THE SPILLOVER EFFECT OF ISO 14001 AND OHSAS 18001 ON CORPORATE SUSTAINABLE PERFORMANCE IN CHINA

(1)

THE SPILLOVER EFFECT OF ISO 14001 AND

OHSAS 18001 ON CORPORATE SUSTAINABLE

PERFORMANCE IN CHINA

by Yuying Liu

University of Groningen Faculty of Economics and Business

Thesis for MSc International Business & Management

Supervisor: Dr. M.M. (Miriam) Wilhelm Co - Assessor: Dr. C. (Chengyong) Xiao

(2)

ABSTRACT

Sustainability first entered into the international scene in 1992 (Paul, 2008). Achieving sustainable development can bring a healthy environment, economic prosperity and social justice, which are important elements to ensure the well-being and quality of life of present and future generations (Learning for a Sustainable Future - Teacher Centre). Kahn (1995) divided the substantiality into three dimensions, namely, economic sustainability, social sustainability, and environmental sustainability (Basiago, 1998). In China, the new ‘One Belt and One Road’ strategy concentrates on developing a green economy, and constructing a ‘Harmonious Society’ which promotes the improvement of social sustainability. Chinese corporates are facing stricter sustainability governance from governments and higher demands regarding sustainability from the market. Therefore, an increasing number of companies would like to improve their sustainable performance through obtaining International Certification Standards for sustainability, such as ISO 14001 and OHSAS 18001. Previous researchers have demonstrated that ISO 14001 influences corporate environmental sustainability and OHSAS 18001 influences the corporate social sustainability. This article will explore whether there is a spillover effect of ISO 14001 on corporate social sustainability or OHSAS 18001 on environmental sustainability.

(4)

1. INTRODUCTION

(5)

their sustainability development (Borella, 2016).

(6)

(7)

2. LITERATURE REVIEW

Literature provides essential information with regards to finding preliminary answers for research questions. The first part of this section discusses theoretical information regarding sustainability and introduces two certificates, namely, ISO 14001 and OHSAS 18001. Secondly, it will explore the spillover effect of two certificates on the sustainability of Chinese corporates. Next, it will analyze the moderation effect of the share of females. The last part discusses the integrated effect of ISO 14001 and OHSAS 18001.

2.1 Sustainability

(8)

and one is widely accepted. Sustainability represents “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” (Bruntland Report for the World Commission on Environment and Development (1992). Elkington (1994) coined the ‘Triple Bottom Line’ (TBL) framework to construct sustainability, as can be seen in Figure 1. In order to achieve corporate sustainability, the company must to adhere to the three bottom lines. The first one is the traditional profit and loss. The second one refers to people, which requires companies to take social responsibility through their business operations. The last one is the ‘Planet’, which shows that companies have duties for the environment (Author, 2009).

FIGURE 1. TRIPLE BOTTOM LINE

(9)

(10)

poverty. Nowadays, more companies in different industries develop special, beneficial or non-commercial programs, which are closely associated with their industries. For instance, Nestle focuses on water scarcity, infrastructure of factories and the health and well-being of people living near factories (Frontstream, 2013).

2.2 Sustainability Development in China

Over the past 30 years, China has experienced a shift from a poor inward-agricultural country to a global manufacturing powerhouse (Cheung & Lee, 2017). China is still progressing in terms of industrialization and urbanization (Li et al., 2016). China has been widely accepted as the largest and the most popular emerging market, and its GDP was evaluated as the world's-second largest economy after the United States (Cheung et al., 2017).

(11)

(Steinbock, 2017). In addition to this, another main contribution of the ‘One belt and One Road’ relates to the deepening the understanding of developing the ‘Green Economy’. The aim of ‘Green Economy’ is to keep the economic growth and to minimize the environmental impact (Bapna & Talberth, 2011). The ‘One belt and One Road’ emphasizes some further points: environmental protection standards should be actively applied in research and development, production, and logistics; Developing environmental protection in industry is a key task of the ‘One Belt and One road’ strategy; Developing low-carbon environmental technology and industries is vital to support the ‘One belt and One road’ (Zhou, 2016). Especially, the One Belt and One Road Forum was held in Beijing in May, 2017. This makes the ‘Green Economy’ a hot topic again in China and further improve the public awareness of sustainability (Griffiths, 2017). In the new situation, more domestic and foreign corporates are willing to invest more in sustainable programs. For example, Mr. Wang, the chairman of the China Elion Resources Group (ELION) announced the investment of almost 15 Billion dollars in developing Desert Economy, improving Ecosystem Restoration, and establishing an Ecological landscape, at the meeting (Zhang, 2017).

(12)

associated with social sustainable development issues, particularly regarding the health and safety issues of people. For example, improved democratic and legal systems are more effective in terms of protecting peoples’ rights and interests. It is also required that the employment rate is to maintain in a high level to ensure urban and rural security (Xinhua News Agency, 2006).

Overall, China, as one of the most important emerging markets in the world, is confronted with a tradeoff issue between economy and ecology (Borella, I. L., Borella, C., & Rodrigues, 2016). Besides maintaining economic growth, China has to give more priority to environmental and social sustainability issues when designing business plans or making corporate decisions (Rondinelli & Berry, 2000).

2.3 Sustainability Governance in China

The Chinese economic reform started in 1978, and was initiated by Deng Xiaoping. Many market principles began to change. For example, Agriculture was decollectivized. Foreign investment was permitted. Furthermore, some of the state-owned industry was privatized (Chow, 2004). Over the past 40 years, the Chinese market economy system has been constructed and improved. Investment, production, and distribution are determined by the interplay of supply and demand (Pariona, 2016). In the economic system, the relationship between the government and market is closed. When market failure exists, governments will set up policies or strategies to repair it and to maintain a stable and perfect market environment (Zhang & Guo, 2014; Arrow, 1969).

