Journal Press India^®

Author Details ( * ) denotes Corresponding author

This study examines the factors, especially the international orientation affecting the environmental management system, ISO 14001 certification for auto component producers in India. The existing micro-level evidence for emerging economies is limited. Exploring the role of type-of-exports, outward FDI (OFDI) and industry-specific quality management system (QMS), this study provides some novel evidence. Little is known so far about (i) the mechanisms through which the OFDI affects the Home operations, and (ii) the influences of industry-specific QMS Standards, notwithstanding their increasing adoption, vis-à-vis the generic Standard ISO 9001, by global firms. The Logit model indicates that the industry-specific QMS and OFDI, commenced in recent years, increase the likelihood of ISO 14001 certification. Compared to non-exporters, the exporters to original-equipment-manufacturers, OEMs/Tier-1 firms have similar certification probability, while the only‑aftermarket exporters have much lower likelihood. The government should promote ‘high-level’ exports and OFDI, and recognize the synergy between international management system certifications.

Keywords

ISO 14001; OEM exports; Outward FDI; Industry-specific QMS Standard; Auto components

1. ACMA (2018). Indian auto component industry preparing for the future: Annual report 2017-18. New Delhi: Automotive Component Manufacturers Association of India.
2. Bellesi, F., Lehrer, D. & Tal, A. (2005). Comparative advantage: The impact of ISO 14001 environmental certification on exports. Environmental Science & Technology, 39(7), 1943–1953.
3. Boiral, O., Guillaumie, L., Heras-Saizarbitoria, I. & Tene, C. V. T. (2018). Adoption and outcomes of ISO 14001: A systematic review. International Journal of Management Reviews, 20(2), 411–432.
4. Curkovic, S. & Sroufe, R. (2011). Using ISO 14001 to promote a sustainable supply chain strategy. Business Strategy and the Environment, 20(2), 71–93.
5. Diebolt, C., Mishra, T. & Parhi, M. (2016). Dynamics of distribution and diffusion of new technology: A contribution to the historical, economic and social route of a developing economy. Heidelberg: Springer.
6. Earnhart, D.H., Khanna, M. & Lyon, T.P. (2014). Corporate environmental strategies in emerging economies. Review of Environmental Economics and Policy, 8(2), 164–185.
7. Fonseca, L. (2015). ISO 14001:2015: An improved tool for sustainability. Journal of Industrial Engineering and Management, 8(1), 37–50.
8. González, P., Sarkis, J. & Adenso-Díaz, B. (2008). Environmental management system certification and its influence on corporate practices: Evidence from the automotive industry. International Journal of Operations & Production Management, 28(11), 1021–1041.
9. He W., Liu C., Lu J. & Cao, J. (2015). Impacts of ISO 14001 adoption on firm performance: Evidence from China. China Economic Review, 32(C), 43–56.
10. Jong, P. D., Paulraj, A. & Blome, C. (2014). The financial impact of ISO 14001 certification: Top-line, bottom-line, or both? Journal of Business Ethics, 119(1), 131-149.
11. Lira, J. M. S., Salgado, E. G. & Beijo, L. A. (2018). Characterization of evolution and dissemination of ISO 14001 in countries and economic sectors in Europe. Journal of Environmental Planning and Management, 62(7), 1166-1184.
12. Nishitani, K. (2009). An empirical study of the initial adoption of ISO 14001 in Japanese manufacturing firms. Ecological Economics, 68(3), 669–679.
13. Nishitani, K. (2011). An empirical analysis of the effects on firms’ economic performance of implementing environmental management systems. Environmental and Resource Economics, 48(4), 569–586.
14. Orsato, R. J. & Wells, P. (2007). The automobile industry and sustainability. Journal of Cleaner Production, 15(11/12), 989–993.
