IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/59451.html
   My bibliography  Save this paper

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

Author

Listed:
  • Sahu, Santosh Kumar
  • Krishnan, Narayanan

Abstract

Obtaining ISO certification has become a status symbol for adopting environmentally benign 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 analysing the impact of ISO Certification on technical efficiency, this paper uses data from the CMIE Prowess for the period 2007-2012. 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 confirms that firms that are ISO certified and doing R&D are better off in technical efficiency as compared to the others.

Suggested Citation

  • Sahu, Santosh Kumar & Krishnan, Narayanan, 2014. "Environmental Certification and Technical Efficiency: A Study of Manufacturing Firms in India," MPRA Paper 59451, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:59451
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/59451/1/207.pdf
    File Function: original version
    Download Restriction: no
    File URL: https://mpra.ub.uni-muenchen.de/59620/1/207.pdf
    File Function: revised version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Connolly, Robert A. & Hirschey, Mark, 1988. "Market value and patents : A Bayesian approach," Economics Letters, Elsevier, vol. 27(1), pages 83-87.
    2. Zvi Griliches, 1984. "Market Value, R&D, and Patents," NBER Chapters, in: R&D, Patents, and Productivity, pages 249-252, National Bureau of Economic Research, Inc.
    3. Bellas, Allen S., 1998. "Empirical evidence of advances in scrubber technology," Resource and Energy Economics, Elsevier, vol. 20(4), pages 327-343, December.
    4. Ian Lange & Allen Bellas, 2005. "Technological Change for Sulfur Dioxide Scrubbers under Market-Based Regulation," Land Economics, University of Wisconsin Press, vol. 81(4).
    5. Nick Johnstone & Ivan Haščič & David Popp, 2010. "Renewable Energy Policies and Technological Innovation: Evidence Based on Patent Counts," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 133-155, January.
    6. Heidi A. Pickman, 1998. "The effect of environmental regulation on environmental innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 7(4), pages 223-233, September.
    7. Megna, Pamela & Klock, Mark, 1993. "The Impact on Intangible Capital on Tobin's q in the Semiconductor Industry," American Economic Review, American Economic Association, vol. 83(2), pages 265-269, May.
    8. Adam B. Jaffe & Karen Palmer, 1997. "Environmental Regulation And Innovation: A Panel Data Study," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 610-619, November.
    9. Hall, Bronwyn H, 1993. "The Stock Market's Valuation of R&D Investment during the 1980's," American Economic Review, American Economic Association, vol. 83(2), pages 259-264, May.
    10. Popp, David, 2006. "International innovation and diffusion of air pollution control technologies: the effects of NOX and SO2 regulation in the US, Japan, and Germany," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 46-71, January.
    11. Chung, Kee H. & Wright, Peter & Kedia, Ben, 2003. "Corporate governance and market valuation of capital and R&D investments," Review of Financial Economics, Elsevier, vol. 12(2), pages 161-172.
    12. David Popp, 2003. "Pollution control innovations and the Clean Air Act of 1990," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 22(4), pages 641-660.
    13. Hirschey, Mark, 1982. "Intangible Capital Aspects of Advertising and R&D Expenditures," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 375-390, June.
    14. Xu, Ming & Zhang, Chu, 2004. "The explanatory power of R&D for the cross-section of stock returns: Japan 1985-2000," Pacific-Basin Finance Journal, Elsevier, vol. 12(3), pages 245-269, June.
    15. Sarkar, Jayati & Sarkar, Subrata, 2009. "Multiple board appointments and firm performance in emerging economies: Evidence from India," Pacific-Basin Finance Journal, Elsevier, vol. 17(2), pages 271-293, April.
    16. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
    17. Brunnermeier, Smita B. & Cohen, Mark A., 2003. "Determinants of environmental innovation in US manufacturing industries," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 278-293, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pramod Kumar Naik, 2014. "R&D Intensity and Market Valuation of Firm: A Study of R&D Incurring Manufacturing Firms in India," Journal of Studies in Dynamics and Change (JSDC), ISSN: 2348-7038, Voices of Inclusive Change and Expressions- (VOICE) Trust, Dehradun, Uttarakhand, vol. 1(7), pages 295-308., November.
