ISO 14001 North America

Journal of Operations Management 21 (2003) 329–351

Assessing the impact of environmental management systemson corporate and environmental performance

Steven A. Melnyka,1, Robert P. Sroufeb,∗, Roger Calantoneaa Department of Marketing and Supply Chain Management, The Eli Broad Graduate School of Management,

Michigan State University, East Lansing, MI 48824-1122, USAb Department of Operations and Strategic Management, Wallace E. Carroll School of Management,

Boston College, Chestnut Hills, MA 02467-3808, USA

Received 23 October 2000; accepted 2 September 2002

Abstract

There has been an increase in interest towards corporate activities aimed at reducing or eliminating the waste created duringthe production, use and/or disposal of the firm’s products. Prior research has focused on the need for such activities, whilecurrent research tries to identify those components that encourage or discourage such activities. As a result of the introductionof ISO 14001, attention has turned to corporate environmental management systems (EMS). The underlying assumption is thatsuch a system is critical to a firm’s ability to reduce waste and pollution while simultaneously improving overall performance.This study evaluates this assumption. Drawing on data provided by a survey of North American managers, their attitudestoward EMS and ISO 14001, this study assesses the relative effects of having a formal but uncertified EMS compared tohaving a formal, certified system. The results strongly demonstrate that firms in possession of a formal EMS perceive impactswell beyond pollution abatement and see a critical positive impact on many dimensions of operations performance. The resultsalso show that firms having gone through EMS certification experience a greater impact on performance than do firms thathave not certified their EMS. Additionally, experience with these systems over time has a greater impact on the selectionand use of environmental options. These results demonstrate the need for further investigation into EMS, the environmentaloptions a firm chooses, and the direct and indirect relationships between these systems and performance.© 2002 Elsevier Science B.V. All rights reserved.

Keywords:Environmental management systems; ISO 14001; Decision analysis; Regression; Empirical research; Survey

1. Introduction

Two areas of uncertainty are proving to be majorobstacles to the widespread adoption of environmen-tal practices by manufacturing firms and to the efforts

∗ Corresponding author. Tel.:+1-617-552-0469;fax: +1-617-552-0433.E-mail addresses:[email protected] (S.A. Melnyk),[email protected] (R.P. Sroufe), [email protected] (R. Calantone).

1 Tel.: +1-517-353-6381; fax:+1-517-432-1112.

of such firms to achieve ISO 14001 certification. Thefirst stems from the ambiguity of the relationshipbetween pollution reduction and profitability. Thesecond arises from the lack of reliable informationabout the differences in tangible benefits derived fromformal, certified environmental management systems(EMS) versus those from an informal or less rigorousset of environmentally focused activities. Conse-quently, the following question should be answered tohelp managers make sound decisions about the pollu-tion reduction policies and practices of their firms: Do

0272-6963/02/$ – see front matter © 2002 Elsevier Science B.V. All rights reserved.PII: S0272-6963(02)00109-2

330 S.A. Melnyk et al. / Journal of Operations Management 21 (2003) 329–351

efforts aimed at reducing pollution impact operationsperformance and, if so, then does it matter whetherthe efforts meet ISO 14001 certification standards?The purpose of this study is to answer this pressingquestion.

A decade ago, there was virtually no debate inscholarly or manufacturing circles over the relation-ship between environmental practices and corporateperformance. It was simply taken as a fact that pur-suing environmental goals was antithetical to soundbusiness strategy and, quite possible, a violation ofthe fiduciary duty of managers to shareholders. Con-ventional wisdom, in fact, held that any investmentin improved environmental performance would con-tribute to penalties such as increased lead times,reduced quality or increased costs—all of which re-duced profits and decreased returns to stockholders.In 1991, however, Porter challenged these entrenchedbeliefs and sparked a debate, which not only increasedtheoretical and practical interest in the possibility thatprofitability and pollution reduction were not mutu-ally exclusive goals but, ultimately, brought abouta dramatic shift in manufacturers’ attitudes towardenvironmental responsibility (Porter, 1991).

According to Porter, pollution was simply waste,regardless of its source, which diminished value andwas symptomatic of problems in products and/or pro-cesses. Therefore, contrary to received opinion, reduc-ing or eliminating pollution/waste would not weakenbut strengthen corporate competitiveness. Traditiondies hard, however, and Porter engendered criticism(Walley and Whitehead, 1994; Jaffee et al., 1993) aswell as supportive efforts to expand upon his originalposition (Porter and Van der Linde (1995a,b)andseveral others (Bonifant and Ratcliff, 1994; Curkovicet al., 2000; Klassen and McLaughlin, 1996; Rothen-berg et al., 2001; Montabon et al., 2000; Tibor andFeldman, 1996). In short, the debate continues, butnot without positive effect. In the last 10 years, a rad-ical change has come about in management’s viewson pollution, the need for pollution reduction and bet-ter environmental management. While the bastions ofconventional thinking remain, they are decreasing innumber, persuasiveness and political clout.

Into this continued questioning of the fundamen-tal relationship between dollars and diminution ofenvironmental destruction comes a new and virtu-ally unresearched variable: ISO 14001 certification.

In 1996, the ISO 14001 certification standards forenvironmental performance were adopted, with theiracceptance predicated on the promise of certain ben-efits. First, ISO 14001 was argued to be the nextlogical step forward given the successes of the qualitystandard ISO 9000 and its automotive industry vari-ant QS 9000 (Miles and Russel, 1997; Block, 1999;Caillibot, 1999; Reid, 1999; Corbett and Kirsch,2001). Second, ISO 14001 was promoted as thestandard that would replace the numerous and oftenconflicting sets of criteria found in various countries.Third, this new standard did not focus on outcomessuch as reduced pollution. Instead, the focus of thestandard is on the processes involved in the creation,management, and elimination of pollution. Basically,ISO 14001 was set forth as an effective tool to guidemanagers in their efforts to capitalize on the costreduction potential of waste reduction (BSI, 1996).Fourth, supporters’ lauded ISO 14001’s stress on thecrucial role played by an EMS in overall corporateperformance (Sayre, 1996; Tibor and Feldman, 1996;Corbett and Kirsch, 2001). The impact on corporateperformance is said to be an advantage of implement-ing a formal, certified environmental managementsystem over those of pursuing a less stringent packageof pollution-sensitive activities. This study assessesthe impact of three types of EMS: (1) an informalsystem; (2) a formal system that does not meet ISO1400 standards; and (3) a formal system that doesmeet ISO 14001 standards.

Since ISO 14001 has been in effect for 5 years, over250,000 firms have been certified internationally (ISOWorld, 2000; ISO, 1999). The rate of certification isgrowing at least 50,000 per year (Corbett and Kirsch,2001) and we even see large multinational OriginalEquipment Manufacturers (OEM) demanding cer-tification of their supply base (Anonymous, 1999).Opportunities for research are now apparent throughaddressing the following questions: has ISO 14001lived up to the promises made on its behalf and to thosepromises made on behalf of the adoption of a formalcertified EMS? Until this study, little systematic re-search has been devoted to finding the answers to thesequestions. Other research questions involve the extentto which pollution reduction contributes to operationsperformance and the need to understand impacts of aformal, certified environmental management system,this study addresses three basic questions:

S.A. Melnyk et al. / Journal of Operations Management 21 (2003) 329–351 331

1. How does the presence or absence of a formal EMSaffect both operations performance and environ-mental options?

2. Does a firm derive tangible benefits from hav-ing a formal, certified environmental managementsystem?

3. What is the magnitude of the impact of (a) havinga formal EMS and (b) having a formal and certifiedEMS?

These questions will be examined using a multi-method research perspective (Brewer and Hunter,1989). Regression analysis of a survey database shedslight on EMS while simultaneously examining sev-eral posited relationships between formal EMSs andoperations performance variables such as cost leadtime, quality, flexibility, and enhanced reputation.

