WHY FIRMS SEEK ISO 9000 CERTIFICATION: REGULATORY COMPLIANCE OR COMPETITIVE ADVANTAGE?

Proponents of iso 9000 certification claim that it is a low-cost signal of a firm's commitment to quality and a meaningful component of total quality management (TQM). Critics claim that it has little relation to TQM and is a tariff on international trade. We test the hypothesis that firms obtain ISO 9000 certification to comply with government and customer demands by estimating a probit model of the certification decision. The results support the view of proponents of ISO 9000. After controlling for regulatory and customer pressures to obtain ISO 9000, other factors related to quality management and quality-based competition explain the adoption decision.

[1]  George A. Akerlof.  The Market for “Lemons”: Quality Uncertainty and the Market Mechanism , 1970 .

[2]  M. Spence.  Job Market Signaling , 1973 .

[3]  H. Demsetz.  Industry Structure, Market Rivalry, and Public Policy , 1973, The Journal of Law and Economics.

[4]  M. Darby,et al.  Free Competition and the Optimal Amount of Fraud , 1973, The Journal of Law and Economics.

[5]  M. Boskin.  Taxation, Saving and the Rate of Interest , 1976 .

[6]  M. Spence.  Consumer Misperceptions, Product Failure and Producer Liability , 1977 .

[7]  R. Schmalensee.  A Model of Advertising and Product Quality , 1978, Journal of Political Economy.

[8]  Hayne E. Leland,et al.  Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards , 1979, Journal of Political Economy.

[9]  John Conlisk,et al.  Product Quality in Markets Where Consumers are Imperfectly Informed , 1979 .

[10]  B. Klein,et al.  The Role of Market Forces in Assuring Contractual Performance , 1981, Journal of Political Economy.

[11]  A. Shaked,et al.  Relaxing price competition through product differentiation , 1982 .

[12]  David M. Kreps,et al.  Reputation and imperfect information , 1982 .

[13]  C. Shapiro.  Consumer Information, Product Quality, and Seller Reputation , 1982 .

[14]  Hayne E. Leland,et al.  Prices and Qualities in Markets with Costly Information , 1982 .

[15]  Charles R. Plott,et al.  Rate Filing Policies for Inland Water Transportation: An Experimental Approach , 1982 .

[16]  C. Shapiro.  Premiums for High Quality Products as Returns to Reputations , 1983 .

[17]  A. Wolinsky.  Prices as Signals of Product Quality , 1983 .

[18]  Franklin Allen,et al.  Reputation and Product Quality , 1984 .

[19]  Thomas W. Ross,et al.  Prices, Product Qualities and Asymmetric Information: The Competitive Case , 1984 .

[20]  Jacques Cremer,et al.  On the Economics of Repeat Buying , 1984 .

[21]  Nallan C. Suresh,et al.  Quality assurance information systems for factory automation , 1985 .

[22]  Paul L. Joskow,et al.  The Effects of Technological Change, Experience, and Environmental Regulation on the Construction Cost of Coal-Burning Generating Units , 1985 .

[23]  Joseph Farrell,et al.  Standardization, Compatibility, and Innovation , 1985 .

[24]  Paul R. Milgrom,et al.  Price and Advertising Signals of Product Quality , 1986, Journal of Political Economy.

[25]  Carl Shapiro,et al.  Investment, Moral Hazard, and Occupational Licensing , 1986 .

[26]  Krishna G. Palepu,et al.  Predicting takeover targets: A methodological and empirical analysis , 1986 .

[27]  Arnold Reisman,et al.  A throughput-maximizing facility planning and layout model , 1989 .

[28]  Jayant V. Saraph,et al.  An Instrument for Measuring the Critical Factors of Quality Management , 1989 .

[29]  John G. Wacker,et al.  An integrative theory of strategic quality management: a cost-benefit framework for evaluating quality improvement programmes† , 1989 .

[30]  A. Meyer,et al.  Lasting Improvements in Manufacturing Performance: In Search of a New Theory , 1990 .

[31]  Roger G. Schroeder,et al.  The effects of organizational context on quality management: An empirical investigation , 1991 .

[32]  Binshan Lin,et al.  Quality Control Information Systems in Manufacturing:Considerations and Concerns for Management , 1991 .

[33]  K. Korane,et al.  Making sense of ISO 9000 , 1993 .

[34]  Sanjay L. Ahire,et al.  TOTAL QUALITY MANAGEMENT: A LITERATURE REVIEW AND AN AGENDA FOR FUTURE RESEARCH , 1995 .