As a contribution to the long, ongoing debate regarding the effects of ISO 14001 on improving environmental performance of industrial facilities, this article focuses on ISO 14001 as an external environmental capacity (EC) building tool. It presents findings from a study of the effects of ISO 14001 within Israeli industry conducted through questionnaires and in-depth interviews at all certified Israeli facilities. A comparative analysis of the Israeli findings with results reported from the US and Japan found that there were differences in implementation of ISO 14001 in regard to building external actors' EC. Janicke's "environmental capacity building," Gunningham, Kagan, and Thornton's"license to operate," and Potosky and Prakash's "club's goods" were applied to explain these differences. The argument offered claims that differences in the motivations of facilities to influence their ISO 14001 club's license to operate depends on society's initial EC. This suggests operation of a vicious cycle: whenever the effect of ISO 14001 is most required, it is the smallest. Recommendations for improvement are offered in the domain of the standard's specification.