1-s2.0-S0301479714003570-main2.pdf

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

journal homepage: www.elsevier.com/locate/jenvman

http://dx.doi.org/10.1016/j.jenvman.2014.04.035
0301-4797/© 2014 Elsevier Ltd. All rights reserved.

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 …

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