Diffusion of ISO 14001 environmental management systems in China: rethinking on stakeholders’ roles

Since the release of ISO 14001 in 1996, China has witnessed a surge in the number of ISO 14001 certification. As an international environmental standard, ISO 14001 has two basic functions: one is playing as an environmental management instrument, while the other as a signal of firms’ better environmental performance to stakeholders. Based on the stakeholder theory, we have examined the effects of community, regulatory and some organizational stakeholders on the diffusion of ISO 14001 certification at Chinese provincial levels. Using a panel data of ISO 14001 certification from each province for the period of 2004–2008 in China, empirical evidence of such relations is found. The finding reveals that signaling to foreign customers and community stakeholders plays a dominant role in encouraging diffusion of ISO 14001 certification. However, as an important organizational stakeholder, foreign investors have shown no significant effect on the diffusion of ISO 14001 in China.