Productivity, Capital Intensity, and ISO 14001 Adoption: Theory and Evidence

20 Pages Posted: 28 Jan 2019

See all articles by Bin Ni

Bin Ni

Toyo University - Business Administration

Date Written: February 2019

Abstract

The determinants of ISO 14001 adoption have been considered to fall into two categories: external pressure from environment‐oriented stakeholders or customers and internal need due to expected future benefits. In this study, we further elaborate the mechanism underlying firms’ adoption of the standard by investigating the inter‐relationship among firms’ productivity, capital intensity, and decision making regarding adoption. Applying a general equilibrium model, we show that under optimal conditions, highly productive firms can benefit more from adoption. Moreover, technological advancements potentially drive up firms’ capital intensity and this positively affects their incentive for adoption. The empirical practice using firm‐level data in Vietnam verifies our predictions with robustness. In addition, we find that the phenomenon outlined above becomes even more obvious in the manufacturing sectors.

Suggested Citation

Ni, Bin, Productivity, Capital Intensity, and ISO 14001 Adoption: Theory and Evidence (February 2019). Review of Development Economics, Vol. 23, Issue 1, pp. 395-414, 2019, Available at SSRN: https://ssrn.com/abstract=3322790 or http://dx.doi.org/10.1111/rode.12547

Bin Ni (Contact Author)

Toyo University - Business Administration ( email )

5-28-20 Hakusan
Bunkyo-ku
Tokyo, 112-8606
Japan

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