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The Adoption of Voluntary Environmental
Management Programs in Mexico: First
Movers as Institutional Entrepreneurs
Ivan Montiel
Bryan W. Husted
ABSTRACT. This article analyzes the adoption of vol-
untary environmental management programs by firms
operating in Mexico. Mexican firms can obtain national
certification (Clean Industry) and/or international certi-
fication (ISO 14001). Based on institutional entrepre-
neurship theory, we posit that the role played by first
movers as institutional entrepreneurs is crucial if these
programs are to become established with sufficient
strength and appeal. This understanding is especially
important in an environment where more than one
program can be adopted. We tested several hypotheses on
the behaviors of 1328 facilities operating in Mexico, half
of which (664) had certified environmental management
programs. Of the 664 certified facilities, 217 were classi-
fied as early adopters. Three variables predicted the
likelihood of a facility being an early adopter: (1) con-
nected to international market, (2) in the maquila sector,
and (3) linked to an industry association that offers free
resources.
KEY WORDS: Mexico, institutional entrepreneurship,
institutional theory, voluntary environmental manage-
ment programs, certified management standards, ISO
14001
Introduction
Mexico has made good progress toward protecting
the natural environment over the last decade, but
there are still pending environmental issues to be
addressed. One of the main concerns is that envi-
ronmental regulations related to issues such as water
pollution, toxic waste management, deforestation,
and ecosystem destruction are not properly enforced
(Restrepo, 2004). Voluntary environmental man-
agement programs might help firms establish their
own environmental management systems, and
ensure their compliance with regulations, when lack
of enforcement is attributed to the lack of economic
resources (Medina-Ross, 2005).
This study seeks to understand the factors that
initially drive firms operating in Mexico to adopt
new voluntary programs for environmental stew-
ardship. Specifically, we analyze the factors moti-
vating the adoption of two voluntary environmental
management programs: (1) a nationally certified
voluntary agreement, which is the Mexican Clean
Industry certification promoted by the Federal
Attorney for Environmental Protection (PROF-
EPA), one of Mexico’s environmental agencies, and
(2) an internationally certified management standard,
ISO 14001, that is promoted by the International
Organization for Standardization, a private organi-
zation.
Our analysis of adoption is based on the new
insights of institutional theory that concern institu-
tional entrepreneurship. We examine how different
institutional entrepreneurs emerge and help com-
peting programs diffuse and become institutions in
the Mexican business context. Our hypotheses are
based on DiMaggio’s (1988) ‘‘interest and agency’’
arguments in institutional theory, Suchman’s (1995)
arguments about manipulative environments and the
role of institutional entrepreneurs, and ‘‘institutional
mechanisms’’ that Eisenstadt (1980) says influence
Ivan Montiel is Assistant Professor of Management at California
State University, Los Angeles. His research interests include
corporate socially responsible and sustainable strategies.
Bryan W. Husted holds the Erivan K. Haub Chair in Business
and Sustainability at the Schulich School of Business of York
University. His research focuses on corporate social and
environmental management.
Journal of Business Ethics (2009) 88:349–363 ÓSpringer 2009
DOI 10.1007/s10551-009-0282-y
the ways in which entrepreneurs shape the institu-
tional order. We analyze how first movers behave as
institutional entrepreneurs facilitating the emergence
of two similar institutions – ISO 14001 and Clean
Industry – both of which are aimed at enhancing
companies’ environmental performance.
Our empirical findings provide evidence that the
mechanisms described by Eisenstadt (1980) do play a
role in the emergence of institutional entrepreneurs.
In regards to the adoption of voluntary environ-
mental management programs by firms in Mexico,
we find that first movers do act like institutional
entrepreneurs. Firms with more ‘‘free’’ resources,
and that have developed broad markets, are more
likely to behave as institutional entrepreneurs.
Extending institutional theory
How do competing organizational institutions
emerge? How do relatively similar management
programs survive, become institutionalized, and
co-exist in the same institutional field? Research on
the emergence of new institutions has so far focused
on the adoption of a single program (e.g., either
public or private). Interdependencies between two
or more programs are left, to the detriment of the-
ory, unexamined (Ingram and Silverman, 2002).
These studies, which are based on institutional the-
ory, identify the different forces motivating com-
panies to adopt programs and processes that lead to
their institutionalization.
Our study takes this research a step further. We
posit that if a new program is to establish itself with
sufficient strength and appeal to become institu-
tionalized, institutional entrepreneurs are required.
These institutional entrepreneurs take a leadership
role in legitimizing the issues with which they
are concerned within their organizational field
(DiMaggio, 1988).
One of the new institutions to enhance corporate
environmental performance that has emerged over
the past decade is the voluntary environmental
management program. In recent years, a myriad of
voluntary certifications have been designed and put
into practice. Some programs are intended to be
applied on a global scale, while others are intended
to apply only to firms operating in a single country.
Furthermore, some programs are designed by the
public sector, such as governmental environmental
agencies, while others are developed by private
agencies, such as the International Organization for
Standardization (ISO), the organization that issues
the ISO management standards.
Several studies analyze the circumstances sur-
rounding the adoption of some of these programs,
such as the international environmental standard ISO
14001 (e.g., Delmas and Montiel, 2009; Jirillo et al.,
2003; Kollman and Prakash, 2002), and national
voluntary programs, such as the Environmental
Protection Agency’s 33/50 Program (Rivera and de
Leon, 2004). However, little is known about the
mechanisms motivating firms to behave as first
movers and adopt these programs before others,
thereby helping them become institutionalized.