    2. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    3. Ren, Shenggang & Hu, Yucai & Zheng, Jingjing & Wang, Yangjie, 2020. "Emissions trading and firm innovation: Evidence from a natural experiment in China," Technological Forecasting and Social Change, Elsevier, vol. 155(C).
    4. Park, Joo Young, 2014. "The evolution of waste into a resource: Examining innovation in technologies reusing coal combustion by-products using patent data," Research Policy, Elsevier, vol. 43(10), pages 1816-1826.
    5. Peters, Michael & Schneider, Malte & Griesshaber, Tobias & Hoffmann, Volker H., 2012. "The impact of technology-push and demand-pull policies on technical change – Does the locus of policies matter?," Research Policy, Elsevier, vol. 41(8), pages 1296-1308.
    6. Francesco Nicolli & Francesco Vona & Lionel Nesta, 2012. "Determinants of Renewable Energy Innovation: Environmental Policies vs. Market Regulation," Working Papers 201204, University of Ferrara, Department of Economics.
    7. Durán-Romero, Gemma & López, Ana M. & Beliaeva, Tatiana & Ferasso, Marcos & Garonne, Christophe & Jones, Paul, 2020. "Bridging the gap between circular economy and climate change mitigation policies through eco-innovations and Quintuple Helix Model," Technological Forecasting and Social Change, Elsevier, vol. 160(C).
    8. repec:hal:spmain:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242 is not listed on IDEAS
    9. repec:hal:wpspec:info:hdl:2441/eu4vqp9ompqllr09j0h0ji242 is not listed on IDEAS
    10. Galloway, Emily & Johnson, Erik Paul, 2016. "Teaching an old dog new tricks: Firm learning from environmental regulation," Energy Economics, Elsevier, vol. 59(C), pages 1-10.
    11. Brian Chi-ang Lin & Siqi Zheng & Nicolò Barbieri & Claudia Ghisetti & Marianna Gilli & Giovanni Marin & Francesco Nicolli, 2016. "A Survey Of The Literature On Environmental Innovation Based On Main Path Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 30(3), pages 596-623, July.
    12. Cameron Hepburn & Jacquelyn Pless & David Popp, 2018. "Policy Brief—Encouraging Innovation that Protects Environmental Systems: Five Policy Proposals," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(1), pages 154-169.
    13. Raphael Calel & Antoine Dechezleprêtre, 2016. "Environmental Policy and Directed Technological Change: Evidence from the European Carbon Market," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 173-191, March.
    14. Lee, Jaegul & Veloso, Francisco M. & Hounshell, David A., 2011. "Linking induced technological change, and environmental regulation: Evidence from patenting in the U.S. auto industry," Research Policy, Elsevier, vol. 40(9), pages 1240-1252.
    15. Vanessa Oltra & Rene Kemp & Frans P. De Vries, 2010. "Patents as a measure for eco-innovation," International Journal of Environmental Technology and Management, Inderscience Enterprises Ltd, vol. 13(2), pages 130-148.
    16. Sanni, Maruf, 2018. "Drivers of eco-innovation in the manufacturing sector of Nigeria," Technological Forecasting and Social Change, Elsevier, vol. 131(C), pages 303-314.
    17. Wang, Yan & Shen, Neng, 2016. "Environmental regulation and environmental productivity: The case of China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 758-766.
    18. del Río González, Pablo, 2009. "The empirical analysis of the determinants for environmental technological change: A research agenda," Ecological Economics, Elsevier, vol. 68(3), pages 861-878, January.
    19. Rubashkina, Yana & Galeotti, Marzio & Verdolini, Elena, 2015. "Environmental regulation and competitiveness: Empirical evidence on the Porter Hypothesis from European manufacturing sectors," Energy Policy, Elsevier, vol. 83(C), pages 288-300.
    20. Böhringer, Christoph & Moslener, Ulf & Oberndorfer, Ulrich & Ziegler, Andreas, 2012. "Clean and productive? Empirical evidence from the German manufacturing industry," Research Policy, Elsevier, vol. 41(2), pages 442-451.
    21. Carraro, Carlo & De Cian, Enrica & Nicita, Lea & Massetti, Emanuele & Verdolini, Elena, 2010. "Environmental Policy and Technical Change: A Survey," International Review of Environmental and Resource Economics, now publishers, vol. 4(2), pages 163-219, October.
    22. Lorena D’Agostino, 2015. "How MNEs respond to environmental regulation: integrating the Porter hypothesis and the pollution haven hypothesis," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 245-269, August.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:59451. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.