Iso‐9000 Certification and Ownership Structure: Effects Upon Firm Performance

ISO certification has become a pervasive mechanism adopted by firms to improve their operational performance. In this paper, we examine the operational and organizational factors that increase the likelihood of adopting ISO certification and the impact that ISO certification and ownership structure have upon firm performance. Using a sample of 163 Spanish manufacturing firms for the period 1996–2000 we perform a rare events logit model and a regression analysis. Our findings show that firms producing intermediate goods that have implemented just-in-time practices are more likely to adopt ISO certification. Furthermore, we report a strong influence of the ownership structure upon ISO adoption policy, especially when a multinational firm is the largest shareholder. Empirical evidence supports that ISO certification and ownership structure positively impact firm performance. However, our results indicate that the positive impact of ISO certification on performance diminishes in firms where ownership is highly concentrated.

[1]  Charles J. Corbett,et al.  The Financial Impact of ISO 9000 Certification in the United States: An Empirical Analysis , 2005, Manag. Sci..

[2]  Karen H. Wruck.  Equity ownership concentration and firm value: Evidence from private equity financings , 1989 .

[3]  Gary King,et al.  Logistic Regression in Rare Events Data , 2001, Political Analysis.

[4]  Jeffrey M. Wooldridge,et al.  Introductory Econometrics: A Modern Approach , 1999 .

[5]  John Mcconnell,et al.  Additional evidence on equity ownership and corporate value , 1990 .

[6]  O. Boiral,et al.  ISO 9000: integration rationales and organizational impacts , 2007 .

[7]  Juan Luis Nicolau,et al.  The stock market's reaction to quality certification: Empirical evidence from Spain , 2002, Eur. J. Oper. Res..

[8]  Marilyn F. Johnson,et al.  WHY FIRMS SEEK ISO 9000 CERTIFICATION: REGULATORY COMPLIANCE OR COMPETITIVE ADVANTAGE? , 1999 .

[9]  Dimitris Skuras,et al.  Adoption of a quality assurance scheme and its effect on firm performance: A study of Greek firms implementing ISO 9000 , 2002 .

[10]  H. Demsetz,et al.  Ownership Structure and Corporate Performance , 2001 .

[11]  Ken R. Beattie,et al.  Implementing ISO 9000: A study of its benefits among Australian organizations , 1999 .

[12]  S. Shortell,et al.  Top manager and network effects on the adoption of innovative management practices: a study of TQM in a public hospital system , 2001 .

[13]  N. Nakamura,et al.  Reactive JIT ordering system for changes in the mean and variance of demand , 2004 .

[14]  Mike Adams,et al.  Determinants of ISO accreditation in the New Zealand manufacturing sector , 1999 .

[15]  Martí Casadesús,et al.  Has ISO 9000 lost some of its lustre? A longitudinal impact study , 2005 .

[16]  Fethi Calisir,et al.  Implementing the ISO 9000 standards in Turkey: A study of large companies’ satisfaction with ISO 9000 , 2001 .

[17]  Sanford J. Grossman,et al.  The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration , 1986 .

[18]  H. Demsetz,et al.  The Structure of Corporate Ownership: Causes and Consequences , 1985, Journal of Political Economy.

[19]  Neset Hikmet,et al.  An exploration of the impact of TQM and JIT on ISO 9000 registered companies , 1997 .

[20]  Uday S. Karmarkar,et al.  Quality, Class, and Competition , 1997 .

[21]  T. C. Powell.  Total Quality Management as Competitive Advantage , 1995 .

[22]  A. Shleifer,et al.  Management Ownership and Market Valuation: An Empirical Analysis , 1988 .

[23]  Javier Merino-Díaz de Cerio,et al.  Factors relating to the adoption of quality management practices: An analysis for Spanish manufacturing firms , 2003 .

[24]  Gary King,et al.  Explaining Rare Events in International Relations , 2001, International Organization.

[25]  R. Rust,et al.  Return on Quality (ROQ): Making Service Quality Financially Accountable , 1995 .

[26]  Nadia Bhuiyan,et al.  An investigation into issues related to the latest version of iso 9000 , 2005 .

[27]  Ulf R. Andersson,et al.  The strategic impact of external networks: Subsidiary performance and competence development in the multinational corporation , 2002 .

[28]  J. González‐Benito,et al.  An Analysis of the Relationship between Environmental Motivations and Iso14001 Certification , 2005 .

[29]  M. Terziovski,et al.  The relationship between total quality management practices and operational performance , 1999 .

[30]  Amrik S. Sohal,et al.  A review and classification of total quality management research in Australia and an agenda for future research , 2002 .

[31]  T. Hill,et al.  Teaching Manufacturing Strategy , 1986 .

[32]  D. Skuras,et al.  The effects of ISO 9001 on firms' productive efficiency , 2006 .

[33]  F. Buttle.  ISO 9000: marketing motivations and benefits , 1997 .

[34]  P. Osterman.  How Common is Workplace Transformation and Who Adopts it? , 1994 .

[35]  G. Easton,et al.  The Effects of Total Quality Management on Corporate Performance: An Empirical Investigation , 1998 .

[36]  Amrik S. Sohal,et al.  The longitudinal effects of the ISO 9000 certification process on business performance , 2003, Eur. J. Oper. Res..

[37]  J. Dean,et al.  MANAGEMENT THEORY AND TOTAL QUALITY: IMPROVING RESEARCH AND PRACTICE THROUGH THEORY DEVELOPMENT , 1994 .

[38]  Jeffrey Zwiebel,et al.  Block Investment and Partial Benefits of Corporate Control , 1995 .

[39]  O. Hart,et al.  Property Rights and the Nature of the Firm , 1988, Journal of Political Economy.

[40]  Andrei Shleifer,et al.  State Versus Private Ownership , 1998 .

[41]  T. Breurch,et al.  A simple test for heteroscedasticity and random coefficient variation (econometrica vol 47 , 1979 .

[42]  George S. Easton,et al.  An Exploratory Empirical Investigation of the Effects of Total Quality Management on Corporate Performance , 1997 .

[43]  John N. Pearson,et al.  Jit Manufacturing: a Survey of Implementations in Small and Large U.S. Manufacturers , 1999 .

[44]  K. B. Hendricks,et al.  Quality awards and the market value of the firm: an empirical investigation , 1996 .

[45]  Iñaki Heras,et al.  Benefits of ISO 9000 implementation in Spanish industry , 2001 .

[46]  J. Baldwin,et al.  Business strategies in more- and less-innovative firms in Canada , 1996 .