Advanced Natural Resources Stewardship and Environmental Advocacy

Time compression diseconomies in environmental management: The effect of assimilation on environmental performance

Gustavo Lannelongue*, Javier Gonzalez-Benito, Oscar Gonzalez-Benito, Carmen Gonzalez-Zapatero Universidad de Salamanca, Facultad de Economia y Empresa, Campus Miguel de Unamuno, 37007 Salamanca, Spain

a r t i c l e i n f o

Article history: Received 25 November 2013 Received in revised form 19 February 2014 Accepted 1 April 2014 Available online 13 September 2014

Keywords: Time compression diseconomy Assimilation Experience Environmental management EMS

a b s t r a c t

This research addresses the relationship between an organisation's assimilation of its environmental management system (EMS), the experience it gains through it, and its environmental performance. Assimilation here refers to the degree to which the requirements of the management standard are in- tegrated within a plant's daily operations. Basing ourselves on the heterogeneity of organisations, we argue that assimilation and experience will inform environmental performance. Furthermore, we posit that the relationship between assimilation and environmental performance depends on experience. The attempt to obtain greater assimilation in a shorter time leads an organisation to record a poorer envi- ronmental outcome, which we shall refer to as time compression diseconomies in environmental management. We provide empirical evidence based on 154 plants pertaining to firms in Spain subject to the European Union's CO2 Emissions Trading System.

© 2014 Elsevier Ltd. All rights reserved.

1. Introduction

The adverse environmental impact caused by the pursuit of business operations in general, and the production of goods and services in particular, has been the focus of considerable attention on the part of scholars in recent years. A firm's environmental performance is the individual measurement of that impact. An environmental impact has been defined by the International Or- ganization for Standardization (ISO) as “any change to the environ- ment, whether adverse or beneficial, wholly or partially resulting from an organization's environmental aspect” (ISO 14001:2004, p. 2).

Consumers may choose from among a greater number of “ecological products” whose environmental impact, in theory, should be lower than that of other products, but regarding which they do not always have the necessary information for making a rational decision. According to Eurobarometer (2012), 48% of con- sumers are “confused” by the flow of environmental information they receive. Organisations also require quality environmental data in order to make the best decisions on their environmental man- agement. The implementation of an environmental management system (EMS) as per the ISO 14001 standard helps to systemise the data and create environmental indicators that assist decision-

making in these matters. According to the ISO standard, the assessment of environmental performance is a “process to facilitate management decisions regarding an organization's environmental performance by selecting indicators, collecting and analysing data, assessing information against environmental performance criteria, reporting and communicating, and periodically reviewing and improving this process” (ISO 14031:1999, p. 2).

A branch of the literature has focused on studying the mea- surement of this environmental impact (in what is referred to as the environmental outcome), distinguishing between those firms that do not have an EMS and those that do, and above all those that have had their EMS certified (Montabon et al., 2000; Dasgupta et al., 2000; Melnyk et al., 2003; Russo, 2002; Potoski and Prakash, 2005a,b; King et al., 2005). One of the problems these studies face is the implicit assumption that all organisations with an EMS introduce similar practices and may be treated as a uniform group (Christmann and Taylor, 2006; Heras-Saizarbitoria and Boiral, 2013). This problem is even more apparent in broader quantitative studies, in which there is no information on each organisation's individual management (Nawrocka and Parker, 2009). This means that scholars have used the presence of an EMS and its certification as a determinant of the environmental outcome (King et al., 2005; Gonzalez-Benito et al., 2011), without considering the wide di- versity of organisations and, above all, the environmental man- agement practices they deploy.

* Corresponding author. E-mail address: [email protected] (G. Lannelongue).

Contents lists available at ScienceDirect

Journal of Environmental Management

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Journal of Environmental Management 147 (2015) 203e212

Nevertheless, there is robust evidence of the diversity of EMS implementations, with scholars specifically focusing their attention on those organisations that despite having an EMS (and even having had it certified) have not changed their environmental behaviour. These cases tend to be referred to as symbolic imple- mentations (Christmann and Taylor, 2006) or “rational myths” (Boiral, 2007). In order to resolve the problem of the differences between the levels of implementation of a specific standard, scholars have used the concept of assimilation of the EMS (Naveh and Marcus, 2004). This term allows differentiating between or- ganisations according to the extent to which the standard's re- quirements are integrated within the organization's daily operations. In a similar way, other scholars highlight the level or quality of adoption (Aravind and Christmann, 2011), the hetero- geneous adoption or integration of the EMS (e.g. Yin and Schmeidler, 2009; Curkovi and Sroufe, 2011; Heras-Saizarbitoria et al., 2011) or the degree of internalization of ISO 14001 (e.g. Castka and Prajogo, 2013; Prajogo et al., 2012; Qi et al., 2012; Heras- Saizarbitoria, I., 2011).

According to Naveh and Marcus (2004), the assimilation is a complex process based on (1) laying down rules enabling the organisation to effectively adhere to the management system's standards; (2) coordination with key suppliers and customers; and (3) an internal integration process between the old way of oper- ating and the new approach to work. Although the literature on environmental management is very extensive, little attention has been paid to the concept of assimilation and, at the time of writing, there is hardly any empirical evidence on the effect such assimi- lation has on firms' environmental performance.

