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International Journal of Quality & Reliability Management

An evaluation of success factors using the AHP to implement ISO 14001-based EMS
Kwai-Sang ChinSimon Chiu V.M. Rao Tummala
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To cite this document:
Kwai-Sang ChinSimon Chiu V.M. Rao Tummala, (1999),"An evaluation of success factors using the AHP to
implement ISO 14001-based EMS", International Journal of Quality & Reliability Management, Vol. 16 Iss 4
pp. 341 - 362
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(2011),"Motives, difficulties and benefits in implementing the ISO 14001 Environmental Management
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(2000),"The relationship between ISO 14001 and continuous source reduction programs",
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(2001),"An analytical hierarchy process assessment of the ISO 14001 environmental management system",
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An evaluation of success Evaluation of
success using
factors using the AHP to the AHP

implement
ISO 14001-based EMS Received February 1998
341

Kwai-Sang Chin and Simon Chiu Revised July 1998


City University of Hong Kong, Hong Kong, China, and
V.M. Rao Tummala
Eastern Michigan University, Ypsilanti, Michigan, USA
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Keywords Analytical hierarchy process, Environmental management strategy, Hong Kong,


Implementation, International standards, Manufacturing
Abstract Today's growing concern in environment awareness forces manufacturers to strive
for implementing competitive strategies in environmental management. With the introduction of
ISO 14001 Environmental Management System (EMS) standard in 1996, many manufacturing
companies are facing a decision problem of whether or not to implement the ISO 14001 based
EMS. The authors have studied the critical success factors to be considered by the Hong Kong
manufacturers in this regard. The Analytic Hierarchy Process (AHP) methodology is used in the
study to formulate an appropriate model to evaluate success factors and develop strategies to
implement ISO 14001 based EMS in Hong Kong manufacturing companies. The model is also
used to evaluate the benefits/costs ratios of implementing ISO based EMS and to decide whether
or not to implement it. As the results of the model indicated, the ISO 14001 based EMS should be
implemented in Hong Kong by manufacturing companies to improve their environmental
performance and sustain the competitive position in the global market place, regardless of the
considerable costs incurred from its implementation. This is supported by a relatively larger
benefits/costs ratio with respect to implementing ISO 14001 based EMS than that of the
contrary. This paper reports the findings of the study.

1. Introduction
Environmental protection is now increasingly demanded by individuals, major
customers and even governmental authorities. Companies, whether they
belong to manufacturing, engineering services or service industries are
becoming responsible for controlling and improving their environmental
performance. They are concerned more with achieving and demonstrating
sound environmental performance within the context of increasingly stringent
legislation and profit motivation, or in search of improved public relations. The
advantage of market differentiation provided by an environmental
management system certification is another significant driving force (Jo, 1990;
Anderson, 1995; Sayre, 1996). However, it is anticipated that it may soon
change from market differentiation and market advantage to market demands
and access to markets. International Journal of Quality &
The introduction of the ISO 14001 Environmental Management System Reliability Management,
Vol. 16 No. 4, 1999, pp. 341-361.
(EMS) standard by the International Organization for Standardization (ISO) # MCB University Press, 0265-671X
IJQRM will have a significant impact on manufacturing and service industries in
16,4 designing and implementing an EMS-based system to minimise the impact of
their operations on the environment. The customers who buy their products or
services, as they are also becoming more environmentally conscious may also
feel the impact. As stated by Kuhre, the greatest impact to the environment will
be in the reduction of hazardous waste (Kuhre, 1995). The ISO 14000
342 certification requires that companies must reduce the use of hazardous
materials and processes in order to minimise and manage waste most
efficiently. The certification would also imply that the environment is not
significantly damaged in the process when companies make products or
provide services. Most customers are already demanding this type of
certification now in terms of quality with respect to ISO 9000 standards. The
experience with ISO 9000 can cast some light on the impact of ISO 14000. The
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ISO 9000 series of standards were first published in 1987 and later revised in
1994 (ISO 9000, 1994). Today, more than 70,000 companies have been
registered to ISO 9000 standards in more than 75 countries. Since the interest
and the attention being paid to quality management issues before the
introduction of ISO 9000 in no way matches the current interest in
environmental management issues, it is logical to predict that the impact of
ISO 14000 will at least match that of ISO 9000. It is envisaged that ISO 14000
will be a very significant development and will exert tremendous influence at
both company and industry levels in near future (Lin, 1995; Clements, 1996;
Taylor, 1996; Affisco et al., 1997). The impact may be felt in terms of the
environment, customers, and operations of most organisations as well as
agencies and most components of society. The purpose of this paper is to
present a methodology to evaluate and prioritise the critical factors involved in
implementing ISO 14000-based EMS and also to report the decision factors
determined in current Hong Kong manufacturing industry. First, based on
literature review, the strategic and their defining operational success factors to
design and implement an environmental management system based on
ISO 14000 will be identified. The AHP model is formulated using these success
factors to evaluate and prioritise them in order to recommend strategies to
implement EMS.