This paper is organized into four major sections:the first section establishes the concept of ISO 14001and the EMS certification standard it sets forth. Thisdiscussion lays the groundwork for developing theconcept of the EMS and its importance to the firm. Thesecond section develops the operational frameworkfor this study, while the third section summarizesthe basic research design and statistical methodologyused. To conclude, the fourth section presents the ma-jor findings and discusses the theoretical and research

Fig. 1. ISO 14001 and environmental management systems.

implications of the study before identifying directionsfor future research.

2. Understanding ISO 14001

In 1996, the International Organization of Standardsadopted a new international standard for EMS–ISO14001—with the intent not only of raising expecta-tions for environmental practices worldwide but alsoto facilitate trade and reduce trade barriers. Whenproperly implemented, ISO 14001 strives to meet theseexpectations, and to date, representatives from over50 countries have formally adopted these standards.

More specifically, ISO 14001 encompasses the fol-lowing general areas: EMS, auditing, performanceevaluation, labeling, life cycle assessment, and prod-uct standards (Tibor and Feldman, 1996).

As shown inFig. 1, these standards are dividedinto two general categories. The first consists of or-ganizational evaluation, or the EMS and the auditingand performance standards used to evaluate the firm.In theory, the EMS standards provide the frameworkfor the management system while the auditing andperformance standards help evaluate and ensure thesuccessful implementation of an EMS. The secondcategory, product and process evaluation includes the


labeling, life cycle assessment, and environmen-tal attributes in product standards and focuses onthe evaluation and analysis of product and processcharacteristics. Of these two categories, the first iscurrently the crux of the research presented in thispaper.

But what exactly is an EMS? Based on our researchefforts involving both field studies, survey data, andresearch with practitioners (Sroufe, 2000), an EMSinvolves the formal system and database which in-tegrates procedures and processes for the training ofpersonnel, monitoring, summarizing, and reporting ofspecialized environmental performance informationto internal and external stakeholders of the firm. Thedocumentation of this “environmental” informationis primarily internally focused on design, pollutioncontrol and waste minimization, training, reporting totop management, and the setting of goals. The use ofthis information for external stakeholders is primarilyfound in annual reports, focuses on the outputs ofthe firm, and is used to enhance firm image. Build-ing on this definition of an EMS, our study tests therelationship between this type of system, the environ-mental options a firm is involved in, and operationsperformance.

Of particular interest to this study, is the emphasisplaced on the EMS. Arguably, this emphasis means theISO 14001’s developers recognized the critical role anEMS plays in any firm’s attempts to reach the goals ofimproved environmental and corporate performance.This emphasis may even suggest that an EMS is soessential to environmental management that no firmcan achieve competitive advantages unless it has anEMS in place that has met ISO 14001 certificationstandards.

Essentially, the ISO standards set forth the basic,structural elements of an EMS and, according toTibor and Feldman (1996)and Sayre (1996)enablemanagement to:

• Establish an environmental policy appropriate tothe organization, including a commitment to theprevention of pollution.

• Facilitate planning, controlling, and monitoringto ensure policy is complied with and remainsappropriate for the organization.

• Identify the legislative requirements and envi-ronmental aspects of the organization’s products,

services and activities to determine impact, signifi-cance, priorities, and objectives.

• Establish a program to implement these policies andobjectives with a disciplined process of evaluatingand achieving target performance levels while seek-ing improvements where appropriate.

• Develop management and employee commitment tothe protection of the environment, with clear assig-nation of accountability and responsibility.

• Encourage environmental planning throughout thefull range of the organization’s activities, from rawmaterials acquisition to product distribution.

• Provide resources, including training, to achievetargeted performance levels on an on-going basis.

• Establish a management process to review and auditthe EMS and to identify opportunities for improve-ment of the system and resulting environmentalperformance.

• Establish and maintain appropriate communicationswith relevant internal and external parties.

• Encourage contractors and suppliers to establish anEMS.

Importantly, however, the ISO 14001 EMS stan-dards are process, not performance standards. In otherwords, these standards do not mandate a particularorganization’s optimum environmental performancelevel but describe a system to help an organizationachieve its own environmental objectives. Underlyingthis approach is the assumption that by helping a firmfocus on each stage of its manufacturing process, thefirm will develop better environmental managementpractices and, ultimately improve its environmentalperformance.

3. Understanding the environmentalmanagement system

The purpose of an EMS is to develop, implement,manage, coordinate and monitor corporate environ-mental activities to achieve two goals: compliance andwaste reduction (Sayre, 1996). For a firm, compliancesimply means reaching and maintaining the minimallegal and regulatory standards for acceptable pollutionlevels for the purpose of avoiding sanctions. For ex-ample, failure to comply can result in increased costs(fines), increased external intervention in day-to-dayoperations, and, in extreme situations, issuance of


cease and desist orders. Clearly, waste reduction goesbeyond compliance and focuses a firm’s activities onthe dramatic reduction of negative environmental im-pact. As compelling as these goals are, however, theextent to which EMS typically reach them has beenrelatively unexplored. So, too, the more fundamentalquestion of what characteristics of an EMS must bepresent for a system to reach these goals remainsvirtually unresearched.

Though the concept and reality of EMS pre-datesthe adoption of the formal ISO 14001 standard,researchers paid scant attention to the definition orstudy of these systems. It was not until 1996, that theInternational Organization for Standards released thestandard and books condensing the standard appearedin the popular press.

4. EMS-developing the operational framework

The starting point for this study is the premiseunderlying much of the justification for the ISO14001 environmental certification process—namelythat the EMS plays a critical role in the firm’s effortsnot only to improve environmental performance butalso overall performance. In this study, the impactbetween the EMS and operations performance can beconceptualized as taking place along two dimensions.The first dimension is that of operations performance.

For the purpose of this study, plant-level expertsassessed the extent to which EMS impact differentmeasures of operations performance. Operations per-formance, like the environmental options considered,consists of multiple measures. Some of the measuresare strategically based. These measures focus on thoseelements of production competence (i.e. lead time,quality and cost) that generate value for the customerand that can create a strategic advantage for the firm(Vickery et al., 1993). Other attributes involve suchareas as corporate reputation (Wood, 1991; Pava andKrausz, 1996), the ability to design and deliver betterproducts and service (Sroufe et al., 2000), the abilityto reduce waste and the relative costs/benefits asso-ciated with the initiatives. Basically, the presence ofan EMS allows a firm to evaluate environmental per-formance against policy, objectives, and performancetargets while seeking performance improvementswhere appropriate.

