Raising awareness of the benefits of certification and assurance services
In ‘ISO-9000 Certification and Ownership Structure: Effects upon Firm Performance’ (Lafuente, E., Bayo-Moriones, A., García-Cestona, M., 2010), a number of issues are examined, including ‘from a longitudinal analysis that relates ISO certification, ownership structure and their impact on firm performance, we find a statistically significant positive relationships between ISO certification and firm performance’. The research was based on examining 163 Spanish manufacturing companies between 1996 and 2000.
One of the explanations for this positive relationship is the ‘impulse effect of ISO certification upon firm performance’, where ‘productive shift following the adoption of ISO-9000 certification exerts an impulse effect that helps explain performance differences’. Three measures are used: ROA – ratio of operating profit to assets; ROE – ration of debt to equity; labour productivity – sales relative to number of employees. The results show no correlation between certification and ROE, but as this is considered a shareholder issue measurement, it is not seen as most important. However, the report states, ‘these results give support to the argument that the implementation of ISO-9000 certification affects to a greater extent the operational performance of the business, which is more observable in performance measures related to operational and productive performance such as ROA and labour productivity’.
In conclusion, ‘companies should be encouraged to adopt ISO certification in order to foster their competitiveness. Our findings show that variables related to the availability of financial resources such as size, past profitability or leverage have no impact in the probability of introducing the ISO-9000 standard. This suggests that the costs that companies must come up with in the certification process are low and quite affordable by any firm’.
Universitat Autonoma de Barcelona (Lafuente, Prof Garcia-Cestona), Universidad Publica de Navarra, Campus de Arrosadia, Pamplona (Bayo-Moriones)