The financial impact of a withdrawn ISO 9001 certificate

The impact of abandoning social responsibility certifications: evidence from the decertification of SA8000 standard

Purpose

In recent years, many companies have decided to decertify from their previously adopted corporate social responsibility (CSR) standards. The aim of this paper is to explore the phenomenon by focusing on the most important auditable CSR standard: Social Accountability 8000 (SA8000).

Design/methodology/approach

First, an event study is performed on a dataset composed of 136 SA8000 decertified public listed companies to analyse the possible relationship between certification, decertification and firms’ operating performance. Second, the authors shed light on the differences between 94 SA8000 (still) certified and the abovementioned 136 decertified firms. Finally, 10 interviews are conducted with decertified firms in the dataset to deepen the outcomes of the previous analyses.

Findings

The results show that, despite an initial positive effect in terms of sales and profitability, decertified companies experienced a reduction in productivity and profitability in the years following the certification, while positive outcomes emerged after the decertification. The study also highlights that certified and decertified firms differ in terms of home country, industry and labour intensity.

Originality/value

The paper contributes to the literature by opening the debate on an important but unexplored research area: the decertification from the most popular CSR standard, i.e. SA8000, and its relationship with firms' performance. In doing this, it also highlights the main differences between decertified and certified companies.

Increasing the value of quality management systems

Purpose

Over one million organisations have a quality management system (QMS) certified to the ISO 9001 standard; however, the system requires a lot of resources and its value has been questioned. This critique also leads to a questioning of the strategic relevance of quality management. The purpose of this paper is to explore how different types of uses of QMS correlate with management perceptions of quality management in terms of respect, cost and strategic importance.

Design/methodology/approach

The paper is based on a mixed method data collection strategy, quantitative data being collected from a survey in 8 organisations (n = 108) and qualitative data being collected from 12 interviews with quality managers in 12 different organisations.

Findings

The paper shows that a compliance-oriented QMS usage will more likely lead to a view of quality management as costly and of little respect, than a business or improvement-oriented QMS usage. Moreover, it nuances the view on compliance-oriented usage, showing that it is mainly documentation that negatively influences how management views quality management, whereas standardisation that is part of the compliance-oriented use is perceived as more value-adding.

Originality/value

This paper suggests three types of QMS use, namely, business management, improvement, and compliance-oriented use, and that a wise selection of how to use the QMS will affect the respect, strategic importance and cost that management associates with quality management.

Stock price reaction on ISO 9001 certification announcement: evidence from Indonesia

Purpose

Certification information published by a company will be responded by the market. Therefore, the purpose of this study is to examine the impact of ISO 9001 certification on the stock market reaction as indicated by stock returns reaction of companies in Indonesia.

Design/methodology/approach

This study used event study method with the period of 13 days. It consists of 6 days before and after ISO 9001 certification announcement and 1 day at the time of the event. It analyzed by using pair sample t-test and one sample t-test. The stock return data is obtained from companies that are ISO 9001 certified and it tested for their stock reactions before and after the certification.

Findings

The results of empirical research showed that the average and companies cumulative abnormal returns in Indonesia react quickly and positively on the first day after ISO 9001 certification announcement. This study proved the differences between abnormal returns before and after the ISO 9001 certification announcement period.

Research limitations/implications

The company's success in implementing ISO 9001 will have an impact on investment in the capital market with a positive response from stock market players. The implication of this study is the further research can examine directly the impact of ISO 9001 implementation on investor behavior in the capital market.

Originality/value

Based on the development of the literature review, this is the first study which examined the impact of ISO 9001 certification announcement on investor reactions in the short term. Therefore, companies in Indonesia need to implement a quality management system for investors in Indonesia.

Sustainable Environmental Management System Integration and Business Performance: A Balance Assessment Approach Using Fuzzy Logic

Companies constantly thrive to enhance their performance in order to achieve their environmental, social, and economic goals. One way to achieve these goals is to integrate some effective management tools, such as an environmental management system (EMS), that can support sustainable development and value creation. Based on the literature, in this study some EMS integration dimensions were identified that can be used to assess its influence on business performance. The study was conducted on SMEs listed on the AeRO-Bucharest Stock Exchange that voluntary apply the ISO 14001 EMS, using a quantitative approach. To assess the EMS integration score, principal component analysis was used. Using logistic regression analysis, business performance probability (quantified by return on assets) was estimated for each company included in the final sample. Fuzzy logic was further used for modelling the influence of EMS integration on business performance probability. The research results showed that EMS integration has different effects on business performance probability, considering the influence of activity field and environmental management experience. This research assertion could be extended for all the listed Romanian companies or for major companies at the EU level.