Identifying and understanding these mechanisms is
especially important in business contexts where firms
have two or more options for standardization, both
of which have similar objectives.
Institutions for environmental quality
in Mexico
During the last decade, and due partially to global-
ization, environmental issues became a priority on the
Mexican public policy agenda. In 1993, the North
American Free Trade Agreement (NAFTA) was
signed and ratified. One year later, Mexico joined
the Organization for Economic Cooperation and
Development (OECD). This new business reality
helped prompt Mexico to start considering new
approaches for improving environmental awareness
and performance among public and private organi-
zations. Some new initiatives involve voluntary
environmental management programs with a third
party certification system.
The case of voluntary environmental manage-
ment programs in Mexico provides a unique setting
to analyze how different institutional entrepreneurs
emerge. Mexican firms face a peculiar situation
when it comes to adopting these programs. They can
choose between two very similar programs: ISO
14001 and Clean Industry. Firms can certify with
one of them, both, or neither. Firms need to
determine which certification will benefit them the
most, and this decision is dependent on their char-
acteristics, scope, and geographical projection.
350 Ivan Montiel and Bryan W. Husted
Firms acting as institutional entrepreneurs not
only certify early, they also play an active role in the
diffusion process. For instance, in the case of ISO
14001, firms in some industry sectors, such as the
automotive sector (i.e., the Big Three Automakers:
Ford, General Motors, and Chrysler), require that
their suppliers certify compliance with the standard.
The so-called ‘‘Big Three’’ requirement has received
considerable attention from business scholars and the
media (Bansal and Bogner, 2002; Christmann and
Taylor, 2001; Handfield et al., 2005; Jiang and
Bansal, 2003; King et al., 2005; Melnyk et al., 2003;
Sabatini, 2000; Sissell, 1997; Thornton, 2000; Wil-
son, 1998). Similarly, early ‘‘Clean Industry’’ certi-
fiers proactively promote certification among their
suppliers and other business partners.
The clean industry certification
In anticipation of the NAFTA agreement, the
Mexican federal government, through PROFEPA,
its agency for environmental compliance, established
the National Environmental Audit Program (Prog-
rama Nacional de AuditorI
`a Ambiental). Beginning
1992, firms could volunteer to participate in this
program and certify their facilities. PROFEPA
auditors conduct an environmental audit of firm
operations and those found to be in compliance with
all national environmental regulations receive a
Clean Industry certification. In 1997, PROFEPA
awarded the first 115 Clean Industry certifications to
industry leaders. By 2004, 1395 facilities throughout
the country had been awarded this certification.
The ISO 14001 certification
Voluntary environmental management programs also
have emerged in the international arena. In 1993, for
instance, the European Union published the Envi-
ronmental Management and Audit Scheme (EMAS)
to certify organizations that establish an Environ-
mental Management System (EMS) in accordance
with certain guidelines. In 1996, the International
Standardization Organization (ISO) presented its
own voluntary environmental standard for EMS
certification, ISO 14001. An EMS is one of the tools
that helps companies implement their corporate
environmental policies. After implementing an EMS,
a company may apply for a third party audit to certify
that the system is in compliance with ISO 14001
guidelines. The ISO 14001 standard requires that
firms establish a documented system for identifying
environmental regulations applicable to the firm. It
also requires a commitment to be in compliance
with all relevant environmental regulations and
establishing corrective measures when inconsisten-
cies with regulations are detected. By 2004, 421
facilities operating in Mexico had certified their EMS
with the ISO 14001 standard (WorldPreferred,
2004).
A 1997 World Bank survey analyzed the effects of
regulation, plant-level management policies, and
other factors on the environmental compliance of
Mexican manufacturers. The survey found that plants
instituting ISO 14001-type internal management
procedures exhibited superior environmental per-
formance (Dasgupta et al., 2000).
Clean Industry and ISO 14001 share common
objectives. They promote environmental perfor-
mance improvements among businesses and certify
them. The critical difference is that Clean Industry is
focused on meeting the specific standards established
by Mexican environmental legislation, while ISO
14001 looks at the development of environmental
management systems (EMS) that minimize envi-
ronmental damage and foster continual improve-
ment in performance.
Theory and hypotheses
Mexican companies are provided two environmen-
tal management certification options: ISO 14001
and Clean Industry. As the two self-regulatory
arrangements are similar, and each option incurs
significant expenses, firms are likely to opt for one or
the other, and thereby prevent the take off of one
program and its subsequent institutionalization in
favor of the other. This has been found to happen
under conditions in which increasing returns and
network effects occur (Arthur 1989; David 1985). In
such a situation, the value of joining a network in-
creases as the number of members of the network
increases.
However, in the case presented by voluntary
environmental regulation in Mexico, network
351Environmental Management Programs in Mexico
effects are minimal because the adoption of one
standard does not preclude adoption of the other.
Thus, the focus of this study is determining the
presence of any common attributes among the types
of firms that are first movers in certifying their
environmental management practices, and that dif-
ferentiate the first movers from firms that are not,
rather than ISO 14001 versus Clean Industry certi-
fication.
Who are institutional entrepreneurs?
Who are these first movers? We suggest that the
answer lies in the mechanisms fostering institutional
entrepreneurship among actors. Traditionally, insti-
tutional theory provides satisfactory answers to
questions about why firms are similar, but it has been
less successful explaining why firms differ. Institu-
tional entrepreneurship provides one explanation.
Institutional entrepreneurs are defined as actors
that have social skills (Perkmann and Spicer, 2007), i.
is, they have the ability to motivate cooperation
among other actors by providing them with com-
mon meanings and identities (Fligstein, 1997).