Assimilation is a process whereby “the links between the or- ganization's old policies, procedures, and rules and its new ones have to be considered” (Naveh and Marcus, 2004). This means that assimilation is a process of change, passing from an old stock of assets to a new one (Dierickx and Cool, 1989). We should not therefore ignore temporal aspects, as all change occurs at a pace that may determine its success (Armenakis and Bedeian, 1999). Accordingly, time is another key factor for studying these organ- isational changes, due both to the need for the proper assimilation of new management fundaments and to the effect of the experience to which the organisation is subject.

This paper is going to focus on the organisational changes involved in the proper assimilation of an EMS and which condition its explanatory role in an organisation's environmental perfor- mance. To do so, we shall analyse the moderating role experience plays in environmental management. We argue that the positive effect assimilation has on environmental performance is not only complemented by an experience effect, but that the passage of time is a necessary requirement for proper assimilation. We return to the concept of time compression diseconomies (Dierickx and Cool, 1989) applied to environmental management, according to which firms recording a high degree of assimilation over a short period of time will manifest a poorer environmental performance. We therefore contend that a firm's assimilation and experience have a direct effect on its environmental performance, and what's more, time has a moderating effect on the impact assimilation has on the environmental outcome.

The next section presents a review of the state-of-the-art regarding environmental outcomes in which we shall set out the arguments upon which we base the causality between EMS-based environmental management and the environmental outcome. We shall then present our predictions on the impact that assimilation, experience and the accumulation of assets will have on an orga- nisation's environmental performance. The third section will outline the methodology used in the empirical study, describing the sample and the metrics applied. The fourth section will address

the results obtained. The fifth section will discuss these results and the papers' contributions, and provides a summary of the main conclusions.

2. Theory and hypothesis

2.1. Environmental practices and the environmental outcome

For some years now, the scientific community has been providing evidence on the relationship that exists between the systemisation of environmental practices and the environmental outcome in firms. In addition to the ongoing debate on the use- fulness of environmental certificates, and assuming there is a generally positive relationship between environmental practices and environmental performance, scholars are becoming increas- ingly more interested in the further exploration of those contin- gencies that determine the nature and strength of that relationship.

Dasgupta et al. (2000) report that a firm only improves its environmental outcome when it has financial incentives to do so, which means it will not spend more on that improvement than the fine it may incur for any breach of the law in matters of environ- mental legislation. In their analysis, and like other scholars, these authors acknowledge that they have not assessed which factors specifically lead to a better environmental performance. Potoski and Prakash (2005b) explain this relationship in terms of the co- ercive power of the standard upon which the firm's environmental management is based. They differentiate between programmes without reprisals and those that do indeed involve them. According to prior studies, the voluntary environmental programmes that certain firms may embrace, such as the chemical industry's Responsible Care Program (King and Lenox, 2000) or the U.S. Department of Energy's Climate Wise Program (Welch et al., 2000), do not appear to improve environmental outcomes due to a lack of disciplinary power. Accordingly, the threat that audits pose to an EMS certified according to ISO 14001 should suffice to encourage an organisation to improve its performance (Earnhart and Leonard, 2013). If this argument were true, those firms with an EMS certi- fied to ISO 14001 should record a better environmental perfor- mance than those with an uncertified EMS, but several studies report the opposite (see Table 1). Some scholars provide evidence on the lack of independence and rigour of the audit process (Heras- Saizarbitoria et al., 2013).

According to Russo (2002) and King et al. (2005), firms with an EMS certified to ISO 14001 record similar environmental outcomes to other firms with an uncertified EMS, albeit superior to those without an EMS. This may be due to the systemisation of their environmental actions, thanks to a series of standards that regulate and programme those activities, processes and procedures, upon which certification has no effect whatsoever. By contrast, an in- ternal transformation is achieved that leads to a series of organ- isational results that the firm achieves with a view to improving its environmental performance. This process involves modifying the incentives of the organisation's agents (King et al., 2005) in order to align their behaviour with the management's objective. Accord- ingly, the stricter the standard that regulates the EMS, the better the environmental performance to be expected, in line with the conclusions reached by Dahlstr€om et al. (2003). These scholars evidence that firms with a certified eco-management and audit system (EMAS) record a better environmental performance than those with an EMS certified to ISO 14001.

Although scholars have based themselves on these organisa- tional changes that imply the systemisation of environmental management according to a management standard, there is scant evidence on how they occur and on the extent to which each one of these changes affects the environmental outcome. Scholars initially

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212204

Table 1 Evidence on the relationship between ISO 14001 and environmental outcome (EO).

Author (year) EO metrics Effect Comparison Data

Rao and Hammer (1999) ! Waste ! Consumption of resources

Better performance Better than prior to certification ! Questionnaire ! Only with ISO 14001

Dasgupta et al. (2000) ! Legal compliance Better performance (plants with ISO 14001-type processes improve their legal compliance)

EMS > No EMS ! Interviews held in 1995 ! 236 plants

Montabon et al. (2000) ! 14 organisational and environmental items

Better performance ISO 14001 > Voluntary programmes

! Questionnaire ! 1510 managers from

SIC 20e39 industries

Russo (2002) ! Toxic emissions (TRI database) Weak evidence related to the certification (having an EMS does improve performance)

ISO 14001 ~ EMS > No EMS ! Interviews ! TRI database ! 316 plants

Melnyk et al. (2003) ! 10 organisational and environmental items

Better performance ISO 14001 > EMS > No EMS ! Questionnaire ! 1222 managers from

SIC 20e39 industries ! Same data as Montabon

et al., 2000.

