Resolving Information Asymmetrics in Markets: The Role of Certified Management Programs

Resolving information Asymmetries in Markets: The Role of Certified Management Programs (Toffel, 2006) examines if ‘a voluntary management program’ (in this study’s case ISO 14001) that features an independent verification mechanism (certification) is achieving its ultimate aims’.

The research involves data from thousands of companies in the USA to evaluate their environmental performance. The research reports, ‘evidence that the ISO 14001 Environmental Management System Standard has attracted companies with superior environmental performance’.

Two key elements of the conclusion state that ‘third party certification may be a critical element to ensure that voluntary management programs legitimately distinguish adopters from non-adopters’. This is greatly assisted by the view that,  ‘As an alternative to more prescriptive industry-specific management practices, voluntary management programs can also ensure performance improvement among its participants by requiring such improvements as a condition for ongoing participation’.

The second key element of the conclusion is a clear message for the concept of certification as a means of delivering public policy objectives, namely that, ‘regulators should seriously consider using ISO 14001 adoption as an indicator of superior (environmental) performance’.


Toffel, M.W., Harvard Business School, Harvard University



Resolving Information Asymmetries in Markets: The Role of Certified Management Programs’, Toffel, M.W., (2006)