This study has not yet examined the impact of EMScertification. A firm’s EMS can be envisioned as be-ing in one of three possible states: (1) the firm doesnot have a formal EMS in place; (2) the firm has a for-mal EMS in place; or (3) the firm has a formal EMSin place that has been certified (through ISO 14001certification). If the lack of a formal EMS representsthe base case for the purposes of analysis, then eachsubsequent state can be viewed as representing anincremental improvement, which should build on thepreceding stages. That is, a firm can choose to investin implementing a formal EMS. Once such a systemis in place, it can then chose to invest in having thatsystem certified. In each case, the movement from onestate to the next is posited to occur when marginal ben-efits exceed marginal costs. The presence of a formaland certified EMS should establish a system of oper-ation, control and maintenance of the environmentalprogram to ensure continuing high levels of overallsystem performance. In this study, the evaluation ofthe three states of an EMS (lack of formal, formal, andformal certified EMS) and any relationship to opera-tions performance is carried out by means of the firsthypothesis.

Hypothesis 1. Performance is lowest when EMS isnot present, intermediate when EMS is present but notISO 14001 certified, and highest when EMS is presentand ISO 14001 certified.

The second dimension is the environmental optionsa firm can evaluate when contemplating how to reduceenvironmental emissions. Available to every managerare numerous options that can be chosen to improveperformance and reduce pollution. Some of the morecommonly considered environmental options are pre-sented inAppendix A. While this list of options isby no means comprehensive, these options representa wide variety of general and sometimes complexapproaches. Alliances tend to be more complex thanrecycling because of the need to develop relationshipsthat cross-corporate, not simply departmental bound-aries. Options, such as recycling and waste separation,focus on reducing the “end of pipe” waste streams,while options such as product and process redesignfocus attention on eliminating the pollution problemfrom occurring. Building on the cross-functional ap-proach proposed byCascio, 1996and GEMI, 1996,


the presence of an EMS should encourage environ-mental planning throughout the full range of theorganization’s activities, from raw materials acqui-sition, through production, to product distribution.Thus, the presence of an EMS should result in a moreextensive use of environmental options.

Hypothesis 2. Use of environmental options are low-est when a formal EMS is not present, intermediatewhen a formal EMS is present but not ISO 14001 cer-tified, and highest when a formal EMS is present andISO 14001 certified.

Of these two hypotheses, this study focuses prima-rily on the first.Hypothesis 1examines whether theEMS and its stage of development has an impact oncorporate performance.Hypothesis 1is important inthat it addresses in part an important question—that ofwhether there is a relationship between environmentaland corporate performance. The second hypothesis,while important, can be viewed as secondary andas supportive of and influenced by the state of theEMS. The selection of options can be viewed as sim-ply being a vehicle by which EMS affects corporateperformance.

5. Other relevant variables

The discussion to this point has focused on the roleof EMS in isolation. It has ignored the possible con-founding impact of other factors. These factors canpotentially affect not only operations performanceand the environmental-related options considered, butalso the state of the EMS. Of various potential factors,three factors have been identified for inclusion in thisstudy: (1) age of the EMS; (2) size as measured bythe resources available to the firm; and (3) the natureof ownership. Each of these three factors will be dis-cussed individually. For each discussion, the factorwill be explicated in terms of its relationships to thetwo sets of dependent variables, and the state of theEMS.

5.1. Age of the EMS

The age of the EMS, or how long it has been inplace, should affect corporate performance and how

the firm makes use of environmental options. How-ever, the nature of this relationship is difficult todetermine “a priori.” On one hand, a mature and well-established EMS should encourage management toexplore and make use of all the options available tothem. Yet, such a system should have also exhaustedall of the “low hanging” fruit—those opportunitieswhere management can reduce or eliminate envi-ronmental waste streams at little or no real costs.However, these same systems may have been ableto resolve those trade-offs inherent to the subsequentopportunities. These trade-offs force management tothink in terms of total costs and benefits. Since thesesubsequent opportunities are far greater in number,they represent a major source of environmental im-provements. Finally, as noted byLitsikas (1999),the ISO 14001 certification process is attractive tothose firms that lack a formal EMS because it offersmanagement a “blueprint” for developing and imple-menting an effective EMS. As a result, the attractive-ness of certification should be considered because itcan influence observed relationships. However, howcertification affects these relationships is difficult todetermine.

5.2. Resources available to the firm

Corporate resources should play an important rolein the environmental options considered by the firmand the state of the EMS for several reasons. First, im-plementing a formal EMS or certifying that system isa time consuming and potentially expensive undertak-ing. For example,Litsikas (1999)has noted that it isgenerally expected that, compared with ISO 9000 cer-tification, the costs of attaining ISO 14001 should beeven higher given that this form of certification is moredemanding and requires extra paperwork. Accordingto Hormozi (1997), the costs experienced with ISO9000 are a good indicator of the costs that can be ex-pected with ISO 14001. In addition, even the act of de-veloping a formal EMS may require that the firm haveaccess to a sufficient level of resources. Second, thelevel of resources available to the firm and its person-nel potentially affect the degree to which the variousenvironmental options are used or considered (Dillonand Fisher, 1992). Third, some of the dimensionsof corporate performance (dimensions such as rep-utation) are positively dependent on the level of


resources available to the firm. In general, for thisvariable, a positive relationship is anticipated (i.e. thehigher the level of resources available to the firm, thegreater the positive impact on the state of the EMS,the options considered, and the level of performanceobserved).

5.3. Nature of corporate ownership

This variable focuses on whether the firm is pub-licly or privately held. On one hand, it can be arguedthat publicly held firms are least likely to explore en-vironmentally related options or to pursue any actionsthat affect corporate environmental performance. Therationale for this position can be traced to the workof Walley and Whitehead (1994)who argued for anegative relationship between investments in environ-mental initiatives and stockholder value. Yet, arguingagainst this position are the results reported by re-searchers such asKlassen and McLaughlin (1996),Deutsch (1998), Nielsen (1999), andDelmas (2001).Klassen and McLaughlin (1996)noted that strongenvironmental management, as indicated by environ-mental performance awards resulted in significantpositive financial performance, as measured by stockmarket performance.Deutsch (1998)observed thateco-efficient companies reward stockholders withgood financial performance. Finally,Nielsen (1999)noted that at least one investment firm, InnovestStrategic Value Advisors, has begun to recommendstocks based on the firm’s environmental record.Thus, better environmental performance can improvethe value of the firm and attract new stockholders.

In evaluating the data for this study, it is importantto note that the major relationships of interest are thosethat involve the state of the EMS and the impact ofthe state of the EMS on operations performance andthe type of environmental options considered.

6. Research methodology

Data collection for this study was facilitatedthrough the use of a survey instrument. The surveybased approach allowed the research team to collectdata pertaining to the attitudes of the respondents to-wards environmental business activities, their plant’senvironmental management system, and towards vol-

untary environmental programs such as ISO 14001.The survey was also used to identify factors thatinfluence these attitudes and the respondent’s under-standing of the effectiveness and efficiency of theplant’s environmental management system. The sur-vey instrument, field studies, and general findings canbe found inMelnyk et al., 1999. Next, the structure ofthe survey and the major attributes of the respondentswill be briefly summarized.

6.1. Survey design

In order to reduce potential problems with surveyitems, numerous safeguards were used. First, the spe-cific form we use sets conditions (i.e. strong situationspecificity) very high so the ambiguity (which is theusual source of difficulty and confusion) is very low.Specificity of conditions leads to less confusion andhigher accuracy of responses in complex assessmentquestions (Warshaw, 1980; Davis et al., 1989). Sec-ond, considerable time was spent in case studies,pilot tests (at two major corporations), and pretestingthe survey during personal interviews with executivesand experts to ensure that there was little or no ambi-guity in the questions and their interpretation. Thesesafeguards help support to the validity of our surveyinstrument and items.