Dahlstr€om et al. (2003) ! Operational performance (OPA) Better performance (plants with ISO 14001 outscore those without)

ISO 14001 > No EMS ! UK Integrated Pollution Control (IPC) e OPRA

! 843 plants

Babakri et al. (2004) ! Kg recycled Better performance Better than before certification ! Questionnaire ! 177 plants

Potoski and Prakash (2005a)

! Legal compliance Better performance EMAS > ISO 14001 > No EMS ! TRI (1995/96, 2000/01) ! Dun and Bradstreet ! A number of interviews ! 3709 plants

Potoski and Prakash (2005b)

! Toxic emissions (TRI database) Better performance (those with certification record a greater reduction in their toxic emissions)

ISO 14001 > No ISO 14001 ! TRI (1995/96, 2000/01) ! Dun and Bradstreet ! Same data as Potoski

and Prakash (2005a)

King et al. (2005) ! Toxic emissions (TRI database) No evidence was found related to certification (having an EMS does improve performance)

ISO 14001 ¼ EMS > No EMS ! TRI (1996e2002) ! Dun and Bradstreet ! 7899 plants

Toffel (2005) ! Toxic emissions (TRI database) Better performance ISO 14001 > No ISO 14001 ! TRI (1991e2003)

Barla (2007) ! Toxic emissions (TSS and BOD) Poorer performance (plants improved after certification, but less so than uncertified ones)

No ISO 14001 > ISO 14001 ! R"eglement sur les fabriques de pâtes et papiers (Quebec Ministry of the Environment)

! 37 plants (1997e2003)

Arimura et al. (2008) ! Consumption of resources ! Solid wastes ! Waste waters

Better performance ISO 14001 > No ISO 14001 ! Survey ! 792 plants

Russo (2009) ! Toxic emissions (TRI database) Better performance (account is taken of early adopter and experience effect)

The longer an EMS has been implemented, the better the EOs it records.

! TRI (1996e2001) ! Dun and Bradstreet ! Interviews (held in

2000) ! 242 plants

Yin and Schmeidler (2009)

! 10 environmental items Better performance (account is taken of the assimilation of the EMS through organisational aspects)

The more assimilated an EMS is in an organisation, the better the EOs it records.

! Questionnaire ! 292 plants and 64

multi-plants ! Only with ISO 14001

ISO 14001/EMAS ¼ plant with an EMS certified to ISO 14001/EMAS; EMS ¼ plant with an uncertified EMS; No EMS ¼ plant without EMS;Voluntary Programmes ¼ Programmes of voluntary actions, such as EPA or OSHA; BOD ¼ Biological Oxygen Demand; TSS ¼ Total Suspended Solids. Source: Author's own preparation

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212 205

focused on verifying whether or not the implementation of an EMS and its certification led to an improvement in environmental per- formance. Only recently have they shown an interest in unravelling the internal processes that differentiate between the different ways of implementing an EMS, and which underpin that improvement in environmental performance. Yin and Schmeidler (2009) analyse the extension of the assimilation of an EMS certified to ISO 14001 within a firm, concluding that the more integrated the manage- ment system is in its daily practices, the better the environmental outcome obtained.

Each firm's singularity is expressed through the fact that each organisation implements its EMS in a different way, obtaining a specific degree of assimilation for each one and, therefore, a different environmental performance. This may explain the wide range of differing, and even contradictory, results recorded before, as no consideration had been given to this intermediary step be- tween the actions a firm introduces and its environmental out- comes, assuming a similar organisational approach in all certified firms.

2.2. Assimilating the EMS

The standards upon which an EMS is based do not usually specify the environmental outcomes a specific organisation should attain. For example, the ISO 14001 standard “does not establish absolute requirements for environmental performance beyond the commitments, in the environmental policy, to comply with applicable legal requirements and with other requirements to which the orga- nization subscribes, to prevention of pollution and to continual improvement. Thus, two organizations carrying out similar operations but having different environmental performance can both conform to its requirements” (ISO 14001:2004, p. 6).

In practical terms, these requirements involve a series of organisational changes that a firm should achieve. The extent to which it does so is what we refer to as assimilation of the EMS. Therefore, the assimilation of the EMS of the two organisations mentioned earlier in the standard's text would reveal a different degree of achievementof the requirements, necessarilyexceeding in both cases the minimum necessary for the award of the certification.

The environmental goals chosen by each firm implementing ISO 14001:2004 are specific, and determined in each case by the in- ternal and external factors that distinguish them (Jiang and Bansal, 2003). Depending on these goals and on the commitments assumed in terms of environmental policy, a firm will dedicate the amount of resources required for implementing certain manage- ment practices that, over the course of time, become routines the organisation creates and which involve the assimilation of the management standard.