(13)

market are two main objectives. The market forces are also emphasized with increasingly strengthened economic forces (China National Report on Sustainable Development, Chapter 1; Kärnä, Hansen, & Juslin, 2003). The government plays a leading role in setting up a sustainable market and controlling the sustainability of corporates. Governments are also responsible for designing relative laws, policies and to explore the sustainable development model.

(14)

engineering research centers, 729 national-level corporate technology centers, and 5,532 provincial-level corporate technology centers (China National Report on Sustainable Development, Chapter 2).

(15)

2.4 Certifications - A Form of Sustainability Governance

2.4.1 Certification of ISO 14001 and OHSAS 18001

(16)

and environmental sustainability. It is an effective way to bolster the customer’s loyalty and market shares (Raynolds, 2007). On the other hand, international certifications reduce many barriers in foreign trade. Business partners, prospective customers and governments are more confident about companies with certifications than those without them. This provides a common language platform for sustainability issues among businesses partners and also reduces governance costs (Gray & Stites, 2013).

Moreover, some international certifications are very popular with global companies, including ISO 9001 for quality, and ISO 14001 for environment and OHSAS 18001 for occupational health and safety (Jonker, 2014). This article will focus on two certifications: ISO 14001 and OHSAS 18001, with the intention to explore the impact of them on corporate environmental and social sustainability in China.

2.5 The Spillover Effect of International Certifications

(17)

code of conduct. As a result, more resources or money is likely to be used efficiently to achieve long-term profits or utilized to their best advantages, which is easier to achieve economic sustainability. In the long run, international certifications for sustainable development have solved the trade-off problem by keeping the coordination between economy and ecology, particularly within companies in international markets (Borella et al., 2016). Even though the aims of most international certificates are used to improve the environmental and social sustainability such as ISO 14001 and OHSAS 18001, it has been found that they simultaneously contribute to companies’ economic sustainability (Borella et al., 2016). In this process, the impact of international certifications for environmental and social sustainability spills over on the economic sustainability. Therefore, a similar spillover effect might exist with the other dimensions of sustainability.

2.6 ISO 14001 for Environmental and OHSAS 18001 for Social

Sustainability in China

2.6.1 ISO 14001 for environmental sustainability in China

(18)

popular. The number of certificates issued has been increasing up to now. According to the ISO Survey 2014, up to 2015, there were totally 319,324 ISO 14001 certificates issued all over the world, which experienced an increase of about 8% (ISO Survey 2015). Meanwhile, China has enjoyed the highest increase in ISO 14001 certificates issued in recent years, particularly with an absolute growth advantage of 13,023 certificates issued in 2014 (ISO Survey 2014).

(19)

changed the method of cleaning the electroplating bath to reduce water waste, and it developed new technology to extract rare metals from electroplating waste (Jiang, 2016). The ability of a corporates environmental management will increase when they follow the guideline of ISO 14001, so ISO 14001 has a positive effect on corporate environmental sustainability in China.

FIGURE 2. The ISO 14000 Series of Standards- (INEM).

Source from: http://www.balticuniv.uu.se/index.php/component/docman/doc_download/850-environmental-management-book-4-chapter-2-overview-of-environmental-standards

(20)

2.6.2 OHSAS 18001 for Social Sustainability in China

(21)

employed several standards of OHSAS 18001 to create specific plans in equipment installation, debugging, routine maintenance, equipment overhaul to reduce accidents, and for hazard identification in operation procedures. This firm eventually found more than 300 hazards (Ma, 2006). This effectively reduced potential risks. Researchers confirmed that OHSAS 18001 provides a number of benefits for companies. For instance, one is that the standards promote firms to build up a complete regulatory mechanism that is effective enough to prevent accidents in the workplace environment. Another is that it can reduce financial and juridical risk caused by the inappropriate behavior of the workers (Bevilacqua et al., 2016).

H1b: OHSAS 18001 has direct and positive effect on corporate social sustainability in China.

2.7 The spillover effect of ISO 14001 and OHSAS 18001 on corporate

sustainability in China

2.7.1 ISO 14001 for Corporate Social Sustainability in China

(22)

development. When companies face higher demands regarding the environmental impact and pressures from the external environment, the best way is to implement technological innovations into their processes, products and services. Technological innovations always reduce cost and lead to a long-term profit (Su & Wang, 2014). For example, Clorox spent three years and more than 20 million dollars developing Green works, a new series of cleaning product. Clorox invested large amount of money and time in the early stages, and this innovative product induced a long-term, stable profit. The US market for cleaning products is worth approximately 200 million dollars, and Clorox accounts for circa 40% of this value (Iberg, 2015). This company improved its reputation due to its technological innovations and its social responsibility. The long-term stable development increased the employees’ sense of security and job satisfaction.