ISO 9001-certified public healthcare center’s efficiency and re-certification

Purpose

The purpose of this paper is to measure the efficiency of ISO 9001-certified public healthcare center in Jakarta, Indonesia and examine the impact of “re-certification“ on the efficiency.

Design/methodology/approach

The sample of the research is 30 ISO 9001-certified district public healthcare centers in Jakarta. The data envelopment analysis (DEA) and the Man–Whitney U test were applied.

Findings

The research result showed that there is a variation in efficiency values of ISO 9001-certified public healthcare centers that this research studied. There are only 23 percent of the public healthcare centers that can be categorized as the technically efficient public healthcare center. Furthermore, this research also found that there are no significant efficiency value differences among the groups of public healthcare center based on the number of “re-certification” the center experienced.

Research limitations/implications

This research only involved ISO 9001-certified public healthcare center from Jakarta, Indonesia.

Practical implications

Registering ISO 9001 for the public healthcare center does not guarantee that the public healthcare center will have better efficiency. The government and the public healthcare center management should ensure that the ISO 9001 implementation method used by the public healthcare center is appropriate for improving the efficiency of the public healthcare center.

Originality/value

There is a lack of research that studied the efficiency of ISO 9001-certified public healthcare center. Furthermore, there is no research that investigates the effect of “re-certification“ on efficiency. This research fulfills the literature gaps.

Valuation of Environmental Management Standard ISO 14001: Evidence from an Emerging Market

ISO 14001 (Environmental Management Standard) helps corporations to build legitimacy and goodwill, and can be also viewed as an organizational response to institutional pressure to act proactively towards the environment. The purpose of this paper is to investigate how investors in the emerging country value voluntary environmental management standard ISO 14001 certification. The impact of voluntary environmental management standard ISO 14001 on market performance is still not clear. By using event study methodology, this study matched ISO-certified firms with non-certified ones based on three different matching principles that include return on assets, size, and industry. The findings indicated that investors negatively valued ISO 14001 in both the short and long run. The study recommended policy implications for managers, policy makers, and non-government organizations.

Impacts of ISO 9000 on Greek SMEs business performance

Purpose

The purpose of this paper is to explore the association between ISO 9000 certification and business performance for small-to-medium enterprises in the food and beverage (F&B) industry.

Design/methodology/approach

The research employed a qualitative approach based on case studies to investigate in depth how companies perceive ISO 9001. More specifically, four enterprises were examined, and a total of 26 semi-structured in-depth interviews were conducted with top and middle managers from the companies. Questions were validated by experts and through pilot interviews. In total, 45 documents of a broad range related to the quality management system were examined. Personal observation and non-structured consultation with personnel were also used to evaluate the possible impacts and livelihood outcomes.

Findings

Research findings showed that the certified companies in the F&B industry gain a number of both internal and external benefits, including: quality awareness, increased productivity, increased personnel participation and efficiency, improved image and penetration into new markets. Regarding the financial benefits of certification, the findings are not as convincing, as one company reported no financial benefits, and the rest reported that financial benefits are indirect and intangible. Conclusively, it can be said that SMEs that wish to pursue certification should certainly expect benefits.

Practical implications

Although many studies have concentrated on analyzing the impact of the implementation of ISO 9001 certification, there is still a clear need for research in specific sectors. Practicing managers and researchers will be able to examine findings in order to evaluate benefits and weaknesses from certification, thereby identifying and acting before and after certification.

Originality/value

Although the F&B industry has shown a great preference for the ISO 9000 standard and has adopted it extensively, scant empirical evidence has been recorded on the subject. This paper contributes to a better understanding of the benefits for implementing the ISO 9001 certification and to the analysis of its application to the ever-important F&B industry in Greece, a country whose economy is particularly supported by SMEs and has been severely hit by the economic crisis. Researchers will therefore further their knowledge, understand benefits but also acknowledge weaknesses.

