companies because of wrong contact infor-mation or failure to obtain an appropriate contact person. Of the remaining 24,16 agreed to participate and eight declined our request. Data on sales and employ-ment of both participants and non-participants were obtained from the CanadianKey Business Directory, and independent t-tests did not reveal any systematic dif-ferences between the two groups.

Interviews

We interviewed managers in charge of their respective firm’s environmental man-agement activities. Corporate level interviewees had titles like Vice President of Environment or Environmental Director, and were responsible for making



environmental policies and strategies for their corporations. Facility level inter-viewees had titles like Operations Manager, Environment Manager or Coordina-tor. They were often the point person in making ISO 14001 certification decisionswhen certification was not mandated by corporate policy. The interviews were allconducted by telephone and ranged in length from 45 minutes to one hour and45 minutes. All but two of the interviews were audio recorded and fully transcribedfor data analysis. For the two interviews that were not tape recorded, detailed noteswere taken by both authors and transcribed immediately after the interviewsoccurred.

Because of the explorative nature of our study, we kept the interview questionsopen-ended. We started each interview by introducing the study and assuringabsolute confidentiality. Next, we asked the interviewees to briefly describe theircompanies and their operations, their titles or roles in the firms, and what theirfirms had done in environmental management. Then, we asked about reasons foradopting certain policies, practices, EMS, and/or ISO 14001. We also asked aboutoutcomes of their environmental practices as well as their opinion of EMSs ingeneral and ISO 14001 in particular. We kept our questions open-ended and short,in an effort to allow the managers to do most of the talking.

Data Analysis

The QSR NVivo software package was used to code and organize the data. Usingthe software, pieces of text could be flagged or marked with one or more codes.Once the transcripts were coded, all of the text associated with a code could beviewed and the codes associated with the text could be refined further into yetmore descriptive codes. Using this software is superior to margin coding becauseof its ability to summarize large amounts of text. It is helpful in applying groundedtheory, as the codes can emerge from the text. It also allows the user to keep memosassociated with a code or a piece of text as ideas emerge while coding.

We initially coded the interviews into three categories: antecedents, prac-tices/EMS stage, and outcomes. Managers often did not discriminate between anEMS and ISO 14001 at the beginning of the interviews, and offered the samedrivers for adopting one or the other (e.g., customer demand, institutional pres-sure, management control). However, when probed further as to why they had orhad not certified for ISO 14001, they mentioned different reasons. We distin-guished two different situations regarding the adoption of an EMS or ISO 14001.One is when ISO 14001 certification was clearly demanded by dominant stake-holders (Mitchell et al., 1997) like customers or governments. In this situation, ISO14001 was no longer truly voluntary but coercive, as firms were in fact ‘forced’ tosatisfy these powerful, legitimate, and urgent demands (DiMaggio, 1988; Mitchellet al., 1997). The other situation was when strong coercive forces did not exist andISO 14001 certification was voluntary. The firms in our sample seemed to per-



ceive themselves mostly in this second situation. We therefore re-coded the tran-scripts, discriminating between the motivations for the EMS and the motivationsfor ISO 14001 certification. After several iterations through the interview tran-scripts, two variables emerged that discriminated between EMS adoption and ISO 14001 certification: task visibility and environmental impact opacity. Toconfirm our suspicions, we developed a table in which the respondent firms’ EMSand ISO 14001 stages were listed by sectors, the results of which are shown inTable I. We then compared the ISO 14001 adoption status of the sectors by rear-ranging the data (shown in Table IV), where sectors were rated on task visibilityand environmental impact opacity, based on the comments drawn from the interviews.

THE REASONS FOR ADOPTING AN EMS

The managers we interviewed generally agreed that environmental managementhad become a part of their business operations. Respondents varied considerably,however, in their stages of implementation of an EMS. Table I summarizes thestages of EMS and ISO 14001 adoption according to firm size, headquarter loca-tion, and sector in the pulp and paper industry.

Analysis of the data confirmed the basic driving forces behind firms’ decisionsto adopt environmentally responsive practices as uncovered by prior researchers.Three factors stood out from the data: institutional pressures, market demand, andmanagement control. The first two represented external pressures pushing firmstowards ecologically responsible practices. The last factor reflected firms’ strategicchoice in handling demands for environmental responsiveness. Exemplary quotessupporting these motivations are presented in Table II.