(23)

engagement lead to higher job satisfaction. For example, IBM was awarded the first single worldwide ISO 14001. ISO14001 helps IBM to maintain environmental leadership, and it ensures that IBM proactively concentrates on controlling the interactions of its manufacturing and non-manufacturing activities and improves their sustainable performance (Gasiorowski-Denis, 2015). There are approximately 320,000 workers in IBM, however, 25% of employees are telecommuters, who sometimes work at home (Joshi, Zhang, & Sikka, 2015). This not only reduces the excessive daily energy consumption, but also saves the cost of real estates, totaling more than 7000 million dollars every year. In this policy, the well-being and job satisfaction of the employees will be improved significantly. On the contrary, when workers feel extremely dissatisfied with their jobs, and as a result they will have increased stress levels. A cumulative effect of job satisfaction on health has also been explored. In the early stages, lower job satisfaction leads to employees developing mental health issues. If the mental health problem is not solved, it will be a precursor to future physical problems. Therefore, the job satisfaction has an influence on people’s health (Grabmeier, 2016). Thus, occupational health is a very important part of social sustainability that every company needs to take responsibility in.

(24)

indirect influence on a company’s social sustainable development.

H2a: ISO 14001 has a positive effect on corporate social sustainability in China.

2.7.2 OHSAS 18001 for Corporate Environmental sustainability in China

(25)

emissions in 2015. Shanghai choose LNG container truck to replace previous gasoline equipment, and this has been estimated that by 2027, the shipping-related PM2.5 emissions will decrease by about 3% (Jun, 2016).

(26)

indirectly improves a companies’ environmental sustainability.

H2b: OHSAS 18001 has indirect and positive effect on corporate environmental sustainability in China.

2.8 The moderating effect of the share of females

Previous research projects have revealed that there are differences between males and females in terms of dealing with their work or tasks (Eagly and Johannesen-Schmindt, 2001: 783; Short, Toffel, & Hugill, 2016). Gilligan (1982) systematically describes male and female characteristics through the theory of ‘male voice’ and ‘female voice’. In this theory, male is typified by rights, justice, logic, individual achievement, and identity, and female is associated with care, responsibility and the connection with others (Stonewater, Eveslage, & Dingerson, 1990). Men and women have different ways of thinking and processing information, which leads to different behaviors when dealing with tasks or work (Darley & Smith, 1995). The same policies, norms, regulations and reward systems have different impacts on males and females (Stonewater et al., 1990).

(27)

(28)

would undervalue their own performance (Jonnergård et al., 2010). This kind of discretion and bias is present in real work performance evaluation. Female performance is always considereably underestimated (Jonnergård et al., 2010). This means that when men and women are estimated by the same work performance, the real performance of female is better than that of male. For example, due to public bias, the real female performance valued ‘2’ can be underestimated to ‘1’, so that females and males appear similar in terms of performance valued ‘1’. In order to pursue equal treatment, females have to put more effort in their work. Therefore, even though companies have similar performance in compliance to the codes of conduct of sustainability, one company with more females can have a better, real sustainable performance than one with fewer females.

Overall, one company with more women may like to comply with the codes of conduct including ISO 14001 and OHSAS 18001. Internal personality and external social justices promote females to obey more ethical standards and work harder to achieve better corporate sustainable performance in environmental and social sustainability.

H3a: The share of females moderates the positive relationship between ISO14001 and corporate environmental sustainability in China.

H3b: The share of females moderates the positive relationship between OHSAS18001 and corporate social sustainability in China.

(29)

H3d: The share of females moderates the positive spillover relationship between OHSAS18001 and corporate environmental sustainability in China.

2.9 The Integrated effect of ISO 14001 and OHSAS 18001 on corporate

social sustainability

(30)

based on legal regulations and stakeholders’ requirements regarding environmental and social aspects (Domingues, Sampaio, & Arezes, 2016). After executing these standards, companies depend on their plans to check the process, products, and then report the final results. Finally, based on results, companies look for final solutions to improve their performance (Hou & Tao, 2010). The similar structure provides a good condition for companies to make two certificates and have complementary advantages.

Even though some regulations between ISO 14001 and OHSAS 18001 overlap, some details are totally different (Wang & Jiao, 2001; Hou & Tao, 2010). These differences bring complementary advantages for companies. ISO 14001 focus on the effect on environment, and it will pay more attention on the outside of corporates. However, the control direction of OHSAS 18001 is ‘within the organization’ (Wang, Jiao & Yang, 2001). One company with ISO 14001 and OHSAS 18001 has a better knowledge stock so therefore it is easier to develop reasonable management systems (Wang et al., 2001; Bi, 2008). For example, a chemical company needs to establish a perfect environmental management system through ISO 14001 to control hazardous chemicals or materials’ effect on the environment. It also allows for the set-up of an effective control system to guarantee the employees’ health and safety. In this situation, companies with two certificates will have a more competitive advantage to develop a higher level of sustainability.

(31)

3. RESEARCH FRAMEWORK

In this article, a conceptual model underlies and summarizes the central research question (see figure 4). In this model, there are four main parts being explored: (1) The effect of ISO 14001 in corporate environmental and social sustainability in China. (2) The effect of OHSAS 18001 on corporate social and environmental sustainability in China. (3) The moderation effect of shares of females on the relationship between ISO 14001 and corporate sustainability in China. (4) The integrated effect of ISO 14001 and OHSAS 18001 on corporate sustainability in China.

(32)

4. RESEARCH PLAN

4.1 Research method

This research sets out to examine whether the spillover effect of ISO 14001 and OHSAS 18001 has an influence on corporates sustainability in China. It is difficult to measure how corporates comply with ISO 14001 for environmental sustainability standards and OHSAS 18001 for social sustainability standards simultaneously (Distelhorst, Hainmueller & Locke, 2016). The challenge is addressed by measuring the environmental and social performance of suppliers with audits that assess the compliance with Philips’s EICC codes.

