International diffusion of ISO 14000 certification

Production and Operations Management, Fall 2001 by Corbett, Charles J, Kirsch, David A

INTERNATIONAL DIFFUSION OF ISO 14000 CERTIFICATION*

The ISO 9000 series of quality management systems standards and the more recent ISO 14000 environmental management systems standards have generated much controversy among practitioners. Although ISO 9000 has become a de facto requirement for many firms, its effects are poorly understood, and similarly the value and domain of applicability of ISO 14000 have been questioned. This paper reports on an exploratory study into the global spread of ISO 14000. We interviewed practitioners worldwide to identify factors that they believe explain differences between national ISO 14000 certification counts. We then collected quantitative data for these factors and, using regression analysis, we found that exports, environmental attitudes (combined with economic development), and ISO 9000 certification count were significant. The fact that ISO 9000 appears as an important factor explaining diffusion of ISO 14000 certifications suggests that the drivers behind the two have significant overlap. This indicates that, although ISO 14000 is an environmental standard, many of the factors driving national certification patterns are not at all environmental in nature, and that ISO 14000 therefore needs to be studied from a broader perspective than from a purely environmental point of view.

(ISO 9000; ISO 14000; ENVIRONMENTAL MANAGEMENT SYSTEMS; QUALITY MANAGEMENT; INTERNATIONAL DIFFUSION)

1. Introduction

The ISO 9000 series of quality management system standards are fast becoming a de facto requirement for doing business in many industries. The total number of certifications worldwide has passed 250,000 (ISO 1999) and is growing at a rate of at least 50,000 to 60,000 every year (see Figure 1), despite the fact that it is a largely voluntary standard. However, the sheer extent of its global adoption makes it a critical `business standard': companies nowadays often find that ISO 9000 has become a `qualifying criterion' (Hill 1989) in the global market, and therefore seek certification regardless of whether they expect to achieve or believe in the need for improvements in quality. Moreover, implementing ISO 9000 involves a far wider range of activities within a firm than just the quality department. Due to this breadth and depth of the reach of ISO 9000, millions of managers worldwide have by now been involved in its implementation.

Previous standards issued by ISO, the International Organization for Standardization, focused on products, but ISO 9000 is the first standard for management systems (Latimer 1997). (The name ISO is not an abbreviation, but comes from the Greek for `same`; see www.iso.ch.) Specifically, certification to an ISO 9000 standard signals that the firm has a quality management system in place that ensures consistency of output quality. The system is embedded in procedures, hence the common paraphrasing of the ISO 9000 requirements as `say what you do, and do what you say.' ISO 9000 has several important characteristics. First, it does not prescribe specific practices, only the requirements on documenting and implementing quality management practices. Second, it does not say anything directly about quality of the product (or service) itself. Third, it is implemented through a highly decentralized system of auditors and accreditation bodies (see Appendix); ISO itself is only involved in design and updating of the standards, not in certification.

Although ISO 9000 was first issued in 1986 and is by now widely used, its effects are still debated. Surprisingly, the standard has not been the subject of sustained scholarly analysis. Firms pursue certification for a variety of reasons, including customer pressure, quality improvement, cost reduction, corporate image, etc.; in some specific industries it is a government requirement. Little is known about the precise reasons for certification, nor about how these factors are affected by other issues such as firm size, ownership structure, national business climate, business cycles, etc. There is also little evidence on how ISO 9000 certification affects quality or financial performance. Practitioners often express concern about the standards, sometimes complaining that the benefits are too limited to justify the perceived heavy implementation burden. Alleged variations in practices between auditors in different countries have led to doubts about the global consistency of the standard. Despite these controversies, ISO 9000 has become a fact of life for many firms, and is considered by ISO itself to be "one of our most spectacular standards' (Latimer 1997).

Riding on the coattails of the success of ISO 9000, the ISO 14000 series of environmental management systems standards was introduced in October 1996. Analogous to the ISO 9000 series, they require that firms have a documented environmental management system in place. Requirements for certification include having procedures to identify all `environmental aspects' of the site's operations, to ensure safe handling and disposal of hazardous materials, to communicate with `interested parties,' etc. The three characteristics of ISO 9000 listed above apply, mutatis mutandis, to ISO 14000 too. In addition, ISO 14000 requires that the firm have a procedure in place that will ensure that it is aware of and complies with all relevant legislation (although it does not prescribe specific environmental targets or technologies).