Managers stressed that market pressure was the most influential factor impact-ing environmental management decisions. They concurred that environmentalmanagement was a ‘customer-driven thing’. The same reason was given for pur-suing an EMS for ISO 14001 as well as for not pursuing one or both. One managersaid: ‘we’re pulp producers so we ship our pulp to paper makers, and paper makerssend us all kinds of questionnaires about our environmental performance. Ques-tions they typically ask include “Are you environmentally certified?” and “Are youtrying to achieve ISO 14000?” ’. As a result of these customer inquiries, thecompany started the ISO 14001 certification process. The manager of anotherfirm said that his firm was not in a hurry to push for ISO 14001 certification,because ‘actually we haven’t received any sort of pressure from customers. Ourcustomers are 20 per cent in Canada and 80 per cent in the United States’. Theimpact of market demand on EMS adoption and ISO 14001 certification appearsto be both direct and strong. This is consistent with accepted theory that says firmsrespond quickly to demands from dominant and definitive stakeholders thatprovide essential resources for them to gain exchange legitimacy (Suchman, 1995)





Tab

le I

.St

ages

of

envi

ronm

enta

l man

agem

ent

by le

vel/

size

,HQ

loca

tion

and

sect

or

Lev

elFac

ilitie

s in

Tot

al

HQ

Sect

or/

prod

uct

EM

S st

atus

ISO

14001 s

tatu

sC

anad

aem

ploy

men

tL

ocat

ion

1C

orpo

rate

19 m

ills

13,0

00C

anad

aW

oodl

and

oper

atio

nsV

ario

us s

tage

sW

ill b

e ce

rtifi

ed s

oon

Pulp

Var

ious

,tow

ards

cor

p.w

ide

EM

SC

ompa

tible

onl

y,no

cer

tifica

tion

Pape

rV

ario

us,t

owar

ds c

orp.

wid

e E

MS

Com

patib

le o

nly,

no c

ertifi

catio

n2

Cor

pora

te1

mill

463

Can

ada

Pulp

Sinc

e 19

93H

alf

way

to

cert

ifica

tion

3C

orpo

rate

13 m

ills

3,30

0C

anad

aW

oodl

and

oper

atio

nsN

o fo

rmal

ized

EM

SW

orki

ng o

n ce

rtifi

catio

nPu

lpN

o fo

rmal

ized

EM

SN

oPa

per

No

form

aliz

ed E

MS

No

4Fa

cilit

y80

Can

ada

Stic

ksN

othi

ngN

ot c

onsi

dere

d5

Div

isio

n5

mill

s6,

000

in 3

U

SAPu

lp a

nd p

aper

Impl

emen

ting

EM

S in

1 m

ill4

mill

s cl

ose

to c

ertifi

catio

n,H

Qco

untr

ies

EM

S in

4 m

ills

agai

nst

cert

ifica

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6Fa

cilit

y40

0C

anad

aT

issu

e pa

per

Ele

men

ts o

fE

MS

Won

’t bo

ther

7Fa

cilit

y1,

000

Can

ada

Pape

r/ne

wsp

rint

Ele

men

ts o

fE

MS

Will

see

k IS

O 1

4001

in a

yea

r or

tw

o,du

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cor

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anda

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mill

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696

USA

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All

mill

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new

spri

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st s

tart

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700

USA

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and

pap

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equi

red

in a

ll m

ills

by 1

999

2 m

ills

cert

ified

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orpo

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rter

from

Ele

men

ts o

fE

MS

Not

in fo

rese

eabl

e fu

ture

100%

rec

ycle

dm

ater

ial

11D

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1 m

ill1,

100

Can

ada

Pape

r/ne

wsp

rint

Ele

men

ts o

fE

MS

Com

patib

le o

nly,

no c

ertifi

catio

n12

Faci

lity

17,5

00 in

33

USA

Con

vert

erN

oN

oco

untr

ies

13D

ivis

ion

1 m

ill,1

45,0

00 in

40

Eur

ope

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dlan

dE

MS

sinc

e 19

90C

ertifi

ed in

199

8w

oodl

and

coun

trie

sPu

lpE

MS

sinc

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90W

orki

ng o

n ce

rtifi

catio

nPa

per

EM

S si

nce

1990

Wor

king

on

cert

ifica

tion

14C

orpo

rate

mul

tiple

5,00

0C

anad

a Pu

lp,p

aper

,A

ll fa

cilit

ies

be I

SO 1

4001

rea

dy b

ym

ills

boxw

ood,

and

mid

-200

0,ce

rtifi

catio

n le

ft to

by

-pro

duct

sfa

cilit

ies

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orpo

rate

12 m

ills

3,28

0C

anad

aPu

lpYe

sW

ill a

ll ce

rtify

in 2

000

Woo

dlan

d op

erat

ions

Yes

Will

all

cert

ify in

200

016

Div

isio

n28

mill

s47

,000

in 1

7U

SAW

oodl

and

oper

atio

nsC

orpo

rate

EM

SW

ill a

ll ce

rtify

by

2002

coun

trie

sPu

lp,p

aper

,ven

eer

Wor

king

on

corp

orat

e E

MS

Com

patib

le o

nly,

no c

ertifi

catio

n



Tab

le I

I.M

otiv

atio

ns fo

r ad

optin

g an

EM

S

Mot

ivat

ion

Exe

mpl

ary

quot

esN

umbe

r of

tim

es s

ugge

sted

Mar

ket

•T

hat

is a

cus

tom

er d

rive

n th

ing.