According to Nawrocka and Parker (2009), the most fruitful way of establishing a link between an EMS and environmental perfor- mance is on a case-by-case basis, as the causality relationship may be based on different factors. We understand that this statement assumes the complexity that exists in an EMS and its myriad pos- sibilities of assimilation.

ISO 14001 is not a results-based standard, but instead a management-based one. Although the standard's ultimate aim is unquestionably to diminish the environmental impact of those organisations implementing it, as it consists of organisational re- quirements it is implicitly assuming that the organisational changes required for fulfilling those requirements are the ones that will lead to an organisation's improvement in its environmental performance. The standard encodes a series of management prac- tices (e.g., specifying certain environmental targets, establishing an environmental policy, arranging training schemes on environ- mental matters, and having prevention mechanisms for dealing

with hazards or accidents) that should indeed reduce a firm's environmental impact.

The assimilation of the EMS is the extent to which the man- agement standard's requirements are integrated within the plant's daily operations. In order for this to happen, two factors are required: first, giving major strategic importance to environmental aspects. The organisation's strategy should include environmental management as a source of possible competitive advantage. This will make the second factor possible, namely, the undertaking of advanced environmental practices. Given their strategic importance, a firm allocates sufficient resources to environmental management, which may replace its usual management practices with others of a more environmental bias. All this will enable a firm to operation- alise the requirements specified by the system's standard in the tasks required in its organisation.

For example, the implementation of an EMS (e.g., based on ISO 14001) requires the training of those employees involved in envi- ronmental matters, which may even be extended to the entire workforce (Corbett and Luca, 2002). Initially, this training allows modifying existing tasks or developing new ones with a lower environmental impact and, in general, it involves greater awareness of environmental issues (Rondinelli and Vastag, 2000; Toffel, 2005). The novelty may even trigger a Hawthorne effect among employees (Potoski and Prakash, 2005b). Nonetheless, it will take some time for employees and managers to comprehend the new environ- mental values and priorities and include them in the planning of any action the organisation may require.

The standard encourages learning from other organisations (e.g., suppliers, customers, collaborators, consultants and auditors), which means firms have more information on the nature of the best practices for each process, thereby enhancing their operational efficiency (Rondinelli and Vastag, 2000). Use is also commonly made of multidisciplinary teams that may contribute new ideas for environmental improvement (Toffel, 2005), with the prior experi- ence of the teams' members and their confidence being vital for their success (Jones and George, 1998). Furthermore, an EMS per- mits identifying both idle resources within a firm and opportunities for improvement in environmental matters (Hart, 1995).

All this is part of the continuous improvement system that provides the basis for the bulk of environmental management standards. The aim pursued by organisations is to implement a virtuous circle, in which the scheduled audits conducted at the firm are used to validate that improvement. Such control should lead the organisation to reduce the probability of any non-compliance of these regulations due to a lack of information (Johnstone and Labonne, 2009), even pre-empting those changes.

Nevertheless, there are numerous cases in the literature positing that all firms certified to the standard proceed in a uniform manner, using ISO 14001 as a dichotomous variable. The ISO 14001 standard is, however, very flexible. It is designed to be implemented in any organisation regardless of its size, type or sector. Depending on the nature of the workplace, it will involve implementing different environmental practices.

As emphasised by Yin & Schmeidler (2009, p. 483) “This het- erogeneity furthermore has an impact on the linkage between ISO certification and facilities' environmental performance”. We under- stand this to be the main reason that explains the disparity in the form and robustness of the results obtained beforehand by re- searchers (see Table 1). The profile of the EMS will begin to take shape as from the very germination of the reasons for imple- menting one based on ISO 14001, subsequently developing in a unique manner, and in time leading to different environmental outcomes.

H1: The higher the level of a firm's assimilation of an EMS, the better the firm's environmental outcome will be.

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212206

2.3. The effect of experience and time compression diseconomies on environmental management

Dierickx and Cool (1989) have reported that in view of the ex- istence of incomplete markets, certain key resources for a firm's strategy should be accumulated, given the impossibility of buying them. Therefore, strategy implementation requires considering the manner in which those stocks of resources are accumulated. Within an EMS based on ISO 14001, there are several types of resources and capabilities with these characteristics. Managers cannot turn to a market in environmental proactivity to purchase environmental proactivity (Arag#on-Correa, 1998) for their firms. Nor can they turn to a market in stakeholder integration to purchase stakeholder integration (Hart, 1995) for their environmental policy. As we described earlier, some of these resources and capabilities that make up an EMS based on ISO 14001 are informed by tacit knowledge specific to the firm and transmitted through a firm's operations and practice; in other words, they are steadily accu- mulated over time.

Moreover, some of those aspects improve their efficiency as of the moment a certain amount is accumulated in the firm. Dierickx and Cool (1989) have referred to this summation as asset mass efficiencies. This increase in the efficiency of that element occurs because its increase is facilitated by the possession of a high level of stock prior to the same. This implies that from a certain level of assimilation of an EMS onwards, the accumulation of resources would not only lead to an improvement in the assimilation itself, but would also permit a more than proportional increase in envi- ronmental outcomes. This seems logical when we consider the development of the necessary competencies for plant personnel, or the strategic position the organisation's environmental policies reach.