Institutional entrepreneurs possess not only social
skills, they must also have an interest in particular
institutional arrangements and the ability to leverage
resources to create new institutions or transform
existing ones (Maguire et al., 2004). As noted by
DiMaggio (1988, p. 14), institutional entrepreneurs
are central to institutional processes because ‘‘new
institutions arise when organized actors with suffi-
cient resources (institutional entrepreneurs) see in
them an opportunity to realize interests that they
value highly.’’ These institutional entrepreneurs lead
efforts to identify political opportunities, frame issues
and problems, and mobilize constituencies by
infusing new beliefs, norms, and values into social
structures (Rao et al., 2000; Zilber, 2007).
The concept of institutional entrepreneurship is
important because it focuses attention on the manner
in which interested actors work to influence their
institutional contexts through such strategies as
providing technical and market leadership, lobbying
for regulatory change, and taking discursive action
(Lawrence and Suddaby, 2006). The task of the
institutional entrepreneur is to create or promote
the construction of an environment that facilitates
the achievement of organizational objectives
(DiMaggio, 1988; Suchman, 1995). At the same
time, they are also ‘‘constructing an organization out
of a diverse set of legitimated practices’’ (Powell,
1991).
Previous research studies have identified that
several actors can function as institutional entrepre-
neurs. In an analysis of the development of the
Chinese Environmental Protection System, the state
was identified as the primary institutional entrepre-
neur, even though other actors outside the govern-
ment domain contributed to the process in later
stages (Child et al., 2007). Wijen and Ansari (2007)
define the concept of collective institutional entre-
preneurship as the process of overcoming barriers to
collective action and achieving sustained collabora-
tion among numerous dispersed actors to create new
institutions.
Regarding voluntary environmental management
programs in Mexico, we posit that institutional
entrepreneurs are not only those actors that initially
designed the program (e.g., the Mexican govern-
mental agency), but also the set of actors that became
the first movers and adopted the programs, thus
enhancing the institutionalization process. Choosing
between the two environmental management
programs is not just a move to gain legitimacy as
traditional institutional theory predicts. Instead,
institutional entrepreneurs choose an environmental
management program strategically because doing so
enables them to identify the technical or competitive
advantages they gain by becoming first movers in the
adoption of one or the other of the programs
(Tolbert and Zucker, 1983). Therefore, the role of
institutional entrepreneurs in Mexico (where two
similar institutions try to emerge) is particularly
crucial if both programs are to take off and become
institutions.
Mechanisms influencing the emergence of institutional
entrepreneurs
Institutionalization of new programs is expensive and
requires high levels of both interest and resources
(DiMaggio, 1988). In a hypothetical regulatory
environment where only one voluntary program for
environmental management is available, we would
expect firms to gain legitimacy by adopting the
352 Ivan Montiel and Bryan W. Husted
program and conforming to its guidelines. However,
Suchman (1995) argues that in some circumstances,
this ‘‘conformity’’ strategy will not suffice. We posit
that one such circumstance is created by the duality
of the voluntary programs for environmental man-
agement that Mexican industry faces. In order for
both programs to succeed and become institutions,
innovators must intervene preemptively in the cul-
tural environment to develop bases of support for
their distinctive needs (Suchman, 1995). These
innovators, or institutional entrepreneurs, will select
or attempt to manipulate their voluntary regulatory
environments by choosing one (in our case, ISO
14001 or Clean Industry) or both.
The adoption of one of these voluntary regulatory
programs is a means for firms to achieve organiza-
tional objectives. For example, a Mexican firm
engaged in business transactions with the Mexican
government (i.e., doing business with any of its
governmental agencies) is likely to adopt the Clean
Industry program as its means of securing future
business transactions with the government, while a
multinational firm operating in Mexico and
exporting products will probably adopt the inter-
national ISO 14001 program. If either of these
programs are to succeed to the point where they can
become institutionalized, institutional entrepreneurs
who move first in adopting these voluntary pro-
grams provide subsequent adopters with legitimacy
in the Mexican business environment.
Building on the arguments of Eisenstadt (1980),
we assert that the emergence of institutional entre-
preneurs depends on three mechanisms that impact
the ability of such entrepreneurs to restructure the
institutional order: (1) the availability of free re-
sources, (2) the development of broad markets, and
(3) the ability to envision alternative conceptions of
order (Eisenstadt, 1980, p. 850). Figure 1summa-
rizes our main hypotheses.
Availability of free resources
The first mechanism influencing the ability of insti-
tutional entrepreneurs to shape institutional order is
‘‘the degree of availability of ‘free’ resources or activ-
ities not entirely embedded in ascriptive units, such as
families, communities, and guilds’’ (Eisenstadt, 1980,
p. 850). These free resources serve as the basis for the
structuring of new institutional centers, hierarchies,
and collectives, which enable institutional entrepre-
neurs to pursue their interests. Institutional entrepre-
neurs use their freedom from the obligations owed to
ascriptive units to create new cultural meanings, and
arelikelytodosowhentheyenjoy‘‘autonomous
symbolic definitions.’’ That is to say, they have the
ability to develop new meanings without the con-
straints of families, guilds, or other ascriptive units.
Institutional Entrepreneur for
Voluntary Environmental Management
Programs
Degree of Availability of Free
Resources
Development of Broad Markets
H2A
H1 H3
+
Size of Industry
Association
Trade with Foreign
Markets
Maquiladora
Facilities
H2B
++
Adoption of
ISO 9000
& ESR
-
Development of Alternative
Conceptions of Order
Figure 1. Mechanisms influencing the emergence of institutional entrepreneurs.