8 in

terv

iew

ees

Dem

and

•If

we

get

driv

en b

y th

e cu

stom

ers

in t

he e

nd t

o pa

y m

oney

to

be c

ertifi

ed b

y IS

O 1

4000

,we

will

go.

•B

ut o

ur c

usto

mer

s la

tely

hav

en’t

been

insi

stin

g th

at w

e ne

ed t

o ha

ve o

ur fo

rest

cer

tified

or

anyt

hing

like

tha

t or

we

need

to

Sugg

este

d 26

have

an

EM

S in

pla

ce fo

r th

em t

o bu

y ou

r pr

oduc

ts.

times

•So

,wha

t w

e ar

e se

eing

is a

big

yaw

n fr

om N

orth

Am

eric

an c

usto

mer

s sa

ying

,‘IS

O 1

4000

for

mill

s,I

don’

t th

ink

so,I

don

’tca

re’.

•W

hat

is h

appe

ning

,is

ther

e is

an

ISO

140

00 p

ull s

tart

ing

in J

apan

as

you

wel

l kno

w a

nd it

is r

isin

g fa

st in

Eur

ope

and

prob

ably

we

are

gear

ing

for

our

expo

rt m

ills

to E

urop

e to

be

ISO

140

00 c

ertifi

ed b

ecau

se w

e ca

n se

e th

at c

omin

g bu

t fo

r th

e N

orth

Am

eric

an s

ide

we

real

ly c

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Inst

itutio

nal

•B

rita

in h

as a

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in t

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Uni

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ulat

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then

we

impr

ove

all f

rom

the

sam

e ba

sis.

and to survive (Mitchell et al., 1997). When this was the case, EMS and ISO 14001was no longer voluntary, but ‘coercive’.

Institutional pressures arise from overall social pressures that drive regulations,environmental activists, and market demand, that in turn directly affect firmbehaviour (Christmann and Taylor, 2001; Fineman and Clarke 1996). As onemanager succinctly put it: ‘social pressure . . . [is] the engine that drives the regu-lations . . . social pressure drives the market place too’. Several respondents sug-gested that having an effective EMS helped them to manage and establish a betterrelationship with regulators and local communities. Institutional pressures seem toexplain much of the differences in EMS adoption. As in other studies (e.g., Bansaland Roth, 2000), large firms were further along in their EMS development thansmaller ones, especially large firms with multiple manufacturing facilities and thoseselling to or operating in multiple geographic markets. These firms generally hada corporate-wide environmental policy, environmental officers and/or offices, andsome sort of environmental reporting system in place. They often pushed for acorporate-wide formal EMS, while the decision for ISO 14001 certification wasoften left to local facilities. Small firms, on the other hand, were less concernedabout environmental management as long as they remained in compliance withregulations. One manager commented that firms of their size had ‘not given awhole lot of thought to environmental issues’. Some small companies had no envi-ronmental policy, no monitoring, no auditing, ‘nothing whatsoever’. This is con-sistent with institutional theory, which argues that larger firms are more likely torespond to institutional pressures, as they are more visible and often more inte-grated within their communities (Goodstein, 1994; Greening and Gray, 1994;Meyer and Rowan, 1977; Tolbert and Zucker, 1983).

For the same institutional argument, the location of the firm’s headquartersseemed to affect the firm’s approach to environmental management. A firm weinterviewed that was headquartered in Europe established a corporate policy ofgetting ISO 14001 certification for all their divisions and facilities. While mostNorth America-based large corporations started to require their facilities to be ISO14001 ready, they were not pushing for the actual certification. Firms that hadexposure to international markets had a more advanced EMS or were more likelyto be ISO 14001 certified than those that were active only in North America. Onemanager explained that the reason why they did not bother to seek certificationwas because their customer base was entirely in North America, so they had notfelt any pressure. Respondents attributed the differences in responses across geo-graphical domains to differences in institutional pressures for environmentalresponsiveness. One manager commented: ‘I think there is a major difference inculture between German countries and American countries, or North Americancountries’, in that the European public are more aware of environmental issues,and hence firms selling to Europe face more pressure for responsible environ-mental practices.



Management control is another factor mentioned by managers that motivatedthem to adopt an EMS. Some managers we interviewed mentioned that adoptingan EMS was a proactive way of managing regulatory changes, community rela-tions, and public opinion, as well as a way of ensuring consistent managementcontrol on environmental issues. As regulatory requirements became more onerousand complex, regulatory compliance was more difficult. Respondents indicatedthat an EMS could help firms in that regard because it required systematic mon-itoring and benchmarking. One manager said that by having an effective EMS, afirm could stay ahead of regulatory changes, so that it would not be hit withchanges that require large investments ‘at a time you least want them’.