2. Success factors for implementing ISO 14001


The ISO 14001 is an EMS standard that includes policies, organizational
systems, management, planning, operational procedures, effect and regulatory
identification procedures, objectives, targets, vendor controls, auditing, record
keeping, etc. (Kuhre, 1995). Even though it is a voluntary environmental
standard, most customers may require it in order to do business. The
complexity in designing and implementing an EMS may depend on many
factors including, management and employee commitment, location, type and
complexity of operations, level and number of environmental impacts and
operating conditions of companies. Thus a variety of success factors would
influence the development and implementation of an ISO 14000-based
environmental management system (Wilson, 1997). They are all fundamentally Evaluation of
influenced by the quality of the environmental management system and the success using
way in which it is implemented in an organization. The success of the system the AHP
highly depends on commitment and co-operation from all levels and functions
within the organization. The literature review indicated that management
attitude, organizational change, external and social aspects, as well as technical
aspects are the major important success factors to implement an ISO 14000- 343
based EMS in companies. Each of these four dimensions focuses on strategic
factors, which can be defined well in terms of various operational attributes, as
shown in Table I.

2.1 Management attitude


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For effective design and implementation of an ISO 14000-based EMS, the


management attitude can be understood by examining the top management
commitment and support, appropriate environmental policy and regular
management reviews. The establishment and implementation of ISO 14000
based EMS is a long-term programme involving the participation of employees
from all levels and all functions within an organisation. Therefore, it is
essential to have total commitment and support from the top management to
initiate the development and implementation of an effective EMS. They should
commit and support not only for an effective system, but also for continual
improvement of environmental management, prevention of pollution,
regulatory compliance and for adequate resource allocation (Kuhre, 1995;
Clements, 1996; Mitsuhashi, 1998). This should not surprise us because many
practices of ISO 9000 certification have indicated similar intentions (Tang
and Tummala, 1996). Top management, which provides only lip service to
ISO 14000 without assigning appropriate authority to their representative(s) in
implementing the system, is unlikely to succeed. Only those senior

Strategic issues Attributes

1 Management attitude Top management commitment and support


Appropriate environmental policy
Regular management reviews
2 Organizational change Structure and responsibility
Training and awareness
Communication
Documentation and control
Emergency preparedness
3 External and social aspects Environmental legislation
Market pressure
Employee relations Table I.
4 Technical aspects Environmental specialist assistance Success factors for
Monitoring and measuring equipment ISO 14000
Production process enhancement implementation
IJQRM management executives who are enthusiastic about ISO 14000 and commit
16,4 their full support to ongoing organizational changes associated with the
implementation will lead to a continual improvement in environmental
performance (Pearson et al., 1993). An environmental policy represents a
serious commitment on behalf of the company in which every word and phrase
will be carefully thought through and its implications fully understood (Kuhre,
344 1995; Clements, 1996). The policy forms the basis on which the organization
sets its environmental objectives and targets. The top management must
actively participate in developing such a policy and make sure that it is
communicated effectively to all levels and functions with in the organisation. In
addition, they should provide strategic direction to middle managers to
participate in developing environmental policy and appropriate plans for
system implementation. In order to maintain continual improvement in
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environmental performance, suitability and effectiveness of the environmental


management system, and thereby its performance, the top management should
review and evaluate the environmental management system at regular
intervals (Pearson et al., 1993). The management reviews must be based on the
EMS audit results and must address all possible needs for changes needed in
the policy, objectives and other elements of the environmental management
system, changing circumstances and the commitment to continual
improvement (ISO 14001, 1996; Clements, 1996).

2.2 Organizational change


Implementation of ISO 14001-based EMS requires important changes in an
organization (Chapman, 1994; Lin, 1995). According to DIS 14001 clause 4.3, the
changes include structure and responsibility, training and awareness,
communication, documentation and control, and emergency preparedness (ISO,
14001, 1996). The top management should ensure that the changes are clearly
understood and supported by all employees in the organisation, and reviewed
at regular intervals against the environmental performance objectives and
targets established in the environmental policy. The successful implementation
of ISO 14000 calls for the commitment of all employees of the organization.
Environmental responsibilities therefore should not be seen as confined to the
environmental function, but should also include other areas of an organization,
such as operational management or staff functions other than environmental. It
is therefore necessary to have well defined, completely documented and
communicated roles and responsibilities to facilitate effective environmental
management. The organization must also identify education and training
needs. It should require that all personnel, whose work may create a significant
impact on the environment, have received appropriate training. The training
must include the environmental policy and EMS requirements, relevant
objectives and targets, job specific environmental effects, the benefits of
improved performance, and the consequences of non-compliance (ISO 14001,
1996). Management should determine the level of experience, competence,
education and training necessary to ensure that they understand the
importance of developing and implementing an effective EMS. With regard to Evaluation of
environmental aspects and environmental management systems, the success using
organization should establish and maintain procedures for both internal and the AHP
external communication. The organization should also establish and maintain
procedures for controlling all EMS documents properly. Documents should be
legible, dated (with dates of revisions) and readily identifiable. They should
also be maintained in an orderly manner, and retained for a specified period. 345
For emergency preparedness, the organization should establish and maintain
procedures to identify potential for and respond to accidents and emergency
situations. It should also develop, establish and maintain procedures for
preventing and mitigating the environmental impacts that may be associated
with accidents and emergency situations. These procedures should be tested
periodically where practicable and reviewed and revised, where necessary,
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after the occurrence of accidents or emergency situations (Clements, 1996).