353Environmental Management Programs in Mexico
Traditionally, Mexican industry has been highly
organized into either compulsory associations (indus-
try, trade, and service chambers) or voluntary associ-
ations (Schneider, 2002). These associations have
played a key role both in negotiating with the gov-
ernment on industry policies and encouraging best
practices among their members. The Mexican
Chemical Industry Association, for e.g., is forcing its
members to adopt a plan for ‘‘Integral Responsibility’’
based on the quality standard ISO 9002 (Acutt et al.,
2004). We expect that the degree to which firms can
avail themselves of available free resources will depend
on the characteristics of these associations.
Mexican industry associations can be classified
according to two criteria: (1) the availability of these
resources to members, and (2) the number of
members by industry (Tirado, 2006). Tirado’s (2006)
definition of resources includes all types of resources
– economic, symbolic, social, intellectual, political,
and so on. He observes that in the Mexican business
environment, the size of the company is a good
indicator of resource availability. However, the
availability of resources does not address the ‘‘free-
ness’’ of these resources. Considering the second
criteria, Mexican industry associations can be
divided in two types: ‘‘private club’’ industry asso-
ciations (which have a limited number of members)
and the ‘‘auditorium’’ industry associations (which
have a large number of members) (Tirado, 2006).
Private club industry associations, according to
Tirado (2006), are able to serve their members
efficiently because they have the conditions and
resources to make decisions and protect members.
Membership to a private club industry association is
limited to an elite group of large companies. These
large companies are the movers and shakers of
Mexican industry. Through their associations, their
voices are heard by the government.
Conversely, auditorium industry associations have
a larger number of members. Members of audito-
rium industry associations are heterogeneous in size;
they may include some large companies but they are
typically composed of micro-businesses. As a result,
auditorium industry associations are more difficult to
manage and their members have fewer political,
social, and other resources available for institutional
innovation.
We expect that those firms belonging to smaller
industry associations have more economic, intellec-
tual, and political resources that can be deployed to
develop initiatives of institutional entrepreneurship,
such as the promotion of voluntary environmental
management programs. On the other hand, small
firms belonging to large industry associations are
more focused on survival issues and have fewer re-
sources at their disposal for activities associated with
institutional entrepreneurship. Thus, both the size of
the different members, and the size of the industry
association itself, will likely have a direct impact on
the availability of free resources. Therefore:
Hypothesis 1:Large elite firms belonging to small
industry associations, compared to the many
smaller firms belonging to larger industry associ-
ations, are more likely to have the free resources
at their disposal needed to act as institutional
entrepreneurs and adopt new programs for envi-
ronmental management.
Development of broad (international) markets
The second mechanism facilitating the emergence of
institutional entrepreneurs involves broad markets,
such as foreign markets that cut across ascriptive
units (Eisenstadt, 1980). We identify Eisenstadt’s
‘‘broad markets’’ as international markets. These
markets provide greater resources for recombining
and adopting the elements necessary for restructur-
ing an institutional order. A firm with international
ties, i.e., a firm exporting its products or services,
will be exposed to new ways of doing business and
thus have a greater propensity to become an insti-
tutional entrepreneur and adopt new environmental
management standards.
International ties that cut across ascriptive units
embedded in a local culture operate in a manner
similar to that of the weak ties identified by
Granovetter (1973). The strength of ties at the
interpersonal level, according to Granovetter (1973),
is derived from a combination of the duration,
emotional intensity, intimacy, and reciprocal services
that characterize the tie. He concludes that weak ties
are indispensable to individuals’ opportunities and to
their integration into several communities. Similarly,
we state that firms with international ties cut across
the strong ties of local ascriptive units and expose
them to new ideas and concepts through their weak
ties to business partners, suppliers, and customers in
international markets. Specifically, cross-cutting ties
354 Ivan Montiel and Bryan W. Husted
to broad markets enhance the firm’s ability to gen-
erate new ideas, such as those related to voluntary
environmental regulation.
It is essential to remember that 100% of Mexican-
owned firms are family firms, so the ascriptive unit
of the family, its needs and norms, heavily influence
business activity (Shleifer and Vishny, 1997). Even
large Mexican-owned multinationals are essentially
family firms with control in the hands of family
members. Although many of these companies are
listed on the New York Stock Exchange, their dual
class stock structure means that only preferred shares,
rather than common stock with voting rights, are
listed. If a Mexican firm establishes ties with coun-
tries where voluntary environmental regulation is
common, the firm will be exposed to new attitudes
and methods of environmental management. These
ties (i.e., weak ties) will increase the likelihood that
the firm will become an institutional entrepreneur
by moving early to adopt voluntary environmental
management programs. Therefore:
Hypothesis 2A:Firms that trade (export or import) in
foreign markets, compared to firms that operate
solely in a domestic market, are more likely to
become institutional entrepreneurs and adopt
new programs for environmental management.
The Mexican business environment, especially
the border region, relies heavily on the maquiladora
industry. A maquiladora is a subsidiary plant of a
foreign company that operates with imported raw
materials and exports all its production to the
country of origin. These facilities are usually exempt
from tax obligations in the country where they are
located. Maquiladoras, according to PROFEPA, tend
to comply with Mexican environmental regulations
at a higher rate than non-maquiladoras. The main
reason for this higher rate of compliance is that
NAFTA and the environmental concerns of the
United States subject them to greater scrutiny and
inspections from authorities.