The respondents indicated that the structure of an EMS or ISO 14001 couldbring rigour and consistency to environmental management. One manager com-mented that they started implementing an EMS to maintain consistency and con-tinuity in environmental management practices and procedures in the face ofpersonnel turnover, so they did not have to ‘reinvent the wheel every time’. Con-sistent with structuration theory (Barley and Tolbert, 1997; Giddens, 1984), man-agers unanimously mentioned that a significant benefit of having an EMS is theenhanced employee awareness of environmental management issues and the con-sequent changes in behaviour. Since an EMS involves an all-encompassing struc-ture and specific procedures, it tends to be integrated into the overall managementsystem, rather than just a decoupled ‘window dressing’ (Weaver et al., 1999). Onemanager said emphatically: ‘It is not just an environmental management system,it is a management system’. Another manager said that the purpose of installingan EMS was to weave environmental management into ‘the organizational fabric’.

DRIVERS FOR ISO 14001 CERTIFICATION

In spite of collective consciousness of the importance of an EMS, there was con-siderable variation in firms’ responses to ISO 14001 certification. One big Canada-based corporation was demanding that all their facilities be ISO 14001 readytowards the middle of year 2000 – but would not necessarily go for certification.A European company was pushing all its global divisions and subsidiaries towardsISO 14001 certification. A US-based company, on the other hand, strongly dis-couraged its facilities from pursuing certification for fear that the required docu-mentation might actually be used by government agencies against the firm toexpose environmental infractions.

Several managers indicated that ISO 14001 did not offer substantial value overan in-house EMS, and they would not bother to go the extra distance of certify-ing with ISO 14001 unless their customers explicitly asked for it. One managerwas very certain that ‘from the effectiveness (perspective) of the implementedEMS, the non-14000 (EMS) are better positioned than the ISO 14000 ones. Andthe reason is that the non-14000 ones really went after what is important and only



after what is important’. Several others, who believed that ISO 14001 certificationdid ‘not add much more’, echoed this view. This seemed to go against the claimthat ISO 14001 certification will lend a competitive edge to the adopters (e.g.,Davies and Webber, 1998; Ralborn et al., 1999). On the other hand, literature on standardization asserts that standardization leads to uniformity rather thanexcellence (Brunsson, 2000). According to Brunsson (2000), standardization candisconnect the firm from what is actually done to what is said is being done. As aresult, standardization creates uniformity in symbolic elements such as speech andpolicy papers rather than in substantive ways. Previous studies of voluntary envi-ronmental management standards such as Responsible Care and ISO 14001 havealso revealed similar scepticism (King and Lenox, 2000; Yap, 2000). Managersseemed to believe that most of the functional benefits claimed for ISO 14001 couldbe achieved by an effective EMS. Moreover, firms could implement a completelyISO 14001-compatible EMS and self declare compliance without actually obtain-ing the certification and incurring the costs.

If ISO 14001 certification did not offer additional functional benefits to anuncertified EMS and there were no coercive forces for it in North America, firmshad discretionary power regarding the certification. The question that needs to beasked then, is, under what circumstances would a firm see the need for ISO 14001certification?

The data revealed that pulp and paper firms had different environmental policies in their facilities in different sectors. Facilities in woodland operations weremore likely to be ISO 14001 certified. All five firms that had woodland operations had or were working to have their facilities certified for ISO 14001. Facilities in the pulp and paper sectors, on the other hand, were more likely to have only an EMS. The converters were least concerned with having an EMS or ISO14001. As we probed the data for reasons for the differences in the responses to ISO 14001, two factors were revealed: task visibility and environmental impact opacity. A discussion of the reasons why these factors influence certifica-tion decisions follows. Exemplary quotes highlighting these concepts are providedin Table III. A summary of firm responses to ISO 14001 by sector is provided inTable IV.

Task Visibility

We define task visibility as the extent to which a particular firm task is easily observ-able or attracts the attention of the public. A firm’s task can be visible because:(1) it is noticeable to the public eye; or (2) the firm itself has a high profile. Firms’tasks can be visible because they are completed publicly and the results can beviewed easily. Woodland operations, for instance, were carried out in the forest,open to the public. ‘Everybody can go out and see a tree being cut down’, as onemanager commented. A firm’s tasks can become visible because the firm’s high





Tab

le I

II.

