Impact of ISO 9000 Certification in China

The report presents the empirical analysis which includes the chi-square test and regression analysis to check the potential impact of ISO 9000 Certification in China. The test concludes that for overseas investment, it is not necessary to have an ISO 9000 certification to the service firms of China. Here, it is recommended to the firms to attract the overseas investment there is no need of ISO certification. They should focus on other factors that may have impact on attracting the FDI. However, the regression result shows that the greater impact on profit is found from the return on asset followed by the certification. Here, ISO certificate raises the profit. This is because of better quality management which is approved by the certificate of ISO 9000.

Running head: IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Impact of ISO 9000 Certification in China
Name of the Student:
Name of the University:
Author Note:

1IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Table of Contents
Executive Summary...................................................................................................................2
Back ground of the Study...........................................................................................................2
Literature Review.......................................................................................................................3
Methodology..............................................................................................................................4
Analysis and Findings................................................................................................................5
Descriptive Statistics..............................................................................................................5
Inferential Statistics................................................................................................................8
Sample Independent t-test..................................................................................................8
ANOVA...........................................................................................................................11
Chi-square test..................................................................................................................13
Correlation........................................................................................................................13
Discussion and Managerial Advices........................................................................................15
Limitation and Further Research..............................................................................................15
Reference..................................................................................................................................17
Appendices...............................................................................................................................20
Appendix 1...............................................................................................................................20
Appendix 2...............................................................................................................................41
Appendix 3...............................................................................................................................44
Appendix 4...............................................................................................................................46

2IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Executive Summary
The report presents the empirical analysis which includes the chi-square test and
regression analysis to check the potential impact of ISO 9000 Certification in China. The test
concludes that for overseas investment, it is not necessary to have an ISO 9000 certification
to the service firms of China. Here, it is recommended to the firms to attract the overseas
investment there is no need of ISO certification. They should focus on other factors that may
have impact on attracting the FDI. However, the regression result shows that the greater
impact on profit is found from the return on asset followed by the certification. Here, ISO
certificate raises the profit. This is because of better quality management which is approved
by the certificate of ISO 9000.
Back ground of the Study
ISO 9000 implies a number of international standards for quality assurance and
management and this provides the companies easy documentation system to maintain an
effective quality system. This quality management systems standard was introduced in 1987
an since then it is extensively used by the companies all over the world (Chatzoglou,
Chatzoudes & Kipraios, 2015). The purpose of the study is to check the relationship between
the certification and FDI. Moreover, the impact of this standard along with other factors on
the revenue of the company. The research objective is mentioned in the form of research
hypothesis:
Research Aim
The interest of the study is to find out the impacts of adoption of ISO 9000.
Hence, the research question,
1. What is the impact of ISO certification on the company’s financial attributes like,
source of capital, assets, equity and demographics of the employees?

3IMPACT OF ISO 9000 CERTIFICATION IN CHINA
2. Is there any relationship between above mentioned variables and the adoption of ISO
9000 certification?
In this report, the first section is about introduction and a brief literature review is
discussed in the very next section. Third section describes the methodology and fourth
section discusses the findings and results. Fifth and sixth section is about discussion and
managerial advices and limitation and further research respectively.
Literature Review
The ISO certification provides directly or indirectly some extent of non-monetary
benefits. There is a lack of research that has found the impact of ISO on monetary gains
(Fikru, 2014). There is a study in Nigeria, that reveals the positive impact of ISO certification
on raising the total amount of return from the asset. The firms with ISO certification have
larger amount of sales due to hike in exports and thus the productivity is higher (Goedhuys &
Sleuwaegen, 2013). The spread of ISO 9000 certification in under developed countries that
are trying to be developed turn out to create the rise in inward FDI and the rise of export in
the trade flow (Allur, Arana-Landin & Heras Saizarbitoria, 2014). There are few papers that
describes the objective, standard and implication of quality management and performance of
the certified organizations that are improved. Now, there studies that says rise in the
performance and quality can raise the profit of those organizations (Terziovski & Guerrero,
2014). The number of studies is very less where researchers have estimated the financial
impacts of ISO certification. A research has found a positive relation with stock prices on the
particular day of being certified with ISO 900 (Terziovski & Guerrero, 2014). Again there is
a study that have noticed a positive reaction in stock market for the introduction of ISO 9000
certification (Lakhal, 2014). However, this is found that the impact was only for small firms
not for the large firms (Djofack & Camacho, 2017). There is a relationship between ISO
certification and superior performance in financial part of the company (Cai, & Jun, 2018).

