مطالعه تجربی از تصویب اولیه ایزو 14001 در شرکت های تولیدی ژاپن

This paper analyzes stakeholders' environmental preferences/pressures and the financial flexibility that together influence firms to adopt ISO 14001, which is the international standard primarily concerned with an Environmental Management System (EMS). Since firms retain ISO 14001 once they have adopted it, a firm's decision to adopt ISO 14001 is considered from the period that they initially acquire the certification. Therefore, we assert that we have to focus on the determinants of initial ISO 14001 adoption. We analyzed: 1) the determinants of initial ISO 14001 adoptions respective to 1996, 1999, and 2004; and 2) the determinants of initial ISO 14001 adoptions during the period 1996–2004. The estimation results support the view that stakeholders' environmental preferences/pressures and firms' financial flexibility influenced their decision to adopt ISO 14001 in both analyses. Particularly, it is remarkable that we found that: 1) the determinants of the initial ISO 14001 adoption differed among the years of adoption; and 2) there is a positive relationship between economic performance and initial ISO 14001 adoption.

In the latter half of the 1990s, many firms regarded environmental management as a top corporate priority, since public concern about environment was growing stronger. In light of this, the ISO 14001 adoption was attractive to many Japanese firms. ISO 14001 is the international standard1 primarily concerned with an Environmental Management System (EMS), and is certified by the International Organization for Standardization (ISO). According to our survey, 83% of Japanese manufacturing firms had adopted the certification in 2004, although it was not legally required (Fig. 1).2 Why have so many firms adopted ISO 14001? The objective of a firm is to maximize long-term profit subject to budget constraints, and its stakeholders' environmental preferences/pressures influence its profit. Firms therefore attempt to satisfy their stakeholders with ISO 14001 adoption, since this indicates their commitment to environmental management. However, firms cannot adopt ISO 14001 without sufficient funds. Thus, stakeholders' environmental preferences/pressures and financial flexibility influence ISO 14001 adoption. Hence, the focus of this paper is to analyze stakeholders' environmental preferences/pressures and financial flexibility that influence firms' ISO 14001 adoption.Before the analysis, however, it is necessary to discuss sample selection. Our sample consisted of 433 manufacturing firms listed on the first section of the Tokyo Stock Exchange. Although firms can freely decide whether to adopt or renew ISO 14001 in each period, our data indicate that firms retain ISO 14001 once adopted. This is because firms with ISO 14001 have an incentive to renew it (at least in the short term) because of a huge initial cost for adoption (including not only registration fees but also initial implementation costs) (Chin and Pun, 1999, Nakamura et al., 2001, Jiang and Bansal, 2003, Melnyk et al., 2003, Neumayer and Perkins, 2004 and Arimura et al., 2005). Therefore, a firm's decision to adopt ISO 14001 is considered from the period that it initially acquires the certification, with no circumstances after this period influencing its decision. Accordingly, we assert the necessity to focus on the determinants of the initial ISO 14001 adoption. Fig. 1 shows that the initial adoption rate increased until 1999 and thereafter decreased, whereas the cumulative adoption rate increased until 2004. Thus, the initial adoption rate in each year was different, and the peak in initial adoptions was in 1999. However, many previous studies that analyzed the decision of environmental action by firms did not consider this characteristic of initial adoption. Most used accumulative data for the cross-sectional analysis of a period. Consequently, their results might have had some sample selection bias, since the firms that had already implemented their environmental actions were included in the observations. To resolve this issue, we eliminated the observations if the firm concerned had already adopted the certification in the previous year. This means that we modified the data of the cumulative ISO 14001 adoption to focus on the data of the initial ISO 14001 adoption, since we could not directly estimate the determinants of a cumulative ISO 14001 adoption as many previous studies did. This allowed us to estimate the intrinsic determinants of ISO 14001 adoption. The objective of this paper is to analyze the determinants of initial ISO 14001 adoption in Japanese manufacturing firms by focusing on stakeholders' environmental preferences/pressures and financial flexibility. We analyzed: 1) the determinants of the initial ISO 14001 adoptions respective to 1996, 1999, and 2004; and 2) the determinants of the initial ISO 14001 adoptions during the period 1996–2004. The former was to test whether the determinants of the initial ISO 14001 adoptions were different among these years. The latter was to use a larger sample of data to analyze the determinants of initial ISO 14001 adoptions. The main conclusions are as follows. First, in 1996 the firms with larger size and lower debt ratios were more likely to adopt ISO 14001. In 1999, firms