2.3 External and social aspects


The effective development and implementation of ISO 14001-based EMS is
inevitably influenced to a great extent by external and social aspects
(Margugio, 1991; Lin, 1995; Sayre, 1996). As shown in Table I, these include
environmental legislation, market pressure, and employee relations. The
increasing trend of environmental legislation is found not only in developed
countries but also in developing countries, for instance, the South Eastern Asia
(SEA) countries, like Thailand, Malaysia, etc. Hong Kong has a history of non-
regulation. The Hong Kong Government used to leave the environmental
legislation to industry to self-regulate and, as a result, little was done to
minimize environmental damage. The situation has been changing rapidly in
recent years, as community expectations are increasing, and the Hong Kong
Government is becoming more responsive in providing more resources to
enforce environmental legislation (HKELA, 1994; HKID, 1995). Growing
pressures from different directions are also forcing several companies to join
the ISO 14000 trend. Multinational and commercial companies, particularly the
high-profile ones, are expected to be pioneers in adopting a comprehensive
EMS to enhance their public image (Chapman, 1994; Sayre, 1996). Moreover, an
organisation committed to the environment is more likely to bolster team spirit
and engender loyalty and increase in the organisation's ability to attract high
quality staff (Pearson et al., 1993; Sayre, 1996). Implementation of an ISO 14000-
based EMS will be a good demonstration of such commitment. As a result,
organizations adopting ISO 14000-based environmental management systems
may have a larger pool of potential employees to choose from their competitors
giving them a market advantage.

2.4 Technical aspects


The effective implementation of ISO 14001-based EMS in manufacturing and
service industries certainly hinges on integrating it with technical aspects
(Kuhre, 1995; Clements, 1996). These include, as shown in Table I, the
IJQRM environmental specialist assistance, availability of monitoring and measuring
16,4 equipment, and the production process enhancement. There is a common
problem that companies in these industries generally lack knowledge of
pollution control technologies, risk assessment and control, and management
(Lin, 1995). Hence, there is a demand for environmental specialist assistance in
understanding and assessing the technical issues of the organization's
346 operations that may have significant environmental impacts. Experts should
then develop and implement corresponding response actions to improve the
organization's environmental performance in a practical manner leading to
compliance with environmental legislation. In implementing ISO 14000-based
EMS, organizations require reliable monitoring and measuring equipment to
regularly monitor and measure all activities that can cause significant impact
on the environment. This should enable the organization to record information
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to track performance, execute relevant operational controls and assess


conformance with the organization's objectives and targets. The existing
production facilities and practices in most of the industrial companies,
particularly the small- and medium-sized enterprises, cannot satisfy the
ISO 14000 requirements for achieving regulatory compliance and optimum
environmental performance. Therefore, production processes need to be
enhanced so that they become more environmentally friendly.

2.5 Benefits and costs


The benefits of ISO 14000-based EMS implementation fall within three major
categories, namely:
(1) legal;
(2) commercial; and
(3) social.
The ISO 14000 compliance can be considered as a safety net against liability
due to increasing environmental legislation. The number of employees injured
and hence the liability by the use of hazardous chemicals and processes can be
reduced if an effective EMS based on ISO 14001 is implemented (Kuhre, 1995).
Improved profitability of an organization can be achieved through the
enhanced productivity, such as improved use of energy and reduced costs due
to use of less chemicals and wastes handled or cleaned up (Kuhre, 1995).
Similarly, companies may implement new processes that use less hazardous
materials resulting in less hazardous waste needing land disposals, which in
turn may result in less soil and ground water pollution. Competitiveness can
also be enhanced by improved company public image and staff morale, as a
result of ISO 14000 implementation. The typical costs of ISO 14000
implementation are the initial set-up cost and long-term maintenance and
improvement cost. Over time, the legal, commercial and social benefits arising
from an organization's activities may outweigh the costs of design and
implementation. The incentive for addressing environmental issues is
gradually shifting from minimum effort to meet enforced statutory limits to Evaluation of
recognition that paying attention to the environment can result in significant success using
commercial and social gains. The current situation is, of course, widely the AHP
different in different countries and across different cultures. Nevertheless, the
trend is that environmental protection is no longer an extra cost. An effective
EMS enables organizations to manage their operations to minimise the
hazardous waste and damage to the environment and maximise the benefits. 347
3. The AHP methodology
The analytic hierarchy process (AHP) methodology, as developed by Saaty, is a
powerful method in solving complex decision problems (Saaty, 1980). Any
complex problem can be decomposed into several sub-problems using the AHP,
in terms of hierarchical levels where each level represents a set of criteria or
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attributes relative to each sub-problem. The top level of the entire hierarchy
represents the goal (such as the implementation of ISO 14000-based EMS) of
the problem. The intermediate levels represent the strategic as well as
operational factors and the last level usually represents alternatives or actions
to be considered to achieve the goal. Decision elements at each hierarchy level
are compared pairwise and are assigned relative scales that reflect the strength
with which one element dominates another. Based on these pairwise
comparison matrices, local and global priority weights will be determined and
the ranking of the alternatives occupying the last level of the hierarchy will be
made to satisfy the overall goal of the problem. There are numerous examples
illustrating the powerful application of AHP methodology to determine
priorities and to conduct benefits/costs analysis (Saaty, 1990; Saaty and
Vargas, 1994; Tummala and Wan, 1994).
Some of the most interesting applications include assessing and prioritizing
criteria/alternatives in new product designs, new product pricing, selecting
bridges and research projects, use of technologies, carrier/degree programs,
CIM benefits and risks, facilities location/layouts, and supplier selection
(Tummala and Wan, 1994). Furthermore, the AHP is integrated with operations
research techniques such as integer programming, goal programming, cost/
benefit analysis and dynamic programming in finding solutions for several
problems. The cost/benefit analysis using AHP has been applied in several
areas (Tummala and Wan, 1994; Tummala et al., 1996a; Tummala et al., 1996b)
including:
. authorizing riverboat gambling;
. energy evaluation;
. allocation of resources; and
. prioritizing success factors for CE implementation.
Applying the AHP to cost/benefit analysis can improve the traditional decision
making by cost/benefit analysis. We can translate benefit/cost problem into
meaningful complementary benefit and cost hierarchies, and use pairwise
IJQRM comparison judgements to quantify intangible and noneconomic factors
16,4 included in the hierarchies. As Saaty argued, these hierarchies would enable us
to make explicit and informed trade-offs among many attributes or criteria in
selecting the best course of action, even when the attributes include multiple
performance goals and output activities (Saaty, 1990). Thus the AHP modelling
process allows more flexibility to aid the management decision making
348 process. The input provided by evaluators involves only the pairwise
comparison judgements based on a nine-point scaling system (Saaty, 1980). It
also allows for disaggregation and the dependence-independence relations
among attributes by decomposing the complex problem into different levels of
meaningful hierarchies so that the evaluators can easily assess pairwise
comparisons. This may enable us to reduce the assessment bias. Even though
some argue against the use of AHP because of certain measurement problems,
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the computation of priority values is based on the classical eigenvalue problem.


