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

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.