The survey consisted of five major sections. Thefirst section gathered information about the respon-dent, their position, professional affiliations (if any),and extent of involvement in various corporate ini-tiatives. The second section focused on the businessunit (the basic unit of analysis). This included prod-ucts manufactured, extent of uncertainty facing thebusiness unit and its personnel, and the status of var-ious initiatives. Section three dealt with the impact ofthe ISO/QS 9000 certification process on the businessunit and its competitive position in the market place.In Section four, the respondent was asked to evaluatea series of questions pertaining to ISO 14001. Thesequestions assessed the respondent’s level of knowl-edge of the ISO 14001 certification process, as wellas the factors affecting its implementation and use.The fifth and final section gathered information aboutthe business unit’s environmental management sys-tem, the effectiveness and efficiency of this system andthe types of options used to improve environmentalperformance.


6.2. The sample and responses

The data used in this study represent the views of asingle respondent. Mailing lists of 5000 names eachwere obtained from three professional associations(National Association of Purchasing Management,American Production and Inventory Control Societyand one anonymous group). The lists were checkedfor duplicate names, with those identified beingeliminated. Where possible, the associations wereasked to provide names of managers who workedfor manufacturers (i.e. in the two-digit Standard In-dustrial Classification (SIC) code range of 20–39inclusive). The researchers also worked closely witha major American manufacturer, who provided anadditional list of 104 managers at six of their facili-ties.

Three waves of mailings were sent out, using themodified Dillman (1978) method. The survey wassent out in the fourth quarter of 1997 and responseswere received well into 1998. As a result, 1510 us-able responses were obtained, for a response rate of10.35%. The single most serious limitation to directmail data collection is the relatively low response rate.Mail surveys with response rates over 30% are the ex-ception and not the rule. Large-scale survey responserates are often only about 5–10% (Alreck and Settle,1995).

When working with survey data, the reliability ofthe measures is a constant concern. Taking into con-sideration the low response rate, the research teamproceeded with the assumption that the number re-ceived would yield a sufficiently large sample to be isrepresentative of American firms, and to have adequatestatistical power to test new theoretical models. Whilethe response rates are always lower than researcherswould like them to be, the length of this survey dis-couraged some potential respondents. Examinationof the responses found no response bias between thefirst half of the respondents and the second half ofrespondents. Information from follow-up phone callsand comments from some participants who did notreturn the survey all pointed to the 16-page surveyinstrument taking too much time. Our large samplesize and management level position of the respon-dents (Phillips, 1981) help alleviate some concernsabout reliable measure generated from perceptualquestions.

6.3. Demographic information

To ensure the survey went only to manufactur-ing firms, the respondents were asked to list theprincipal products produced in their plants. Theseresponses (open-ended) were recoded into appropri-ate SIC codes. From the 40-some SIC codes, 1347(89.2%) came from the targeted SIC codes, while 110(7.3%) came from industries out of the target SICcodes, and 53 respondents (3.5%) did not identifytheir industries. Furthermore, the bulk of respondents(999 respondents or 66.2% of the respondents) weredrawn from one of five SIC codes (noted in thebrackets):

• Industrial and commercial machinery and computerequipment (35): 316 respondents.

• Transportation equipment (37): 198 respondents.• Electronic and other electrical equipment and com-

ponents except computer equipment (36): 179respondents.

• Fabricated metal products, except machinery andtransportation equipment (34): 179 respondents.

• Measuring, analyzing and controlling instruments;photographic, medical and optical goods; watchesand clocks (38): 127 respondents.

Based on this information, the analysis focused onfirms located in manufacturing industries where en-vironmental business practice are more likely to befound (Handfield et al., 1997). Consequently, it wasdecided to exclude from further analysis 288 respon-dents operating in services, printing and publishing,agricultural/forestry. The excluded industries typicallydo not have an EMS that is given critical considera-tion and the focus of the research was based on moretraditional manufacturing industries. All subsequentstatistical analysis was based on data provided by theremaining 1222 respondents.

By limiting the sequent statistical analysis tothese 1222 responses, this study recognizes thatthe industrial setting can significantly influence therelationships that exist between the independent anddependent variables of the theoretical model (asdescribed in the subsequent section). By limiting theresponses analyzed to those respondents working inmanufacturing settings, this study has tried to intro-duce a simple control for this effect.


6.4. Operationalizing the research model

To address the research questions posed in thispaper, several independent and dependent variableswere identified from the survey as being appropriatefor addressing the research questions. While the de-velopment of EMS research is new, an exploratoryapproach to the selection of variables was not used.Instead, identification of the variables was basedon the literature (Cascio, 1996; Tibor and Feldman,1996), discussion with practitioners, the experiencesof the researchers, and a confirmatory factor analy-sis with coefficient alphas >0.7. For the independentvariables, four were selected and/or developed, whereeach corresponded to one of the four constructsdiscussed previously.

6.5. State of the EMS

The first variable is that of the state of the EMS.This variable is based on the responses to the question:“What is the status of ISO 14001 in your company?”The respondent was asked to select a value that bestdescribed the status within the company based on aone to seven scale. SeeAppendix A for all surveyitems.

The state of the EMS is coded at three levels,where EMS1 is the base case “No Formal EMS inplace,” EMS2 means the firm has a “Formal EMSin place,” and EMS3 consists of those firms havinga “Formal certified EMS.” The first level, the basecase, consists of all respondents who said that ISO14001 was not applicable, not being considered, isa future consideration, or the plant is assessing itssuitability. These firms are considered to have aninformal EMS. One assumption of the researchersis that all firms have some sort of system in placefor environmental activities and that our efforts togroup the respondents reflects the presence of atleast an informal system and then different levels offormal systems. The second level consists of thoserespondents who are planning to implement EMScertification, but who had not yet begun to activelypursue ISO 14001 certification. The final level con-sisted of respondents who had not only a formalEMS but also one that was either in the process ofobtaining certification, or was already ISO 14001certified.

6.6. Age of the EMS (years)

Each respondent was asked to indicate the numberof years that the company EMS was in place. Thisresponse, YEARS, was used as a continuous variableto capture the age of the EMS.

6.7. Resource availability

The third variable was SALES. This variable wastransformed and consists of four levels, where eachlevel corresponds to a quartile of the reported salesfor the company, as reported by the respondent. Us-ing an approach suggested byHampel et al. (1986),the first quartile represents the lowest amount of re-sources available, and the fourth quartile representsthe highest amount of resources available. Initiallythis variable was transformed to its natural log toreduce the variance in annual sales while still main-taining a linear relationship to the dependent variable(Cohen and Cohen, 1983). Use of the natural log ofthis variable later led to no significant relationships inthe regression model. Thus, quartiles of the variableare used in the analysis.

6.8. Nature of corporate ownership

This construct was defined in terms of one dichoto-mous variable (where one indicates “yes”): PUBLIC(publicly traded). The privately owned firm repre-sented the base case. The descriptive informationabout these four independent variables is summarizedin Table 1.