There is no controversy about this problem (Saaty, 1994). Therefore, we used
the AHP methodology in this paper to formulate a model to assess the relative
importance and to determine the priority weights of the criteria and sub-criteria
in terms of success factors for implementing ISO 14000-based EMS as
described in section 2. We also used it to assess the benefits and costs and to
consider the trade-offs between them in deciding whether or not to implement
the ISO 14000-based EMS in the Hong Kong manufacturing industries.

4. The AHP model


The application of AHP methodology involves four phases, namely:
(1) Phase 1: Structuring the problem and building the AHP model.
(2) Phase 2: Collecting data through pairwise comparisons by expert
interviews.
(3) Phase 3: Determining normalised priority weights of individual factors.
(4) Phase 4: Analyzing the priority weights and deriving a solution to the
problem.
Based on the identified success factors, as discussed in section 2, the ISO 14000
implementation problem was formulated as a series of hierarchies where each
level represents a set of relevant critical factors, benefits and costs, as shown in
Figures 1 and 2. Figure 1 describes the benefits hierarchy, whereas Figure 2
describes the costs hierarchy. Each of the benefits and costs hierarchies
consists of the goal, decision criteria, sub-criteria, benefits or costs, and the
alternatives (implement or do not implement). The goal is to decide whether or
not to implement the ISO 14001-based EMS in the Hong Kong manufacturing
industries. Based on this goal, the relevant strategic success factors (decision
criteria) are placed in level 1. In level 2, the relevant attributes (sub-criteria) that
define each of the level-1 strategic factors are placed. Similarly, level 3 includes
the benefits realised or costs incurred by considering level-2 factors to
implement an ISO 14001 based EMS, as shown in Figures 1 and 2, respectively.
ISO 14000 BASED EMS IMPLEMENTATION
Evaluation of
success using
the AHP
Management Organizational External & Social Technical
Attitude (MA) Change (OC) Aspects (ENSA) Aspects (TA)
349
Structure &
Top Responsibility Environmental Environmental
Management (SNR) Legislations (EL) Specialist
Commitment & Assistance (ESA)
Support (TMC) Training &
Awareness
(TNA)
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Appropriate Monitoring &


Environmental Communication Market Pressure Measuring
Policy (AEP) (CM) (MP) Equipment
(MNME)
Documentation
& Control (DNC)
Regular Employee Production
Management Emergency Relations Process
Reviews (RMR) Preparedness (ER) Enhancement
(EP) (PPE)

Lowered Improved Improved Company


Legal Profitability Image & Staff Morale
Liablility (IP) (ICISM)
(LLL)

Figure 1.
Implement Do Not Benefits hierarchy of
(I) Implement ISO 14000 EMS
(NI) implementation

Finally, the alternatives of implementing or not implementing an ISO 14001-


based EMS according to the benefits or costs are considered in level 4.
In phase 2, the relevant data was collected through interviews with the
experts in the Hong Kong manufacturing industry to determine the relative
importance of criteria or sub-criteria. The nine-point scale as suggested by
Saaty was used to assign the relative scales (Saaty, 1980; Saaty and Vargas,
1994). Six representative evaluators were selected, namely; a private
international environmental management consultant, a local consultant from
the Hong Kong Productivity Council (which is a Hong Kong government
IJQRM ISO 14000 BASED EMS IMPLEMENTATION
16,4

Management Organizational External & Social Technical


Attitude (MA) Change (OC) Aspects (ENSA) Aspects (TA)
350
Structure &
Top Responsibility Environmental Environmental
Management (SNR) Legislations (EL) Specialist
Commitment & Assistance (ESA)
Support (TMC) Training &
Awareness
(TNA)
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Appropriate Monitoring &