Returning to Granovetter’s (1973) weak ties
argument, maquiladoras may be seen as facilities with
a greater number of national and international ties
than domestic facilities. These ties are likely to help
maquiladoras cut across ascriptive units and generate
such new ideas as becoming an institutional entre-
preneur for voluntary environmental management
programs. Moreover, because of the contact with
foreign markets resulting from their international
activity, maquiladoras might also be receptive to
adopt new ideas and practices promoted by the
international business community, e.g., ISO 14001.
Therefore:
Hypothesis 2B:Maquiladoras, compared to non-ma-
quiladoras, are more likely to become institutional
entrepreneurs and adopt new programs for envi-
ronmental management.
Development of alternative conceptions of order
A third mechanism that helps facilitate the rise of
institutional entrepreneurs relates to ‘‘the develop-
ment of alternative conceptions of social, political, or
cultural order which differ from the existing one,
not only in the sense of the reversal of existing
arrangements but also in the possibility of going
beyond them’’ (Eisenstadt, 1980, p. 850). Alternative
conceptions of order stimulate innovation and the
development of new standards or the application of
existing standards in new ways.
In the case of programs for environmental man-
agement, we posit that prior experience with other
progressive management practices might plant the
seeds for an alternative conception of order so that
firms become innovators and adopt new programs in
different contexts. For instance, in Mexico, some
firms have already joined voluntary programs pro-
moting social responsibility and quality manage-
ment. These programs are now institutionalized in
the Mexican business environment.
One of these voluntary programs is the Socially
Responsible Enterprise, or Empresa Socialmente
Responsable (ESR), program. The ESR program is an
initiative launched in 1997 by the Mexican Center
for Philanthropy (CEMEFI). CEMEFI is a private,
non-profit organization that promotes social
responsibility initiatives in Mexico. It developed the
ESR certification to recognize companies for the
development, implementation, evaluation, and
improvement of socially responsible practices. By
2004, 61 firms operating in Mexico had received
ESR certification.
A second, relevant institution is the international
ISO 9000 standard for quality management. By
2004, 3391 facilities operating in Mexico had their
355Environmental Management Programs in Mexico
quality management system ISO 9000 certified
(ISO, 2007). We expect to find a relationship be-
tween firms that adopted institutions such as ISO
9000 and ESR and those that adopt new programs
for environmental management such as ISO 14001
and Clean Industry. Successful experience with the
process of adopting other innovative programs might
enhance a firm’s ability to certify under ISO 14001
and Clean Industry. ESR was formed in the 1990s, a
time when environmental issues became one of the
most mentioned social issues in the management
field (Carroll, 1999). Companies with a tradition for
socially responsible practices might have a higher
likelihood of incorporating the environmental as-
pects of Corporate Social Responsibility (CSR) into
their management practices. Therefore:
Hypothesis 3:Firms that have developed alternative
conceptions of order (i.e., adopted similar pro-
grams such as ISO 9000 for quality management
or ESR for corporate social responsibility),
compared to firms that have not subscribed to
these programs, are more likely to become insti-
tutional entrepreneurs and adopt new programs
for environmental management.
Empirical analysis
The sample
In order to test these hypotheses, we created a single
database that consists of the 421 Mexican facilities
with ISO 14001 certification as of July 2004, and the
1395 Mexican facilities with Clean Industry certifi-
cation as of the same date. The list of ISO 14001
certified facilities was collected from WorldPreferred
database on ISO 14001 certified facilities (World-
Preferred, 2004). The list of Clean Industry certified
facilities is publicly available on PROFEPA’s website
(PROFEPA, 2006). We matched the ISO 14001
database with the Clean Industry certification list of
facilities to determine which facilities had adopted
both programs. The matching process indicated that
55 facilities had adopted both programs.
We added information provided by the Mexican
Enterprise Information System or SIEM (2006),
which is compiled by the Mexican Ministry of
Economics to promote Mexican commerce. The
data include geographic location, sector, scope of
market, gross sales, equity, imports and exports, and
status as a government supplier. This SIEM database
is constantly updated to add new entrants, and
to remove plants that have exited the market. The
data in SIEM are not time-specific. They do not
include, for instance, information on when plants
provided their data to SIEM or indicate whether the
information has ever been changed (Blackman,
2007).
We obtained this additional information from
other databases, including Mexico’s Maquila Online
Directory (SII, 2004), Hoover’s Online Database
(Hoover’s, 2006), and the QSU ISO 9000 Registry
(QSU, 2006). We removed companies from our
database whose information regarding key variables
under study were not available from these sources, or
did not meet our time period criterion. At this point
in the development of our database, the database
contained 664 of the 1816 facilities located in
Mexico with either ISO 14001 or Clean Industry
certification, or both. Table Isummarizes the dif-
ferent variable definitions and their sources.
Next, we developed a control group of facilities
with characteristics similar to those of the certified
facilities, but that had not certified under either
program. We selected a group of facilities from the
SIEM database in the same industry sector – 2-digit
CMAP codes (Mexican Classification of Production
Activities) – and of similar size (number of
employees). Our criteria are consistent with other
studies. Previous studies, especially those in finance
research, use such criteria to select control groups as
industry matching only (Ahn and Denis, 2004;
Dittmar and Shivdasani, 2003), industry and size
(Mikkelson and Parth, 2003), or operational per-
formance (Daley et al., 1997). After matching by
industry and size, our final database contained
information for 1328 facilities in Mexico, half of
which (664) had certified environmental manage-
ment programs.