that had higher export ratios, higher proportions of stock held by other corporations, larger size, and better economic performance were more likely to adopt ISO 14001. The positive relationship between economic performance and the initial ISO 14001 adoption is a new finding. However, no variables could be validated to explain initial ISO 14001 adoptions in 2004. Consequently, the determinants of initial ISO 14001 adoption differed among the years of adoption. Second, firms that had higher export ratios, higher proportions of stock held by financial institutions, higher proportions of stock held by other corporations, larger size and better economic performance were more likely to adopt ISO 14001 earlier during the period 1996–2004. Of especial interest was that we also found a positive relationship between economic performance and the initial ISO 14001 adoption in this analysis. The structure of this paper is as follows. In Section 2, we provide an overview of ISO 14001. The literature on firms' environmental management is reviewed in Section 3. The hypotheses of the determinants of ISO 14001 adoption are discussed in Section 4. In Section 5, the econometric models and data are presented. Section 6 is devoted to the estimation results. Finally, our concluding remarks are summarized in Section 7. 2. Overview of ISO 14001 The ISO 14000 series, released in 1996 and revised in 2004, is the international standard for an Environmental Management System (EMS) published by the International Organization for Standardization (ISO). The series is based on the need for improved environmental quality as expressed at the United Nations Conference on Environment and Development in Rio de Janeiro in 1992 (Bansal and Bogner, 2002). An EMS provides the requirements for an organization's structure, responsibilities, practices, procedures, processes and resources for environmental management, so that a firm can reduce its negative environmental impact while improving management control (Bansal and Bogner, 2002 and Bansal and Hunter, 2003). ISO 14001 is the only specific standard for an EMS in the series, and the other designations are as follows: general guidelines on principles, systems and supporting techniques (ISO 14004), guidelines for environmental auditing (ISO 14010–14012), environmental labels and declarations (ISO 14020–14025), and life cycle assessment (ISO 14040–14049) (Welch et al., 2002 and International Organization for Standardization, 2004). For ISO 14001 adoption, a firm needs to meet the requirements for five main elements based on the principles of continuous improvement (Plan, Do, Check and Act): environmental policy, planning, implementation and operation, checking and corrective action, and management review. Besides, the firm must be certified by an accredited third party (Churche, 1996, Lamprecht, 1997, Boiral and Sala, 1998, Kruit and Gleckman, 1998 and Zutshi and Sohal, 2004). Third party certification incurs costs. Firms usually decide to adopt ISO 14001 at the facility level, and the registration fee costs between $15,000 and $26,000, depending on facility size and industry in Japan. To renew its certification, the firm must undergo a full recertification audit every 3 years, which costs half or two-thirds of the initial registration fee (Arimura et al., 2005). In addition to the registration fee, the firm incurs initial implementation and maintenance costs. According to an estimate by the Global Environmental and Technology Foundation, the total initial cost is $24,000 to $128,000, and the maintenance cost is $5000 to $10,000 annually (Jiang and Bansal, 2003). Although ISO 14001 compliance is not legally required, ISO 14001 has been adopted by numerous firms. There are several reasons for this. One is the external advantage. ISO 14001 brings the external benefit of signaling a firm's commitment to environmental management to its external stakeholders. The fact that ISO 14001 is the most recognized EMS certification in the world provides a strong and well-recognized signal to stakeholders of the firm's commitment to environmental management. Another reason is an internal advantage. ISO 14001 brings achievement of environmental objectives and cost reductions, since it reduces environmental impact and improves aspects such as operational efficiency and effectiveness (Boiral and Sala, 1998, Rondinelli and Vastag, 2000, Bansal and Bogner, 2002 and Jiang and Bansal, 2003). However, firms have many choices for obtaining an internal advantage for their EMSs even if they do not acquire the certification. These choices include the following: 1) firms can be certified by other EMSs that are less strict or have cheaper registration fees than ISO 140013; and 2) firms can declare themselves to be in compliance with ISO 14001 or follow only certain elements of ISO 14001 (Bansal and Bogner, 2002 and Neumayer and Perkins, 2004). Indeed, some firms use ISO 14001 guidelines to develop new EMSs or adapt their environmental practices to the international standard without formal ISO 14001 certification (Rondinelli and Vastag, 2000). Therefore, an external advantage can play an even more important role in a firm's ISO 14001 adoption. The external advantage and the stakeholders' influence in the adoption of ISO 14001 are discussed in more detail in Section 4.

