Financial performance in Taiwans ISO14001 environmental management systems (EMS)

Abstract

Numerous empirical studies have examined how voluntary environmental adoption and financial performance are related in enterprises from industrialized countries; little attention has been paid to Taiwanese enterprises. This work empirically explores how ISO14001 environmental management systems (EMS) influences the financial performance of Taiwan Stock Exchange (TSE) and over the counter (OTC) listed adopted companies in Taiwan. Based on a sample of 369 ISO14001 certified firms and 706 non-certified firms, the regression results showed that firm age and scale influence firm decisions regarding whether to acquire ISO14001 certification. Measures of profitability, productivity and Research and Development (R and D) competence do not indicate any significant differences between ISO14001 certified and non-certified companies in terms of their financial performance. Since the institutional forces such as greening supply chain pressures have become the major driver of the moves of Taiwanese firms towards more environmentally responsible operations, the estimation results demonstrate that Taiwanese firms regard the ISO14001 standard as an acceptable means of seeking legitimacy, establishing trust and long-term relationships with a wide range of stakeholders, and deflecting the scrutiny and interest of watchdog agencies and other interested parties worldwide; thus, no significant correlation exists between environmental and financial performance.

Power of sustainable development: Does environmental management system certification affect a firm's access to finance?

“…Additionally, in terms of internal drivers, firms are prone to pursue environment certification or conduct green management when they want to improve environmental performance (Massoud et al, 2010; Prajogo et al, 2016), establish corporate image (Mas‐Machuca & Marimon, 2019), and increase export or market shares (Mas‐Machuca & Marimon, 2019) or ethical motivations (Melnyk et al, 2003; Zhu et al, 2012). Moreover, internal drivers include firm characteristics, such as ownership (Zeng et al, 2005), firm age and size (Lin & Liu, 2011), firm‐level resources (Baek, 2017), managerial perceptions (Simpson et al, 2012), and scope of business operation (Bansal & Hunter, 2003; Montiel & Husted, 2009). For example, focal firms pursue the ISO 14001 certification because of high ethical motivations.…”