The dependent variables were drawn from two setsof questions. While this study only reports informationfrom respondents in the United States, an 11-pointscale was used to facilitate international implementa-tion of the survey (Calantone et al., 1996). The first setof 10 questions asked the respondents to assess the im-pact of environmental activities on various dimensionsof the firm (0—“Strongly Disagree”; 10—“StronglyAgree”). These questions were selected because theyasked managers to explicitly identify how they sawEMS affecting dimensions of operations performancesuch as lead time, cost, quality, and market reputation.The second set of 16 questions asked the respondentsto assess the extent to which various environmentaloptions were considered within their plants. For each


Table 1Independent variables: summary information

Variable Level Meaning Number Percentagea

EMS 1 No formal EMS present 591 50.92 Formal EMS present 475 40.93 Formal certified

EMS present96 8.3

SALES 1 First quartile sales 335 30.92 Second quartile sales 256 23.63 Third quartile sales 254 23.44 Fourth quartile sales 240 22.1

PUBLIC 0 Privately held firm 628 51.41 Publicly held firm 594 48.6

YEARS Continuousmean= 3.53, S.D.= 5.84

1055 100

a Numbers may not equal 100% due to rounding.

Table 2dependent variables: summary information

Variable Variable label N Mean S.D.

Environmental activities within your plant haveSignificantly reduced overall costs ACTCOST 1142 3.35 2.57Significantly reduced lead times ACTLT 1143 2.71 2.28Significantly improved product quality ACTQUAL 1144 3.24 2.53Significantly improved its position in the marketplace ACTPOS 1140 3.48 2.70Helped enhance the reputation of your company ACTREP 1144 4.85 3.09Helped your company design/develop better products ACTPRODS 1144 3.60 2.77Significantly reduced waste within the production process ACTWPROD 1144 4.73 2.99Significantly reduced waste within the equipment selection process ACTWEQIP 1133 4.02 2.79Had benefits that have definitely outweighed any costs incurred ACTBENE 1138 4.21 2.83Improved its chances of successfully selling its products in international markets ACTINTER 1133 3.73 2.89

To what extent are the following options considered within your companyProduct redesign OPTPROD 1163 4.99 3.07Process redesign OPTPROC 1166 5.95 2.91Disassembly OPTDIS 1155 4.03 3.02Substitution OPTSUB 1163 6.02 3.05Reduce OPTREDUC 1160 5.82 3.03Recycle OPTRECYC 1165 5.48 3.19Rebuild OPTREBLD 1153 4.80 3.21Remanufacture OPTREMAN 1148 4.16 3.12Consume internally OPTCONSM 1163 3.66 2.99Prolong use OPTPROLN 1154 5.01 3.98Returnable packaging OPTREPCK 1162 5.81 3.23Spread risks OPTSPRED 1153 4.44 2.89Create a market for waste products OPTCREAT 1156 4.24 3.07Waste segregation OPTSEG 1161 5.83 3.05Relocation OPTRELOC 1153 3.30 2.85Alliances OPTALL 1154 4.96 3.05

of the questions the participants were asked to respondusing an 11-point scale (0—“never considered;” 10—“always considered”). Summary information for these26 performance measures is presented inTable 2.

6.9. Research methodology

To address the research questions presented at thebeginning of this paper, the statistical analysis in-volved a four-step process in which we first checkedthe normality of the data. Second, we checked to seeif the data was consistent with the assumptions of atraditional OLS procedure for regression analysis. Thethird step involved screened variables for main effectsusing analyses of variance (ANOVA). The fourth step,built upon on the results of the ANOVA to finally


specify and test the regression models. This procedureenabled the researchers to quantitatively assess themagnitude of the independent variables previouslyidentified. It also permitted the researchers to testif there was a significant difference in performancebetween having a formal EMS, and having a formalcertified EMS. We next discuss each of the stepsinvolved in the analysis.

Step one: The data was tested for normality usingboth Shapiro–Wilk test (D’Agostino et al., 1990) andthe D’Agostino–Pearson tests. Both of these testsare specifically designed to detect departures fromnormality without requiring that the mean or thevariance of the hypothesized normal distribution bespecified in advance. The tests are more specializedto normality testing and tend to be more powerfulin this role than the Kolmogorov–Smirnov test. Bothtests indicated that the data was non-normal andpathologically skewed for most variables at the 0.05level of significance. This precluded any assumptionof normality from this point on in our analysis.

Step two: After assessing normality of the data,the next step in our analysis determined whether thedata is consistent with the conventional assumptionsof regression analysis. Traditionally, Ordinary LeastSquares (OLS) assumes that the data is homoscedasticand normally distributed. When these assumptions areviolated, the reliability of the results generated by theOLS becomes suspect (Kennedy, 1998). When facedby data that fails one of these requirements, the usercan turn to one of two basic approaches, transformingthe data, or using a regression procedure that is adeptto departures of normality.

We explored and actually tested the suitability ofvarious transformations. We applied Box’s Ladder ofPower procedure. This procedure evaluates the extentto which any one of nine commonly recommendedtransformations (cube, square, raw, square root, log,reciprocal root, reciprocal, reciprocal square, and re-ciprocal cube) could generate a new distribution thatwas normally distributed (as evaluated using aχ2-testfor normality). None of the transformations weresuccessful for the set of dependent variables tested.

Next, we re-examined the distributions in light ofattempted transformation. Indications obtained fromQ–Q and P–P analyses revealed data characterized by“fat” centers and yet having a number of extreme out-liers. Additionally, the distributions generally tended

to be right skewed. For these reasons, we used robustregression due to the violation of normality and pres-ence of outliers.

Step three: We next determined the nature of therelationships presented in the study. Primarily, thisstep determined the extent to which higher orderinteractions were present. Since the independent vari-ables are categorical in nature and the dependent vari-ables can be treated as interval, a series of univariatefull-factorial ANOVAs were developed. With a fullfactorial design, we could evaluate the extent to whichsignificant first order (and higher) effects were present.This knowledge would be then used in determining thestructural form of the subsequent regression equations.

Step four: Based on the information from the previ-ous two steps, robust regression analysis was carriedout using the guidelines and procedures set forth byBerk (1990). This procedure was implemented usingSTATA Version 6.0 (StataCorp, 1999). This procedureis well suited to working with data sets characterizedby non-normality. Specifically, it begins by estimat-ing the regression equation, calculating Cook’sD andthen excluding any observations for whichD > 1.Thereafter, it works iteratively: it first carries out aregression, calculates the weights based on absoluteresiduals, and regresses again using those weights.Weights are derived from one of two weight func-tions: Huber weights and biweights. Both weights areused jointly because of limitations encountered whenusing each alone. For example, Huber weights haveproblems dealing with severe outliers. In contrast,biweights occasionally fail to converge or generatemultiple solutions. For all statistical tests, anα of0.05 was used to assess statistical significance.

7. Discussion of results

After assessing non-normality and departures fromsome of the assumptions of regression analysis, 26full factorial univariate ANOVAs were run. Since theyare essentially preparatory, the results of these runsare not reported in detail. The performance variableresults are summarized inTable 3, while environmen-tal options results summarized inAppendix B. In allcases, the models were significant (as denoted by theF-statistic) and, with the exception of two instances(both observed for the options-oriented models), the


Table 3Full factorial ANOVA: summary results of performance variables

Performancevariables

F-statistic Significance Number ofsignificant higherorder effects

ACTCOST 6.19 0.0000∗ 0ACTLT 3.77 0.0000∗ 0ACTQUAL 5.60 0.0000∗ 0ACTPOS 7.45 0.0000∗ 0ACTREP 14.30 0.0000∗ 0ACTPRODS 5.94 0.0000∗ 0ACTWPROD 8.62 0.0000∗ 0ACTWEQIP 6.84 0.0000∗ 0ACTBENE 8.56 0.0000∗ 0ACTINTER 8.95 0.0000∗ 0

∗ P < 0.05.

higher order interactions werenot significant. Withno theoretical support for including the two interac-tions, it was decided to include only main effects inthe resulting regression equations for the fourth stageof analysis. To test for omitted variable bias of themodel, all regressions were tested using the Ram-sey regression specification test for omitted variables(Ramsey, 1969; Ramsey and Schmidt, 1976). Theregression specification error identified no problemswith the models used in this study. The use of a maineffects regression model simplifies the interpretationof the resulting findings, especially as they pertain totheβ weights, since these can now be viewed as cap-turing the incremental effects of the each independentvariable on the resulting dependent variables.