We have discussed what determines a firm's initial adoption of ISO 14001. The main findings are as follows. First, we found that the determinants of initial ISO 14001 adoption differed among the years of adoption. It follows that there are several stages in initial ISO 14001 adoptions. The early stage was the year 1996, when ISO 14001 was launched. Firms that had larger size and lower debt ratios were more likely to adopt ISO 14001 at this stage. Specific stakeholders did not influence the decision. Perhaps stakeholders did not recognize the adoption of ISO 14001 as an indicator of a firm's environmental concern, or perhaps even social concern about a firm's environmental impact was not yet strong. Even in such situations, larger firms with lower debt ratios were more concerned about publicity regarding their environmental performance. The middle stage was the year 1999, when most of the firms adopted ISO 14001 for the first time. The firms that had higher export ratios, higher proportions of stock held by other corporations, larger size and better economic performance were more likely to adopt ISO 14001 in 1999. We have two remarkable results. Firstly, some specific stakeholders such as foreign customers and long-term stockholders influenced ISO 14001 adoptions at this stage. As we expected, environmental preferences/pressures of their customers and long-term stockholders influenced their decisions. Essentially, firms began to realize that their stakeholders' environmental preferences/pressures increased the firms' long-term profit. A trigger for this social concern about the environment might have been the Kyoto Protocol, which was negotiated in 1997. The firms' stakeholders became more concerned with environmental management in light of the objectives of the Kyoto Protocol. Secondly, firms that have better economic performance are in a better position to adopt ISO 14001. This result indicates that better economic performance allows a firm more flexibility in financing new programs. Most of the previous studies did not reach this conclusion. The later stage was the year 2004. We could not find any determinants of initial ISO 14001 adoptions in this stage. This means that environmental preferences/pressures from the stakeholders and financial flexibility did not influence the adoption at all in this stage. However, small sample size may have led to the result in 2004. Hence, coefficients of the explanatory variables in 2004 might not be zero if we had a larger sample. This is a future issue for study that we need to resolve. Although we had a small sample problem in 2004, the Wald test indicated that coefficients of proportion of stock held by other corporations and coefficients of debt ratio were significantly different in 1996, 1999 and 2004, which supports our conclusion that the determinants of initial ISO 14001 adoption differed among the years of adoption. To defend our conclusion further, we provide some basic descriptive statistics comparing the explanatory variables among the firms that initially adopted ISO 14001 in 1996, 1999 and 2004 (not shown in the table). These comparisons show approximate comparisons of the determinants among the years of adoption. An example is debt ratio, for which the coefficients were significantly different in 1996, 1999 and 2004. The average debt ratios for the early, middle and later adopters were 1.260, 1.604 and 0.822 respectively, and they were 0.54, 0.60 and 0.36 times larger than those for non-adopters. This implies that the average debt ratio for the ISO 14001 adopters increased in 1999 and decreased in 2004, and the negative relationship between debt ratio and initial ISO 14001 adoption weakened in 1999 and strengthened in 2004. Although the negative relationship was strongest in 2004, this was not supported by the probit estimation. Another example is firm size, for which coefficients were not significantly different in 1996, 1999 and 2004. The average firm sizes for the early, middle and later adopters were 9.218, 7.428 and 6.427 respectively, and 1.26, 1.08 and 1.02 times larger than those for non-adopters. This implies that the average firm size of ISO 14001 adopters decreased until 2004, and the positive relationship between firm size and initial ISO 14001 adoption weakened until 2004. Consequently, the firms that adopted ISO 14001 in 2004 were smaller firms. This trend toward smaller firm size suggests a reason why we could not find any significant effects for initial ISO 14001 adoption in 2004. That is, the larger firms had already adopted the certifications in earlier years. More precisely, in terms of firm size, most of the firms that wished to adopt ISO 14001 had already acquired the certifications. This interpretation is consistent with the discrete-time proportional hazards result. The same finding also applies to export ratio. Second, we examine the determinants for initial ISO 14001 adoption during the years from 1996 to 2004. As we found various determinants of the initial ISO 14001 adoption in the probit estimations, we further analyzed these determinants with a larger data set. The firms that had higher export ratios, higher proportions of stock held by financial institutions, higher proportions of stock held by other corporations, larger size and better economic performance were more likely to adopt ISO 14001 earlier in the period 1996–2004. Thus, most of the significant variables in the probit estimations were also significant in this estimation. Among them, it is particularly remarkable that we found a positive relationship between economic performance and initial ISO 14001 adoption in this analysis as well as in the probit model. This means that better economic performance was required for initial ISO 14001 adoptions in most of the firms. We could only find this result by focusing on initial adoptions. On the other hand, we found no significant effects for end product consumers, short-term stockholders and debt ratio. However, we can provide consistent interpretations for short-term stockholders. The interpretation is that proportion of stock held by financial institutions and proportion of stock held by other corporations have significantly positive effects, but free float weight has no significant effect, which supports the view that long-term stockholders are more conscious of a firm's environmental management. By focusing on initial ISO 14001 adoption, we were able to find the determinants of ISO 14001 adoption, including a determinant that most of the previous studies did not find. Thus, our estimation results support the view that stakeholders' environmental preferences/pressures and financial flexibility influence a firm's decision regarding ISO 14001 adoption.