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great article on usefulness of ISO 14001



I found this via university database, it is so pertinent to the discussion
of the real effectiveness of EMS and ISO 14001 - the largest survey of its
kind ever, as far as I can tell - so I am forwarding it.  I hope I am not
creating a copyright crisis.

Burt Hamner
www.cleanerproduction.com

> The following article has been sent by a user at UNIVERSITY OF WASHINGTON
LIBRARIES via ProQuest, a Bell & Howell information service.
>
> ISO 14000:  Assessing its perceived impact on corporate performance
> Journal of Supply Chain Management
> Tempe
> Spring 2000
>
> --------------------------------------------------------------------------
------
>
> Authors:                  Frank Montabon
>
> Authors:                  Steven A Melnyk
>
> Authors:                  Robert Sroufe
>
> Authors:                  Roger J Calantone
>
> Volume:                   36
>
> Issue:                    2
>
> Pagination:               4-16
>
> ISSN:                     15232409
>
> Subject Terms:            Studies
>                           Statistical analysis
>                           Environmental management
>                           Environmental regulations
>                           Quality standards
>                           Performance evaluation
>
> Classification Codes:     5320: Quality control
>                           1540: Pollution control
>                           9190: United States
>                           9130: Experimental/theoretical
>
> Geographic Names:         United States
>                           US
>
>
> Abstract:
>
> The ISO 14000 series of environmental standards is a relatively recent
> development in environmentally responsible manufacturing (ERM). It applies
> to environmental systems and processes the same approach used by its
predecessors,
> the ISO 9000 quality standards. Being relatively new, numerous questions
> have arisen regarding the impact of these new standards on both the
corporate
> environmental management system and corporate performance. Some of these
> questions are addressed by drawing on data generated by a large-scale
survey
> of American managers. The results indicate that, even though ISO 14000
> has achieved relatively limited acceptance, there is strong evidence to
> indicate that this series of standards can positively impact both the
performance
> of the environmental management system as well as overall corporate
performance.
> Further, it was found to outperform other ERM initiatives such as the
Environmental
> Protection Agency's 33/50 program.
> Copyright National Association of Purchasing Management, Incorporated
Spring
> 2000
>
> Full Text:
>
> SUMMARY
>
> The ISO 14000 series of environmental standards is a relatively recent
> development in environmentally responsible manufacturing (ERM). It applies
> to environmental systems and processes the same approach used by its
predecessor,
> the ISO 9000 quality standards. Being relatively new, numerous questions
> have arisen regarding the impact of these new standards on both the
corporate
> environmental management system and corporate performance. This article
> addresses some of these questions by drawing on data generated by a
large-scale
> survey of American managers. The results indicate that, even though ISO
> 14000 has achieved relatively limited acceptance, there is strong evidence
> to indicate that this series of standards can positively impact both the
> performance of the environmental management system as well as overall
corporate
> performance. Further, it was found to outperform other ERM initiatives
> such as the Environmental Protection Agency's (EPA) 33/50 program.
>
> INTRODUCTION
>
> The 1990s was a time of challenge and transition. The last decade has seen
> a change in management paradigms - from the paradigm of "or" to the
paradigm
> of "and." In the past, managers only saw trade-offs (i.e., the paradigm
> of "or"). That is, you could have low cost or short leadtimes or high
quality
> or high flexibility. You could have superior performance on any one of
> these dimensions, but not superior performance on two or more dimensions.
> Today however, managers are expected to simultaneously reduce leadtimes
> (manufacturing, purchasing, and design), improve quality, reduce costs,
> and enhance flexibility. This has also become a period when managers are
> expected to become more environmentally responsible and environmentally
> conscious.
>
> Being environmentally responsible is increasingly viewed as a requirement
> of doing business. For manufacturing managers, this has meant reexamining
> their products and processes, with an eye toward the reduction or
elimination
> (if possible) of any resulting waste streams. For the purchasing
profession,
> the corresponding challenge has been to identify suppliers who can provide
> environmentally responsible goods and services without sacrificing cost,
> quality, flexibility, or leadtime. It has also meant identifying and
evaluating
> any initiative consistent with these new expanded objectives. One such
> initiative is ISO 14000.
>
> Formally adopted in 1996 by the International Organization for
Standardization
> (ISO), ISO 14000 represents a new standard and approach to improved
environmental
> performance. ISO 14000 shares many common traits with its "cousin," ISO
> 9000. It is backed by the ISO; as such, it is hoped that it will become
> a way for firms to use one standard of practices rather than dealing with
> conflicting environmental regulations across national borders (Sayres
1996).
> Like its predecessor, ISO 14000 does not focus on outcomes, such as
pollution
> output, but focuses on processes. Finally like its "cousin," ISO 14000
> involves an audit by a third party.
>
> The introduction of ISO 14000 has raised a number of questions such as:
>
>
> What is the initial predisposition of potential users/adopters of ISO
14000
> to the ISO 14000 standards?
>
> How are these predispositions influenced by factors such as past
experience
> with ISO 9000, corporate orientation toward environmental responsibility,
> industrial factors, importance of international trade to corporate
performance,
> and the functional positions of the respondents? To what extent do the
> respondents see a relationship between ISO 14000 registration and success
> and improved market, or corporate performance?
>
> How effective is ISO 14000 relative to the other alternatives available
> for improving environmental performance?
>
> What are the major sources of uncertainty facing the manager interested
> in attaining ISO 14000 certification and which of these sources have a
> significant impact on the attainment of ISO 14000 certification?