Tas

k vi

sibi

lity,

envi

ronm

enta

l im

pact

opa

city

,and

ISO

140

01 c

ertifi

catio

n

Fac

tors

Exe

mpl

ary

quot

esN

umbe

r of

tim

es s

ugge

sted

Tas

k vi

sibi

lity

•IS

O 1

4001

on

the

Woo

dlan

ds w

as la

rgel

y a

corp

orat

e de

cisi

on t

o ge

t ex

tern

al r

ecog

nitio

n th

at w

e ar

e tr

ying

to

impl

emen

t5

inte

rvie

wee

ssu

stai

nabl

e fo

rest

man

agem

ent

prac

tices

.•

We

felt

that

we

had

to h

ave

som

e w

ay o

fpr

ovin

g,by

ext

erna

l mea

ns,t

hat

the

fore

st p

ract

ices

tha

t w

e w

ere

unde

rtak

ing

Sugg

este

d 12

wer

e in

fact

sus

tain

able

and

wer

e th

e ri

ght

thin

gs t

o be

doi

ng.

times

•T

he fo

rest

ry s

ecto

r is

a v

ery

visu

al in

dust

ry in

my

opin

ion.

Eve

rybo

dy c

an g

o ou

t an

d se

e a

tree

bei

ng c

ut d

own

as

oppo

sed

to g

as o

r oi

l com

ing

out

ofth

e gr

ound

.So

publ

ic p

erce

ptio

n of

that

com

pany

is v

ery

visi

ble.

(Why

woo

dlan

dop

erat

ions

get

ISO

140

01 fi

rst?

)•

The

re is

muc

h m

ore

pres

sure

on

our

woo

dlan

ds g

roup

in t

erm

s of

bein

g in

the

pub

lic e

ye o

ut h

arve

stin

g in

the

bus

hve

rsus

som

eone

tha

t ju

st w

orks

in t

he m

ill.T

hat’s

ver

y ap

pare

nt.

•In

the

saw

mill

s,..

.asp

ects

and

pot

entia

l ris

ks a

re m

ore

limite

d th

an o

n th

e fo

rest

ry.I

t is

not

sub

ject

ed a

s m

uch

to p

ublic

scru

tiny

as it

is o

n th

e fo

rest

ry s

ide.

Les

s vi

sibl

e th

an t

he fo

rest

ry fo

r su

re.

Env

iron

men

tal

•T

here

is a

big

pro

blem

with

exp

lain

ing

to e

xter

nal p

eopl

e ho

w w

e do

thi

ngs

or h

ow t

hing

s w

ork

ifyo

u w

ill.(

Why

ISO

4 in

terv

iew

ees

impa

ct

1400

1 ce

rtifi

catio

n?)

opac

ity•

Pulp

mill

s ha

ve s

ome

key

para

met

ers

or k

ey in

dica

tors

tha

t ca

n be

mea

sure

d ag

ains

t co

mpa

nies

wor

ldw

ide

to m

easu

reSu

gges

ted

10en

viro

nmen

tal p

erfo

rman

ce fr

om t

he m

ill s

ide

itsel

f.Fo

rest

ry,o

n th

e ot

her

hand

,is

muc

h m

ore

ofa

softe

r sc

ienc

e.(W

hytim

esth

e w

oodl

and

oper

atio

n re

gist

ered

for

ISO

140

01?)

•T

he e

colo

gica

l pro

cess

es a

re a

lot

mor

e co

mpl

ex a

nd s

o an

app

eara

nce

ofso

met

hing

isn’

t ne

cess

arily

a b

ad t

hing

and

som

etim

es w

hat

look

s lik

e,yo

u kn

ow,v

isua

lly p

leas

ing,

may

act

ually

be

bad

fore

stry

in a

n ec

olog

ical

sen

se.(

Exp

lain

ing

sect

oria

l diff

eren

ces

betw

een

woo

dlan

d op

erat

ions

and

mill

s.)•

The

y (a

ctiv

ists

) are

a lo

t,in

my

view

,les

s te

chni

cally

sop

hist

icat

ed in

ter

ms

ofun

ders

tand

ing

ofei

ther

the

man

ufac

turi

ngpr

oces

s or

the

fore

st m

anag

emen

t pr

oces

s.M

uch

mor

e in

tun

e to

the

em

otio

nal s

ort

ofso

cial

-cul

tura

l sid

e of

it,w

hich

are

the

visu

al a

spec

ts t

o so

me

degr

ee a

nd t

he s

usta

inab

ility

of

old

grow

th h

arve

stin

g an

d w

ildlif

e ha

bita

t an

d al

l tha

t ki

nd o

fsi

de.

•It

’s an

eas

y w

ay o

fco

mm

unic

atin

g th

at y

ou h

ave

a ce

rtai

n st

anda

rd.

profile draws attention to them. A large multinational firm’s tree-cutting practicesmay be under closer scrutiny than a small firm’s for this reason.