Estimated model and dependent variable: multinomial logit
Since our purpose is to determine which mechanisms
are motivating firms to behave as institutional entre-
preneurs, we differentiated between institutional
356 Ivan Montiel and Bryan W. Husted
entrepreneurs and followers by using time of adop-
tion. We used a multinomial logistic model that in-
cludes a dependent variable representing three types
of firms: institutional entrepreneurs (early adopters),
followers (late adopters), and non-adopters.
We created the categorical dependent variable
‘‘Institutional Entrepreneur,’’ which differentiates
among early adopters (institutional entrepreneurs),
late adopters (followers), and non-adopters. Since
both standards are relatively new (first certifications
were awarded during 1996–1997), a good repre-
sentation of institutional entrepreneurs were those
facilities that adopted the standard during the first
3 years. Of the 664 certified facilities, 217 of them,
approximately one-third of the adopting facilities,
met the ‘‘institutional entrepreneur’’ (or ‘‘early
adopter’’) definition.
In summary, of the 1328 companies in the re-
search database, 217 were classified as institutional
entrepreneurs, 447 were followers, and 664 were
non-adopters.
In order to assure that our results were valid, we
ran additional regression models using a different
threshold for institutional entrepreneurs. We more
narrowly defined ‘‘institutional entrepreneurs’’ as
those facilities certified at the first Clean Industry
award ceremony in 1997 and during the first 2 years
ISO 14001. The results were consistent with our
first threshold.
The multinomial logit model was derived from a
theory of probabilistic choice in economics (McFadden,
1974). This logistic model enables us to estimate the
likelihood that a given firm will adopt a program as
an early or late participant. Using one group as the
TABLE I
Definitions and sources of variables
Definition Source
Dependent variable
Institutional entrepreneur Categorical variable (= 0: non-
adopters), (= 1: late adopters), (= 2
institutional entrepreneurs)
a
WorldPreferred ISO 14001 database
and PROFEPA’s Clean Industry
Registry
Independent variables
Industry association Number of industry association
members (log transformed)
Mexican Confederation of Industry
Associations
Maquila Facility is a ‘maquiladora’ Mexico’s Maquila Online Directory
Exports Facility exports abroad Mexican Enterprise Information
System (SIEM) database
Imports Facility imports raw materials/
products
Mexican Enterprise Information
System (SIEM) database
ISO 9000 Facility has the quality ISO 9000
standard
QSU ISO 9000 Database
ESR Company participates in the ESR
program (Socially Responsible
Enterprise program)
Centro Mexicano para la Filantropı
´a
Control variables
Government client Facility sells products/services to the
Mexican government
Mexican Enterprise Information
System (SIEM) database
Facility size Number of employees (log trans-
formed)
Mexican Enterprise Information
System (SIEM) database
Industry effects 2-Digit CMAP Industry Classifica-
tion Codes dummies
Mexican Enterprise Information
System (SIEM) database
a
Only results between institutional entrepreneurs (= 2) and Late Adopters (= 1) are reported in the regression results
(Table III).
357Environmental Management Programs in Mexico
baseline, multinomial logit manages the non-inde-
pendence of the three groups by estimating the
models for all outcomes simultaneously.
Independent variables
Availability of free resources: In order to account for
the degree of available free resources, we generated
the variable ‘‘Industry Association,’’ which corre-
sponds to the natural log of the number of members
in the industry association of each particular facility.
This information was obtained from the Mexican
Confederation of Industry Associations.
Development of broad markets: The information
necessary for testing Hypothesis 2A, which concerns
the development of broad markets related to the
Export–Import characteristics of a particular firm.
We created two variables ‘‘Exports’’ and ‘‘Imports,’’
based on information contained in the SIEM data-
base. In order to test Hypothesis 2B, we generated
the variable ‘‘Maquila’’ by determining whether a
particular facility is a ‘‘maquiladora’’. This informa-
tion is available from Mexico’s Online Maquila
Directory.
Development of alternative conceptions of order:
Hypothesis 3, which concerns the development of
alternative conceptions of order, was tested by cre-
ating two variables: ‘‘ESR’’ and ‘‘ISO 9000.’’ The
‘‘ESR’’ variable identifies whether the company to
which each facility belongs has joined the ESR
program. The ‘‘ISO 9000’’ variable identifies whe-
ther the company previously adopted the ISO 9000
quality management program. This information was
gathered from the Whosregistered.com ISO 9000
Registry.
Control variables
Besides the independent variables, we also incor-
porated different measures to control for alternative
explanations as to why firms might certify their
facilities with ISO 14001 or Clean Industry.
Important competing hypotheses include being a
government client, size effects, and industry effects.
Government client: The variable ‘‘Government
Client’’ was created to control for the effect that
selling products or services to the Mexican govern-
ment might have on the decision to adopt a vol-
untary environmental management program. This
information is available from the SIEM database.
Size effects: The variable ‘‘Facility Size’’ was created
to control for the size of the facility by using the natural
logarithm of number of employees. This information
was also collected from the SIEM database.
Industry effects: We control for the different
industry sectors to remove the effect that a particular
industry might have on adopting an environmental
management program. We include industry dum-
mies for 2-digit CMAP codes for eight of the nine
industry sectors in our sample that had adopted
either of the two environmental management pro-
grams: textile manufacturing, paper manufacturing,
chemical manufacturing, glass and ceramics-related
activities, metal-machinery manufacturing, miscel-
laneous manufacturing, financial services, and repair-
wholesale services. We omitted the dummy variable
for food manufacturing, the ninth industry, to avoid
over-determination issues.