>
> This study examines these and other related questions by drawing on data
> generated by the first large-scale survey of U.S. managers and their
positions
> toward ISO 14000. The development of this survey and the subsequent
analysis
> of the data were supported by funding from the National Science
Foundation,
> the Center for Advanced Purchasing Studies (CAPS), and the Educational
> and Research Foundation of the American Production and Inventory Control
> Society (APICS).
>
> One of the objectives of the study was to survey the relevant literature
> and use the researchers' experience to draw some logical conclusions about
> the costs and benefits of ISO 14000. These benefits and obstacles/
concerns
> were incorporated into the large-scale survey. The data received from this
> survey were intended to provide insights into how adopters and potential
> adopters of ISO 14000 view this development. The survey also helped assess
> the extent to which there is excitement or acceptance for ISO 14000 (as
> well as the degree of awareness of the need for such standards).
>
> This article is organized into seven major sections. The first section
> provides a brief overview of the ISO 14000 certification standards. Next,
> the research design is presented and discussed, along with critical traits
> of the respondents. The third section examines the aggregate impact of
> the environmental management system (EMS). The next three sections focus
> attention on ISO 14000 its impact, factors affecting its adoption, and
> obstacles to its adoption. In the final section, ISO 14000 is compared
> to several of its competitors.
>
> UNDERSTANDING THE ISO 14000 CERTIFICATION STANDARDS
>
> Representatives from some 50 countries around the globe have formally
adopted
> the international standard on environmental management systems (ISO 14001)
> introduced by the ISO in 1996. This standard attempts to build on the
success
> and experience of its predecessor, the ISO 9000 standards, and variants
> such as the QS 9000 standards now being implemented within the automotive
> industry. If the ISO 14000 standards work as intended, they will set a
> higher level of expectations for environmental management practices
worldwide.
> Additionally, these new standards are predicted to facilitate trade and
> remove trade barriers.
>
> The ISO 14000 environmental standards specify the structure of information
> technology, in the form of an EMS, that an organization must have in place
> if it seeks to obtain certification of the EMS according to ISO
guidelines.
> The ISO 14000 standards describe the basic elements of an effective EMS.
> These elements include creating an environmental policy setting objectives
> and targets, implementing a program to achieve those objectives,
monitoring
> and measuring its effectiveness, correcting problems, and reviewing the
> system to improve it and overall environmental performance (Tibor and
Feldman
> 1996).
>
> ISO 14000's EMS standards are process, not performance, standards. In
other
> words, these standards do not tell organizations what environmental
performance
> they must achieve aside from compliance with environmental regulation.
> Instead, the standards describe a system that will help an organization
> to achieve its own objectives and targets. The assumption is that better
> environmental management will indirectly lead to better environmental
performance
> (Tibor and Feldman 1996).
>
> ISO 14000 encompasses standards in the following seven general areas:
>
> 1. Environmental Management Systems
>
> 2. Environmental Auditing
>
> 3. Environmental Performance Evaluation
>
> 4. Environmental Labeling
>
> 5. Life Cycle Assessment
>
> 6. Environmental Aspects of Product Standards
>
> 7. Terms and Definitions
>
> These standards are then divided into two general categories as shown in
> Figure 1. The EMS, auditing, and performance evaluation standards will
> be used to evaluate the firm. The EMS standards provide the framework for
> the management system. Auditing and performance evaluations are seen as
> management tools in the successful implementation of an EMS. Labeling,
> life cycle assessment, and environmental attributes in product standards
> emphasize the evaluation and analysis of product and process
characteristics.
>
>
> A firm can implement an EMS that is in line with one of the EMS standards
> (BS 7750, EMAS, or ISO) without external certification. Some situations
> in which external certification could become important include the
following
> (Tibor and Feldman 1996).
>
> A customer requires EMS certification as a condition to sign a contract.
>
>
> Your organization supplies to a customer who strongly suggests you become
> registered.
>
> A government provides benefits to registered organizations.
>
> You have a site in the European Union, where market pressure or the
regulatory
> environment forces you to obtain registration or certification.
>
> A single international environmental standard can reduce the number of
> environmental audits conducted by customers, regulators, or registrars.
>
>
> You export to markets where EMS registration is a de facto requirement
> for entering the market.
>
> You expect to gain a competitive advantage through EMS registration.
>
> Your major stakeholders (local community, shareholders, unions, etc.)
expect
> environmental excellence, and an EMS registration is the way to
demonstrate
> it.
>
> If one of the above situations applies, a firm should decide whether to
> become certified for the organization as a whole or just for parts of it.
>
>
> To date, no research has addressed whether ISO 14000 will be widely used
> by businesses as a consensus model, or whether it should be. Instead, the
> literature is saturated with conflicting predictions and viewpoints
offered
> by experts. The champions of ISO 14000 suggest that it will unify
countries
> in their approach to environmental management and will eventually be
looked
> upon more favorably than traditional measures (Cascio 1996). Hammer (1996)
> argues that small manufacturing firms constitute the largest potential
> market for ISO 14000, and that the real test of the standards can be
measured
> by adoption rates among these firms, which typically need the most
direction
> in these issues. According to Hammer, the development to watch is what
> industrial customers do with these standards with regard to their supply
> chains. Acceptance of the standards will come when conformance or
certification
> becomes a condition for customer requirements. This suggests that the
predisposition
> of corporations to ISO 14000 will mostly influence the adoption rates and,
> ultimately, the success of these standards. However, no research to date
> has examined the views of managers toward ISO 14000 and the relative
impact
> of this new approach on the view of the effectiveness and efficiency of
> corporate environmental management systems as well as its impact on
corporate
> performance. This concern forms the major impetus for this study.