Environmental Communication Market Pressure Measuring
Policy (AEP) (CM) (MP) Equipment
(MNME)
Documentation
& Control (DNC)
Regular Employee Production
Management Emergency Relations Process
Reviews (RMR) Preparedness (ER) Enhancement
(EP) (PPE)

Cost of Cost of
Initial Set-up Maintenance
(CIS) & Improvement
(CMNI)

Figure 2.
Costs hierarchy of
ISO 14000 EMS Implement Do Not
(I) Implement
implementation (NI)

subvented body to provide environmental management service and training to


the Hong Kong manufacturing industry), two representatives from Hong Kong
manufacturers' associations (Federation of Hong Kong Industries and Chinese
Manufacturers' Association of Hong Kong), and two private printed circuit
board (PCB) manufacturers. The two manufacturers belong to medium- to
large-size companies. One of them is a multinational business, while the other is
a local manufacturing company. They are considering adopting the ISO 14000
but the decision has not yet been made. All these evaluators are senior
consultants, directors or general managers, representing a wide spectrum of
experience and expertise from consultancy to private and public sector Evaluation of
organizations. Each of the evaluators has more than 15 years industrial success using
experience. They are knowledgeable of the Hong Kong manufacturing the AHP
environment and ISO 14000.
Thus, the evaluators can represent well the general practices and opinions
in the Hong Kong manufacturing industry in evaluating the criteria and
assigning the relative scales in order to determine the relative importance of 351
criteria or sub-criteria used in the AHP models shown in Figures 1 and 2. From
reviewing the literature and our experience, we find that three to seven (most
often five) evaluators are usually selected as a representative sample of
members to assign relative scales. Also, experience shows that the relative
gains made would decrease with the increase in the number of evaluators in a
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team (Saaty, 1994). The number of problems in collecting pairwise comparison


judgements by personal interviews would also increase as the number of
evaluators in a team is increased. Therefore, we selected six evaluators to
assess pairwise comparison judgements. Each of these evaluators was asked to
evaluate carefully and assign relative scales using the nine-point scaling
system in a pairwise fashion with respect to the criteria of one level of
hierarchy given the criterion at the next higher level. This process was
continued to all levels of the entire hierarchy. We conducted personal
interviews in collecting these pairwise comparison judgements. As a result, we
obtained a series of pairwise comparison judgement matrices with respect to
the criteria, sub-criteria, benefits, costs and the alternatives used in the AHP
models. We found that conducting personal interviews is a more convenient,
faster and more effective means of collecting data than using a questionnaire.
Also, by interviewing the evaluators personally, we can minimize problems due
to different definitions or interpretations used of the success factors of the AHP
models.
The pairwise comparison judgement matrices obtained from the expert
interviews were translated into the largest eigenvalue problems that can be
solved to obtain the normalized and unique priority vectors of weights to
criteria or sub-criteria, benefits or costs, and alternatives used in each level of
the hierarchy. Expert Choice was used to achieve this purpose (Saaty et al.,
1986). As suggested by Saaty, the geometric mean (GM) approach, instead of
the arithmetic (AM) approach, was used to combine the pairwise comparison
judgement matrices obtained from each evaluator. The normalized weights are
shown in Appendices 1 and 2. The overall consistency ratios of pairwise
comparison judgement matrices (individual as well as combined) at all levels is
well within the value of 0.10 as recommended by Saaty, which implies that all
evaluators are consistent in assigning relative scales (Saaty and Vargas, 1994).
As mentioned earlier, conducting personal interviews instead of sending a
questionnaire would enable us to resolve any problems confronted regarding
the inconsistencies among the judgements that are provided by the evaluators.
We can interview the evaluators again and resolve any problem much faster.
IJQRM Based on the normalized priority weights, the relative importance of success
16,4 factors, benefits and costs are assessed, as explained in the following sections.
It should be noted, however, that the priority weights obtained by using the
Expert Choice and the conclusions drawn from them are the results of the
analysis of collective judgements provided by the panel of experts selected for
this study.
352
5. Evaluation of decision factors, benefits and costs
5.1 Critical success factors based on the benefits hierarchy
By examining the normalized priority weights of level 1, as shown in Appendix
1, management attitude (MA) is found to be the most important success factor
to implement ISO 14000-based EMS. It carries relatively higher weight than
external and social aspects (ENSA), indicating that external and social aspects
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is the second most important driving force in implementing ISO 14000-based