Table II summarizes the descriptive statistics and
correlations for the different explanatory and control
variables.
Results
Table III displays the results of the multinomial lo-
gistic regression for adopting either of the two envi-
ronmental management programs. Since our intent is
to determine the mechanisms that explain why some
firms become institutional entrepreneurs, we report
only one of the three regression outputs that the
multinomial logit generates: the one that compares
institutional entrepreneurs (early adopters) with late
adopters, respectively. We do not report regression
models that compare institutional entrepreneurs with
non-adopters, or late adopters with non-adopters.
Models 1, 2, and 3 in Table III only compare insti-
tutional entrepreneurs with late adopters.
Hypothesis 1 states that firms with available free
resources are more likely to become institutional
entrepreneurs. The degree of available resources
measure indicates that facilities belonging to smaller
industry associations, compared to those belonging
to large industry associations, are more likely to
become institutional entrepreneurs. The results in
Table III show that members of small industry
associations, which tend to be large elite firms,
probably enjoy more of the free resources essential
to innovation. This enables them to become
358 Ivan Montiel and Bryan W. Husted
institutional entrepreneurs and move first in the
adoption of new programs, ahead of those without
free resources (p<0.01 in Models 1 and 2 and
p<0.05 in Model 3). These results support
Hypothesis 1.
Hypotheses 2A and 2B state that those firms that
have developed broad markets have a higher pro-
pensity to become institutional entrepreneurs. Since
these firms might have experience in other markets,
they might be more proactive in adopting new
TABLE II
Descriptive statistics and correlations
Variable Mean Std. dev. 1 2 3 4 5 6 7 8
1 Institutional entrepreneur 0.66 0.75 1
2 Industry association 4.10 1.02 -0.03 1
3 Maquila 0.15 0.36 0.13 0.14 1
4 Exports 0.61 0.48 0.16 0.05 0.30 1
5 Imports 0.67 0.55 0.15 -0.01 0.24 0.65 1
6 ISO 9000 0.12 0.32 0.30 0.02 0.09 0.12 0.16 1
7 ESR 0.01 0.10 0.05 -0.02 -0.02 -0.00 -0.01 0.00 1
8 Government client 0.18 0.38 0.06 -0.15 -0.12 0.20 0.18 0.04 0.07 1
9 Facility size 4.95 2.04 0.03 0.05 0.25 0.34 0.27 0.06 0.01 -0.04
n= 1328; |coefficients| >0.07 are significant at p<0.01.
TABLE III
Multinomial logit for environmental management programs (ISO 14001 and Clean Industry)
Model 1 2 3
Dependent variable Late adopters
Reference group Institutional entrepreneurs
Industry association 0.24** (0.09) 0.22** (0.08) 0.22* (0.08)
Maquila -0.64** (0.23)
Exports -0.41* (0.21)
Imports -0.43* (0.21)
ISO 9000 0.05 (0.20) 0.06 (0.20) 0.07 (0.20)
ESR -0.08 (0.22) 0.08 (0.22) 0.07 (0.22)
Government client -0.09
+
(0.04) -0.09
+
(0.05) -0.09* (0.04)
Facility size 1.15
+
(0.64) 1.25
+
(0.64) 1.26* (0.64)
Textile manufacturing -0.63 (0.53) -0.59 (0.53) -0.50 (0.53)
Paper manufacturing -0.58** (0.22) -0.51* (0.22) -0.47* (0.22)
Chemical manufacturing -0.14 (0.42) -0.08 (0.42) -0.04 (0.42)
Glass/ceramics manufacturing -0.79
+
(0.45) -0.68 (0.45) -0.69 (0.45)
Metal/Machinery manufacturing -0.36 (0.32) -0.38 (0.32) -0.40 (0.32)
Miscellaneous manufacturing 0.23 (0.59) 0.13 (0.60) 0.13 (0.60)
Financial services 0.93 (0.78) 0.88 (0.78) 0.87 (0.78)
Repair services -0.59 (0.64) -0.56 (0.64) -0.57 (0.64)
Constant 0.41 (0.43) 0.62 (0.43) 0.68 (0.43)
Observations 1328 1328 1328
Log-likelihood -1220.07 -1220.33 -1222.64
% Correctly classified 62.8 63.9 63.2
Standard errors are in parentheses,
+
significant at 10%, *significant at 5%, **significant at 1%.
359Environmental Management Programs in Mexico
programs in their Mexican operations. The results in
Table III indicate that Maquiladoras are more likely to
be institutional entrepreneurs than non-Maquilado-
ras (p<0.01 in Model 1), supporting Hypothesis 2A.
Hypothesis 2B is also supported. Facilities that
export and import – thus having broad markets for
their products and services – are more likely to be-
come institutional entrepreneurs.
Hypothesis 3, which relates to the development of
alternative conceptions of order, is not supported by
our results. The results in Table III do not indicate
that adoption of standards for corporate social
responsibility (SRE) or quality management (ISO
9000) are factors determining whether firms become
institutional entrepreneurs.
No significant results are found regarding the
three control variables (government client, facility
size, and industry) except for the control variable for
facility size (logarithm of number of employees) in
Models 1 through 3 and two of the industry dum-
mies. Previous research on the early adoption of ISO
14001 in the United States found facility size to be
one of the main explanatory variables (King and
Lenox, 2001). In the case of Mexican facilities, we
find similar results, although the significance is only
at the 10% level. In terms of industry differences,
facilities in the paper manufacturing industry were
more likely to be institutional entrepreneurs than
food manufacturing industries, the reference group.
