WHY FIRMS CERTIFY TO ISO 14001: AN INSTITUTIONAL AND RESOURCE-BASED VIEW.

Abstract

This article combines institutional theory and resource-based view of the firm to empirically evaluate a firm's decision to certify its environmental management system to the International Organization for Standardization 14001. Institutional theory suggests that external pressures shape organizational action. Applied to the natural environment, most institutional studies have emphasized the effects of coercion from regulatory and social pressures and how they encourage homogeneous outcomes. In contrast, the research-based view of the firm suggests resources that are specialized and non-replicable create opportunities for heterogeneity leading to competitive advantage. Business strategy therefore depends on specific organizational competencies and on a firm's ability to put them to routine productive use and maintain them over time. To the extent that organizations influence the formation of regulation, managing their environmental impacts may signal to lawmakers that regulatory restrictions should increase for industry as a whole. These findings, combined with the regulatory and industry differences, suggest that early adopters were the dirtiest firms in the cleanest manufacturing sectors and less able to hide their environmental offenses among their cleaner industry peers.

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