Ranking criteria for selection of certification bodies for ISO 9001 through the Analytic Hierarchy Process (AHP)

Purpose

The purpose of this paper is to present a framework to assist the selection of certification bodies in the implementation of quality management system (QMS) based on ISO 9001 taking into account a set of criteria organized in a multi-level hierarchical form. To deal with this complexity, the multi-criteria decision-making method (MCDM) analytic hierarchy process (AHP) was used in this research.

Design/methodology/approach

The research was conducted in small and medium-sized companies certified to ISO 9001. The MCDM method AHP was used as a method for developing the model to support the selection of certification bodies.

Findings

This paper provides a framework for companies seeking to hire certification bodies, mainly for ISO 9001 certification, which help identify the companies that best fit the certification objectives. Additionally, a ranking of the main criteria to select certification bodies for ISO 9001 was obtained.

Research limitations/implications

The decision-making method was applied to Brazilian companies from different sectors. As the results can vary between regions and sectors, this is a limitation of the research. In addition, the number of ten respondents could be higher to increase the robustness of the results.

Practical implications

The model assists companies looking for certification, mainly ISO 9001, in the selection of certification bodies contributing in the search for deeper implementations of QMS.

Originality/value

This work has the originality of the application of a decision-making method in the final process of ISO 9001 certification, scarce in the literature. In addition, it defines weights for the criteria involved in the process of selecting certification bodies.

Executing strategy through comprehensive performance measurement systems

Purpose

The purpose of this paper is to investigate the mediating role of comprehensive performance measurement systems (PMS) – i.e. measurement systems that comprise financial and non-financial indicators, and which also consist of indicators related to different aspects of an organisation’s operations – in the relationship between strategy and company performance.

Design/methodology/approach

Survey data of top managers of large European companies were collected and analysed by means of exploratory factor analyses and hierarchical regressions in order to validate the proposed hypotheses.

Findings

This research shows that different strategies lead to the use of different types of performance indicators. Also, it finds that the utilisation of a comprehensive PMS enables the implementation of both differentiation and cost-leadership strategies. Specifically, a comprehensive PMS positively mediates the effect of differentiation strategy on organisational and innovative performance, and of cost-leadership strategy on organisational performance.

Research limitations/implications

Further research could be undertaken in other contexts and consider additional factors, such as the structure, maturity and different uses of PMS, and the cost of measuring performance. Qualitative studies could examine the role of PMS in dynamic environments, as well as the evolution of PMS during strategic transitions.

Practical implications

Greater consideration should be given to the utilisation of different types of performance indicators when implementing and re-formulating strategy.

Originality/value

This study clarifies the links between strategy and performance measurement, and it is the first to identify the mediating effect of comprehensive PMS between strategy and company performance.

Exploring quality challenges and the validity of excellence models

Purpose

The purpose of this paper is to identify and explore important quality-related challenges facing organizations, and investigate how current excellence models incorporate these challenges.

Design/methodology/approach

The paper is based on a Delphi study of Swedish organizations. Forty-nine challenges were generated and ranked according to importance and the ten top-ranked challenges were compared to the principles of four excellence models.

Findings

The excellence models still seem to be relevant since their content matches many of the identified challenges. The Malcolm Baldrige National Quality Award and the Swedish Institute for Quality models were found to have the most comprehensive coverage, while the International Organization for Standardization model had limited coverage.

Research limitations/implications

Three areas for further research were identified: first, how quality management (QM) can evolve in different contexts that have varying needs in terms of adaptive and explorative capabilities; second, the interfaces of QM and sustainability, and ways to understand how customers and stakeholders can be active contributors to improvements; and third, the roles of the owners and board of directors regarding QM, and how to organize and distribute responsibilities of the QM work.

Practical implications

There are three important challenges that future revisions of excellence models could address: first, making QM a strategic issue for company owners; second, involving customers in the improvement activities; and third, developing processes that are robust yet still easily adaptable.

Originality/value

The Delphi study identified upcoming challenges in the QM area based on input from 188 quality professionals.