>
> DESIGN OF THE STUDY
>
> The primary method used in this research article is a large-scale survey.
> The survey allowed the research team to collect data pertaining to the
> attitudes of the respondents toward environmentally responsible
manufacturing,
> their plants' environmental management systems, and ISO 14000. The survey
> was also used to identify factors that influence these attitudes and the
> perceived effectiveness and efficiency of the plant EMS.
>
> The survey was developed by the research team and pre-tested by 15
respondents
> in a three-round process over a period of two months. The respondents
represented
> a variety of positions and functions within their firms in a variety of
> industries. The pre-test group was asked to review the survey primarily
> for clarity of questions and time required to complete the survey. The
> group indicated that the length of the survey was a concern. The
researchers
> believe that the length of the survey was justified by the need to
establish
> valid measures for the concepts that were included in the survey. Also,
> they were aware that research concerning environmental issues is fraught
> with Socially Desirable Response (SDR) issues (Messick 1959). To mitigate
> these issues, it is wise to include more questions as a validity check.
>
>
> The survey consisted of five major sections. The first section gathered
> information about the respondent, his or her position, professional
affiliations
> (if any), and extent of involvement in various corporate initiatives. The
> second section focused on the business unit (the basic unit of analysis)
> and details about the unit. This included the products manufactured, the
> extent of uncertainty facing the business unit and its personnel, and the
> status of various initiatives. Section three dealt with the perceived
impact
> of the ISO/QS 9000 certification process on the business unit and its
competitive
> position in the marketplace. In section four, the respondent was asked
> to evaluate a series of questions pertaining to ISO 14000. These questions
> assessed the level of knowledge of the respondent on the ISO 14000
certification
> process, as well as the factors affecting its implementation and use. The
> fifth and final section gathered information about the business unit's
> EMS, the effectiveness and efficiency of the system, and the types of
options
> used to improve environmental performance. At the end of the
questionnaire,
> respondents were given some free-form space to describe any obstacles,
> potential or realized, to their firm implementing ISO 14000.
>
> [IMAGE CHART] Captioned as: Fiqure 1
>
> The Sample and Responses
>
> A mailing list of 5,000 names was obtained from three professional
associations
> (National Association of Purchasing Management (NAPM), APICS, and one
anonymous
> group), for a total of 15,000 names. The lists were checked for duplicate
> names, with the few identified being eliminated. Where possible, the
associations
> were asked to provide names of managers who worked for manufacturers
(i.e.,
> in the two-digit Standard Industrial Classification (SIC) code range of
> 20 to 39). The researchers also worked closely with a major American
manufacturer,
> who provided an additional list of 104 managers at six of its facilities.
>
>
> Three waves of mailings were sent out, using the modified Dilman method.
> The survey was sent out in the fourth quarter of 1997 and responses were
> received well into 1998. Usable responses totaled 1,510, for a response
> rate of 10.35 percent. While this is lower than the 20 percent that
researchers
> strive to achieve, the length of the survey discouraged some potential
> respondents (a view substantiated by feedback received from those who did
> not return their surveys). The overall response rates by wave are
summarized
> in Table 1.
>
> DEMOGRAPHIC INFORMATION
>
> Before examining the results gained from this survey as they pertain to
> environmental systems, environmental performance, corporate performance,
> and ISO 14000, the demographic characteristics of the sample will be
described.
> By establishing the traits of the respondents, this study can begin to
> assess the extent to which the results are generalizable.
>
> Industrial Descriptive Information
>
> To ensure the survey went only to manufacturing firms, the respondents
> were asked to list the principal products produced in their plants. These
> responses (open-ended) were recoded into appropriate SIC codes. Of the
> more than 40 SIC codes, 1,347 respondents (89.2 percent) came from the
> targeted SIC codes, while 110 respondents (7.3 percent) came from
industries
> out of the target SIC codes, and 53 respondents (3.5 percent) did not
identify
> their industries. Furthermore, the bulk of respondents (999 respondents
> or 66.2 percent) were drawn from one of five SIC codes:
>
> Industrial & Commercial Machinery & Computer Equipment (SIC 35): 316
respondents
>
>
> Transportation Equipment (SIC 37): 198 respondents
>
> Electronic & Other Electrical Equipment & Components Except Computer
Equipment
> (SIC 36): 179 respondents
>
> Fabricated Metal Products Except Machinery & Transportation Equipment (SIC
> 34): 179 respondents
>
> Measuring, Analyzing, & Controlling Instruments; Photographic, Medical,
> & Optical Goods; Watches & Clocks (SIC 38): 127 respondents
>
> The researchers believe that the distribution of industries observed
within
> the survey sample is reasonably representative of the distribution of
industries
> in the United States. Other firm demographics information indicates that
> a statistically diverse sample was achieved, including the median number
> of Full-Time Equivalent Employees (400) (a proxy for plant size),
percentage
> of sales as exports (19.7 percent), percentage of sales as exports for
> the European Community (9.7 percent), and the average percentage of sales
> going to the end customer (or consumer) (24.6 percent). Furthermore, 729
> plants (48.3 percent) were publicly owned, 250 plants (16.6 percent) were
> foreign-owned, and 54 plants (3.6 percent) were joint ventures.
>
> Background of the Respondents
>
> Respondents were asked to indicate their job titles. These were recoded
> into the categories listed in Table II.
>
> As can be seen, the respondents embody a variety of job rides. They occupy
> positions ranging from presidents and chief executive officers (CEOs) to
> managers and staff. This diversity argues strongly in favor of the
generalizability
> of the results.
