Published on March 11, 2014
«Be a yardstick of quality. Some people aren’t used to an environment where excellenceis expected.»
ISO 9000: effects of Quality on corporate performances
Literature review approach
Topics: 1) ISO 9000 adoption effects 2) Impact of contextual factors
Phase I: A) ISO 9000 standards B) How much, how long C) Adoption effects
Phase II: A) Impact of contextual factors B) Research methodology C) HLM statistical analysis
ISO 9000 standards
ISO 9000 standards Quality Management collection of standards used to define, enstabilish and mantain an effective and efficient QMS on corporations.
ISO 9000 worldwide
ISO 9000 worldwide 1 MLN+ certificates worldwide
ISO 9000 worldwide +2% growing trend ISO, 2012. The ISO Survey of Management System Standard Certifications – 2012.
Adoption costs it depends
Adoption costs • Strategic quality objectives • Company size and complexity • Overall commitment • In-place quality • Time & money resources
Adoption costs 6 out of 10 spanish medium sized firms spends 8 000 to 22 000 € Casadesús, M. and Karapetrovic, S. 2005. An empirical study of the benefits and cost of ISO 9001:2000 compared to ISO 9001:1994. Total Quality Management.
Adoption costs 444 000 € average implementation cost for large firms in U.S.A. Dunn & Bradstreet Information Services, 1996. The ISO Survey, Comprehensive Data and Analysis of Registered Companies in the United States and Canada. Irwin Publishing, Burr Ridge, Illinois, United States.
Adoption time 20 months average implementation time for spanish firms Casadesús, M. and Karapetrovic, S. 2005. An empirical study of the benefits and cost of ISO 9001:2000 compared to ISO 9001:1994. Total Quality Management.
External effects 1. Impact on suppliers 2. Impact on customers 3. Impact on stakeholders
Suppliers chosen on the basis of quality
Suppliers +1.3% per year higher production growth for ISO 9000 certified suppliers Terlaak, A. and King, A.A. 2006. The effect of certification with the ISO 9000 quality management standard: a signaling approach. Journal of Economic Behavior and Organization.
Customers increased customer satisfaction increased market share in 6out of 10companies Kunnanatt, J.T. 2007. Impact of ISO 9000 on organizational climate – Strategic change management experience of an Indian organization. International Journal of Manpower.
Stakeholders increase of trust inversely proportional to industry reputation
Stakeholders poorer industry reputation higher benefits East Germany vs. West Germany Beck, N., Walgenbach, P. 2009. The economic consequences of ISO 9000 Certification in East and West German firms in the mechanical engineering industry. Journal for East European Management Studies.
Internal effects 1. Impact on product & service 2. Impact on human resources 3. Impact on financial performance
Product & service
Product & service certification led to increase in process quality and product quality in malaysian firms survey Tan, L.P. and Sia, G.L. 2001. ISO 9000: the answer for total quality management implementation? The Malaysian case. Total Quality Management.
Human resources 1. Relationships development 2. Workforce involvement 3. Goal-orientation 4. Teamwork improvements Srivastava, A.K. 1992. ISO 9000 as a tool for organizational change and work redesign. Proceedings of the XIV Annual Spring Conference, AQP, USA.
Financial performance certified vs. non-certified firms +60% in average ROA growth +85% in income per employee growth Martinez-Costa M., et al. 2008. Simultaneous consideration of TQM and ISO 9000 on performance and motivation: an empirical study of Spanish companies. International Journal of Production Economics.
ISO scepticism 1 out of 4 australian companies could not identify strategic benefits Beattie, K.K. and Sohal, A.S. 1999. Implementing ISO 9000: a study of its benefits among Australian organizations. Total Quality Management.
ISO scepticism 15 out of 100 U.K. firms achieved financial benefits Batchelor, C. 1992. Badge of quality. Financial Times, 1 September 1992, London, England.
Contextual factors Chris K.Y. Lo, Frank Weingarten Paul Humphreys, Andy C.L. Yeung T.C.E. Cheng
Contextual factors Impact of contextual factors on the efficacy of ISO 9000 adoption Journal of Operations Management, 2013
Contextual factors which circumstances led to stronger benefits in ISO 9000 adoption?
Contextual factors Firm level Industry level
Technology intensity R&D expenditures Sales Wakelin, K. 2001. Productivity growth and R&D expenditure in UK manufacturing firms. Research Policy.
Technology intensity applied research
Technology intensity exploratory research Benner, M.J. and Tushman, M. 2002. Process management and technological innovation: a longitudinal study of the photography and paint industries. Administrative Science Quarterly.
Hypothesis 1 firm with low technology intensity reap more benefits Lo, C.K.Y., et al. 2013. The impact of contextual factors on the efficacy of ISO 9000 adoption. Journal of Operations Management.
Labor intensity Employees Total Assets
Labor intensity workforce-reliant firms prone to higher defect level reap more benefits Hendricks, K.B. and Singhal, V.R. 2000. Firm characteristics, total quality management and financial performance. Journal of Operations Management.
Hypothesis 2 firm with high labor intensity reap more benefits Lo, C.K.Y., et al. 2013. The impact of contextual factors on the efficacy of ISO 9000 adoption. Journal of Operations Management.
Labor productivity EBIT Employees
Labor productivity Supplier Development Program low productivity suppliers reap more benefits Rogers, K., et al. 2007. A supplier development program, rational process or institutional image construction. Journal of Operations Management.
Hypothesis 3 firm with low labor productivity reap more benefits Lo, C.K.Y., et al. 2013. The impact of contextual factors on the efficacy of ISO 9000 adoption. Journal of Operations Management.
Efficiency level ROAi = ROAj n n j=1
Efficiency level in high profitability industries firms already have advanced OM practices
Efficiency level in low profitability industries firms have instead primitive OM practices Dixon, D., et al. 2006. Application of DOE techniques to process validation in medical device manifacture. Journal of Validation Technology.
Hypothesis 4 firm in less efficient industries reap more benefits Lo, C.K.Y., et al. 2013. The impact of contextual factors on the efficacy of ISO 9000 adoption. Journal of Operations Management.
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