4IMPACT OF ISO 9000 CERTIFICATION IN CHINA
This implies that the rise in stock price indicates a better position in financial sector which
has potential to raise the profit of the company. There is a study on 160 Australian
companies, it shows the positive impacts of ISO 9000 on relation with its customers, products
and services, the product quality awareness of the company, satisfaction of the customers,
management of the company and a relative growth of the company, with its competitors
(Ong, Kathawala & Sawalha, 2015). Similarly, another study conducted in UK has claimed
that the certification has contributed positively in raising the number of new contracts,
reducing the customer audits, improving the market relation and giving an international
exposure (Kunnaala, Lappalainen & Tapaninen, 2013). Moreover, there are studies that
claims that the ISO 9000 has a contribution in raising the operational and business
performance which is reflected by the attributes like collection of capital from different
sources, assets and equities which has direct linkage in raising business and the profit
(Georgiev & Georgiev, 2015). Again there are few studies which has claimed that the ISO
certification has no role in improvement of quality management, profitability and
productivity (Grela, 2015). In this case, it is necessary to check the profitability of a firm due
to ISO certification and the attributes that are linked with the financial performance of a firm.
Methodology
In order to find the significant evidence for the answers of research questions, a large
data is collected on service firms in China. The data is secondary and collected from the
National Bureau of Statistics of China from an economic census which was conducted in
2008. A chi-square test is conducted to find the association between FDI and ISO
certification. There is ANOVA test and independence test to check the mean difference in the
variables of certified and non-certified companies. The Pearson correlation is computed to
check the relationship between the variables sales, profit, asset, capital paid, capital from
others, return on sales and return on asset and ISO 9000 certification.

5IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Analysis and Findings
Descriptive Statistics
The descriptive statistics is presented for each variable in this section of the report.
Each variable is discussed one by one in the following section.
The table 1 shows the certification year for the companies and it is found that the
certification year is not known for each service firm as the missing value is recorded for 5257
companies. Hence, this variable cannot be included in the analysis.
Table 1: Year of certification
Frequency Percent
Valid
2004 55 1.0
2005 110 1.9
2006 112 2.0
2007 93 1.6
2008 90 1.6
Total 460 8.0
Missing System 5257 92.0
Total 5717 100.0
The table 2 presents the dummy for certification and it has recorded that the 5257 out
of 5717 companies which is 92% of the sample, are not certified with the ISO 9000. So, there
is very few number of companies in which the study is focused on.
Table 2: Certification dummy
Frequency Percent
Valid
not certified 5257 92.0
certified 460 8.0
Total 5717 100.0

6IMPACT OF ISO 9000 CERTIFICATION IN CHINA
The table 3 presents different types of service firms which shows that almost 48% of
the sample is business service firms followed by the specialized technological services which
is recorded as 21% of the sample.
Table 3: Industry code 2
Frequency Percent
Valid
storage and transportation 392 6.9
Telecommunication 184 3.2
computer services 365 6.4
software 390 6.8
Business services 2722 47.6
Research and Development 222 3.9
Specialized technology services 1200 21.0
Technology exchange and promotion 242 4.2
Total 5717 100.0
The table 4 presents the FDI dummy which has recorded that most of the service
firms are without overseas investments and it is 97% of the sample. This implies that very
few service providers have overseas investment.
Table 4: FDI dummy
Frequency Percent
Valid
NO FDI 5546 97.0
with FDI 171 3.0
Total 5717 100.0
The table 5.1, 5.2 and 5.3 present some of the interesting features of the service firms
of China and few are mentioned here. The average number of employee in each service firm
is approximately 45. From these employees on an average 2 employees have masters and
doctor degree, 12 employees have bachelor degree, 13 employees have diploma, 13
employees have completed high school and rest of them have lesser education. 50% of the