15. Ozusaglam, S., Robin, S. & Wong C. Y. (2018). Early and late adopters of ISO 14001-type standards: Revisiting the role of firm characteristics and capabilities. Journal of Technology Transfer, 43(5), 1318–1345.
16. Paul, J. & Benito, G. R. G. (2018). A review of research on outward foreign direct investment from emerging countries, including China: What do we know, how do we know and where should we be heading. Asia Pacific Business Review, 24(1), 90–115.
17. Perea, J. R. & Stephenson, M. (2018). Outward FDI from developing countries. In World Bank. Global Investment Competitiveness Report 2017/2018: Foreign investor perspectives and policy implications (pp.101–134), Washington: World Bank. Retrieved from https://elibrary.worldbank.org/doi/abs/10. 1596/978-1-4648-1175-3_ch4.
18. Pradha, J. & Singh, N. (2009). Outward FDI and knowledge flows: A study of the Indian automotive sector. International Journal of Institutions and Economies, 1(1), 155–186.
19. Reis, A. V., Neves, F. O., Hikichi, S. E., Salgado, E. G. & Beijo, L. A. (2018). Is ISO 14001 certification really good to the company? A critical analysis. Production, 28. Retrieved from http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0103-65132018000100405.
20. Saizarbitoria, I. H., Azorín, J. M. & Dick, G. P. M. (2011). ISO 14001 certification and financial performance: Selection-effect versus treatment-effect. Journal of Cleaner Production, 19(1), 1–12.
21. Sandhu, S., Smallman, C., Ozanne, L. K. & Cullen, R. (2012). Corporate environmental responsiveness in India: Lessons from a developing country. Journal of Cleaner Production, 35(November), 203–213.
22. Simpson, D., Power, D. & Samson, D. (2007). Greening the automotive supply chain: A relationship perspective. International Journal of Operations and Production Management, 27(1), 28–48.
23. Singh, N. (2013). Influence of outward-foreign direct investment and technological efforts on exports: Indian auto component firms. Innovation and Development, 3(2), 205-221.
24. Singh, N. (2016). Outward FDI type and ownership mode: The effect on home country exports. FOCUS: Journal of International Business, 3(2), 11–34.
25. Stolwijk, C. C. M., Punter, L. M. & Montalvo, C. (2017). ‘Smart industry’ and the confluence of standards. In Hawkins, R., Blind, K. & Page, R. (Eds.), Handbook of innovation and standards (pp.212–226), U.K.: Edward Elgar Publishers.
26. Tambunlertchai, K., Kontoleon, A. & Khanna, M. (2013). Assessing participation in voluntary environmental programmes in the developing world: The role of FDI and export orientation on ISO 14001 adoption in Thailand. Applied Economics, 45(15), 2039-2048.
27. Tatoglu, E., Bayraktar, E., Sahadev, S., Demirbag, M. & Glaistere, K. W. (2014). Determinants of voluntary environmental management practices by MNE subsidiaries. Journal of World Business, 49(4), 536–548.
28. Turaga, R. M. R. & Gupta, V. (2018). Adoption of ISO 14001 standards in Indian manufacturing firms. DFID working paper, Tilburg: Tilburg University. Retrieved from https://assets.publishing.service.gov.uk/media/5aa94774e5274a3e3603ad08/Extra_WP_ISO14001_India_TuragaGupta.pdf.
29. Vílchez, V. F. & Darnall, N. (2016). Two are better than one: The link between management systems and business performance. Business Strategy and the Environment, 25(4), 221–240.
30. Wiengarten, F., Onofrei, G., Humphreys, P. & Fynes, B. (2018). A supply chain view on certification standards: Does supply chain certification improve performance outcomes? In Heras-Saizarbitoria, I. (Ed.), ISO 9001, ISO 14001, and new management standards (pp.193–214), Switzerland: Springer.
31. Wu, H., Chen, J. & Liu, Y. (2017). The impact of OFDI on firm innovation in an emerging country. International Journal of Technology Management, 74(1-4), 167–184.