For example, an individual joining a work group that already has certain habits will adopt those habits more readily than if they did not exist. A firm that considers the development of new processes for diminishing its environmental impact will be able to do so much more efficiently if it has had time to accumulate experience and knowledge on the matter. Therefore, investments in environmental innovations will pave the way for a better environmental perfor- mance based on a certain level of expertise accumulated in the firm. In the best of cases, firms that have not had enough time to accu- mulate that knowledge will implement pollution control solutions referred to as “end-of-pipe”, and those firms with a greater leeway for accumulating knowledge will opt for more efficient solutions of the “pollution prevention” type (Porter & Van der Linde, 1995). In the worst of cases, those organisations that have not reached a certain level of experience will seek to implement prevention so- lutions, investing in risky schemes that, given their lack of knowl- edge in design or the lack of integration of the firm's goals and strategies, will not entail a better environmental performance. The employees themselves may in some way see themselves over- whelmed by all the new commitments that the organisation seeks to embrace. Without the necessary environmental values or the appropriate work routines, employees are overcome by the sys- tem's more bureaucratic aspects, which they will try to resolve by applying the minimum effort required so as to be able to focus on their normal tasks.

Prior empirical studies have evidenced that, years later, the early adopters of the certification and firms with an EMS certified for longer record better environmental results (Russo, 2009; Toffel, 2005; Babakri et al., 2004). Jiang and Bansal (2003) have argued that this may be because the early birds sought to improve their efficiency, while the latecomers sought greater legitimacy through the certification of their EMS. However, we contend that it is due to a twin effect. First, there is the effect of linear learning in

environmental management, which includes sundry factors (e.g., improvement in the management of the resources earmarked for environmental protection) that imply a greater understanding of environmental management. In addition, there is a second effect based on the fact those firms have developed organisational capa- bilities related to environmental management (e.g., organisational routines in stakeholder management), which lead to better envi- ronmental results than those recorded in firms of similar charac- teristics, but whose EMS has been implemented much more recently. In other words, time has a direct effect on the environ- mental outcome, and another moderating role due to the accu- mulation of the resources required for the development of the management capabilities associated with the assimilation of the EMS. The differences in environmental management due to assimilation and experience can be seen in a systemised manner in Table 2.

The attempt to accumulate these resources required for advanced environmental management in a shorter time than necessary may give rise to time compression diseconomies (Dierickx and Cool, 1989). The attempt to attain goals that are too ambitious, even though the means have been made available, but without the organisation having assimilated the management system, will lead to a poorer environmental outcome. These sudden changes in the organisation contradict the continuous improve- ment approach of most of the standards that underpin an EMS. We therefore conclude that the relationship between assimilation and environmental outcome is not constant in relation to the time elapsed since the certification of the EMS, but instead it increases positively in step with the passage of time. We therefore propose the following hypotheses:

H2: The greater the experience accumulated since a firm's EMS has been certified, the better the environmental outcome it will record.

H3: The time elapsed since the certification of the EMS posi- tively moderates the relationship between assimilation and envi- ronmental outcome; that is, in firms with more experience, the same level of assimilation of the EMS leads to a better environ- mental outcome.

The hypotheses formulated are shown in Fig. 1.

3. Methodology

3.1. Data

With a view to verifying the hypotheses considered, we have used primary and secondary data sources. Regarding the former, we have sent a questionnaire to Spanish firms both subject to the European Union's Emissions Trading System (EU ETS) and with an EMS certified to ISO 14001 or EMAS regulations. This questionnaire has provided us with information on the degree of assimilation of the EMS. As regards the secondary information sources, on the one hand we have resorted to the Spanish national registry of green- house gas emission allowances (RENADE in Spanish) to obtain the CO2 emissions of these firms and construct a mean for environ- mental performance. On the other hand, we have gathered financial information from the Amadeus database (Bureau Van Dijk) for variable control samples. All the data regarding the questionnaire, emissions and financial information correspond to 2010. We used different data sources to eliminate major biases present in the research based on a single source (Podsakoff et al., 2003).

The data collated through the questionnaire were gathered between December 2010 and February 2011. This questionnaire was sent in both electronic format and on paper to all Spanish firms subject to the EU ETS (except for the ceramics sector and cogene- ration plants, given the low percentage of environmental

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212 207

certifications in the former, and the scant relationship with the firm's core business in the latter) following Dillman's method (1978). The questionnaire was addressed to the chief environ- mental officer or to the manager of the plant indexed in the RENADE registry. Out of the 647 questionnaires sent out, we received 204 properly completed answers (31.5%), of which 154 corresponded to plants with a certified EMS, and these were used for this study. The analyses conducted did not reveal significant biases due to non-responses. This sample of firms is relevant for studying the phenomena considered because these plants have environmental practices that are more developed than others without a certified EMS, and the data on their emissions are more reliable.

3.2. Metrics

3.2.1. Dependent variable

3.2.1.1. Plant emissions. Computation was made of the ratio be- tween a plant's CO2 emissions and its headcount. Using emissions as a measure of environmental performance is fairly commonplace in the literature on environmental management (King et al., 2005).

In order to interpret the results, it needs to be remembered that the higher the emissions, the poorer the environmental performance.

