Environmental Audits and Third Party Certification of Management Practices: Firms’ Motives, Audit Orientations, and Satisfaction with Certification

• Author: Kee‐Hung Lai,Andy C.L. Yeung,Daniel Prajogo,Daphne Yiu,Pavel Castka
• Published date: 01 July 2016
• Date: 01 July 2016
• DOI: http://doi.org/10.1111/ijau.12068

Environmental Audits and Third Party Certification of Management Practices:

Firms’Motives, Audit Orientations, and Satisfaction with Certification

Daniel Prajogo,

1

Pavel Castka,

2

Daphne Yiu,

3

Andy C.L. Yeung

3

and Kee-Hung Lai

3

1

Department of Management, MonashUniversity, Australia

2

Department of Management, Marketing and Entrepreneurship, University of Canterbury, New Zealand

3

Department of Logistics and Maritime Studies, The Hong KongPolytechnic University, PRC

In this study, we investigate the interplaybetween motives for certification, audit orientations and firms’benefitsand

satisfaction with ISO 14001 certification. We demonstrate that firms’motive for certification is an important

determinant in firms’satisfaction. Firms with internal motivations (such as improvements in their environmental

performance) require audits that foster continuous improvement and tend to report greater benefits and satisfaction

with the thirdparty certification comparedto those that are driven by externalmotives (such as to match competitors’

actions). Ourfindings show that only an improvement orientationtowards auditing would leadto clients’satisfaction

with ISO 14001. In contrast, external motives for pursuing ISO 14001 certification make firms less focused on

environmental improvement through the standard, and, thus, less satisfied with the certification. Our research

demonstrates how different motives for seeking certification lead to different satisfaction levels with voluntary

standards in an environmental management context.

Key words: Auditing, environmental management system (EMS), ISO 14001 certification, motives for certification,

satisfaction with certification

INTRODUCTION

Over two decades ago, voluntary environmental standards,

such as ISO 14001, emerged as global instruments to

address environmental degradation and to provide firms

with a framework to manage their environmental systems

(Castka & Balzarova, 2008; Büthe & Mattli, 2011). Their

emergence was a response to difficulties in harmonizing

and enforcing national and international law, which often

proved ineffective in addressing global issues. At the

same time, environmental management has moved to

the forefront of boards’and managers’attention (Buzzelli,

1991; Greeno, 1992; Porter & van der Linde, 1995). ISO

14001 is a response to these forces. It is a voluntary

standard and involves a complex set of steps such as an

evaluation of environmental aspects and impacts,

establishment of environmental management objectives

and policy, training, implementation and operation,

monitoring and corrective actions, documentation and,

importantly, environmental audit by a third party

certification body (Delmas, 2002; Gomez & Rodriguez, 2011).

The scholarly literature provides mixed opinions about

the effectiveness of ISO 14001 (Castka & Corbett, 2015);

however, on balance, academic studies point to a positive

impact of ISO 14001 on environmental performance. The

academic literature also shows a remarkable convergence

in agreeing that the variation amongst certified firms

impacts significantly the effectiveness of ISO 14001. In

general, the institutional literature attributes the variation

to the ‘decoupling effect’; for example, the difference

between stated practices and the actual daily operational

routines of firms (Meyer & Rowan, 1977). In terms of

voluntary standards, the variation has been attributed to

various forces such as different firms’motives for

certification (Prajogo, 2011); company culture (Balzarova

et al., 2006; Sandholtz, 2012); institutional nature ofvarious

industriesor variations of the quality of consultingservices

during the implementation phase (Ivanova, Gray, &

Sinha, 2014). However, the research thus far has paid

comparatively less attention to environmental audits and

their role in ISO 14001 certification (Dogui, Boiral, &

Heras-Saizarbitoria, 2014)

Environmental audits have a critical role in ISO 14001

certification. The audit is conducted by accredited

certification bodies and firms have a wide choice of

certification bodies for their selection (e.g., in Australia

and New Zealand, over 20 certification bodies are

accredited for ISO 14001 audits). The environmental audit

determines whether a firm meets the requirements of the

standard,and, if so, it can publicly claima compliance with

ISO 14001. Even though ISO 14001 certification is a

pass/fail type of certification (Busch, 2011), the standard

also requires firms to continuously improve their

environmental management efforts (Barthelemy & Zairi,

1994; Poksinska, 2003). However, the practice shows that

many firms in fact try to gain the certification at the

minimal level and are not necessarily interested (or in fact

resist) ‘continuous improvement’(Lal, 2004). Consequently,

firms seem to be seeking certification bodies that match

their preference for an environmental audit (Castka et al.,

2015). Yet this aspects of research on environmental

certification has not been adequately addressed in the

literature (Heras-Saizarbitoria & Boiral, 2012).

Our study aims to fill the aforementioned gaps in the

literature. We build on the literature on voluntary

standards and adopt the constructs that have been

developed and fine-tuned by numerous studies. Central

to our researchis a construct of ‘motivationfor certification’

(defined in our study as an approach that an individual

firm takes to implement and maintain ISO 14001

certification) and ‘auditing orientation’(defined in our

study as an approach that an individual firm takes in

choosing their preferred style of environmental audit). We

recognize that the past research has linked motivation for

certification to firms’performance (Naveh & Marcus,

Correspondence to: Dr Daniel Prajogo, Department of Management,

Monash University, PO Box 137, Caulfield East, Victoria, Australia.

Email: daniel.prajogo@monash.edu

International Journal of Auditing doi: 10.1111/ijau.12068

Int. J. Audit. 20:202–210 (2016)

©2016 John Wiley& Sons Ltd ISSN 1090-6738