The effect of ISO 14001 on environmental performance: Resolving equivocal findings

Previous research evaluating ISO 14001 certification has shown that it both increases environmental performance and has no effect. We hypothesize that the equivocal findings are due to two factors: institutional pressures arising from differences in regulatory settings across and within countries, and typical methodological approaches for addressing endogeneity. We examine these factors using facility-level data from the United States and Japan for two environmental impacts. After applying Altonji, Elder, and Taber’s (2005) method for dealing with the case where there are no potential instruments, we find evidence that the effectiveness of these environmental governance tools varies across countries and type of environmental impact being assessed.