EMS in Hong Kong manufacturing industry. Organizational change (OC) and
technical aspects (TA) respectively are found to be the next most important
success factors (see Appendix 1).
The priority weights in level 2 reflect that top management commitment
and support (TMC) is found to be the most important defining factor with
respect to management attitude. It is vital to ISO 14000 implementation in
which positive management support should be provided to drive the change
required. It also plays an important part in steering the direction for ISO 14000
program planning and management. In order to accomplish this, it appears that
appropriate environmental policy (AEP) is essential as it is found to be the
second most important success factor. Regular management reviews (RMR) is
found to be the next most important decision factor. With respect to
organizational change, the priority weight of structure and responsibility (SNR)
outweighs the other criteria considerably, implying that it is of paramount
importance to organizational change required for ISO 14001-based EMS
implementation. Training and awareness (TNA), documentation and control
(DNC), and emergency preparedness (EP) are found to be the next most
important critical success factors. Given external and social aspects, the
environmental legislation (EL) is determined to be the most dominant success
factor and thus critical to the manufacturers' adoption of ISO 14000 as well as
its implementation. As seen from Appendix 3, market pressure (MP) serves as
the second most important driving force for manufacturers to implement the
ISO 14000-based EMS in order to maintain their competitive position in the
global marketplace. With respect to technical aspects, environmental specialist
assistance (ESA) outweighs the other success factors, implying that local
manufacturers, due to their lack of knowledge of pollution control technologies
and management, are demanding that environmental specialist assistance is
essential in developing and implementing ISO 14000-based EMS. Also,
production process enhancement (PPE) and monitoring and measurement
equipment (MNME), in that order are found to be the next most important
factors that needs to be addressed.
By comparing the priority weights of benefits with respect to all success Evaluation of
factors of level 2 (except MP, ER, and PPE), it is found that the lowered legal success using
liability (LLL) is perceived to be the primary benefit of implementing the AHP
ISO 14001-based EMS in the Hong Kong manufacturing industry (see
Appendix 3). Improved company image and staff morale (ICISM) is perceived
to be the most important benefit given employee relations (ER), whereas
improved profitability (IP) is found to be the most important benefit given 353
market pressure (MP) and production process enhancement (PPE). With the
exception of MP, ER, ESA, MNME, and PPE, the improved company image
and staff morale (ICISM) is found to be the second most important benefit. It is
interesting to note that all three defining attributes are found to be equally
important given MP, even though IP is perceived to be the slightly more
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important benefit. Similarly, the priority weights of the two alternative actions
considered at the fourth level indicates that all the three listed benefits suggest
the implementation of ISO 14001-based EMS.

5.2 Success factors based on the costs hierarchy


To provide a clear and comprehensive picture on the feasibility and to consider
trade-offs between costs and benefits for implementing ISO 14001-based EMS,
the cost hierarchy is also considered in addition to the benefits hierarchy. The
normalized priority weights of each level are shown in Appendix 2. Similarly,
the most important and the second most important success factors based on the
priority weights are shown in Appendix 4. Since the factors of levels 1 and 2 are
the same as those in the benefits hierarchy, the conclusions obtained would be
the same for costs hierarchy. Therefore, we consider the costs of
implementation in level 3 in order to determine their relative priorities. With
respect to the emergency preparedness (EP) and environmental specialist
assistance (ESA), the relatively large normalized priority weights for the cost of
initial set-up (CIS) reflect that they carry more cost concerns than the cost of
maintenance and improvement (CMNI) in successfully developing and
implementing ISO 14000 based-EMS. The same is true for other success factors
of environmental legislation (EL), monitoring and measuring equipment
(MNME), production process enhancement (PPE), documentation and control
(DNC), structure and responsibility (SNR), and communication (CM)
respectively. Conversely, the cost of maintenance and improvement is found to
be more important for regular management reviews (RMR), and appropriate
environment policy (AEP). With respect to other success factors, namely TMC,
TNA, ER, and MP, the two cost elements are found to be more or less of equal
importance. Thus, as a whole, the initial set-up cost is perceived to be the major
cost concern by the Hong Kong manufacturers in deciding whether or not to
implement an ISO 14001-based EMS. Even though the cost considerations are
important, the priority weights of the two actions shown in level 4 clearly
indicate that Hong Kong manufacturing industry should go for implementation
of the ISO 14001-based EMS.
IJQRM 6. Solution of the problem
16,4 In order to determine the best course of action to the problem, the normalized
priority weights are multiplied together along all successive hierarchical levels
to obtain a global or composite priority vector using Expert Choice. Each of
these vectors corresponding to the benefits and costs hierarchy represent the
relative priorities of the alternative decisions (implement or not to implement
354 the ISO 14001-based EMS) included at the lowest level that enables the
accomplishment of the stated goal of the problem. These composite weights are
tabulated as shown in Table II. Based on these priority weights, the benefits/
costs ratio can be determined.
Based on the overall priority weights related to the benefits hierarchy, it is
obvious that implementing ISO 14001-based EMS is the optimal decision as its
priority weight of 0.811 far outweighs the priority weight of not implementing
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ISO 14000 based EMS. Interestingly, the same is the conclusion by considering
the costs hierarchy. Therefore, the benefits/costs ratio, which is determined as
equal to 1.238 for "implement ISO 14001 based EMS", indicates that
implementing the environmental management system based on ISO 14000 is
the best course of actions for Hong Kong manufacturing industry.
Interestingly, we can arrive at the same conclusion by considering the
individual benefit/cost ratios of LLI/CIS, IP/CIS, ICISM/CIS, LLI/CMNI, IP/
CMNI, and ICISM/CMNI.