(33)

and urgency. All red and orange questions are major issues in the EICC audit questions classification (Philips EICC Audit Question List – 2010). Philips invites an independent firm to audit the suppliers’ sustainable performance through EICC codes every three years, but sustainability experts from Philips provide training or the sharing of best practices for suppliers to improve their performance.

4.2 Sample and Data

Independent Variable

This research will use statistics from Philips’ database. There were 201 suppliers assessed by the Philips’ EICC codes in China, however, 157 Chinese suppliers were selected to for analysis, focusing on two criteria. This first one was that the audit results of health and safety, and environmental aspects are complete and effective. 35 suppliers lack the complete audited information about health and safety, and environmental aspects. The second was that the selected samples should have been audited by the latest Philips’ EICC codes (2013). Only 9 suppliers were audited by the Philips’ EICC codes (2010). Therefore, these 44 suppliers were deleted and the remaining suppliers were analyzed in this research.

(34)

performance was measured through the audited results of Chinese suppliers assessed by the Philips EICC codes.

Dependent Variable

As mentioned before, on the one hand, Phillips used colors to classify questions based on the severity and urgency of the issue. On the other hand, these questions have also been classified into five aspects including environmental, ethics, labor, health and safety, and general management. This research will focus on two aspects, namely, environment and health and safety. The sum of orange and red questions in environmental or health and safety aspect represented separately the degree of corporate environmental or social sustainability.

(35)

10.15 million tons in 1999 (Liu & Yu, 2003). With the rapid economic growth, this trend is this trend is even going further upwards. In the past, around 40% of waste was produced by the chemical materials and product industry, though with the change of the Chinese economic framework, this has resulted in an increase in E-waste (Liu & Yu, 2003; Zhang, 2011). Waste producers are distributed extensively in China, and the hazardous waste issue is universal (Liu & Yu, 2003). In order to improve the validity of the test, the question (NO. C3.1) was removed from the final audit results. The first dependent variable - the degree of corporate environmental sustainability will be cleaned.

(36)

5. DATA ANALYSIS

The whole calculated process refers to three basic tests, namely, linear regression, moderation model, and Mann-Whitney Test. Testing Inter-item correlations and carrying out a comparison between companies with different certifications was computed in SPSS, and the testing of the moderation effect was completed in the E-views. When selecting useful data, it was worth noting that ** shows that the coefficients were at 5% significant level and *** represents that they were at 1% significant level. These data had a strong reliability.

TABLE 1: Correlations

ISO14001 OHAS18001 ISO14001 Pearson Correlation 1 .386**

Sig. (2-tailed) .000

N 157 157

OHAS18001 Pearson Correlation .386** ₁

Sig. (2-tailed) .000

N 157 157

**. Correlation is significant at the 0.01 level (2-tailed).

TABLE 2: H1a:

(37)

Model R R Square Adjusted R Square Std. Error of the Estimate 1 ,053a _,003 _-,007 _,8604

a. Predictors: (Constant), ISO14001

ANOVAa

Model Sum of Squares df Mean Square F Sig.

1 Regression ,205 1 ,205 ,276 ,600b

Residual 72,545 98 ,740

Total 72,750 99

a. Dependent Variable: EP-1 b. Predictors: (Constant), ISO14001

Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) -1,665E-16 ,860 ,000 1,000 ISO14001 ,455 ,865 ,053 ,526 ,600

a. Dependent Variable: EP-1

H1b: Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 ,084a ,007 -,003 1,9239

(38)

ANOVAa

1 Regression 2,560 1 2,560 ,692 ,408b

Residual 362,750 98 3,702

Total 365,310 99

a. Dependent Variable: OHS-1 b. Predictors: (Constant), OHAS18001

Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2,750 ,240 11,435 ,000 OHAS18001 -,333 ,401 -,084 -,832 ,408

a. Dependent Variable: OHS-1

H2a: Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 ,033a ,001 -,009 1,9297

a. Predictors: (Constant), ISO14001

ANOVAa

(39)

1 Regression ,401 1 ,401 ,108 ,744b

Residual 364,909 98 3,724

Total 365,310 99

a. Dependent Variable: OHS-1 b. Predictors: (Constant), ISO14001

Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) 2,000 1,930 1,036 ,303 ISO14001 ,636 1,939 ,033 ,328 ,744

a. Dependent Variable: OHS-1

H2b: Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 ,093a _,009 _-,002 _,8579

a. Predictors: (Constant), OHAS18001

ANOVAa

1 Regression ,627 1 ,627 ,852 ,358b

Residual 72,123 98 ,736

Total 72,750 99

(40)

b. Predictors: (Constant), OHAS18001 Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) ,391 ,107 3,643 ,000 OHAS18001 ,165 ,179 ,093 ,923 ,358

a. Dependent Variable: EP-1

(41)

TABLE 3 H3a:

Dependent Variable: EP_1

Variable Coefficient Std. Error t-Statistic Prob.

