Demand for ISO 14001 adoption in the global supply chain: An empirical analysis focusing on environmentally conscious markets

This paper analyzes the environmental preferences and pressures of customers in environmentally conscious markets influencing the number of adoptions of ISO 14001--the international standard certified by the International Organization for Standardization (ISO) concerning an Environmental Management System (EMS)--in a country. Customers in different countries have different priorities and ideas with regard to the environment and its management, and therefore it is possible that environmental preferences and pressures of customers in environmentally conscious markets are greater, although many earlier studies suggest that foreign customers generally form a significant stakeholder group encouraging the adoption of ISO 14001. A random-effects Tobit estimation using a sample of 155 countries over eight years supports the view that the environmental preferences and pressures of customers in environmentally conscious markets (including Finland, Japan, Germany and Denmark) are more likely to encourage domestic along with foreign suppliers to adopt ISO 14001. As it is easier for firms in environmentally conscious markets to adopt ISO 14001 because of their better economic performance, they have already adopted certification and consequently require their domestic and foreign suppliers to do likewise in the global supply chain. For this reason, suppliers wishing to access environmentally conscious markets can obtain an advantage with ISO 14001 certification.