>
> [IMAGE TABLE] Captioned as: Table I
>
> [IMAGE TABLE] Captioned as: Table II
>  Captioned as: Table III
>
> Information on the functional areas in which the respondents worked was
> also collected. This data is summarized in Table III. Due to the source
> of the mailing list used, the two primary functional areas represented
> are manufacturing and purchasing. Environmental management (compliance)
> represented a very minor portion of the respondents (48 respondents or
> 3.2 percent). This indicates that the survey consists primarily of users
> (engineers, purchasing managers, and manufacturing people) who should be
> able to assess ERM and ISO 14000 as business/strategic decisions. Again,
> this is consistent with the objectives of this study.
>
> ENVIRONMENTAL MANAGEMENT SYSTEMS - FINDINGS
>
> Before turning our attention to ISO 14000 and its impact, it is useful
> to understand the state of environmental management systems within the
> plants of the respondents. To this end, data were collected on the EMS
> and its performance by identifying 46 different dimensions. The
respondents
> were then asked to assess their plants' systems using an 11 -point scale.
> In this scale, 0 represented "Strongly Disagree," while 10 represented
> "Strongly Agree." The neutral position for this scale was anchored on the
> 5 point. Rather than summarizing the mean values from these 46 dimensions,
> the following summary is presented. Those interested in obtaining more
> detailed information are encouraged to contact the authors.
>
> The results paint an interesting picture of the environmental management
> systems found within the respondents' plants. First, these systems are
> strong on the formal dimensions. In most of the respondents' facilities,
> there is a formal EMS in place. Within this system, there is a formal
reporting
> linkage between environmental performance and top management. This system
> is supported by formally documented procedures, which are generally widely
> circulated and readily available. Environmental issues are also given
visibility
> during employee training. In addition, top management has taken a visible
> role in support of improved environmental performance. Environmental
performance
> is formally tracked and monitored.
>
> In many cases, this EMS is operational and reactive in nature. It is also
> tactical in that it deals with operating problems and issues.
Environmental
> issues have a strong influence on process designs, plant and equipment
> layouts, new equipment acquisition, and equipment modification decisions.
> The EMS is reactive in nature in that it responds to the emergence of
problems
> when they occur. Furthermore, it is often primarily driven by changes in
> environmental regulations. When these regulations change, the plant's EMS
> also changes.
>
> However, these systems exhibit certain shortcomings. The shortcomings
reflect
> issues of information management, performance evaluation, and supplier
> evaluation. In general, these systems do little tracking of best-in-class
> performance or comparison of their plants' performance with best-in-class
> "benchmarks." Further, the performance measures do not often identify the
> qualitative and quantitative costs associated with environmental
performance.
> Environmental performance is also infrequently considered when evaluating
> individual performance.
>
> These environmental measures, when collected, rarely involve the efforts
> of the cost accounting department (despite the fact that in most firms
> this department is the one most often held responsible for collecting and
> distributing performance and cost information). Finally, environmental
> efforts are confined to the plant. As shown by the low means recorded on
> those questions pertaining to the supplier base, environmental issues and
> performance are seldom considered during supplier selection, retention,
> and evaluation.
>
> [IMAGE TABLE] Captioned as: Table IV
>
> In short, the environmental system is portrayed as a separate activity,
> internally focused, driven by regulations, and reactive in nature. This
> picture is further supported by the overall negative perceptions given
> by the respondents regarding the impact of environmental activities on
> the various dimensions of corporate performance.
>
> Environmental Management and Corporate Performance - The Aggregate Impact
>
>
> The relationship among environmental systems, environmental performance,
> and overall corporate performance is not clear. Some writers, such as
Makower
> (1993, 1994) and Porter and Van der Linde (1995a, 1995b), have argued that
> by becoming more environmentally responsible, firms also uncover new
sources
> of waste and productivity. The result is that enhanced environmental
responsibility
> results in improved corporate performance. Other writers, primarily Walley
> and Whitehead (1994), argue that this is not the case. In most instances,
> improved environmental performance comes at the cost of reduced
profitability
> and reduced shareholder value.
>
> One way of evaluating the nature of this relationship is to ask the
respondents
> to assess the impact of their environmental management systems on several
> critical dimensions of corporate performance. To this end, a section was
> included that focused on this specific aspect of performance. The
respondents
> were asked to evaluate the impact of their environmental management
systems
> on 14 dimensions of performance. Some of these dimensions focused on the
> core strategic areas of competition (cost, leadtime, and market position).
> Others touched on areas such as reputation and customer acceptance. Still
> others dealt with issues of process/product design and cost/benefit
assessment.
> Respondents were asked to assess the impact of their environmental
management
> systems using an 11-point scale (0 = "Strongly Disagree"; 10 = "Strongly
> Agree"). The mean results are summarized in Table IV.
>
> Before examining these results, it is important to note that they reflect
> general or overall responses by the participants to the questions posed.
> As can be seen by the high standard deviations associated with the means,
> there is a fair degree of differences in positions taken. However, a study
> of the mean responses reveals a mixed picture of the impact of an EMS on
> overall corporate performance. At best, environmental systems have caused
> managers to explore more options when dealing with problems, especially
> problems involving new technologies and procedures. Further, these systems
> have not compromised product acceptance and corporate position in the
marketplace.
> Yet, these systems have not helped management to reduce leadtimes, improve
> quality, or reduce costs - the primary factors that shape the firm's
competitive
> position in the marketplace.
>
> More interestingly these systems have not been perceived as increasing
> the ability of the firm to successfully sell its products internationally.