C 1.95E-15 0.863363 2.26E-15 1.0000

ISO14001 0.493431 0.870392 0.566907 0.5721 FEMALE*ISO14001 -0.000105 0.000184 -0.569827 0.5701

R-squared 0.006139 Mean dependent var 0.450000 Adjusted R-squared -0.014353 S.D. dependent var 0.857233 S.E. of regression 0.863363 Akaike info criterion 2.573578 Sum squared resid 72.30342 Schwarz criterion 2.651733 Log likelihood -125.6789 Hannan-Quinn criter. 2.605209 F-statistic 0.299557 Durbin-Watson stat 2.160010 Prob(F-statistic) 0.741829

H3b:

Dependent Variable: OHS_1

C 2.750000 0.240769 11.42174 0.0000

OHAS18001 -0.062874 0.505418 -0.124399 0.9013 FEMALE*OHAS18001 -0.000462 0.000524 -0.880176 0.3809

(42)

Log likelihood -205.9233 Hannan-Quinn criter. 4.210097 F-statistic 0.732362 Durbin-Watson stat 2.024558 Prob(F-statistic) 0.483411

H3c:

Dependent Variable: OHS_1

C 2.000000 1.917415 1.043071 0.2995

ISO14001 0.863946 1.933025 0.446940 0.6559 FEMALE*ISO14001 -0.000615 0.000410 -1.501657 0.1364

R-squared 0.023792 Mean dependent var 2.630000 Adjusted R-squared 0.003663 S.D. dependent var 1.920937 S.E. of regression 1.917415 Akaike info criterion 4.169374 Sum squared resid 356.6187 Schwarz criterion 4.247529 Log likelihood -205.4687 Hannan-Quinn criter. 4.201005 F-statistic 1.182010 Durbin-Watson stat 2.018815 Prob(F-statistic) 0.311039

H3d:

Dependent Variable: EP_1

C 0.390625 0.107592 3.630606 0.0005

(43)

Adjusted R-squared -0.008194 S.D. dependent var 0.857233 S.E. of regression 0.860738 Akaike info criterion 2.567487 Sum squared resid 71.86434 Schwarz criterion 2.645642 Log likelihood -125.3744 Hannan-Quinn criter. 2.599118 F-statistic 0.597716 Durbin-Watson stat 2.198820 Prob(F-statistic) 0.552080

The moderation effect of the share of females in hypothesis 3a-3d through four regression model is estimated as follows.

H3a: Ye = c + β1 ISO14001 + β2 Female + β3 ISO14001 * Female + ε

H3b: Ys = c + β1 OHSAS18001 + β2 Female + β3 OHSAS18001 * Female + ε

H3c: Ys = c + β1 ISO14001 + β2 Female + β3 ISO14001 * Female + ε

H3d: Ye = c + β1 OHSAS18001 + β2 Female + β3 OHSAS18001 * Female + ε

In these equations, Ye and Ys represent the compliance with the environmental codes in EICC codes and social codes. ε is an error term (Distelhorst, Hainmueller, & Locke, 2016).

Once these equations as functions were inputted in the E-views, the final results were able to be calculated.

(44)

TABLE 4

Case Processing Summarya

Certificate 2

Cases

Valid Missing Total

N Percent N Percent N Perce nt Y 1,0 65 100.0% 0 0.0% 65 100.0 % Y 2,0 35 100.0% 0 0.0% 35 100.0 % a. Certificate 2 = 2,0 Descriptivesa

Certificate 2 Statistic Std. Error

(45)

95% Confidence Interval for Mean Lower Bound 2.283 Upper Bound 3.717 5% Trimmed Mean 2.833 Median 3.000 Variance 4.353 Std. Deviation 2.0864 Minimum 0.0 Maximum 9.0 Range 9.0 Interquartile Range 2.0 Skewness 1.216 .398 Kurtosis 1.413 .778 a. Certificate 2 = 2,0 Tests of Normalitya Certificate 2 Kolmogorov-Smirnovb _Shapiro-Wilk

Statistic df Sig. Statistic df Sig.

Y 1,0 .135 65 .005 .903 65 .000

Y 2,0 .271 35 .000 .864 35 .000

a. Certificate 2 = 2,0

b. Lilliefors Significance Correction

(46)

Test Statisticsa Y Mann-Whitney U 1130.000 Wilcoxon W 1760.000 Z -.055 Asymp. Sig. (2-tailed) .956 a. Grouping Variable: Certificate 2

(47)

(48)

6. DISCUSSION

In this study, focus sits with four basic relationships which include the following: 1- the positive effect of ISO 14001 on the corporate environmental sustainability; 2- the spillover effect of ISO 14001 on the corporate social sustainability; 3- the positive effect of OHSAS 18001 on the corporate social sustainability; 4- the spillover effect of OHSAS 18001 on the corporate environmental sustainability. However, the final results do not support these hypotheses. The moderation effect of the share of females and the integrated effect of ISO 14001 and OHSAS 18001 are not confirmed either. Several reasons can be given to explain these counterintuitive results. These reasons include the dependence of suppliers on Philips and EICC training and suppliers’ motivation of seeking certificates (Jiang, 2009; Kim & Davis, 2016; Fryxell, Lo, W. H., & Chung, 2004).

Firm Size

(49)

number of female employees). If these two variables including firm size and the share of female are put into the same model, it will create multicollinearity problems.

The dependence of suppliers on Philips

Power is considered as a capability to influence or restrict another actor (Hunt and Nevin, 1974). In a supplier-buyer relationship, if the buyer has greater power, it will have an impact on supplier involvement (Chen, Zhao, Lewis, & Squire, 2015). The degree of buyer power can be measured by the dependence of suppliers on it (Chen et al., 2015). Therefore, if the dependence of suppliers on buyers is higher, the buyer will have more power which influences or restricts suppliers’ behaviors. When the buyer is important to a supplier business, the suppliers can be more cautious about buyers’ regulations (Morgan, Kaleka, & Gooner, 2007; Jiang, 2009). For example, Meixing, a middle-sized manufacturer of transformers in Shanghai had a very high level of dependence on Philips. In 2013, Philips purchased 67% of Meixing’s annual production. The administrative director of Meixing even said: ‘as a supplier of Philips, our company wants to keep this relationship. Based on such as consideration, we always try our best to meet Philips requirements’ (Philips Case Study Report). Therefore, the dependence of suppliers on Philips need be controlled in future research.

