Using private management standard certification to reduce information asymmetries in corrupt environments

Ivan Montiel, Bryan W. Husted, Petra Christmann

Research output: Contribution to journalReview articlepeer-review

129 Scopus citations

Abstract

This paper investigates how corruption in the institutional environment influences firms' decisions to obtain third-party certification to private management standards as signals of desirable conduct. We argue that policy-specific corruption erodes trust in government efforts to regulate firms' conduct, thus increasing the signaling value of private certifications and the likelihood of certification. However, widespread corruption in the general environment can extend distrust to private certification systems, which reduces the credibility and signaling value of private certifications, thus decreasing the likelihood that firms obtain certification. Our empirical results based on ISO 14001 environmental management system certification among 433 automotive plants in Mexico confirm these relationships. We discuss the implications of our findings for transaction cost economics, institutional theory, research, and practice.

Original languageEnglish (US)
Pages (from-to)1103-1113
Number of pages11
JournalStrategic Management Journal
Volume33
Issue number9
DOIs
StatePublished - Sep 2012

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

Keywords

  • Mexico
  • corruption
  • environmental management systems
  • information asymmetry
  • private certification

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