For each of the regression equations, the inde-pendent variables were coded as dummy variables.The intercept was treated as the base case. This caseconsisted of the following conditions:

• no formal EMS;• first quartile sales;• privately held.

The result is that the independent variables wererepresented by six dummy variables, one continuousvariable, as well as the intercept. The resulting regres-sion models involve

26 individual DVs

= intercept+ EMS2+ EMS3+ SALES2

+ SALES3+ SALES4+ PUBLIC

+ YEARS+ error

An additional variable was used to test for a sig-nificant difference between having a formal EMS anda formal certified EMS. This variable EMS2–EMS3is also included in the results inTable 4. The resultsof the regression analyses involving performance aresummarized inTable 4. The results of the regressionanalysis for environmental options are summarized inAppendix C.

We will first examine and discuss the results of thecorporate performance variables. A summary of thesignificant findings by independent variables for thesetwo categories of dependent variables is presented inTable 5.

7.1. Corporate performance

First, it is important to note that for each of the 10performance variables, the overall model is significant.Second, for the four sets of independent variables, thepattern of behavior and influence was generally con-sistent across performance variables. Differences be-tween the two stages of a formal EMS (EMS2–EMS3)were significant for 8 of the 10 options.

Basically, we see the corporate performance find-ings support Hypothesis 1 indicating the impact ofenvironmental activities on corporate performance isstrongly affected by the presence of a formal EMSand strongly influenced by the presence of a formal,certified EMS. The significant variables include ACT-COST, ACTLT, ACTPOS, ACTREP, ACTPRODS,ACTBENE, and ACTINTER. The impact of the otherfactors, when taken as a whole and compared withthe EMS state variables, are not as strong. In examin-ing these findings, we focus on explaining the resultspertaining to the impact of the EMS.

One explanation of the results is that what weobserved the specialized impact of the EMS. Theresource based view of the firm (Wernerfeldt, 1984;Russo and Fouts, 1997) supports the idea that theEMS provides the firm with specialized informationfor critical functions. These systems and functions arenecessary for the firm and its personnel to reduce pol-lution and to improve overall performance. Without aformal EMS, the firm may have no other method ofobtaining this same type of information. Alternatively,it could be argued that what we observing is greaterawareness of the environmental efforts taking place inthe firm and greater awareness of the impact of these

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Table 4Regression results: performance variables

Factors ACTCOST ACTLT ACTQUAL ACTPOS ACTREP ACTPRODS ACTWPROD ACTWEQIP ACTBENE ACTINTER

EMS2 1.21 (0.000)∗ 0.77 (0.000)∗ 1.07 (0.000)∗ 1.15 (0.000)∗ 2.09 (0.000)∗ 0.76 (0.004)∗ 1.76 (0.000)∗ 1.27 (0.000)∗ 1.54 (0.000)∗ 1.26 (0.000)∗EMS3 2.44 (0.000)∗ 1.55 (0.000)∗ 1.61 (0.000)∗ 2.53 (0.000) 3.85 (0.000)∗ 1.58 (0.000)∗ 2.96 (0.000)∗ 1.87 (0.000)∗ 2.62 (0.000)∗ 3.42 (0.000)∗SALES2 0.03 (0.909) −0.09 (0.642) 0.04 (0.866) 0.18 (0.438) −0.07 (0.800) 0.06 (0.565) −0.11 (0.687) 0.30 (0.243) −0.11 (0.674) 0.17 (0.501)SALES3 −0.09 (0.692) 0.01 (0.967) 0.31 (0.179) 0.26 (0.286) 0.46 (0.092) 0.26 (0.312) 0.20 (0.459) 0.37 (0.157) 0.21 (0.414) 0.59 (0.024)∗SALES4 −0.12 (0.622) −0.01 (0.954) 0.21 (0.376) 0.54 (0.032)∗ 0.68 (0.016)∗ 0.79 (0.003)∗ 0.24 (0.406) 0.42 (0.127) 0.19 (0.481) 0.71 (0.008)∗PUBLIC 0.39 (0.027)∗ 0.24 (0.128) 0.36 (0.039)∗ 0.03 (0.119) 0.46 (0.025)∗ 0.51 (0.008)∗ 0.52 (0.012)∗ 0.50 (0.012)∗ 0.36 (0.068) 0.55 (0.005)∗YEARS 0.13 (0.476) 0.01 (0.430) 0.03 (0.189) 0.34 (0.058) 0.05 (0.057) 0.06 (0.011)∗ 0.03 (0.189) 0.05 (0.042)∗ 0.05 (0.026)∗ 0.01 (0.697)Constant 2.44 (0.000)∗ 2.07 (0.000)∗ 2.30 (0.000)∗ 2.26 (0.000)∗ 3.14 (0.000) 2.35 (0.000)∗ 3.36 (0.000)∗ 2.68 (0.000)∗ 2.97 (0.000)∗ 2.30 (0.000)∗

N 910 910 911 908 910 910 911 902 906 903F 16.21 9.10 13.45 19.58 39.96 15.92 24.07 17.20 23.94 23.49P > F 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗EMS2–EMS3

(F-statistic)12.68 (0.0000)∗ 6.34 (0.011)∗ 2.44 (0.1187) 14.74 (0.0001)∗ 19.12 (0.000)∗ 4.73 (0.0298)∗ 8.69 (0.0033)∗ 2.26 (0.1252) 7.93 (0.0050)∗ 31.67 (0.000)∗

∗ P < 0.05.


Table 5Summary of variables with significant findings

Independent variables Performancevariables

Environmental-relatedoption variables

Number of variables 10 16Overall model 10 16EMS2 10 16EMS3 10 16SALES2 0 4SALES3 1 4SALES4 4 8PUBLIC 7 6YEARS 3 10EMS2–EMS3 8 6

efforts on not only pollution reduction/elimination butalso on the other areas of operations performance. Thisexplanation would emphasize the role of the EMS asa “clearinghouse” of information about the environ-mental efforts of the firm. The presence of the EMSpromotes awareness and communication of environ-mental activities.

Hypotheses 1 posits significant differences betweenthe lack of a formal EMS, presence of a formal sys-tem, and the presence of a formal certified EMS.The results support the hypothesis and also leave re-searchers with interesting questions as to why thereare significant differences between the different typesof systems. The improvement generated by the pres-ence of a certified formal EMS, as compared to a for-mal, but uncertified, EMS, can be explained in severalways. The first is that the act of a plant-wide certifi-cation, helps to involve many people in different posi-tions and functions. In the process of involving thesepeople, they become aware of the environmental ac-tivities of their firm. Alternatively, it could be arguedthat what we are observing is the impact of externalreview and verification—a critical requirement of ISO14001 certification. That is, before the EMS can beISO 14001-certified, it must be evaluated by an impar-tial third party. It could be that evaluation motivatesthe real improvements. Finally, it could be argued thatwe are observing benefits generated from focusing onunderlying processes. Ideally, ISO 14001 certificationforces the people involved to examine the various pro-cesses and not just the outputs of the firm. By focusingon these processes and ideally altering them, the firmgains real and long-term improvements not only in

the decreased level of pollution generated but also byincreasing operations performance. This improve-ment in performance is due to the elimination ofwaste discovered when examining the various pro-cesses. Further research is required to test the positedrelationships.