The Third-party Auditor

(50)

obvious problems than Philips itself. The third-party in real situations sometimes don’t listen to suppliers’ explanation about questions. This means that there could be some differences between the fact and the audited questions (Philips Case Study Report). For example, many companies in China asked workers to clock in, but some cooperated suppliers still belong to small processing plants. These small companies may not have a complete management mechanism or lack of punch machine to guarantee that the commuting time is precisely recorded. However, some auditors will assess that suppliers forged information about man-hours. The report also showed that similar problems often happened. The degree of compliance to codes by suppliers cannot be correctly assessed, which will have a direct and negative influence on the test result.

EICC training

(51)

did not provide complete data about how many times suppliers attended the training in a three-year auditing cycle. For example, some companies could attend the training in 2015 but not in 2016, but the data cannot show it. It is impossible to explore the effect of EICC training on these suppliers. Due to these limitations, the EICC training cannot be controlled in this test. This negatively influences the final results.

The motivation of seeking certificates

Different companies have different reasons to seek certificates of ISO 14001 and OHSAS 18001, and not all companies are aiming to improve their sustainability. Chan and Li (2001) discovered that the main reason as to why most corporates in China would like to obtain the certification of ISO 14001 is to increase their market share and enhance their reputation. Companies think that having this certificate is a good way to respond to direct pressures from the public, or other relevant stakeholders (Fryxell, Lo, & Chung, 2004). Some Chinese companies want to get the certificate to show their effort on environmental protections, but the actual final implementation of the codes of the certificate and influences of codes were not given more attention (Fryxell et al., 2004). These certificates will be little use without enforcement.

The Gender Diversity

(52)

(53)

7. CONCLUSION

7.1 Conclusion

(54)

(55)

sustainable performance, so it should be continuously extended. Philips can do some detailed demand about the third-party audited team, because the mixed-gender audited group have better performance in identifying violations.

7.2 Limitations and Future Research

(56)

(57)

REFERENCE

Potoski, M., & Prakash, A. (2005). Green clubs and voluntary governance: ISO 14001 and firms' regulatory compliance. American Journal of Political Science, 49(2), 235-248.

Arimura, T. H., Darnall, N., & Katayama, H. (2011). Is ISO 14001 a gateway to more advanced voluntary action? The case of green supply chain management. Journal

of environmental economics and management, 61(2), 170-182.

Arora, S., Singhai, M., & Patel, R. (2011). Gender & education determinants of individualism - collectivism: A study of future managers. Indian Journal of

Industrial Relations, 321-328.

Arrow, K. J. (1969). The organization of economic activity: issues pertinent to the choice of market versus nonmarket allocation. The analysis and evaluation of

public expenditure: the PPB system, 1, 59-73.

Author Online extra. - Triple bottom line It consists of three Ps: profit, people and planet.

2009. http://www.economist.com/node/14301663. 11 May. Bapna, M., & Talberth, J. - What is a Green Economy?. 2011.

http://www.wri.org/blog/2011/04/qa-what-green-economy-0. 11 May.

Basiago, A. D. (1998). Economic, social, and environmental sustainability in development theory and urban planning practice. The Environmentalist, 19(2), 145-161.

Bevilacqua, M., Ciarapica, F. E., & De Sanctis, I. (2016). How to successfully implement OHSAS 18001: The Italian case. Journal of Loss Prevention in the

Process Industries, 44, 31-43.

Bi, H. (2008). The choice of target corporates – the precondition of Chinese companies

doing mergers and acquisition. Chinese Cadres Tribune, (9), 33-35 Blackman, A., & Rivera, J. (2011). Producer-level benefits of sustainability

(58)

Borella, I. L., Borella, C., & Rodrigues, M. (2016). Environmental Impact and Sustainable Development: An Analysis in the Context of Standards ISO 9001, ISO 14001, and OHSAS 18001. Environmental Quality Management, 25(3), 67-8 Brebbia, C. A., Popov, V., & Fajzieva, D. (Eds.). (2005). Environmental Health Risk III

(Vol. 9). WIT Press.

Catalyst. Catalyst Quick Take: Women in the Workforce: China. New York: Catalyst, July 8, 2016.

Chen, J., Zhao, X., Lewis, M., & Squire, B. (2015). A Multi-Method Investigation of Buyer Power and Supplier Motivation to Share Knowledge. Production and

Operations Management.

Chen, X.S., - The accident rate of fire decreased by about 40% from January to August. http://news.163.com/14/0918/07/A6DKTJL300014AED.html. 20 June.

Chen, Y., - How many SMEs in China. 2015. http://iask.sina.com.cn/b/HeUAO5MVI.html. May 22.

Cheng, P., - Implementing the integration of OHSAS 18001 and ISO 14001 by ‘Interaction and Advancing Together’. Industry safety and environmental protection

Cheung, F. & Lee, A., - A brilliant plan One belt, One road. 2017. https://www.clsa.com/special/onebeltoneroad/. May, 2017.

China National Sustainable Development Report. 2012. http://www.china-un.org/eng/zt/sdreng/. 20 May.

Chow, G. C. (2004). Economic reform and growth in China. Analysis of economics and

financeANNALS OF ECONOMICS AND FINANCE., 5, 93-118.

Clover C., Sherry Fee Ju S.F. and Lucy Hornby, May 14, 2017, China’s Xi hails Belt and Road as ‘project of the century. https://www.ft.com/content/88d584a2-385e-11e7-821a-6027b8a20f23. May 18, 2017

(59)

Journal of Advertising 24(1): 41–56.