> This finding was surprising in that it has been argued that many
international
> customers (especially those located in Europe and the Far East) are more
> sensitive to environmental issues. In light of these results, the natural
> question is why any firm would ever consider trying to attain ISO 14000
> certification. As will be shown in the next section, there is evidence
> that such certification does result in some real, quantifiable benefits.
>
>
> ASSESSING THE IMPACT OF ISO 14000 CERTIFICATION ON THE FIRM
>
> The major intent of this study was twofold. The first objective was to
> assess the attitudes of managers toward the newly introduced ISO 14000
> certification standards. The second was to determine what effect, if any,
> these new standards have had on the firms and their performance. With
respect
> to the first issue, it is clear that many managers harbor critical
concerns
> about their environmental management systems and the impact of these
systems
> on corporate performance. With respect to the second issue, the data
showed
> a far more complex and, ultimately, far more interesting and satisfying
> answer. To uncover the nature of this response, it is first necessary to
> ask a simple but important question: "What effect does the stage of ISO
> 14000 certification have on corporate performance?"
>
> To address this question, it is important to note that every respondent
> could describe the level of ISO 14000 certification in terms of one of
> seven levels: (1) Not Applicable; (2) Not Being Considered; (3) Future
> Consideration; (4) Assessing Suitability; (5) Planning to Implement; (6)
> Currently Implementing; and (7) Successfully Implemented. One way of
examining
> the effect of progress in terms of certification is to examine the mean
> responses given by the respondents in each of these seven levels for the
> 14 dimensions of performance. This is shown in Table V. For each of the
> dimensions, the respondents were asked to evaluate the impact of their
> EMS on specific dimensions of performance using an 11 -point scale, where
> 0 represented "Strongly Disagree," while 10 represented "Strongly Agree."
> The neutral position for this scale was anchored on the 5 point.
>
> In reviewing the data contained in Table V, several important results can
> be readily identified. The first result is that there is a strong positive
> relationship between the stage of ISO 14000 certification and the
effectiveness
> of the EMS. In other words, the closer the firm is to attaining ISO 14000
> certification, the greater the positive impact that the EMS has on the
> overall performance of the firm. This impact is statistically significant
> in all cases. To evaluate this relationship, a series of one-way Analyses
> of Variances (ANOVA) was run, using stage of ISO 14000 certification as
> the independent variable. For each ANOVA, a Multiple Comparison Procedure
> (MCP) was run using Scheffe's statistic. These results, summarized in
Table
> V, indicate that for each of the 14 dimensions of performance, the stage
> of ISO 14000 certification has a significant impact on performance.
Furthermore,
> for each dimension, an analysis of the MCP results indicated that those
> systems at the latest stages of certification performed significantly
better
> than those at the early stages of certification (i.e., levels 1, 2, 3,
> and 4).
>
> In short, these findings are important to the purchasing manager. By
dealing
> with plants that are well on their way to attaining ISO 14000
certification,
> purchasing managers can expect to be dealing with plants that are more
> efficient and more competitive. Except for the increased leadtimes, the
> attainment of ISO 14000 certification has helped these plants become
better
> suppliers.
>
> These findings raise two other related issues. The first pertains to the
> decision to pursue ISO 14000 certification. That is, if there is a real
> benefit to being ISO 14000 certified, then what factors influence this
> decision?
>
> The second focuses on assessing the effectiveness of ISO 14000
certification
> relative to the other programs available (specifically, industry voluntary
> environmental programs such as Responsible Care or governmental voluntary
> environmental programs such as Green Light or 33/50). These two issues
> will be assessed in the following sections.
>
> FACTORS INFLUENCING ISO 14000 ADOPTION
>
> The decision to achieve ISO 14000 certification constitutes a major
undertaking.
> It can often be viewed as a response to a number of factors or influences.
> In this section, we evaluate the degree to which various factors,
previously
> identified in the review of the literature, have affected the
certification
> effort. We view the progress in ISO 14000 certification as a dependent
> variable, which can be explained in terms of certain critical independent
> (explanatory) variables, as identified from a thorough review of the
literature.
>
>
> Past Experience with ISO 9000 and QS 9000: It has been argued that ISO
> 14000 builds on the foundation established by ISO 9000 and QS 9000 (for
> example, see Begley 1996). Both of these certification processes are
quality-oriented,
> with QS 9000 oriented toward the automotive industry and ISO 9000 more
> broad-based in its focus. Both of these processes are also processbased.
> Finally, both ISO 9000 and QS 9000 require external auditing and
assessment
> before certification can be conferred. These traits are very much in
evidence
> in the ISO 14000 certification process. In addition, it has been argued
> that past experience with these two quality-based certification processes
> positively prepares a firm to plan for and attain ISO 14000 certification.
> As a result, two variables, Status of ISO 9000 Certification (IS09000)
> and Status of QS 9000 Certification (QS9000), are included in the model
> as independent variables. These two measures use the same seven-point
scale
> developed for the ISO 14000 certification variable. The initial
expectation
> is that ISO 14000 status should be positively influenced by the status
> of the plant in terms of either ISO 9000 or QS 9000 certification.
>
> Past Experience with Total Quality Management (TQM): Research has shown
> a tight relationship between quality management and environmental
management
> (Curkovic 1998). The transition between these two approaches is made by
> broadening the definition of Quality and Waste to include environmental
> problems and pollution. In addition, many of the same tools used by TQM
> systems are used in ECM systems. As a result, a variable, TQM,
representing
> the status of TQM implementation is included. This variable uses the same
> seven-point scale as described for the preceding variables, IS09000 and
> QS9000. The initial expectation is that TQM should significantly affect
> ISO 14000 certification status.