Overall, resource availability and age of the EMSexercised the least amount of influence on perfor-mance. Within resource availability, SALES2 andSALES3 had almost no impact with only one per-formance variable, ACTINTER (improved chancesof selling in international markets) having a signif-icant relationship with the second quartile of sales.Resource availability was only found to have an im-pact at the very high levels of sales in the fourthquartile (SALES4). Even then, a significant effect(P-value of 0.01 or better) was noted only for 4 of the10 performance variables. Its average influence, asindicated by this variables coefficient was also limitedaveraging 0.68.

Publicly held firms had some impact on perfor-mance. Here we see significant coefficients noted for7 of the 10 performance variables. Even when signifi-cant, the relative impact, as denoted by the average ofthe significant coefficients for PUBLIC, was limited(being 0.47).

However, it was the state of the EMS that was foundto have the most significance and largest impact. Forall 10 performance variables, both EMS2 (a formalbut uncertified EMS) and EMS3 (a formal and cer-tified EMS) were found to have a significant impacton performance. Furthermore, this impact was rela-tively large when compared to other coefficients (onaverage, the coefficient assigned to EMS2 was 1.29while the average coefficient assigned to EMS3 was2.44). Finally, the difference in performance betweenEMS2 and EMS3 was significant in 8 of the 10 vari-ables. This indicated that having a formal EMS, whilesignificant, was not enough. In most cases, the firmbenefited from having a formal EMS that was alsocertified.

7.2. Environmental option variables

For the option variables, the overall model wassignificant for every environmentally related depen-dent variable. Furthermore, EMS2 and EMS3 wereagain found to have a positive effect and significant


impact on the use of all 16 options. Additionally, thedifferences between the two stages of a formal EMS(EMS2–EMS3) was significant in the use of only 6of the 16 options.

The impact of resources was slightly more pro-nounced. For 4 of the 16 options, both SALES2 andSALES3 were found to have a significant and positiveimpact on the level of the options used. In contrast,the impact of resources was highest at the SALES4level, with this variable having a significant and posi-tive relationship with eight of the options used. Publicownership was found to have a significant relationshipwith six of the 16 options.

In reviewing the findings for environmental op-tions, attention is devoted to looking at the impact ofthe state of the EMS and the Age of the EMS. Whatthese findings argue for is that the impact of certifica-tion is limited when it comes to the level of optionsused. While certification can affect the performanceof the firm, certification is limited as to the extent withwhich firms use certain options. In these cases wherethere is a significant difference between the certifiedformal EMS and uncertified EMS (EMS2–EMS3), theoptions involved are those that can be best describedas being reactive. The significant variables includeOPTSEG, OPTCREAT, OPTSPREAD, OPTREPCK,OPTREBUILD, and OPTREMAN. Options such asOPTSEG (segment waste streams), and OPTCREAT(creating markets for waste streams) OPTRMAN(remanufacturing) and OPTREBUILD (rebuildingproducts) are options where the level of waste createdis not changed through proactive process or designchanges. Rather, there is an attempt to manage thesewaste streams so as to reduce their end-of-life im-pact. This would seem to argue that the process ofbecoming certified makes plant-level personnel moreaware of the opportunities available for the more ef-fective and efficient disposal of waste. One possiblereason for the focus on waste is that the process ofstudying the various waste processes required by theISO 14001 standard. The ISO 14001 certificationprocess creates a greater awareness of the opportuni-ties for better disposal of waste streams. The reasonsfor the focus on waste options warrants further in-vestigation by future studies. Given the results ofthe regression analysis, Hypothesis 2 is supportedfor only six of the environmental option variables.Otherwise, all environmental options are significant

and do not demonstrate a strong difference betweenoptions pursued with a informal ESM and a formalEMS.

In contrast, we find a more persistent impact forthe age of the EMS (years). YEARS has a signifi-cant (P-value of 0.01 or better) influence on the levelof the options used for 10 of the 16 options. Someadditional support for Hypotheses 2 is found whenexamining the difference in options for firms with for-mal systems and firms without systems. One way ofinterpreting this result is to argue that when it comesto the use of environmentally related options, it isexperience (as represented by YEARS) that has animpact. As firms become more experienced with EMSand the various options, management is more likelyto draw on these options to improve environmentalperformance.

8. Directions for future research

While this study has addressed an assessment ofthe incremental impact of not only formalizing theEMS but also attaining ISO 14001 certification, it hasalso uncovered several areas in which future researchis needed. The first area involves undertaking a moredetailed assessment of the impact of industry on therelationship between EMS and performance at theoperational and corporate levels. Industry is used asa surrogate to capture a number of effects, includingdegree of regulation (past or current), environmentalopportunities, past experience with EMS, degree ofvisibility of environmental problems, and opportuni-ties for environmental improvements within the supplychain. Consequently, a more detailed analysis of thisindustry variable is needed so that a better understand-ing of its effects (and the nature of its effects) can bedeveloped.

A second area of interest for future researchinvolves the analysis of the relationships highlightedin the study using alternative statistical procedures.The relationships described in this paper can be eval-uated using not only robust regression but also pathmodels. Such an analysis might provide alternativeand potentially rich insights into the new EMS rela-tionships demonstrated in this study.

Third, there is a need to replicate this study. Thedata was collected over a period of time when ISO


14001 certification was a relatively new conceptto many American managers. This period could beviewed as the introductory stage. ISO 14001 is nowbecoming more prevalent. More sites worldwide arebeing certified (Corbett and Kirsch, 2001). Conse-quently, it would be useful to evaluate what changes,if any, have taken place in the relationships stud-ied in this paper. Such an analysis would requireanother sample similar to the one described in thisstudy.

Finally, there are a number of question involvingthe EMS that must resolved. Given that the formalEMS does play a critical role in the firm’s attempts toimprove environmental and operations performance,what are the minimum components of such a system?Do the ISO 14001 environmental standards fully de-scribe all of the elements that should be present insuch a system? These and other similar questions areleft for future researchers to address.

9. Concluding comments

This study began by exploring a question that per-tained to the importance and impact of the formalEMS and certification of this EMS. The EMS isimportant because it is not only at the heart of the ISO14001 certification process, but also integrated withinoperations management. Implicit in this certificationis the assumption that the EMS is critical to the firm’sattempts to reduce or elimination the waste and pollu-tion created by the fabrication, use, and disposal of aproduct.

This study has evaluated the impact of environmen-tal systems on self-reported measures of corporateperformance, and the environmental options a firmpursues. A limitation of the study is that environmen-tal information is extremely hard to obtain. With thisin mind, self-reported measures of performance fromplant-level experts is only way in which informa-

tion is obtained about EMS attributes, environmen-tal options, and impacts of these types of systems onoperations management and performance. Based onthe information from plant-level experts within theUnited States, the results demonstrate that these typesof environmental systems are critical to the manage-ment and reduction of waste. The results of our re-search show many significant relationships betweenthe presence of a formal EMS or a certified EMSand improved performance such as reduced costs, im-proved quality, the reduction of waste in the designand equipment selection process, and reduction of leadtimes.

