Environmental management, nonmarket strategy and firm performance in emerging markets: The case of ISO 14001

Hammad Riaz, Abubakr Saeed, Tahiru Liedong, Tazeeb Rajwani

Research output: Contribution to journalArticlepeer-review

4 Citations (SciVal)

Abstract



Firms use environmental management standards such as ISO 14001 to reduce the impact of business activity on the natural environment. Though these standards are widely celebrated on moral and ethical grounds, their implication for financial performance and competitiveness is equivocal. Drawing on neo-institutional theory, we conceptualize ISO 14001 as a nonmarket strategy and examine its impact on firm performance within the contexts of three highly polluted emerging markets – China, India, and Pakistan. Employing a rigorous event-study approach, we find that ISO 14001 certification has a negative impact on firms’ operating profitability and market value in both short and long runs. This negative impact appears to be stronger in contexts with weak institutions and poor environmental protection regimes. Further multivariate analyses show that the negative impact of ISO 14001 on firm performance is weaker among socially responsible firms and stronger among politically connected firms. These findings contribute to the environmental management literature. They also have practical implications for managers.
Original languageEnglish
Pages (from-to)139-163
Number of pages25
JournalBusiness Ethics: A European Review
Volume31
Issue number1
Early online date23 Nov 2021
DOIs
Publication statusPublished - 31 Jan 2022

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management
  • Management, Monitoring, Policy and Law
  • Philosophy

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