3.2.2. Independent variables

3.2.2.1. Assimilating the EMS. It is essential to consider the best way of measuring the different levels of assimilation of a firm's EMS, so we studied what other scholars before us had done. Naveh and Marcus (2004) measure the assimilation of a quality system based on the ISO 9001 standard with twenty questions (five-point Likert-type scale, from (1) very low to (5) very high) forming the following five constructs on these aspects of the assimilation (two refer to planning and three to doing):

1. Integrated: To what degree was the design and development of the ISO 9000 standard integrated with systems already in place?

2. Externally coordinated: To what degree was its design and development externally coordinated?

3. Daily practice: To what extent did the standard end up being used in daily practice?

4. Applied to solving problems: To what degree was it applied to solving problems?

5. Kept current: To what extent were efforts made to keep it current?

Yin and Schmeidler (2009) measure the assimilation (which they call integration) with the arithmetic means of three questions in a questionnaire (five-point Likert-type scale, from (1) very low to (5) very high), which are:

1. To what extent did the design and development of your ISO 14001-based EMS involve participation by the managers at your facility?

2. To what extent was the design and development of the ISO 14001-based EMS based on involvement by the employees?

3. Has the use of the ISO 14001-based EMS become part of your regular routines?

Both approaches have their strengths and weaknesses. We consider that the approach posited by Naveh and Marcus (2004) is

Table 2 Differences in management according to assimilation and experience.

EXPERIENCE WITH EMS

ASSIMILATION OF EMS

ENVIRONMENTAL OUTCOME

H3 +

H1 +

H2 +

Fig. 1. Research model and working hypothesis.

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212208

appropriate in that they inquire about numerous aspects of the system, although these aspects refer more to the different repre- sentations of the system than to the different dimensions of the system itself. On the other hand, the approach made by Yin and Schmeidler (2009) has the advantage of creating a single construct that favours both comprehension and comparability, although the limited number of questions means they do not capture the entire scope of the assimilation.

In order to exploit the strengths of these studies, we use a combination of both approaches. We have measured assimilation by asking firms to appraise the extent to which the solutions described in 18 items match their reality (see Table 3), in each case using a seven-point Likert-type scale (1 e the minimum required, to 7 e much more than required). We understand that a system is

fully assimilated when all the situations are fulfilled at the same time in a firm and far outstrip the requirements for the award of the certification. According to Lannelongue et al. (2011), these items cover the critical factors of an EMS. Each item defines one of the system's specific characteristics, whereby an increase or decrease in the appraisal of one of the items means an overall improvement or worsening in the level of assimilation for the firm. Nevertheless, a change in the assimilation need not be reflected in each one of the specific characteristics of the EMS, as it may instead affect only a part of the same. Therefore, the degree of assimilation fulfils the cases of the formative scales (Jarvis et al., 2003), thereby con- structing a single indicator through the sum of scores assigned to all the items.

3.2.2.2. Experience. With a view to measuring experience in envi- ronmental management, we referred to the age in years of the certification of the EMS. When a firm has been certified according to several standards, we have used the oldest one. We have ob- tained this datum from the questionnaire, and we treat it as a continuous variable.

3.2.3. Control variables 3.2.3.1. Plant size. This applies to the plant's headcount. We have obtained this figure from the questionnaire, and treat it as a continuous variable.

3.2.3.2. Firm size. This corresponds to the book value of the firm's assets. The figure has been obtained from the Amadeus database. It is treated as a continuous variable. We use these two variables to capture the possible economies of scale in environmental man- agement derived from the size of the plant or firm.

3.2.3.3. Sector emissions. In order to compare firm emissions across sectors, we have added this variable that provides the average emissions in the sector in which a firm operates. For consistency in size, we have calculated the average emissions of the firms in the sample in the sectors of food and drink, pulp and paper, chemical products, cement and energy.

3.2.3.4. Efficacy of the emissions market. This variable enables us to measure the impact EU ETS has on a firm's environmental perfor- mance. Firms have an emissions allowance above which they must buy emissions rights or, vice versa, they may sell any surplus rights they may have. We have divided the allowances the firm has effectively recorded by the quota the firm is entitled to emit. This variable therefore discounts the part of the environmental out- comes due to market incentive, as indicated by Dasgupta et al. (2000).

4. Analysis and results

The results of the multivariate regressions we have performed to test the hypotheses formulated are shown in Table 5, with the dependent variable in the models being a plant's environmental outcome (measured in equivalent CO2 emissions). The regression in Model 1 includes solely the control variables, which are: plant size, firm size, sector emissions and efficacy of the emissions market. Model 2 includes our independent variables: assimilation and experience. Finally, Model 3 includes the interaction between assimilation and experience. The incorporation of these variables significantly increases the model's R2. Table 4 shows the correla- tions between the variables in our model.

Regarding the results observed in the four control variables, it should be noted that while size has a non-significant coefficient, firm size has a significant and positive correlation coefficient. This

Table 3 Measures of assimilation.

Item Rate the extent to which the following statements are true for your firm.

Top management commitment

The facility's management addresses environmental management in a diligent and effective manner.

Strategic plan The firm considers environmental aspects when it competes with its rivals.

Environmental policy The firm pursues its operations according to its established environmental policy.

Objectives and goals Those responsible for each function understand the environmental goals affected by their tasks.

Leadership The firm's employees acknowledge the role the facility's management plays as a leader and guide in environmental matters.

