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Environmental Certification and Technical Efficiency: A Study of Manufacturing Firms in India

Author

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  • Santosh Kumar Sahu

    (Madras School of Economics)

  • K. Narayanan

    (Indian Institute of Technology Bombay)

Abstract

Obtaining environmental certification (such as the ISO-14,001) has become a status symbol for adopting greener practices for the corporate sector in emerging economies. Such certification can help improve the global visibility of firms and is mandated in international trade. This paper attempts to examine the impact of such certifications on technical efficiency of firms belonging to the manufacturing sector in India. In analyzing the impact of ISO Certification on technical efficiency, this paper uses data from the CMIE Prowess from 2007 to 2012. In the first step, the paper estimates technical efficiency for the sample firms and then examines the determinants of inter-firm differences in technical efficiency using firm specific characteristics. The results of this study conclude that there are substantial inter-firm differences in technical efficiency and they are systematically different based on firm age, firm size, debt capital, MNE affiliation, and ISO certification. ISO certification, especially maintaining the standards associated with it, turned out to be an important factor in making the firms achieve higher technical efficiency. In addition, the results of this study also confirm that firms that are ISO certified and doing R&D are better off in technical efficiency as compared to others.

Suggested Citation

  • Santosh Kumar Sahu & K. Narayanan, 2016. "Environmental Certification and Technical Efficiency: A Study of Manufacturing Firms in India," Journal of Industry, Competition and Trade, Springer, vol. 16(2), pages 191-207, June.
    • Handle: RePEc:kap:jincot:v:16:y:2016:i:2:d:10.1007_s10842-015-0213-9
    DOI: 10.1007/s10842-015-0213-9
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    Cited by:

    1. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.
    2. Dewi Mustikaningsih & Martha Fani Cahyandito & Umi Kaltum & Sri Sarjana, 2019. "Building Business Performance through Partnership Strategy Model: Evidence from Renewable Energy Industry in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 297-307.
    3. Bishwanath Goldar, 2023. "ICT Investment, Adoption of ISO 14000 Certification, and Export Performance in Indian Manufacturing Plants," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 21(3), pages 523-553, September.

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    More about this item

    Keywords

    ISO certification; R&D; Efficiency; Manufacturing Firms; India;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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