In several cases, a firm’s woodland operations were certified prior to other mills,sometimes despite the fact that the overall corporate policy did not impose certi-fication. Forest management activities, like tree cutting or tree-planting, were veryvisible tasks. One manager said: ‘There is much more pressure on our woodlandsgroup in terms of being in the public eye out harvesting in the bush versus someonethat just works in the mill.’ Another manager said: ‘The forestry sector is a veryvisual industry. Everybody can go out and see a tree being cut down as opposedto gas or oil coming out of the ground, so public perception of that company isvery visible.’ Task visibility increases the possibility of scrutiny from external stake-holders like regulatory bodies, local communities, green activists, and consequen-tially increases a firm’s need for external recognition. External recognition of goodenvironmental practices is important for a firm to gain legitimacy and procureresources (Pfeffer and Salancik, 1978). Task visibility also increases the urgency ofthe issue which likely leads to a faster organizational response (Ginsberg andVenkatraman, 1995).

Likewise, the visibility of the firm would increase the scrutiny of its tasks, andlead to early actions to gain external recognition. Multinationals, for example, aremore visible and also certified early for ISO 14001, which is consistent with thereceived theory which suggests that larger firms are usually early adopters of prac-tices or structures that cater to institutional pressures (Greening and Gray, 1994;Tolbert and Zucker, 1983). The visibility of the firm can also be enhanced as firmsinteract with community members by serving their needs or hiring employees. Thismay explain why IBM, Ford, and GM have been among the first to seek ISO



Table IV. Comparison of ISO 14001 adoption status in different sectors of forest products industry

Sector Task Environmental No. of respondents* No. of respondents reported ISO

visibility impact opacity having operation(s) 14001 status

in the sector

Will not Will certify Already

certify soon certified

Woodland High High 5 0 4 1operation

Pulp Medium Medium 9 3 6 0Paper Medium Medium 10 4 5 1Converters Low Low 5 4 1 0

and others

*Some respondents have operations in more than one sector.

14001 certification. Firm size may also enhance the visibility of the firm’s tasks aslarge firms generate more economic wealth and are more closely tied to the community’s social health.

However, firm visibility is not the same as task visibility as illustrated by two facts(see Table I). First, the five firms that have woodland operations all decided tocertify their woodland operations, even though some are medium to small domes-tic firms with only a few thousand workers. Second, out of the three large firmswith more than 10,000 employees, one firm had certified its woodland operationsbefore its mills, and two decided to certify their woodland operations in spite ofthe fact that their overall corporate policy was not to seek certification. Managersbelieved that the high visibility of the woodland operation itself demanded dif-ferent treatment and required extra external recognition. Therefore, task visibilityis an attribute of a procedure or operational process, which, although influencedby firm visibility, is nevertheless an independent feature impacting a firm’s certifi-cation decision.

High task visibility increased the need for external recognition. Firms might bedoing all the right things for the environment, but to convince the public, a third-party verification was effective. ISO 14001, by being an internationally acknowl-edged EMS standard, provides a means to gain such external recognition andcredibility. A Vice President of Environment of a company explained why the firmmandated ISO 14001 certification for all the woodland operations but not themills: ‘ISO 14001 on the woodlands was largely a corporate decision to get exter-nal recognition that we are trying to implement sustainable forest managementpractices.’

While managers often did not believe that ISO 14001 offered extra functionalbenefits to environmental management, they certainly understood its value inbeing an internationally recognized standard and thus having wider internationalcredibility than a home-grown EMS. ISO 14001 was used as a symbol or signalof legitimacy. In our interviews, words like ‘demonstrate’, ‘show’, ‘prove to thepublic’, ‘verify to people’ were often used in discussing certification decisions,revealing the fact that ISO 14001 was considered as a legitimizing tool when highvisibility demanded external recognition. This is consistent with Suchman’s (1995,p. 580) notion of procedural legitimacy: ‘. . . organizations also can garner morallegitimacy by embracing socially accepted techniques and procedures.’

Therefore, when market and institutional forces favour environmental respon-siveness but do not directly demand ISO 14001 certification, task visibility of afirm’s operation enhances the need for external recognition and pushes the firmtowards ISO 14001 certification. Hence we propose:

Proposition 1: Other things being equal, operations with higher task visibility aremore likely to be certified for ISO 14001.



Environmental Impact Opacity

Environmental impact opacity refers to the difficulty with which the environ-mental impact of a firm’s task can be measured and understood by external stake-holders. If the impact is opaque, then there are often no quantifiable criteria orparameters to measure the environmental impact of the operation. As a result, thefirm’s environmental performance will be more difficult to evaluate, and the firmcannot easily communicate its environmental responsiveness to outside audiences.On the other hand, if the impact is not opaque but easily comprehensible, thenthere are usually ready-to-use criteria or parameters to measure or evaluate its per-formance, which can be shown to the external stakeholders for communicationpurposes. When the former is the case, procedural legitimacy gains saliencebecause standard practices speak for the firm’s efforts to act responsibly (Scott,1992; Suchman, 1995). By achieving ISO 14001 certification, the firm signals itssound practices in environmental management.

