logo

Impact of Adoption of ISO 9000 on the Financial Performance of Firm

   

Added on  2019-10-31

13 Pages3431 Words130 Views
Executive summaryThe purpose of this report was to determine the impact of adoption of ISO 9000 on the financialperformance of a firm and lastly to determine the effects of certification of ISO on a firm’smanagement. Several literature was discussed on the importance of ISO adoption and theirimpacts on the companies’ financial performance as well as certification effects of ISO 9000.The method that was engaged in data collection was through census and the use of questionnaireas a tool of collecting data. The population of the targeted companies was 5717 that included allthe service firms in china. The collected data was entered in Statistical Package for SocialScience (SPSS) to generate tables and carryout hypothesis testing. The obtained results were theninterpreted into information of what they truly represent. Managers are then advised from thisreport to consider the number, level of education and the professional skills of the employeeswhen they are hired to get committed to the companies since it has direct relationship to thefinancial performance of the companies.

IntroductionQuality of the management is one of the key concerns of all industries. As a result therefore, ISO9000 was developed and introduced to provide the guidance and tools to the companies and organizations which have the focus of consistent production of goods and services that meet the requirements of the customers and also ascertaining for their improved quality. Popularity of ISOhas increased in the past years for both small and big companies since it articulates how the management operations of the companies should be conducted. The international standards organizations ensure that all the products and services are designed and created in manner that they conform to the predetermined standards. More than 100 nations have adopted ISO 9000 in their companies’ management and quality assurance. This report is developed and aimed at meeting the following objectives; i) Determining the impact of adoption of ISO 9000 on the financial performance of a firm and ii) Determining the effects of certification with ISO 9000 on a firm’s management. Meeting these two stated objectives will help to clarify the understanding of impacts created by ISO 9000 and also the certification effects on the firm’s management.Literature reviewNumerous researches have been carried out around the globe concerning ISO 9000 since its invention and development on the effects and impact on business performance with the same results being arrived at. Different researches will therefore be reviewed in this report with various literatures portraying different framework and methods that are used to measure certification impact. Some of the studies have advocated that certification of ISO leads to improved financial performance. According (Chatzoglou et al, 2015), holistic overview by studies to cover all the components that can be seen to have effects and relationship on how the financial performance can be achieved can result to obtaining positive financial benefits. The

impact of ISO certification can be indirectly measured to determine the financial performance of a company by using comprehensive conceptual framework. The impact of certification success isdetermined by the degree of certification effectiveness, this is according to (Posmas et al, 2013). Operational performance is directly improved that have direct effect in increasing the financial performance though direct relationship might not be there between ISO and financial performance. According to (Ismyrlis & Moschidis, 2015), they argued that external perspectives form the most important benefits of certification. This was so as obtained from evaluation of impacts of the implementation of ISO. Some of the most important benefits derived from ISO areexternal in nature that portray higher operational performance.Adoption of ISO 9000 in business was with the aim of adding quality and value to the management of the business. Incorporating and adopting ISO 9000 should be for development reasons to realize the optimum benefits other than when companies acquire it for non-developmental purposes, this will make them realize less benefits from it, this is according to (Papadimitriou & Westerheijden, 2010). In response to that, companies are supposed to be evaluated depending on their objectives and categories separately to determine their benefits from ISO 9000 (Franceschini et al, 2010). When carrying out market differentiation strategy, certified companies by ISO 9000 show profit increase when operationalizing cost leadership strategy (Lafuente et al, 2010). The benefits derived from ISO 9000 certification are motivationalfactors that are significant in giving positive predictions. ISO has been undergoing updates to uphold the changes available in businesses environment and focus on quality improvements. Compared to non-ISO companies, companies certified by ISO 9000 show higher levels of improvement in their practices (Zaramdini, 2007). Time has been a very important factor in almost all the activities carried out in any business operation. In regards to that, companies that

had been certified for long period of time portray better improvements of TQM results. Companies certified in the recent past years with updated ISO 9000 of other versions enjoy morebenefits with time as compared to their counterparts certified with traditional ISO 9000. Businessfinancial performance improvement can be visualized and analyzed for ISO 9000 certified companies by applying 3 to 5 years of post-certified period (Chow-Chua et al, 2003).Companies and businesses of any size have adopted the ISO 9000 in their management (Bernardo et al, 2015). Process of ISO 9000 is not affected by the business or company size on the impacts it create to the business. All the factors determining the size of the company such as the number of employees do not show any evidence of becoming more likely to be certified sincethe size of the company does not have any effect in the relationship between the organization performance and implementation of ISO 9000 (Psomas et al, 2012). Certification of a company by ISO 9000 shows significant and positive effect on the company’s operational performance. Among other benefits that are enjoyed by a firm are external benefits from ISO 9000 certification since they enable the companies to bid for tenders thus improving their performance.MethodologyEmergence of ISO 9000 in 1980s have made the companies to acquire and adopt it for their quality management. The number had grown enormously for the companies that have adopted ISO 9000 in more than 100 countries. Questionnaires form one of the most used common type ofsurvey methodology. The type of survey have experienced increase since after 1980s more so forthe quality management in the area of operations management field. In this case census was carried out by National Bureau of Statistics of China on the service firms. There were a total of 5717 service firms that data were collected from which covered the entire population of the

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Determinants of Adopting ISO 9000 and Its Impact on Financial Performance
|20
|1219
|117

(PDF) The Determinants of ISO 9000 Certifications
|19
|4534
|48

Introduction to ISO 9000
|8
|583
|371

Importance of Adopting ISO 9000
|16
|3767
|87

Financial Performance of Chinese Firms after Adoption of ISO 9000
|12
|3114
|183

Impact of ISO 9000 Certification in China
|50
|5886
|51