De Oliveira, O. J., Serra, J. R., & Salgado, M. H. (2010). Does ISO 14001 work in Brazil? Journal of Cleaner Production, 18(18), 1797-1806.

Domingues, P., Sampaio, P., & Arezes, P. M. (2016). Integrated management systems assessment: a maturity model proposal. Journal of Cleaner Production, 124, 164-174.

Eagly AH, Johannesen-Schmindt MC. 2001. Leadership styles of women and men.

Journal of Social Issues 57(4): 781–797.

Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The impact of corporate sustainability on organizational processes and performance. Management Science, 60(11), 2835-2857.

Elkington, J. (2004). Enter the triple bottom line. The triple bottom line: Does it all add up, 11(12), 1-16.

Frick, K., 2011. Worker influence on voluntary OHS management systems – a review of its ends and means. Saf. Sci. 49, 974–987.

FrontStream, -The three pillars of sustainability. 2013. https://www.frontstream.com/the-three-pillars-of-sustainability/. 11 May.

Fryxell, G. E., Lo, C. W. H., & Chung, S. S. (2004). Influence of motivations for seeking ISO 14001 certification on perceptions of EMS effectiveness in China.

Environmental Management, 33(2), 239-251.

Gasiorowski-Denis, E., - IBM leverages ISO 14001 for sustainable business. 2015. https://www.iso.org/news/2015/11/Ref2015.html. 17 June.

Gereffi, G., Humphrey, J., & Sturgeon, T. (2005). The governance of global value chains. Review of international political economy, 12(1), 78-104.

Grabmeier, J., - Lousy jobs hurt your health by the time you’re in your 40s Early job satisfaction has strongest impact on mental health. 2016. https://news.osu.edu/news/2016/08/22/lousy-jobs/. May 22.

(60)

collaboration. Network for business sustainability, case study.

Green Economy. (n.d.). In Wikipedia. Retrieved October 14, 2009, from. https://en.wikipedia.org/wiki/Market_economy. 17 June, 2017.

Griffiths, J., - China's new world order: Xi, Putin and others meet for Belt and Road Forum. 2017. http://edition.cnn.com/2017/05/13/asia/china-belt-and-road-forum-xi-putin-erdogan/. May 28.

Haslinda, A., & Fuong, C. C. (2010). The implementation of ISO 14001 environmental management system in manufacturing firms in Malaysia. Asian Social Science, 6(3), 100.

Hou, Y., & Tao, J. (2010). The necessarity and avaviablity of integrating ISO 9001, ISO 14001 and OHSAS 18001. Information technology and standardization, (1), 61-64.

Hunt, S. D., J. R. Nevin. 1974. Power in a channel of distribution: Sources and consequences. J. Mark. Res. 11(2): 186–193.

Iberg, A. E. (2015). Creating Competitive Advantage in the Premium Market Segment through a Sustainability Strategy.

ISO 14000. (n.d.). In Wikipedia. Retrieved from 14 May. https://en.wikipedia.org/wiki/ISO_14000

ISO 18001. (n.d.). In Wikipedia. Retrieved from 11 May. https://en.wikipedia.org/wiki/OHSAS_18001

Jiang, B. (2009). The effects of interorganizational governance on supplier's compliance with SCC: an empirical examination of compliant and non-compliant suppliers. Journal of Operations Management, 27(4), 267-280.

Jiang, D., 2016, The effect of ISO 14001 and OHSAS 18001 in reducing energy. Ningbo

saving energy, (1), 39-40.

Jonker, J. (2004). Systems thinking for the integration of management systems.

Business Process Management Journal, 10(6), 608-615.

(61)

barriers in professional organizations: A study of auditing firms. Gender, Work &

Organization, 17(6), 721-747.

Joshi, M., Erb, N., Zhang, S., & Sikka, R. (2015). Leading Health Care Transformation: A Primer for Clinical Leaders. CRC Press.

Jun, M. (2016). The Economics of Air Pollution in China: Achieving Better and Cleaner Growth. Columbia University Press.

Kan, J., - Environmentally Friendly Consumers Emerge, 2010. https://www.chinabusinessreview.com/environmentally-friendly-consumers-emerge/. 18 May.

Kärnä, J., Hansen, E., & Juslin, H. (2003). Social responsibility in environmental marketing planning. European Journal of Marketing, 37(5/6), 848-871.

Lauesen, L. M. (2015). Sustainable governance in hybrid organizations: An international case study of water companies. Ashgate Publishing, Ltd.

Li, X., Song, J., Lin, T., Dixon, J., Zhang, G., & Ye, H. (2016). Urbanization and health in China, thinking at the national, local and individual levels. Environmental

Health, 15(1), S32.

Liu, X., & Yu, D. (2003). Current status and future focus of hazardous waste management in China. Journal of material cycles and waste management, 5(1), 0022-0025.

Lo, C. K., Pagell, M., Fan, D., Wiengarten, F., & Yeung, A. C. (2014). OHSAS 18001 certification and operating performance: The role of complexity and coupling.

Journal of Operations Management, 32(5), 268-280.

Ma, B. (2006). The application of OHSAS18001 on equipment safety. Mining

Machinery Journal. 34 (11)

McCabe, D. L., Trevino, L. K., & Butterfield, K. D. (1996). The influence of collegiate and corporate codes of conduct on ethics-related behavior in the workplace.

Business Ethics Quarterly, 6(04), 461-476.

(62)

supermarket retailer category management. Journal of Operations Management, 25(2), 512-527.