>
> Current Status of Cross-Functional Programs: Ultimately, to be certified
> on the ISO 14000 standards, the plant's personnel must be able to work
> together (as Lamprecht (1997) noted, "Make sure all responsible parties
> are involved" in the implementation). As a result, it is expected that
> success in implementing cross-functional programs should have a
significant
> influence on the plant's progress and status in attaining ISO 14000
certification.
> To this end, a variable representing the extent to which the plant has
> successfully implemented cross-functional programs is included. This
variable
> uses the same seven-point scale as the preceding three variables.
>
> [IMAGE TABLE] Captioned as: Table V
>
> [IMAGE TABLE] Captioned as: Table VI
>
> Full-Time Employee Equivalents: This variable, which reports the number
> of employees in terms of full-time equivalents, is a proxy for corporate
> size. It is included because some researchers have argued that ISO
certification
> is primarily pursued by larger firms, due to economies of scale in
certification
> (see Anderson, Daly, and Johnson 1999). That is, the larger the firm, the
> more likely it is to attempt and to achieve ISO 14000 certification.
>
> End Sales: This variable captures the percentage of total sales made by
> the plant that go directly to the end consumer, as compared to another
> industrial customer. As pointed out by nearly every writer dealing with
> ISO 14000 (Clark 1999; Hogarth 1999; Hormozi 1997; Sayre 1996; Tibor and
> Feldman 1996; and others), one of the major reasons for pursuing ISO 14000
> certification is market demands. Achieving ISO 14000 certification for
> such firms offers a method of differentiating their products and their
> corporate image from that of their competitors.
>
> Public/Foreign/Private/Joint: These four variables describe the four
distinct
> traits of the plant or the firm (i.e., whether it is publicly owned,
foreign-owned,
> privately held, or a joint venture). For each variable, a 0/1 rating is
> used, where 1 indicates that the condition is present and 0 denotes its
> absence. For example, a plant that is a joint venture would receive a
value
> of 1 for Joint. This data was collected because the number of ISO 14000
> certificates issued in Europe and in Asia is much higher than in the
United
> States, so the research team desired to learn whether foreign ownership
> increased the likelihood of a firm to attempt ISO 14000 certification.
>
>
> Exports/Exports to the European Union: These two variables measure
different
> aspects of export sales. The first variable captures the percentage of
> total sales made by the plant/firm that consists of exports. The second
> variable measures the percentage of total sales made by the plant/firm
> that consists of exports destined to the European Union. Both variables
> are based on the view that ISO 14000 certification is most desirable
internationally
> overall, and in the European Union specifically. Such certification is
> seen as a vehicle fox responding to the "stricter" environmental
requirements
> found in foreign markets and as a marketing means of appealing to the
demands
> of the "foreign" consumer.
>
> These variables were used to develop an ordinal logistic regression model.
> This statistical procedure was selected over a multiple regression
analysis
> for several reasons. First, the dependent variable was ordinal, rather
> than continuous (a requirement for any multiple regression procedure).
> Second, the ordinal logistic regression model uses a monotone function
> (which was more appropriate for the data set), rather than the least
squares
> criteria used by multiple regression. The results of this model are
summarized
> in Table VI. Given our interest primarily in main effects, it was decided
> to evaluate the results of the analysis only in terms of the main effects;
> interactions were ignored. As seen from the results found in this table,
> only six of the 12 independent variables were found to have a
statistically
> significant impact on the ISO 14000 certification status of the
firm/plant.
>
>
> These results are interesting for several reasons. First, they provide
> support for the critical role played by firm size (as represented by FTE).
> In addition, they provide support for the relationship among ISO 9000
certification,
> QS 9000 certification, TQM implementation, and cross-functional programs,
> as well as the progress of the plant/firm in achieving ISO 14000
certification.
> It can be argued that these various programs act to precondition the firm
> and its systems for the introduction, acceptance, and progress of ISO
14000.
>
>
> With regard to firm ownership, the results argue that a firm/plant that
> is foreign-owned is more likely to be either interested in or actively
> pursuing ISO 14000 certification. To a certain extent, this may reflect
> the fact that firms in European and Asian countries have been more
aggressive
> in achieving ISO 14000 certification, as evidenced by the higher number
> of certificates issued in comparison to the United States. It could be
> argued that ISO 14000 acts to level the environmental requirements present
> in the home market and present in the American market. This premise needs
> to be evaluated in future studies.
>
> OBSTACLES TO ISO 14000 CERTIFICATION
>
> The next question examined within this study focused on the issue of
identifying
> those factors that could act as an obstacle to ISO 14000 certification.
> Attention was focused on the various potential sources of uncertainty.
> Uncertainty was flagged on the assumption that the higher the uncertainty,
> the less likely a firm or plant was to pursue ISO 14000 certification.
> The research team identified 11 potential sources of uncertainty from a
> series of field visits to firms actively involved in the ISO 14000
certification
> process, and through a review of the literature. For all 11 dimensions,
> an 11-point scale was used in soliciting responses. This scale was
anchored
> at 0, which represented "Highly Uncertain," at one end and at 10,
representing
> "Well Known," at the other end of the scale.
>
> The first step in understanding the role of uncertainty is to describe
> it in statistical terms. This was done by generating the mean levels of
> perceived uncertainty for each of the 11 dimensions. These results are
> presented in Table VII. As is evident from this table, the level of
uncertainty
> is very high on all of the 11 dimensions, with the average level of
uncertainty
> being 3.13 (relatively high). The reported uncertainty is highest for
investors'
> reaction (with this scale, the lower the reported value, the higher the
> level of perceived uncertainty), with a mean value of 2.66, and lowest
> for changes in local laws, with a mean of 3.54.