Communication Stakeholders (customers, the community, employees, contractors…) are familiar with the firm's environmental policy, as well as with any other environmental data they may require.

Allocating responsibilities Each employee is absolutely clear about their environmental responsibilities.

Motivation Employees are engaged with the firm's environmental policy.

Team in charge The team responsible supervises the system and informs the facility's management of its performance and of opportunities for improvement.

Training Employees have developed the necessary competencies in environmental matters through training schemes.

Documentation system The system's environmental information/ documentation is always accessible and updated.

Impact identification The firm prioritises its environmental actions by first addressing the more salient environmental issues.

Emergency plan The emergency plan covers all possible procedures and controls in anomalous operating conditions, emergency situations or potential accidents.

Continuous improvement The appropriate corrective actions are applied as soon as any non-compliance is detected.

Top management review Environmental goals and programmes are updated on the basis of the results of the reviews conducted by management.

Stakeholders Stakeholders (customers, the community, employees, contractors…) are satisfied with the firm's endeavour in environmental matters.

Legislation The firm complies with environmental legislation and pre-empts its prescriptive deadlines and requirements.

Audits The programme of internal audits provides valuable information for the firm's management.

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212 209

means that the larger a firm is, the poorer its environmental outcome will be; however, this effect is not recorded at plant level. This is possible because small firms do not invest their money in response to stakeholder pressure, but instead do so to improve their environmental performance (Bowen, 2002) and they are more prone to invest in proactive environmental changes (Jones and Klassen, 2001). Second, as we predicted, firms in polluting in- dustries have a poorer environmental outcome than those oper- ating in lower-emission industries. Finally, the efficacy of the emissions market variable has a significant and positive correlation coefficient. It stands to reason that those plants emitting more CO2 than permitted by the allowances assigned to them are associated with a poorer environmental outcome. This coefficient allows us to discount the financial incentive effect resulting from the fact the emissions allowance quota is not exceeded in the environmental outcome (Dasgupta at al., 2000). These results confirm the reli- ability of the sample's data, as they are consistent with prior studies.

Hypothesis 1 predicts a positive correlation between the assimilation of the EMS and environmental performance. This model's coefficient in the model is, however, non-significant. Hy- pothesis 2 predicts a positive correlation between experience in the use of the EMS and environmental performance. The coefficient of the experience variable in Model 2 is negative and significant, whereby we may conclude that there is evidence to validate Hy- pothesis 2. Hypothesis 3 predicts a moderating effect of experience in the relationship between the assimilation of the EMS and envi- ronmental performance. In order to verify the moderating hy- pothesis, we used the method propounded by Busemeyer and Jones (1983), assuming that the moderation is linear and can therefore be captured by the intersection of the experience and assimilation variables. The results of the variation can be seen in Model 3. We can see that the coefficient of the interaction term is significant and negative, so we may affirm that the data in our sample validate the

hypothesis formulated. It may therefore be posited that experience produces a positive moderating effect between assimilation and environmental outcome. This induces us to reconsider Hypothesis 1, as the effect of the moderation is so significant that the direct effect between assimilation and environmental outcome loses in- terest, as that relationship is explained through the experience a firm may have in the management of its EMS.

5. Discussion

In spite of the numerous studies that explain the environmental outcomes of firms with an EMS, little progress has been made regarding the true reasons for the differences in those outcomes. In this paper, we have returned to the concept of the assimilation of a management system (Naveh and Marcus, 2004) to explain the disparity of outcomes in environmental management.

The results forthcoming highlight two key aspects. First, the fact that an environmental outcome is the result of a complex and unique organisational process, in which importance should be given not only to the management standard being applied but also to its degree of assimilation. Second, the experience effect is deci- sive for recording the best environmental outcomes (due both to its direct effect and to its moderating effect). All this reveals the oversimplification with which scholars have addressed these is- sues, in which the tendency has been to homogenise the environ- mental management of all certified firms.

From this perspective, it is interesting to reread the conclusions of previous papers that provided evidence to show that firms with a certified EMS based on the ISO 14001 standard do not outperform the outcomes of those firms that also have an EMS (uncertified), although they do improve upon those firms without an EMS (Russo, 2002; King et al., 2005). This may be because the necessary expe- rience is accumulated not only through the system's certification, but also from when it is first implemented. Other scholars,

Table 4 Correlations between variables.

1 2 3 4 5 6 7 8

1. CO2e Emissions 2. Facility Size #0.124 3. Firm size 0.239** #0.055 4. Industry emissions 0.323*** #0.367*** 0.32*** 5. ETS performance 0.212** #0.028 #0.14* #0.065 6. Experience #0.168* 0.159* 0.295*** #0.081 #0.107 7. Assimilation 0.156* #0.079 0.211** 0.176* 0.089 0.096 8. Expe * Assi #0.135* 0.093 0.352*** 0.013 #0.093 0.934*** 0.406***

Note: N ¼ 154; ***p < 0.001; **p < 0.01; *p < 0.05.

Table 5 Assimilation and experience impact on environmental output.

