WHY FIRMS SEEK ISO 9000 CERTIFICATION: REGULATORY COMPLIANCE OR COMPETITIVE ADVANTAGE?

TLDR

Proponents view ISO 9000 as a low‑cost signal of quality commitment and a component of TQM, while critics argue it has little relevance to TQM and acts as a trade tariff. The study tests whether firms pursue ISO 9000 certification to meet government and customer demands using a probit model. A probit model of the certification decision was estimated to test the compliance hypothesis. Results support proponents’ view, and after controlling for regulatory and customer pressures, additional quality‑management and competition factors also explain ISO 9000 adoption.

Abstract

Proponents of iso 9000 certification claim that it is a low‐cost signal of a firm's commitment to quality and a meaningful component of total quality management (TQM). Critics claim that it has little relation to TQM and is a tariff on international trade. We test the hypothesis that firms obtain ISO 9000 certification to comply with government and customer demands by estimating a probit model of the certification decision. The results support the view of proponents of ISO 9000. After controlling for regulatory and customer pressures to obtain ISO 9000, other factors related to quality management and quality‐based competition explain the adoption decision.