This paper investigates the effects of implementing the international standard ISO 9000 on measures of business and operating performance. Based on the literature and a case study we identified two stages in implementing ISO 9000 - (1) Installation, which has two dimensions: (a) external coordination and (b) integration; and (2) Usage, which also has two dimensions: (a) in daily practice and (b) as a catalyst for change. The hypotheses were that installation of ISO 9000 is positively related to use of ISO 9000, and use of ISO 9000 is positively related to operating performance. In addition, use of ISO 9000 is positively related to business performance since operating performance is positively related to business performance. We used hierarchical linear models (HLM) to test our hypotheses and validated the results by comparing the longitudinal performance of ISO 9000 certified companies with four matched samples of companies that were not ISO 9000 certified. Our analysis indicated that while the installation stage was necessary to successfully implement ISO 9000, organizations achieved a distinct operating advantage from this replicable standard when they used it in daily practice and as a catalyst for change. These findings were based on responses to a survey of 1150 quality managers in 924 organizations, which was supplemented for about one-third of the organizations with longitudinal information from the Compustat database on the organizations' business and operating performance. The validation indicated that implementing the ISO 9000 standard led to improved operating performance, but that this outcome did not necessarily or automatically yield better business performance.
Bibliographical noteFunding Information:
This paper was supported in part by a grant from the NSF, Decision, Risk Analysis, and Management Division (SES-9905604). McGraw Hill Quality Systems and Plexus Corporation sponsored the survey of ISO 9000 registrants upon which this paper is based. Gove Allen of the University of Minnesota designed the Internet site through which the survey was conducted. Mr. Allen also helped the authors gather additional data to supplement the survey from the Compustat database. The authors are grateful to Ayala Cohen and Roger Schroeder for their comments on an earlier draft.
- ISO 9000 standard
- Operating and business performance