Morrow, D., & Rondinelli, D. (2002). Adopting corporate environmental management systems: Motivations and results of ISO 14001 and EMAS certification. European

Management Journal, 20(2), 159-171.

Ninjas, - Sustainable events and the three pillars of sustainability. 2014.

http://greenmeetingninjas.com/the-dojo/sustainable-events-three-pillars-sustainability/. 11 May.

Ogunseitan, L., - Ethics at Work: Are Women Generally More Ethical than Men in the Workplace? 2014. http://theglasshammer.com/2014/09/16/ethics-at-work-are-women-generally-more-ethical-than-men-in-the-workplace/. 5 June.

Örtenblad, A., Marling, R., & Vasiljevic, S. (Eds.). (2017). Gender Equality in a Global Perspective (Vol. 68). Taylor & Francis.

Pariona A., - What is a market Economy? 2016. http://www.worldatlas.com/articles/what-is-a-market-economy.html. 17 June. Paul, B. D. (2008). A history of the concept of sustainable development: literature

review. The Annals of the University of Oradea, 17(2), 581.

Piccirillo, C., - Summer Fires: The Effects on Air Pollution and Health. 2015. https://www.decodedscience.org/summer-fires-effects-air-pollution-health/55350. May 22.

Porter, M. E., & Van der Linde, C. (1995). Toward a new conception of the environment-competitiveness relationship. The journal of economic perspectives, 9(4), 97-118.

Portillo S, DeHart-Davis L. 2009. Gender and organizational rule abidance. Public

Administration Review 69(2): 339–347.

(63)

Raynolds, L. (2007). Regulating sustainability in the coffee sector: A comparative analysis of third-party environmental and social certification initiatives. Agriculture and Human Values: Journal of the Agriculture, Food, and Human Values Society,24(2), 147-163.

Reuters, May. 2017, Xi Jinping Says the Rejection of Protectionism Is Part of What ‘One Belt, One Road’ Is About. http://fortune.com/2017/05/15/china-xi-jinping-belt-road-summit-protectionism/. May 18

Revellino, P., Sera mova, K., & Sun. Y., - Financial market regulation for sustainable development in the BRICS countries. 2015. http://www.wwfchina.org/content/press/publication/2015/150535_WWF_Interna tional_Report_BRICS_final.pdf. May 27.

Rhee, J. H., & Cheng, J. L. (2002). Foreign market uncertainty and incremental international expansion: The moderating effect of firm, industry, and host country factors. MIR: Management International Review, 419-439.

Rondinelli, D. A., & Berry, M. A. (2000). Environmental citizenship in multinational corporations: social responsibility and sustainable development. European

Management Journal, 18(1), 70-84.

SA8000. (n.d.). In Wikipedia. Retrieved May 14, 2017, http://www.saintl.org/index.cfm?fuseaction=page.viewpage&pageid=1689 Schwartz, M. (2001). The nature of the relationship between corporate codes of ethics

and behaviour. Journal of Business Ethics, 32(3), 247-262.

Short, J. L., Toffel, M. W., & Hugill, A. R. (2016). Monitoring global supply chains.

Strategic Management Journal, 37(9), 1878-1897.

Singh, M., Brueckner, M., & Padhy, P. K. (2014). Insights into the state of ISO14001 certification in both small and medium enterprises and industry best companies in India: The case of Delhi and Noida. Journal of Cleaner Production, 69, 225-236. Smith, A., Stirling, A., & Berkhout, F. (2005). The governance of sustainable

(64)

Steinbock, D., - How the Belt and Road could change the 21st century. 2017. http://europe.chinadaily.com.cn/opinion/2017-05/15/content_29356495.htm. May 19.

Stonewater BB, Eveslage SA, Dingerson MR. 1990. Gen- der differences in career helping relationships. Career Development Quarterly 39(1): 72–85.

Su, D. Z. & Wang, Y. - What kind of effect does corporates social responsibility have? 2014. http://www.hbrchina.org/2014-07-02/2133.html. May 23.

Suarez-Garcia, H., 2001. Quality, safety and environmental system integration. Wang, L. D. (2011). Impacts of "put people first" concept on the establishment of

harmonious society. Journal of Hubei Financial & Economic College.

Wang, S. (2002). The integration of OHSAS 18001 and ISO 14001 and their audition. China ISO 14001 Certificate, (2), 15-19.

Wang, Y., Jiao, Z.F., & Yang, S. (2002). The key to pass OHSAS 18001 Standard.

Quality Engineering Volume.,

Xinhua News Agency. 2006, China Publishes Its Resolution on Building a Harmonious Society. http://www.china.org.cn/english/report/189591.htm. May 20, 2017 Yu, X. (2008). Impacts of corporate code of conduct on labor standards: A case study

of reebok’s athletic footwear supplier factory in china. Journal of Business Ethics, 81(3), 513-529.

Zhang, J., - The management of Hazardous Waste in China, 2011. https://www.wilsoncenter.org/publication/the-management-hazardous-waste-china. 17 June.

Zhang, X., - Wenbiao Wang said: ‘It is good time to develop international alliance to promote green development under the One Belt and One Road strategy’. 2017. http://news.sina.com.cn/2017-05-15/doc-ifyfeius7935758.shtml. May 19.

Zhang, X., & Guo, R. (2014). The role of government in economic sustainability development. Economic Forum, Economic Forum, (10), 171-176.

(65)

THE SPILLOVER EFFECT OF ISO 14001 AND OHSAS 18001 ON CORPORATE SUSTAINABLE PERFORMANCE IN CHINA