Voluntary management standards (e.g., ISO14001, Forest
Stewardship Council, and Certified Organic) have grown significantly in the
last 10 years as a way to self regulate rather than be regulated so intently from
government and industry. (Simpson, D., Power, D., & Klassen, R. 2012)
However as Simpson, et al explain, some standards are
failing to affect improved performance in the companies that adopt them. Some voluntary
management industry- and product-based
standards fail to improve internal organization performance because, too often,
they are either too narrow or too encompassing to fit within some companies.
Additionally, external pressures to adopt certain management standards cause
some companies to focus only on the extrinsic reasons to adopt the standard. They put forth a minimal effort to establish
the processes that will satisfy the requirements of certification rather than
making actual internal improvements that will benefit the company in the long
run. Coincidentally, the purpose of establishing a standard is to encourage
performance improvement and self-governance toward a specific social or
industry standard. This topic is important because companies spend a great
amount of resources in adopting voluntary standards and often do not benefit in
performance from their purpose. Both companies who adopt and organizations that
develop the standards should take consider the proposals offered in the
article.
Simpson, et al contributed five proposals, three that are
based on the existing environment concerning adoption of standards, and two
proposals that may indeed improve the business environment concerning the
standards.
“H1a Voluntary management standards limit the capabilities of over-fit
firms where their existing capabilities significantly exceed institutional
requirements for performance improvement.” (Simpson, et al, p.90)
“H1b Voluntary management standards fail to improve the capabilities of
under-fit firms where the institutional requirements for performance
improvement significantly exceed firms’ existing capabilities.” (Simpson,
et al, p.90)
“H1c No-fit firms fail to adopt voluntary management standards because
of low institutional pressure to do so and limited related capabilities.”
(Simpson, et al, p.91)
According to Simpson, et all, companies can be classified
into four categories with regard to compatibility to the standards they seek to
adopt. They are fit, over-fit and under-fit, and no-fit. These categories
describe the compatibility of the standard requirements to the company’s
capabilities. For example, when the requirements exceed the capabilities of the
firm, the standards do not improve company performance and the company priority
is to seeking association with the standard. On the other hand, in the situation
of a leader firm, company capabilities usually exceed the standard requirements
and if adopted the standards would reduce firm performance. And, in the case
where the firm does not fit the standards at all, the firm is usually so small
or operates in a relatively small environment and poses low pressure to
consider adoption of the standards. (Simpson, et al, 2012)
“H2a Improving fit of
management standards may require a tailoring or moderating of requirements to
increase their value to firms.” (Simpson, et al, p.91)
“H2b Improving fit of
management standards may require strengthening of requirements to increase the
participation of firms.” (Simpson, et al, p.92)
Standards with governance that is too restrictive can be
costly to adopt and could force smaller companies out of a particular standard.
Standards that have been more successful (e.g., ISO standards and USDA organic)
were developed using a cooperative process and incorporating the requirements of
both industry and the stakeholders. The authors propose a model that integrates
the company’s existing capabilities along with the standard requirements in
addition to solutions that will prevent failure. (Simpson, et al, 2012)
Implications for managers are to recognize standards that do
not fit their operations and also consider the long-term benefits of adopting a
particular standard that result in an improved performance, not just standard
adoption based on external pressure. Modification of standards could improve the
compatibility and fit with some companies, resulting in improved performance
within the operations.
Simpson, D., Power, D., & Klassen, R. (2012). When One Size Does Not Fit All: A Problem of Fit Rather than Failure for Voluntary Management Standards. Journal Of Business Ethics, 110(1), 85-95. doi:10.1007/s10551-011-1149-6 (Business Source Complete, Sep 17, 2012)
Simpson, D., Power, D., & Klassen, R. (2012). When One Size Does Not Fit All: A Problem of Fit Rather than Failure for Voluntary Management Standards
