I made this presentation to summarize the results of my research thesis about the influence of contextual factors - both internal and external - in the efficacy of ISO 9000 adoption. In this project I analyzed and synthesized the findings of some studies, assuming a literature review approach.

1. «Be a yardstick of quality.
Some people aren’t used to an environment
where excellenceis expected.»

2. ISO 9000:
effects of Quality
on
corporate
performances

3. Literature review
approach

4. Topics:
1) ISO 9000 adoption effects
2) Impact of contextual factors

5. Phase I:
A) ISO 9000 standards
B) How much, how long
C) Adoption effects

6. Phase II:
A) Impact of contextual factors
B) Research methodology
C) HLM statistical analysis

7. Phase I

8. ISO 9000 standards

9. ISO 9000 standards
Quality Management
collection of standards used to
define, enstabilish and mantain
an effective and efficient
QMS on corporations.

10. ISO 9000 worldwide

11. ISO 9000 worldwide
1 MLN+
certificates
worldwide

12. ISO 9000 worldwide
+2%
growing
trend
ISO, 2012. The ISO Survey of Management System Standard Certifications – 2012.

13. How much?

14. Adoption costs
it
depends

15. Adoption costs
• Strategic quality objectives
• Company size and complexity
• Overall commitment
• In-place quality
• Time & money resources

16. 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.

17. 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.

18. How long?

19. 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.

20. Adoption effects

21. External effects

22. External effects
1. Impact on suppliers
2. Impact on customers
3. Impact on stakeholders

23. Suppliers

24. Suppliers
chosen on the basis of quality

25. 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.

26. Customers

27. 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.

28. Stakeholders

29. Stakeholders
increase of trust
inversely proportional to
industry reputation

30. 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.

31. Internal effects

32. Internal effects
1. Impact on product & service
2. Impact on human resources
3. Impact on financial performance

33. Product & service

34. 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.

35. Human resources

36. 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.

37. Financial performance

38. 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.

39. ISO scepticism

40. 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.

41. 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.

42. Phase II

43. Contextual factors

44. Contextual factors
Chris K.Y. Lo, Frank Weingarten
Paul Humphreys, Andy C.L. Yeung
T.C.E. Cheng

45. Contextual factors
Impact of contextual factors on
the efficacy of ISO 9000 adoption
Journal of Operations Management, 2013

46. Contextual factors
which circumstances
led to stronger benefits
in ISO 9000 adoption?

47. Contextual factors
Firm level Industry level

48. Firm-level

49. Technology intensity

50. Technology intensity
R&D expenditures
Sales
Wakelin, K. 2001. Productivity growth and R&D expenditure in UK manufacturing firms. Research Policy.

51. Technology intensity
applied
research

52. 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.

53. 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.

54. Labor intensity

55. Labor intensity
Employees
Total Assets

56. 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.

57. 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.

58. Labor productivity

59. Labor productivity
EBIT
Employees

60. 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.

61. 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.

62. Industry-level

63. Efficiency level

64. Efficiency level
ROAi =
ROAj
n
n
j=1

65. Efficiency level
in high profitability industries
firms already have
advanced OM practices

66. 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.

67. 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.

68. Competitiveness

69. 𝐻𝐻𝐼 = (𝑠𝑗
2
)
𝑛
𝑗=1
Competitiveness

70. Competitiveness
more competition
1. sharper market shares
2. high customer expectations
Ohmae, K. 1985. Triad power: The coming shape of global competition. Free Press, New York, United States.

71. Competitiveness
in high-competitive contexts
investing on quality
becomes necessity
Das, A., et al. 2000. A Contingent View of Quality Management –
The Impact of International Competition on Quality. Decision Sciences.

72. Hypothesis 5
firm in
highly competitive 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.

73. Sales growth

74. Sales growth
Industry sales growth %
(annual)

75. Sales growth
firms in fast-growing markets are
less well known

76. Sales growth
ISO 9000 becomes a
signal of
good intentions
Ferguson, W. 1996. Impact of the ISO 9000 Series Standards on Industrial Marketing.
Industrial Marketing Management.

77. Sales growth
newbie non-ISO firms are
screened out
from potential supplier lists
Lo, C.K.Y., et al. 2013. The impact of contextual factors on the efficacy of ISO 9000 adoption.
Journal of Operations Management.

78. Hypothesis 6
firm in
fast growing 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.

79. ISO adoption level

80. ISO adoption level
ISO Certified firms sales
Industry sales

81. ISO adoption level
once upon a time…
differentiation
Hill, T. 1993. Manufacturing Strategy: Text and Cases. Macmillan Press, London, England.

82. ISO adoption level
but now…
homologation

83. ISO adoption level
firms adopt the standard in a
superficial way
Dick, G. 2000. ISO 9000 certification benefits, reality or myth? The TQM Magazine.

84. Hypothesis 7
firm in
low ISO adoption 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.

85. Research methodology

86. Research methodology
U.S.A. manufacturing firms
SIC code:

87. Research methodology
U.S.A. manufacturing firms
2000 to 3999

88. Research methodology
SIC

89. Research methodology
ISO Y 438 ISO N>>
with complete dataset for all years

90. Research methodology
ISO Y 438 ISO N>>
1. Same 2-digit SIC code
2. Total Assets 50-200%
3. ROA in year 2 90-110%

91. HLM analysis

92. Dependent variable

93. Dependent variable
ROA
post-certification (year 3)
industry adjusted

94. Dependent variable
𝐑𝐎𝐀∗
𝐣

95. Dependent variable
=

96. Dependent variable
ROAj

97. Dependent variable
−
(minus)

98. Dependent variable
ROAi
(industry median)

99. Note:
ROAj =
EBITj
Total Assetsj

100. Results

101. Results
Hypothesis
fully supported

102. Results
Technology
intensity
(negative impact)

103. Results
Labor
intensity
(positive impact)

104. Results
Labor
productivity
(negative impact)

105. Results
Industry
efficiency
(negative impact)

106. Results
Industry
competitiveness
(positive impact)

107. Results
Industry
sales growth
(positive impact)

108. Results
Industry
ISO adoption
(negative impact)

109. Results
contextual factors account for
18.22%
of post-certification ROA
variance
Lo, C.K.Y., et al. 2013. The impact of contextual factors on the efficacy of ISO 9000 adoption.
Journal of Operations Management.

110. Rewind…

111. Rewind…
whoreaps
more benefits?

112. Rewind…
firms with:

113. Rewind…
firms with:
low
technology intensity

114. Rewind…
firms with:
high
labor intensity

115. Rewind…
firms with:
low
labor productivity

116. Rewind…
firms in:

117. Rewind…
firms in:
less
efficient industries

118. Rewind…
firms in:
highly
competitive industries

119. Rewind…
firms in:
fast
growing industries

120. Rewind…
firms in:
less
certified industries

121. Final considerations