In the case of the forestry industry, pulp and paper sectors have criteria such asemission levels and energy consumption levels that directly measure a facility’senvironmental performance and help to achieve ‘consequential legitimacy’(Suchman, 1995), which refers to legitimacy gained through the outcomes of anaction. For instance, in 1999, the CPPA reported that Canadian pulp and papermills had improved their environmental performance by indicating that water con-sumption per tonne of pulp is less than half of what it was 20 years ago and thatlevels of Total Suspended Solids (TSS) and Biological Oxygen Demand (BOD)had dropped more than half since 1990. The CPPA also reported that, in 1995,the use of elemental chlorine in bleaching had dropped 87 per cent, and dioxinsand the amount of furans in mill effluent was down 99 per cent from 1988 (CPPA,2001). While an EMS may be necessary to achieve these desirable environmentalperformance results, ISO 14001 certification is nevertheless not a must-have todemonstrate the achievements, since the firm can show the numbers on energyconsumption, TSS and BOD emission levels in their communication with thegeneral public or enforcement agencies.

No such measure of consequential legitimacy, however, exists for woodlandoperations. Woodland operations lack direct measurements that signal environ-mental performance. One respondent explained his firm’s decision to register itswoodland operations with ISO 14001 but not the mills: ‘pulp mills have some keyparameters or key indicators that can be measured against companies worldwideto measure environmental performance. Forestry, on the other hand, is much moreof a softer science.’ Another manager expressed a similar idea: ‘In the forest man-agement side . . . the ecological processes are a lot more complex and so an appear-ance of something isn’t necessarily a bad thing. . . . So what they looked for . . . isto have other outside experts to look at it and then basically tell them (the public)and verify if what we were doing was satisfactory.’ Managers felt that ‘there is a



big problem with explaining to external people how we do things or how thingswork’. To make communication with the public easier, an internationally recog-nized standard like ISO 14001 was useful.

Environmental impact opacity can also be determined by the stakeholders’ tech-nical knowledge of a particular operation. One manager discussed why their papermills became certified before pulp facilities. The pulp mills, he explained, ship theirproducts to paper mills, whose managers are familiar with the pulp manufactur-ing process. Therefore, paper manufacturers could assess the environmental per-formance of the pulp mills just by the technology or equipment being used. Thepaper mills, on the other hand, sell primarily to newspapers and publishing com-panies. These customers do not know much about the paper-making process,therefore, its environmental impact is opaque to them. Rather than trying toexplain all the details, the paper mills can certify for ISO 14001 to show that theyare managing the environmental aspects of their operations in an acceptable way.

Once again, the ISO 14001 standard is not sought after for its functional ben-efits, but rather, as an effective way of transmitting information – to convince thepublic or stakeholders that things are being done acceptably without having toexplain the complexities of the activities involved. To achieve this end, self decla-ration is not enough; a trusted and recognized third party is needed to verify tothe less knowledgeable public (Brunsson and Jacobsson, 2000). ISO 14001 wasconceived and used as a tool to facilitate communication and consequently gainlegitimacy. Therefore, we propose the following:

Proposition 2: Other things being equal, operations with higher environmentalimpact opacity are more likely to be certified for ISO 14001.

DISCUSSION AND CONCLUSIONS

The main thrust of this study was to explore the circumstances under which firmswould seek ISO 14001 certification when they were not required to do so by themarket or regulating institutions. Most respondents believed that ISO 14001 cer-tification provided little, if any, additional functional value to an in-house EMSexcept for external recognition, credibility, and procedural legitimacy. Therefore,if firms did not feel any direct market demand or institutional pressure, they wouldprobably not bother to certify. However, procedural legitimacy was more likely tomatter when the organization’s tasks were highly visible (i.e., the task was easy tosee and the organization was visible), and the environmental impacts were opaque(i.e., they were hard to measure and communicate). Therefore, task visibility andenvironmental impact opacity increase the probability and speed of ISO 14001certification.

These constructs are related to constructs developed by others. Bansal and Roth (2000) identified the importance of issue salience in motivating corporate



environmental responsiveness. They argued that issue salience is shaped by theissue’s certainty, transparency and emotivity. Issue certainty is defined as ‘thedegree to which the impact of the issue on the natural environment can be mea-sured’, while issue transparency is ‘easily attributable to a polluting firm’ (Bansaland Roth, 2000, p. 729), and issue emotivity is the affect that the issue evokes. Theresulting impact of their constructs is similar to ours: the issue becomes morevisible or salient in the minds of stakeholders, which allows them to see the ben-efits of environmental responsiveness more clearly, or in our case, task visibilityand environmental impact opacity of an operation helps the managers to see theadvantages of ISO 14001. The construct of task visibility has also appeared in thecontext of employee social loafing or shirking (George, 1992; Jones, 1984). George(1992) found that perceived high task visibility was negatively associated with socialloafing because it would elicit greater supervisor scrutiny, which is similar to the argument that we presented. Task visibility leads to an enhanced level ofexternal attention and impact opacity points to the difficulty of detection or evaluation.