>
> These results, while interesting, do not address the critical question
> of whether or not these sources of uncertainty significantly affect a
plant's
> progress in achieving ISO 14000 certification. To address this question,
> an ordinal logistic regression, similar to the one presented in Table VII,
> was formulated in which the dependent variable was again the progress in
> ISO 14000 certification. The 11 different dimensions of uncertainty were
> the independent variables. The results of this analysis are summarized
> in Table VIII.
>
> The results contained in Table VIII indicate that the progress in
attaining
> ISO 14000 certification is significantly affected by five types of
uncertainty.
> Two of these five sources are governmentally related. One of these
dimensions,
> federal regulations, can be viewed as reflecting the potential impact of
> governmental agencies such as the EPA. The remaining three factors are
> areas in which additional information could be very helpful in reducing
> the uncertainty (thus encouraging more interest in the ISO 14000
certification
> process).
>
> Of potential interest are the last three sources of uncertainty (impact
> on suppliers, investors' reactions, and potential disclosures). They have
> no significant impact on the progress on ISO 14000 certification. These
> results point to a situation where the ISO 14000 certification decision
> is primarily internal in focus. This decision is made for internal
reasons;
> how this decision affects other stakeholders is not considered.
>
> COMPARING ISO 14000 AND VOLUNTARY EMS PROGRAMS
>
> [IMAGE TABLE] Captioned as: Table VII
>  Captioned as: Table VIII
>
> As previously discussed, ISO 14000 is only one of the various programs
> and approaches available to a manager interested in enhancing the
environmental
> performance of the plant. Other programs include industry-specific
voluntary
> programs. The best example of this type of program is Responsible Care'
> in the chemical industry, which was initially spearheaded by Dow Chemical.
> The program has attracted a great deal of attention because it
demonstrated
> to many outside of the industry
>
> (including those in government) that it was possible for industry to
develop
> and implement pollution prevention and management programs that are
extremely
> effective and cost-efficient. Another alternative available to managers
> is to participate in one of the voluntary pollution prevention and
management
> programs initiated by government. One example is the 33/50 program
developed
> by the EPA. Another possible approach is the Occupational Health and
Safety
> Administration's (OSHA) Voluntary Prevention Program.
>
> There are several important differences among these approaches. The ISO
> 14000 certification approach is more process-oriented. It requires that
> the participants identify and manage the various critical processes
assodated
> with environmental performance and targeted by this certification process.
> In addition, it requires the environmental management system to be audited
> and evaluated by a third party (typically an outside auditor or
certification
> group). This means that the plant must prove it has met or exceeded all
> of the requirements set down by the ISO 14000 certification process.
>
> In contrast, the voluntary programs, while interested in the same outcomes
> (i.e., reduced pollution and waste), are voluntary in nature;
participation
> in these programs is not mandated. In addition, they are more interested
> in the outcomes rather than the processes. Finally, they do not require
> outside certification. Effectiveness is assessed in terms of the data
provided
> by the participating firms.
>
> One method of comparing the effectiveness and efficiency of these four
> competing approaches is to compare the impact of environmental activities
> on the various aspects of performance for those firms that use or are
implementing
> these four programs. For this comparison, only those firms that are
currently
> implementing or that have completed the programs were used- The results
> of a difference of means analysis, using a series of T-tests, are
summarized
> in Table IX.
>
> As can be seen from the data, of the four approaches, ISO 14000
certification
> is far more effective. For 10 of the 14 dimensions of performance, ISO
> 14000 is more effective than either Voluntary EPA Programs or Industrial
> Voluntary Environmental Programs. For 13 of the 14 dimensions, ISO 14000
> is more effective than OSHA's Voluntary Prevention Program. What these
> results suggest is that plants actively pursuing ISO 14000 certification
> seem to do better on the various dimensions of performance. The reason
> for this improved performance is to be determined. However, as pointed
> out previously, two possible explanations can be identified. The first
> is that ISO 14000 is process-oriented rather than output-based. As a
result,
> when pursuing this form of certification, firms are more likely to change
> the underlying processes. These changes result in more efficient
processes,
> less waste, and less pollution. An alternative explanation lies in the
> requirements found in ISO 14000 for outside certification. Plants pursuing
> this form of certification must demonstrate to a third party that they
> have met the various requirements of ISO 14000. As a result, these plants
> are more likely to take this approach "more seriously." The current data
> cannot be used to determine the reasons for this improved level of
performance.
> The real reasons can be found in one or both of these factors. However,
> it is difficult to overlook the major finding - pursuing ISO 14000 is more
> effective than the voluntary options.
>
> CONCLUDING COMMENTS
>
> With a sample of 1,510 respondents, this study was faced with an
"embarrassment
> of riches." That is, the researchers were presented with a great deal of
> information. This report represents an attempt to identify the critical
> findings from this large database. In reviewing this article and its
findings,
> the following major points were flagged as important:
>
> The respondents in this study came from a variety of industries and were
> in a variety of managerial positions. They had familiarity with their
position,
> being in the current position for an average of 5.4 years. They also had
> been involved in a wide range of corporate initiatives, including
continuous
> improvement, new product launches, and reengineering.
>
> Overall, environmental management systems are not seen in a positive
light.
> In general, these systems are seen as having a strong negative impact on
> the major strategic dimensions of performance (i.e., leadtime, costs, and
> quality), and they do not enhance the firm's competitive position in the
> marketplace. They also are not seen as improving the firm's ability to
> sell its products internationally. These results are influenced by the
> progress of the plant in attaining ISO 14000 certification.