7. Discussion and conclusions


Based on the global or composite priority weights of each alternative
corresponding to benefits and costs hierarchies, it is found that implementing
an ISO 14000-based environmental management system for the Hong Kong
manufacturing industry is the best course of action. The same conclusion is
also observed by using the benefits/costs ratio shown in Table II. Thus to
sustain the competitiveness in the world marketplace and to follow the global
trend, the Hong Kong manufacturers should develop an EMS satisfying
ISO 14000 requirements and implement it effectively.
In considering the implementation of ISO 14001-based EMS, management
attitude (MA), and external and social aspects (ENSA) as well as organizational
change (OC) are found to be the most important and next most important
success factors. Any company that wishes to develop and implement
ISO 14001-based EMS must first consider the implementation of strategies that

Composite weights Combined judgement

Benfits Implement (I) 0.811


Not implement (NI) 0.189
Table II. Costs Implement (I) 0.655
Composite priority Not implement (NI) 0.345
weights for alternative Benefits/costs ratio Implement (I) 1.238
decisions Not implement (NI) 0.548
address these important issues. The senior management must understand the Evaluation of
importance of ISO 14000 and focus clearly on developing an environmental success using
policy and the corresponding objectives and targets. In addition, they must the AHP
understand and support the need for continual improvement of environmental
management, prevention of pollution, environmental legislation and regulatory
compliance, and adequate resource allocation. They must also be able to
communicate these policies and objectives, and the importance of 355
ISO 14000 at all levels of the employees in the organization to gain their
commitment and involvement. In addition, implementation of ISO 14001-based
system requires important changes in the organization not only in gaining the
employee commitment and involvement, but also in getting them to know the
requirements of ISO 14000, documentation and control, continual improvement
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of environmental performance, emergency preparedness, and regulatory


compliance. The Hong Kong manufacturers are generally reluctant to spend a
large amount of money on ISO 14000 implementation unless they are
threatened by government actions with heavy penalties for environmental non-
conformance, or the loss of their company's competitive position. If the top
management understands the importance of ISO 14000 and commits its
support and involvement, neither the cost of initial set-up nor the cost of
maintenance and improvement would become critical roadblocks for effective
implementation of ISO 14001-based EMS.
As summarized and shown in Appendix 3, top management commitment
and support, structure and responsibility, environmental legislation and
environmental specialist assistance are found to be most important operational
or defining factors to support the decision factors of level 1 that are determined
to be important. Appropriate environmental policy, training and awareness,
documentation and control, emergency preparedness, market pressure,
production process enhancement and monitoring and measuring equipment
are perceived to be the next most important operational factors. This means
that organizations which aim at implementing environmental management
systems based on ISO 14000 must have the ability to develop plans to address
these level 2 critical factors. They would become an effective foundation for
implementing strategies related to level 1 factors. The priority weights of CM
and ER did not reflect that they are important. This may be due to the fact that
organizational change is found to be the most important critical factor as
explained above. We need active participation of employees and appropriate
communication channels to understand the environmental policies and
ISO 14000 requirements to implement strategies for effective organizational
change.
Lowered legal liability followed by the improved company image and staff
morale are perceived to be the major benefits in implementing the ISO 14001
based EMS. Improved profitability, however, is perceived to be the next
important benefit. This may lead to the belief that Hong Kong manufacturers
are suspicious in thinking whether the implementation of ISO 14000 would
IJQRM improve profits because of considerable cost investment that may be incurred
16,4 for set-up, and subsequent maintenance and improvement (see Appendix 4).
However, the benefits/costs ratio clearly indicates that it is not true. In fact
lowered legal liability and improved company image along with the other
benefits that may be realised by implementing an effective ISO 14001-based
EMS may offset the costs of implementation and increase the profits. Also, the
356 improved profit is perceived to be the most important benefit given the
production process enhancement (PPE) and market pressure (MP) of level 2
factors. It is found to be the second most important benefit given the success
factors of environmental special assistance (ESA), monitoring and measuring
equipment (MNME), and employee relations (ER).
As explained earlier, implementation of ISO 14001-based EMS needs to
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involve changes in the organization. Structure and responsibility is considered


to be most important element contributing to organizational change. There
should be well defined, documented and well-communicated roles and
responsibilities within the organization. Similarly, necessary training must be
provided to appropriate personnel. Training must include ISO 14000
requirements, environmental legislation and regulatory compliance,
documentation and control, and continual improvement of environmental
performance. Also, there appears to be a definite need for environmental
specialist assistance. This may indicate that Hong Kong manufacturers lack
knowledge of pollution control technologies and management. Production
process enhancement is also perceived to be another important decision factor
as it is critical for achieving continual improvement of environmental
performance.
Finally, even though the implementation of ISO 14001-based EMS needs to
involve considerable costs of initial set-up and subsequent maintenance and
improvement, this study indicated that the benefits far outweigh the costs as
shown by the benefits/costs ratio of Table II. Thus Hong Kong manufacturers
consider implementing the system satisfying ISO 14000 requirements to
improve the environmental performance and to sustain their competitive
position in the global market place.
This study involved six representative evaluators in assigning relative
importance scales to decision factors considered in all levels of the benefits and
costs hierarchies. As mentioned earlier, the judgements provided by all these
evaluators are found to be consistent and within the bounds as suggested by
Saaty (Saaty and Vargas, 1994). In addition, because of their experience and
expertise, it is felt assured that their judgements and opinions sufficiently
represent the Hong Kong manufacturers' practices. The number of evaluators
can be increased from six to any desired level. One should be cautious in
getting the coherent and consistent judgements from all evaluators. Also, it
should be noted that the increased number of evaluators might not always
increase the value of information in improving the local and global priority
weights.
In evaluating the validity of the results obtained in this application, certain Evaluation of
limitations must be recognized. First, as mentioned earlier, the number of success using
evaluators can be increased to examine the effects of changing the relative the AHP
priorities of success factors. Even though the number of concerns in resolving
the consistency problem would increase by increasing the number of
evaluators, one can attempt to increase the number to more than six and see if
the relative priority weights would change considerably. The biases of the 357
evaluators interviewed may slant the judgements thus affecting the results.
Interdependencies or commonalities among the elements in the hierarchy
possibly existed but were minimized by constructing two separate hierarchies.
Also, the analytic network process (ANP) can be used to address some of these
interdependencies. In addition, imperfect preferences may also lead to
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inconsistencies among the criteria used in the AHP model. As Saaty argued on
several occasions, a certain degree of inconsistency in making judgements is
acceptable in real world application (Saaty, 1994).
In this paper, we formulated an AHP model to assess decision factors,
benefits and costs in order to determine their relative priorities and to decide
whether or not to implement ISO 14001-based EMS for Hong Kong
manufacturing industries. Interestingly, the same model can be applied if the
CEO of a company wants to assess success factors using his/her own personal
judgements. He/she can use the model and evaluate the relative priorities in
order to assess the current status and to develop appropriate strategies to
implement ISO 14001-based EMS. Or, a project team formed by senior
management can collect data systematically and use the model to determine the
relative priorities to assess the company's status and then develop appropriate
implementation strategies. Even though the model is applied to Hong Kong
manufacturing industries, it can be applied to determine the relative priorities
among success factors and to develop appropriate strategies for other
countries.

