Academic journal article Journal of Supply Chain Management

ISO 14000: Assessing Its Perceived Impact on Corporate Performance

Academic journal article Journal of Supply Chain Management

ISO 14000: Assessing Its Perceived Impact on Corporate Performance

Article excerpt

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? …

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