>
> The ISO 14000 certification program is relatively new. As a result, there
> are relatively few plants that have attained this certification. Out of
> the 1,510 respondents, only 37 (2.5 percent) have attained this level of
> certification. This number is low relative to other environmental programs
> such as Industrial Voluntary Environmental Programs (284 respondents noted
> that they had successfully implemented these programs) and Voluntary EPA
> Programs (253 respondents noted successful implementation).
>
> [IMAGE TABLE] Captioned as: Table IX
>
> Successful attainment of ISO 14000 has a large, positive impact on the
> perceived efficiency and effectiveness of the EMS. Except for leadtimes,
> which are slightly negatively affected, ISO 14000 greatly improves every
> dimension of performance. This finding points to a situation where those
> firms that have attained this level of certification are not only more
> environmentally responsible but also more efficient (and potentially
better
> suppliers).
>
> The progress of a plant in attaining ISO 14000 certification is influenced
> by several factors. It is affected by size (the larger the firm, the more
> progress it is likely to have made), nature of ownership (foreign-owned
> firms are more likely to pursue and attain ISO 14000 certification), past
> success with QS 9000 and ISO 9000 certification, past success with the
> implementation of TQM systems, and degree to which crossfunctional
programs
> and teams are used. Progress in attaining ISO 14000 certification is also
> influenced by uncertainty concerning federal regulations, changes in ISO
> 14000 standards, costs of certification, benefits of certification, and
> impact of the ISO 14000 standards on current environmental management
systems.
>
>
> Compared with other voluntary-based programs aimed at improving
environmental
> performance, the evidence indicates that the ISO 14000 certification
process
> is more effective and efficient when viewed in terms of its impact on
performance.
>
>
> In short, the data seems to indicate that, with ISO 14000 certification,
> plants can be both clean (more environmentally responsible) and green
(more
> efficient). These are important findings for the operations manager.
>
> REFERENCES
>
> Anderson, S.W., J.D. Daly, and M.E Johnson. "Why Firms Seek ISO 9000
Certification:
> Regulatory Compliance or Competitive Advantage?" Production and Operations
> Management, (8:1), Spring 1999, pp. 28-43.
>
> Begley, R. "Is ISO 14000 Worth It?" The journal of Business Strategy,
(17:5),
> 1996, pp. 50-55.
>
> Cascio, ]. "International Environmental Management Standards," ASTM
Standardization
> News, April 1994, pp. 44-48. Clark, D. "What Drives Companies to Seek ISO
> 14000 Certification?" Pollution Engineering, Summer 1999, pp. 14-18.
Curkovic,
> S. "Investigating the Linkage between Total
>
> Quality Management and Environmentally Responsible Manufacturing,"
unpublished
> dissertation, 1998. Hammer, B. "Pollution Prevention: The Cost Effective
> Approach Towards ISO 14000 Compliance," Environmentally Conscious Design
> and Manufacturing list-server, University of Toronto, March 20, 1996.
>
> Hogarth, S. "On the Horizon: ISO 14000," Manufacturing Engineering,
(122:3),
> March 1999, pp. 118-128.
>
> Hormozi, A.M. "ISO 14000: The Next Focus in Standardization," S.A.M.
Advanced
> Management journal, (62:3), Summer 1997, pp. 32-41.
>
> Lamprecht, J. ISO 14000: Issues & Implementation Guidelines for
Responsible
> Environmental Management, AMACOM, New York, NY, 1997.
>
> Makower, J. Beyond the Bottom Line, Simon & Schuster, New York, NY, 1994.
>
>
> Makower, J. The Bottom Line Approach to Environmentally Responsible
Business,
> Times Books, New York, NY, 1993. Messick, S. Dimensions of Social
Desirability,
> Educational Testing Services, Princeton, NJ, 1959.
>
> Porter, M.E. and C. Van der Linde. "Green and Competitive Ending the
Statement,"
> Harvard Business Review, SeptemberOctober 1995a, pp. 120-134.
>
> Porter, M.E. and C. Van der Linde. "Toward a New Concept of the
Environment-Competitive
> Relationship," journal of Economic Perspectives, (9:4), Fall 1995b, pp.
> 97-118.
>
> Sayre, D. Inside ISO 14000: The Competitive Advantage of Environmental
> Management, St. Lucie Press, Delray Beach, FL, 1996.
>
> Tibor, T. and I. Feldman. ISD 14000: A Guide to the New Environmental
Management
> Standards, Irwin Professional Publishing, Burr Ridge, IL, 1996.
>
> Walley, N. and B. Whitehead. "It's Not Easy Being Green," Harvard Business
> Review, May-June 1994, pp. 46-52.
>
> Frank Montabon is a Ph.D. candidate at Michigan State University. He
earned
> his B.B.A. degree from the University of Notre Dame.
>
> Steven A. Melnyk is professor of supply chain management in the Department
> of Marketing and Supply Chain Management at Michigan State University.
> Dr. Melnyk earned his Ph.D. degree from The University of Western Ontario.
>
>
> Robert Sroufe is a Ph.D. candidate at Michigan State University, where
> he earned his MBA degree.
>
> Roger J. Calantone is Eli Broad professor of marketing and product
innovation
> at Michigan State University, Dr. Calantone earned his Ph.D. degree from
> University of Massachusetts-Amherst.
>
> Reproduced with permission of the copyright owner.
> Further reproduction or distribution is prohibited without permission.
>
>
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>
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