Dependent variable: CO2e emissions

Model 1 Model 2 Model 3

b b b

Facility Size #0.005 0.021 #0.008 Firm size 0.185* 0.243** 0.257** Industry emissions 0.278** 0.24** 0.269** ETS performance 0.256*** 0.235** 0.202** Assimilation 0.062 0.538*** Experience #0.204* 1.163*** Experience $ assimilation #1.514*** F 8.68*** 7.186*** 8.317*** R2 0.189 0.227 0.285 DR2 0.038* 0.058***

Note: Multiple regression. Standardized coefficients. ***p < 0.001; **p < 0.01; *p < 0.05.

Fig. 2. The moderating effect of experience on the relationship between assimilation and environmental outcome.

G. Lannelongue et al. / Journal of Environmental Management 147 (2015) 203e212210

however, report that firms with a certified EMS do in fact improve their environmental outcomes as regards those that are not certi- fied or do not have an EMS (Melnyk et al., 2003; Dahlstr€om et al., 2003; Potoski and Prakash, 2005a,b; Arimura et al., 2008). Ac- cording to our model, these differences may be explained by the assimilation and experience of these firms in their environmental management, and not by the certification or otherwise of their EMS.

Furthermore, this approach allows delving further into one of the more prolific research currents in the literature on environ- mental performance. Given that environmental outcomes are similar regardless of whether or not an EMS has been certified, certified firms make the most of such recognition to reveal some kind of opportunistic behaviour (Lannelongue and Gonz#alez- Benito, 2012). This paper may explain, on the one hand, why firms record different environmental outcomes with a similar level of assimilation and, on the other, why firms have a different envi- ronmental outcome due to their different level of assimilation. Only in the latter case could we refer to opportunistic behaviour, always comparing firms with a similar level of experience. We need to know the type of management that is being pursued within the firm (e.g., the degree of assimilation of the EMS) and for how long (e.g., date of EMS certification). Therefore, by opening the black box, we encounter enormous diversity in the environmental perfor- mance of organisations, which contradicts (at least in part) Neo- Institutional theory (Heras-Saizarbitoria and Boiral, 2013), whereby organisations should tend towards isomorphic behaviour (DiMaggio and Powell, 1983).

Our study highlights the importance time has in the accumu- lation of resources for the development of the capabilities associ- ated with environmental management (Hart, 1995; Arag#on-Correa, 1998). Time has a twin effect on environmental management: first, an experience effect that improves environmental outcomes through the constant use of EMS and through the pressure of auditing systems. We should remember that continuous improve- ment is one of the system's basic pillars, so this is an effect that is foreseen and pursued in the ISO 14001 standard, and as such should be considered a key characteristic of those implementing it. What's more, time has another effect on the more complex capa- bilities present in environmental management. We have approached that measurement through the combined effect of assimilation and time on the environmental outcome, with this impact being positive and significant.

Fig. 2 provides a depiction of the moderating effect of experi- ence on the relationship between assimilation and environmental outcome. In order to present this depiction, we have taken three values for experience and three for assimilation (mean minus one standard deviation, mean, mean plus one standard deviation). The graph plots the value of environmental performance for each combination of those values. We can clearly see how the lines have different slopes depending on the variation in experience. Indeed, with newbie or middle experience, an increase in assimilation has hardly any negative effect on environmental outcome (higher emissions). By contrast, with aged experience, assimilation has a major impact on the improvement in the environmental outcome. This graph reveals the negative effects assimilation has on the environmental outcome when it is prematurely obtained (with little experience) or what we understand as time compression diseconomies in environmental management.

The results forthcoming have major implications for scholars and managers alike. Firstly, studies on environmental management should take into account the heterogeneity of the environmental practices in each plant, defined largely by the degree of assimilation of the EMS. Secondly, the experience effect has been undervalued in research into environmental management. Nevertheless, the very

understanding of an EMS based on continuous improvement in- dicates that it has a major direct effect. What's more, this paper has shown it also has a significant impact on furthering the assimilation of best practices in environmental management.

This is something that should be closely considered by man- agers when planning their environmental goals, as the greater assimilation of the EMS than that initially required may lead to poorer environmental outcomes than those that would be obtained through a lesser assimilation of the standard. This conclusion should also provide food for thought for the standard's auditors and their expectations for organisations with little experience in envi- ronmental management.

It is fair to say that our conclusions are constrained by certain aspects of our study. First, our sample involves especially polluting firms in which the effects studied can be seen more clearly. Second, we have measured the experience effect, not through a longitudinal study, but through a mainstream sample. There is a need to collate detailed data on a firm's environmental management (obtained via a questionnaire) on repeated occasions over time. And third, only environmental managers completed the questionnaire. The results may be influenced by the self-reporting bias and we are not taking into account directly other stakeholders perspectives inside and outside the organization.

The next research question should revolve around the appro- priate pace, considering an organisation's idiosyncrasies, for properly assimilating the EMS and thereby recording the best environmental outcomes.

The research presented here has developed the concept of the assimilation of an EMS and described its impact on an organisa- tion's environmental performance depending on its level of expe- rience in environmental management. We have seen how the materialisation of the system's requirements in the organisation's everyday tasks is only beneficial in environmental terms when the necessary time has elapsed to enable the firm to acquire sufficient expertise and develop organisational capabilities related to envi- ronmental management. An attempt to implement advanced environmental management practices more quickly than is expe- dient would lead to time compression diseconomies in a firm's environmental management.

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