In summary, we find support for two of the three
mechanisms identified by Eisenstadt (1980) as gener-
ators of institutional entrepreneurs. Mexican facilities
that first adopted ISO 14001 or Clean Industry vol-
untary environmental management programs had
broad markets and access to more free resources.
Facilities with these two characteristics are more likely
to play an active role in the institutionalization of new
voluntary certified environmental management pro-
grams than facilities without these characteristics.
Discussion and conclusion
This study provides insight on how new voluntary
environmental management programs became
institutionalized within the Mexican business con-
text. Given the very serious environmental problems
in Mexico, the need for corporate environmental
management is vital. Most quantitative analyses on
the adoption of voluntary environmental manage-
ment programs analyze firms in developed econo-
mies. Moreover, these studies only analyze adoption
patterns and do not explore differences between
early and late adopters.
This study is novel because it aims to understand
differences between early adopters and late adopters.
We posited that in emerging economies such as
Mexico, early adopters play a critical role in the
diffusion of these programs by behaving as institu-
tional entrepreneurs. Their role helps the initial
penetration, and subsequent diffusion, of programs
that will improve firm environmental performance.
The pro-action of institutional entrepreneurs be-
comes especially relevant to catalyze the adoption of
voluntary environmental management programs in
regions where government agencies might lack the
resources to implement or enforce an effective
environmental management policy. These programs
help firms establish their own environmental man-
agement systems and self-monitor their compliance
with applicable regulations. Henceforth, under-
standing how these programs start to diffuse in re-
gions with a regulatory enforcement deficit is
essential.
The study contributes to institutional theory by
developing theory related to the emergence of insti-
tutional entrepreneurs for environmental management
in Mexico. Using a model of institutional entrepre-
neurship as a basis, this is the first study to analyze the
establishment of similar institutions for environmental
management within a Mexican context.
Institutional mechanisms that identify first movers
as institutional entrepreneurs help to explain the
emergence of two similar programs for environ-
mental management in a particular business envi-
ronment. We found partial support for Eisenstadt’s
theory regarding the mechanisms that facilitate the
emergence of institutional entrepreneurs. The results
indicate that the availability of free resources and the
development of broad markets are vital to the
emergence of institutional entrepreneurs.
This study represents a new benchmark for sec-
ondary data analysis in emerging market countries.
Research of firm-level phenomena has historically
been extremely difficult. The lack of secondary data
sources made primary data collection, either through
case studies or surveys, essential. However, the evo-
lution of the Internet has made it possible to construct
360 Ivan Montiel and Bryan W. Husted
sophisticated data sets based entirely on secondary
sources at the firm level for these countries.
Once environmental performance information is
made publicly available by the Mexican environ-
mental agency, researchers should analyze the dif-
ferences in environmental performance between
facilities that have not yet adopted any of the stan-
dards and facilities that have adopted ISO 14001,
Clean Industry, or both.
The Mexican environmental agency made it
mandatory that companies report their 2004 releases
and emissions by July 2005 through the Registro de
Emisiones y Transferencia de Contaminantes (RETC)
(an equivalent to the U. S. Toxic Releases Inven-
tory). A preliminary 2004 environmental perfor-
mance report was released in August 2006. The
RETC database did not become available to the
public until 2008. A user-friendly full version of
RETC is anticipated in 2009. Researchers should
analyze not only the environmental performance
differences between institutional entrepreneurs and
the rest of adopting facilities, but also the differences
between adopting and non-adopting facilities.
This study has several limitations. Business in
Mexico is not entirely representative of business
globally. In addition, the specific measures of vari-
ables, such as ISO 9000 and ESR as indicators of
alternative conceptions of order, are not the only
indicators for operationalizing their respective con-
cepts. Further research should be conducted using
other possible measures before discarding the possi-
bility that alternative conceptions of order might
play a role in the emergence of institutional entre-
preneurs.
This study opens up a number of avenues for
future research.
First, although some of the mechanisms that
facilitate institutional entrepreneurship have been
identified, other factors and institutions may also be
relevant. Further empirical study is needed to un-
cover the factors leading to institutional entrepre-
neurship for other kinds of institutions.
Second, theoretical study involving the develop-
ment of a model of institutional entrepreneurship
needs to advance. We relied on institutional theory.
The entrepreneurship and innovation literatures
could also be helpful in understanding the condi-
tions, resources, and capabilities that foster the
emergence of institutional entrepreneurs.
Third, qualitative research is also necessary. The use
of secondary data sources fails to examine the processes
by which institutional entrepreneurs exercise influ-
ence. The mechanisms and strategies identified by
Fligstein (1997) are suggestive, but they need to be
subjected to empirical verification. Interviews with
organizational actors engaged in making decisions
about the creation or adoption of specific programs
would be particularly insightful for theory building.
Finally, additional research is needed to evaluate
the competitive and environmental impacts of
institutional entrepreneurship.
Our results have interesting implications for
managers. This study helps them understand under
what circumstances they might undertake activities
related to institutional entrepreneurship in terms of
moving first to adopt voluntary schemes of envi-
ronmental regulation. Specifically, the availability of
free resources and participation in broad markets are
vital to the emergence of institutional entrepreneurs.
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Ivan Montiel
California State University,
Los Angeles, CA, U.S.A.
E-mail: imontiel@calstatela.edu
Bryan W. Husted
Schulich School of Business of York University,
Toronto, Canada
E-mail: bhusted@schulich.yorku.ca
363Environmental Management Programs in Mexico