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Appendix 1 Evaluation of
Level 1: Given level 0 goal success using
MA 0.432 the AHP
OC 0.124
ENSA 0.372
TA 0.072
359
Level 2: Given level 1 factors
MA OC
TMC 0.679 SNR 0.423
AEP 0.218 TNA 0.206
RMR 0.103 CM 0.091
DNC 0.156
EP 0.125
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ENSA TA
EL 0.604 ESA 0.507
MP 0.303 MNME 0.166
ER 0.092 PPE 0.327

Level 3: Given level 2 factors


TMC AEP RMR SNR
LLL 0.636 0.649 0.522 0.594
IP 0.147 0.137 0.179 0.138
ICISM 0.217 0.214 0.298 0.268
TNA CM DNC EP
LLL 0.484 0.404 0.626 0.409
IP 0.143 0.164 0.157 0.206
ICISM 0.373 0.432 0.217 0.385
EL MP ER
LLL 0.658 0.333 0.178
IP 0.133 0.348 0.235
ICISM 0.209 0.318 0.586
ESA MNME PPE
LLL 0.437 0.637 0.347
IP 0.288 0.194 0.391
ICISM 0.275 0.170 0.262

Level 4: Given level 3 factors Table AI.


LLL IPICISM Normalized weights of
I 0.855 0.703 0.793 combined judgement
NI 0.145 0.297 0.207 for benefits hierarchy
IJQRM Appendix 2
16,4 Level 1: Given level 0 goal
MA 0.432
OC 0.124
ENSA 0.372
TA 0.072
360
Level 2: Given level 1 factors
MA OC
TMC 0.679 SNR 0.423
AEP 0.218 TNA 0.206
RMR 0.103 CM 0.091
DNC 0.156
EP 0.125
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ENSA TA
EL 0.604 ESA 0.507
MP 0.303 MNME 0.166
ER 0.092 PPE 0.327

Level 3: Given level 2 factors


TMC AEP RMR SNR
CIS 0.509 0.454 0.226 0.558
CMNI 0.491 0.546 0.774 0.442
TNA CM DNC EP
CIS 0.500 0.529 0.597 0.731
CMNI 0.500 0.471 0.403 0.269
EL MP ER
CIS 0.671 0.492 0.500
CMNI 0.329 0.508 0.500
ESA MNME PPE
CIS 0.725 0.611 0.602
CMNI 0.275 0.389 0.398

Table AII. Level 4: Given level 3 factors


Normalized weights of CIS CMI
combined judgement I 0.638 0.675
for costs hierarchy NI 0.145 0.297
Appendix 3 Evaluation of
Level 0: ISO 14000-based EMS implementation
success using
Level 1
the AHP
Given level 0 factor First most important Second and next most important
Goal MA ENSA, OC, TA
Level 2 361
Given level 1 factor First most important Second and next most important
MA TMC AEP, RMR
OC SNR TNA, DNC, EP, CM
ENSA EL MP, ER
TA ESA PPE, MNME
Level 3
Given level 2 factor First most important Second and next most important
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TMC LLL ICISM, IP


AEP LLL ICISM, IP
RMR LLL ICISM, IP
SNR LLL ICISM, IP
TNA LLL ICISM, IP
CM LLL ICISM, IP
DNC LLL ICISM, IP
EP LLL ICISM, IP
EL LLL ICISM, IP
MP IP LLL, ICISM Table AIII.
ER ICISM IP, LLL First and second most
ESA LLL IP, ICISM important decision
MNME LLL IP, ICISM factors: benefits
PPE IP LLL, ICISM hierarchy

Appendix 4

Level 0: ISO 14000-based EMS implementation


Level 3
Given level 2 factor First most important Second and next most important
TMC CIS CMNI
AEP CMNI CIS
RMR CMNI CIS
SNR CIS CMNI
TNA CIS CMNI
CM CIS CMNI
DNC CIS CMNI
EP CIS CMNI
EL CIS CMNI
MP CMNI CIS
ER CIS CIS
Table AIV.
ESA CIS CMNI First and second most
MNME CIS CMNI important decision
PPE CIS CMNI factors: costs hierarchy
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