The purpose of The performance evaluation and comparison based on enterprises passed or not passed with ISO accreditation: An appliance of BSC and ABC methods (Wu, Chen, 2012) ‘is to determine whether passing ISO accreditation can effectively enhance business performance, and further to explore the major contributions of ISO accreditation for companies’. (NB, this paper refers to ‘ISO accreditation’, meaning certification to ISO standards).
‘In this study, both the Balanced Scorecard (BSC) and Activity Based Costing (ABC) methods are used to compare the direction and strength of each performance indicator for companies that have passed, or not passed, ISO accreditation’.
The research was based on companies quoted on the Taiwanese stock market and 212 questionnaires received from companies in the manufacturing industry and 120 in the service industry regarding their business performance. Amongst the companies in the research, in the manufacturing sector 60 companies had ISO 9000 certification, 30 did not; in the service sector, 30 had certification, 30 did not.
The report states that, ‘Through qualitative and quantitative methods, this study develops key measurement indicators along four performance constructs based on the Balanced Scorecard. These include 38 indicators for the manufacturing industry and 32 indicators for the service industry. Through evaluation and comparison, the study shows that the pass of ISO accreditation by an enterprise can enhance its business performance and financial benefits. Higher effects are especially apparent in the manufacturing industry’.
‘After summarizing the empirical results, we arrive at the following statement: ISO accreditation can enhance the business performance of an enterprise’.
Broken down by sector and different aspects (constructs) of the business, the reports shows the following benefits were delivered to companies:
In the manufacturing industry
- The financial construct shows achieving ISO certification can help to reduce repeated cost and scrap costly operation processes, and can effectively increase profitability.
- The customer construct shows that obtaining ISO certification can allow the enterprise to provide better customer service, so that a long term relationship with the customer can be developed and customer satisfaction and loyalty can be improved.
- The internal process construct shows that ISO certification can improve operational efficiency and productivity and also the enterprise’s ability to locate the target customer.
- The learning and growth construct indicates that ISO certification can allow an enterprise to more effectively promote its corporate reputation and image, and improve its product quality.
- Financial information analysis confirms that obtaining ISO certification by a manufacturing company can effectively improve profitability.
In the service industry
- The financial construct shows that obtaining ISO certification can effectively reduce service costs, and that the business operation capability can be enhanced through enhancement of standard service processes.
- The customer construct shows that achieving ISO certification can, through the implementation of a quality management system, more effectively reduce the returned goods rate and enhance sales growth rate.
- The internal process construct shows ISO certification attainment can, through the systemisation of its business operation management, enhance its standard service processes and improve operational efficiency.
- The learning and growth construct demonstrates achieving ISO certification can increase the level of authorization of a supervisor in an enterprise, enhance the relationship between a company and its employees, and improve the ability of employees to effectively solve problems.
- Financial information proved that attaining ISO certification by a service company enterprise can effectively enhance its profitability and provide benefits unattainable without ISO certification.
- Wu. S-I., Chen, J-H., (2012) ‘The performance evaluation and comparison based on enterprises passed or not passed with ISO accreditation: An appliance of BSC and ABC methods’, International Journal of Quality & Reliability Management, Volume 29 Issue 3, pp.295 – 319
National Chin-Yi University of Technology, Taiping, Taiwan (Wu), National Chin-Yi University of Technology, Taiping, Taiwan (Chen)