Raising awareness of the benefits of certification and assurance services
The 2003 research of companies based in Singapore, ‘Does ISO 9000 Certification Improve Business Performance‘ (Chua, Goh, Wan, 2003), looks to see if certified companies have performed better than non-certified companies. The research does this by asking the companies’ view of their performance and examining annual reports to evaluate business performance. The research was carried with 35 companies who were certified and listed, 43 non-certified listed companies and 68 certified who weren’t listed.
The report’s first conclusion is ‘obvious improvements in ROE and debt to equity ratio (for certified companies). Thus ISO 9000 certification has yielded better financial returns through better asset management, better use of equity and debt control. More in-depth research of these findings showed that all financial ratios, except the profit margin on sales, show significant improvement after certification. The hypothesis that ISO 9000 certification improves financial performance, is clearly supported’.
The report also states that ISO certification is beneficial to both listed and non-listed companies, but ‘listed firms that are certified out-performed financially those that are not certified. Shareholders may want to take note of this’.
NUS Business School, National University of Singapore (Chua, Goh, Wan)