Basically, a formal EMS does play a role inimproving overall performance; it also affects the fre-quency with which various environmentally relatedoptions are used. Furthermore, certification of thesesystems does have a significant incremental impacton performance and on the reactive options the plantsinvolved in the study considered. This study demon-strates that certification, as embodied within the ISO14001 environmental standards, brings with it realbenefits.

Acknowledgements

This research is supported in part by the NationalScience Foundation Division of Design, Manufacture,and Industrial Innovation (ECM Initiative), Grant no.DMI-9528759. Additional support was provided bythe Center for Advanced Purchasing Studies (CAPS)of the National Association for Purchasing Man-agement (NAPM) and the Education and ResearchFoundation of the American Production and Inven-tory Control Society (APICS). The authors wish toacknowledge with gratitude the assistance in the datacollected and used in this paper rendered by FrankL. Montabon (Iowa State University), and SimeCurkovic (Western Michigan University).

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Appendix A

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Appendix A (Continued)

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Appendix B

Full factorial ANOVAS—summary results: environmental options

OPTPROD 6.27 0.0000∗ 0OPTPROC 11.43 0.0000∗ 0OPTDIS 5.55 0.0000∗ 1 (EMSSTATE× SALES× PUBLIC

(F = 10.94, significance at 0.01))OPTSUB 8.99 0.0000∗ 0OPTREDUC 10.52 0.0000∗ 0OPTRECYC 6.84 0.0000∗ 0OPTREBLD 4.32 0.0000∗ 0OPTREMAN 3.86 0.0000∗ 0OPTCONSM 4.94 0.0000∗ 1 (EMSSTATE× SALES (F = 2.52,

significance at 0.02))OPTPROLN 3.65 0.0000∗ 0OPTREPCK 5.00 0.0000∗ 0OPTSPRED 3.01 0.0000∗ 0OPTCREAT 5.91 0.0000∗ 0OPTSEG 7.50 0.0000∗ 0OPTRELOC 5.85 0.0000∗ 0OPTALL 10.14 0.0000∗ 0

Total significant higher-order interactions 2

∗ P < 0.05.

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Appendix C

Regression results: environmentally-related option variables (part I)

Factors OPTPROD OPTPROC OPTDIS OPTSUB OPTREDUC OPTRECYC OPTREBLD OPTREMAN

EMS2 1.03 (0.001)∗ 2.08 (0.000)∗ 1.01 (0.001)∗ 1.75 (0.000)∗ 1.75 (0.000)∗ 1.25 (0.000)∗ 0.93 (0.004)∗ 1.16 (0.000)∗

EMS3 1.51 (0.001)∗ 2.37 (0.000)∗ 1.59 (0.000)∗ 2.11 (0.000)∗ 2.04 (0.000)∗ 2.10 (0.000)∗ 2.27 (0.000)∗ 2.54 (0.000)∗

SALES2 0.39 (0.172) 0.77 (0.002)∗ 0.37 (0.182) 0.29 (0.278) 0.43 (0.109) 0.34 (0.244) 0.55 (0.066) 0.16 (0.590)SALES3 0.62 (0.036)∗ 0.57 (0.029)∗ 0.52 (0.069) 0.34 (0.219) 0.35 (0.200) 0.58 (0.055) 0.17 (0.586)−0.04 (0.894)SALES4 0.67 (0.028)∗ 0.56 (0.039)∗ 0.61 (0.040)∗ 0.34 (0.031)∗ 0.37 (0.195) 0.89 (0.004)∗ 0.15 (0.648) 0.28 (0.365)PUBLIC 0.52 (0.017)∗ 0.55 (0.005)∗ 0.29 (0.169) 0.60 (0.004)∗ 0.60 (0.004)∗ 0.17 (0.451) 0.31 (0.185) 0.15 (0.512)YEARS 0.09 (0.001)∗ 0.05 (0.031)∗ 0.08 (0.002)∗ 0.05 (0.035)∗ 0.08 (0.001)∗ 0.08 (0.004)∗ 0.06 (0.038)∗ 0.01 (0.807)Constant 3.47 (0.000)∗ 4.14 (0.000)∗ 2.70 (0.000) 4.52 (0.000)∗ 4.24 (0.00)∗ 4.14 (0.000)∗ 3.74 (0.000)∗ 3.31 (0.000)∗

N 920 921 913 920 917 920 912 908F 17.35 32.63 15.43 24.65 28.12 17.91 10.43 8.78P > F 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗

EMS2–EMS3 1.17 0.53 1.86 0.73 0.50 3.56 8.35 9.49F-statistic 0.2787 0.4663 0.1730 0.3926 0.4817 0.0596 0.0039∗ 0.0021∗

∗ P < 0.05.

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Appendix D

Regression results: environmentally-related option variables (part II)

Factors OPTCONSM OPTPROLN OPTREPCK OPTSPRED OPTCREAT OPTSEG OPTRELOC OPTALL

EMS2 1.39 (0.000)∗ 1.21 (0.000)∗ 0.96 (0.003)∗ 1.04 (0.000)∗ 1.41 (0.000)∗ 1.55 (0.000)∗ 0.60 (0.028)∗ 1.85 (0.000)∗

EMS3 1.82 (0.000)∗ 1.21 (0.011)∗ 2.29 (0.000)∗ 2.07 (0.000)∗ 2.35 (0.000)∗ 2.58 (0.000)∗ 1.00 (0.017)∗ 2.44 (0.000)∗

SALES2 0.57 (0.038)∗ 0.06 (0.833) −0.34 (0.264) 0.01 (0.977) 0.01 (0.607)∗ 0.55 (0.047)∗ −0.13 (0.606) 0.71 (0.009)∗

SALES3 0.38 (0.188) 0.05 (0.869) 0.56 (0.075) −0.25 (0.372) 0.66 (0.025)∗ 0.54 (0.062) 0.33 (0.214) 0.68 (0.016)∗

SALES4 0.98 (0.001)∗ 0.41 (0.190) 0.38 (0.238) −0.02 (0.937) 0.69 (0.024)∗ 0.21 (0.485) 0.23 (0.405) 0.76 (0.009)∗

PUBLIC 0.17 (0.440) 0.04 (0.859) 0.35 (0.134) 0.14 (0.506) 0.42 (0.059) 0.20 (0.353) 0.62 (0.002)∗ 0.46 (0.029)∗

YEARS 0.01 (0.804) 0.04 (0.193) 0.34 (0.165) 0.01 (0.796) 0.01 (0.607) 0.06 (0.018)∗ 0.10 (0.000)∗ 0.05 (0.032)∗

Constant 2.36 (0.000)∗ 4.12 (0.000)∗ 4.96 (0.000)∗ 3.88 (0.000)∗ 2.93 (0.000)∗ 4.51 (0.000)∗ 2.12 (0.000)∗ 3.12 (0.000)∗

N 918 913 920 912 916 920 915 914F 11.65 8.22 11.37 6.97 14.69 19.34 15.77 26.86P > F 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗ 0.000∗

EMS2–EMS3 1.05 0.00 8.09 5.85 4.70 5.71 1.03 2.04F-statistic 0.3063 0.9936 0.0045∗ 0.0157∗ 0.0305∗ 0.0171∗ 0.3108 0.1540

∗ P < 0.05.


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Documents

ISO 14001 North America