The data analysis also confirmed the results of previous studies in finding thatfactors such as market demand, institutional pressure, and management controlwere relevant in driving a firm’s EMS adoption decision. Firms responded most strongly to the market – specifically to demands from dominant and definitive stakeholders (Mitchell et al., 1997) which had an impact on firms’ imme-diate survival, profitability, or growth (Banerjee, 2001). Firms also heeded to insti-tutional pressures from society, local community, green activists, and regulatoryforces.

Obviously, firms in our sample were still at the stage of seeking pragmatic legit-imacy (Suchman, 1995) for their environmental management practices, whichexplains why customer demand appeared to be a most salient factor in firms’ EMSadoption decision. This is consistent with Banerjee’s finding that ‘corporate envi-ronmentalism, or a pervasive rationale for it, ultimately follows the economicbottom line’ (Banerjee, 2001, p. 507). Managers appeared to be deliberate in theirthinking towards the standard. They selectively registered their facilities with ISO14001 based on customer demands in the markets served. They weighted the possible costs and benefits of ISO 14001 certification, evaluated the legislator’sattitudes towards ISO 14001, and responded to different institutional pressures differently.

Our findings contribute to research on organizations and the natural envi-ronment. We demonstrated the following two points. First, although ISO 14001certification helps with the maintenance and improvement of an EMS,standardization leads to ‘uniformity’ not excellence. Therefore, claiming ISO14001 certification as a way of gaining and sustaining competitive advantages may not sell with managers, particularly if their intuition leads them to appreci-ate ISO 14001 for its legitimization value rather than for functional benefits.



Second, although environmental preservation and sustainable development seemto have become accepted values among large portions of society, firms still needto see the need for voluntary environmental standards like ISO 14001. Many firmswill not certify for ISO 14001 if they do not receive clear market or institutionalpressures and are not in need of external recognition and communication. There-fore, the most effective way for governments to improve the take-up rate of ISO14001 is to increase supply chain pressure for certification by having large influ-ential firms commit to the standard. This is probably beginning to happen in NorthAmerica as firms like Ford and GM announced that their suppliers need to be ISO14001 compliant by the end of 2002.

Our findings regarding ISO 14001 certification also provide a new scenario toorganizational researchers interested in the emergence and institutionalization ofpractices and structures. Studies of the diffusion patterns of civil service reforms,the multi-divisional form, financial reporting standards, and CEO long-termincentive plans (Fligstein, 1985; Mezias, 1990; Palmer et al., 1993; Westphal andZajac, 1994) have come up with a consistent finding that distinguished betweenearly and later adopters: early adopters usually base their decision on efficiencyconsiderations and focus on the substance – functional features – of the adoptedpractice, while later adopters tend to subscribe for legitimacy purposes and focusmore on the symbolic functions. The special status of ISO 14001 as a new yetwell-recognized standard, and the co-existence of regular EMSs that share similarfunctional features led even the early adopters of ISO 14001 to value not only itssubstance but also – to a larger extent – its legitimatizing benefits. Hence, ourresearch suggests that the symbolic elements of a standard may be relevant toadministrative forms, if there are strong connections to existing forms (such as ISO9000 in this case), or for which the functional benefits are not clearly known.

Our insights were gained from an inductive analysis of qualitative interviewdata. The fact that this was an explorative study of a small sample of firms in asingle industry and country makes the findings limited and their generalizabilityuntested. Further research is needed not only to validate, but also to develop ourstudy. For example, managers did not indicate to us that they were mimicking theircompetitors, or even aware of what others were doing. This finding could be dueto the relatively short history of ISO 14001. In a few years, we may find isomor-phic forces at work in ISO 14001 adoption. Future research can also examine othervoluntary standards within the environmental management arena to see if taskvisibility and impact opacity have the same kind of influence in firms’ efforts tobuild credibility and legitimacy.

NOTE

[1] The Canadian Pulp and Paper Association has recently changed its name to Forest ProductsAssociation of Canada (FPAC). Its website address may change as well.



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Ruihua Joy Jiang and Pratima Bansal - Oakland Universitysbafaculty.oakland.edu/Directory/jiang12/intellcont/JMS 2003-1.pdf · Ruihua Joy Jiang and Pratima Bansal Richard Ivey School