7IMPACT OF ISO 9000 CERTIFICATION IN CHINA
firms have less than 23 employees and they are less likely to recruit employees who has
completed masters or doctorate. The distribution of educational status at different level and
the number of employees are right skewed. The firms have at least 11 employees and at most
969 employees in China.
Table 5.1: Descriptive statistics of variables.
employee
number
master
and
doctor bachelor diploma
high
school other sales
N Valid 5717 5717 5717 5717 5717 5717 5717
Missin
g
0 0 0 0 0 0 0
Mean 44.96 1.38 11.85 12.92 12.26 6.54 11698.57
Median 23.00 0.00 4.00 7.00 5.00 0.00 4205.00
Mode 12 0 0 0 0 0 1500
Std. Deviation 74.378 5.688 28.453 24.306 31.290 25.980 32873.609
Variance 5532.023 32.358 809.600 590.775 979.065 674.963 1080674167.52
8
Skewness 5.823 12.311 7.640 7.610 9.260 10.118 11.328
Kurtosis 45.706 234.090 83.321 89.888 124.742 140.704 188.002
Range 958 161 530 490 689 568 868176
Minimum 11 0 0 0 0 0 1000
Maximum 969 161 530 490 689 568 869176
Percentiles 25 15.00 0.00 0.00 3.00 1.00 2273.50 0.00
50 23.00 0.00 4.00 7.00 5.00 4205.00 0.00
75 42.00 1.00 12.00 14.00 11.00 8953.50 4.00
The average profit of each firm is 2067.97 million dollar and 50% of the firms have
692 million dollar of profit. Each service firm in China has at least 7 million dollar of profit
and at most 296176 million dollar of profit.
Table 5.2: Descriptive statistics of variables.
profit asset equity capital paid
capital from
state
N Valid 5717 5717 5717 5717 5717
Missing 0 0 0 0 0
Mean 2067.97 16473.16 7693.77 4765.67 1201.12
Median 692.00 3972.00 1600.00 1000.00 0.00
Mode 300 2000 1000 1000 0
Std. Deviation 7158.417 54666.560 31012.079 17120.175 11264.936

8IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Variance 51242940.369 2988432750.32
1
961749073.465 293100400.983 126898792.888
Skewness 19.254 9.296 12.702 11.566 20.017
Kurtosis 602.738 113.569 228.913 183.898 514.075
Range 296159 977548 879356 402100 402110
Minimum 17 1000 -1367 10 0
Maximum 296176 978548 877989 402110 402110
Percentile
s
25 313.00 2065.00 800.00 0.00 500.00
50 692.00 3972.00 1600.00 0.00 1000.00
75 1542.00 9671.00 4309.50 0.00 3000.00
In China, the service firms are doing business for an average of 7.62 years and 50% of
the companies have the age of less than 6 years. The newest firm in China is operating for
last 2 years and the oldest firm in China is operating for last 61 years.
Table 5.3: Descriptive statistics of variables.
capital from
overseas
capital from
other
return
on
sales
return
on
asset
percentage
of FDI
age of
company
in years
N Valid 5717 5717 5717 5717 5717 5717
Missing 0 0 0 0 0 0
Mean 348.87 3215.68 .1911 .2236 .0245 7.62
Median 0.00 1000.00 .1700 .1550 0.0000 6.00
Mode 0 1000 .24 .04a 0.00 2
Std. Deviation 4598.814 11765.554 .12397 .20858 .14937 7.074
Variance 21149093.297 138428249.797 .015 .044 .022 50.044
Skewness 21.317 15.536 .514 1.500 6.168 3.540
Kurtosis 535.442 368.302 -.701 2.021 36.651 17.849
Range 150000 400000 .49 1.01 1.00 59
Minimum 0 0 .01 .01 0.00 2
Maximum 150000 400000 .51 1.02 1.00 61
Percentiles 25 0.00 400.00 .0847 .0649 0.0000 3.00
50 0.00 1000.00 .1700 .1550 0.0000 6.00
75 0.00 2077.50 .2840 .3148 0.0000 9.00
Inferential Statistics
Sample Independent t-test
The below table is the inferential table for the independence t-test where the certification
dummy is used as a factor. This shows the comparison of the factors that are influenced by

9IMPACT OF ISO 9000 CERTIFICATION IN CHINA
the ISO 9000 certification. Now, if the p-value for the equal variance is greater than 0.05 then
the assumption of equal variance is not violated otherwise there is unequal variance. Now
looking at the p-value of t-stat for all variables, it is found that the p-value is greater than 0.05
for other level of educational qualification, capital from state and capital from overseas and
percentage of FDI. This implies that these variables are not significantly different for the
certified and non-certified companies. This implies that the mean value of employee number,
master and doctor, bachelor, diploma, high school, sales, profit, asset, equity, capital paid,
capital from other, return on sales and return on asset off certified and uncertified companies
are significantly different.
Table 6: Result of sample independent t-test

10IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Lower Upper
Std. Error
Difference
95% Confidence
Independent Samples Test
Levene's t-test for Equality of Means
F Sig. t df
Sig. (2-
tailed)
M ean
Difference
Equal
variances
279.85 0.00 -17.13 5715.00 0.00 -60.43 3.53 -67.35 -53.52
Unequal
variances
-9.90 479.62 0.00 -60.43 6.10 -72.43 -48.44
Equal
variances
242.20 0.00 -12.61 5715.00 0.00 -3.44 0.27 -3.97 -2.90
Unequal
variances
-6.24 472.04 0.00 -3.44 0.55 -4.52 -2.36
Equal
variances
527.37 0.00 -22.09 5715.00 0.00 -29.34 1.33 -31.94 -26.74
Unequal
variances
-11.23 473.17 0.00 -29.34 2.61 -34.47 -24.21
Equal
variances
292.16 0.00 -17.05 5715.00 0.00 -19.66 1.15 -21.92 -17.40
Unequal
variances
-9.40 477.01 0.00 -19.66 2.09 -23.77 -15.55
Equal
variances
54.46 0.00 -5.20 5715.00 0.00 -7.90 1.52 -10.87 -4.92
Unequal
variances
-3.22 483.86 0.00 -7.90 2.45 -12.72 -3.08
Equal
variances
0.50 0.48 -0.08 5715.00 0.94 -0.10 1.26 -2.58 2.37
Unequal
variances
-0.08 537.81 0.94 -0.10 1.29 -2.64 2.44
Equal
variances
203.85 0.00 -12.33 5715.00 0.00 -19458.79 1577.67 -22551.63 -16365.95
Unequal
variances
-7.45 482.25 0.00 -19458.79 2613.15 -24593.36 -14324.21
Equal
variances
82.96 0.00 -7.27 5715.00 0.00 -2519.41 346.49 -3198.66 -1840.16
Unequal
variances
-5.71 504.96 0.00 -2519.41 441.10 -3386.03 -1652.79
Equal
variances
55.64 0.00 -7.01 5715.00 0.00 -18543.42 2646.91 -23732.37 -13354.48
Unequal
variances
-6.08 517.80 0.00 -18543.42 3051.11 -24537.50 -12549.34
Equal
variances
42.89 0.00 -6.57 5715.00 0.00 -9873.21 1502.35 -12818.38 -6928.04
Unequal
variances
-6.07 527.60 0.00 -9873.21 1626.82 -13069.05 -6677.38
Equal
variances
22.96 0.00 -5.90 5715.00 0.00 -4895.22 829.97 -6522.28 -3268.15
Unequal
variances
-5.57 531.61 0.00 -4895.22 878.26 -6620.50 -3169.93
Equal
variances
4.59 0.03 -1.43 5715.00 0.15 -780.93 547.68 -1854.59 292.73
Unequal
variances
-1.71 590.73 0.09 -780.93 456.45 -1677.39 115.53
Equal
variances
4.33 0.04 -1.07 5715.00 0.28 -239.40 223.60 -677.74 198.95
Unequal
variances
-1.23 576.16 0.22 -239.40 195.17 -622.73 143.94
Equal
variances
51.61 0.00 -6.80 5715.00 0.00 -3874.89 569.82 -4991.95 -2757.83
Unequal
variances
-5.11 500.10 0.00 -3874.89 758.49 -5365.12 -2384.67
Equal
variances
0.95 0.33 6.75 5715.00 0.00 0.04 0.01 0.03 0.05
Unequal
variances
6.72 541.46 0.00 0.04 0.01 0.03 0.05
Equal
variances
38.49 0.00 6.10 5715.00 0.00 0.06 0.01 0.04 0.08
Unequal
variances
7.37 592.84 0.00 0.06 0.01 0.05 0.08
Equal
variances
0.04 0.85 -0.11 5715.00 0.92 0.00 0.01 -0.02 0.01
Unequal
variances
-0.11 542.84 0.92 0.00 0.01 -0.02 0.01

11IMPACT OF ISO 9000 CERTIFICATION IN CHINA
ANOVA
The below table is the result of Homogeneity test. The column “sig” shows the p-
value and the homogeneity is not violated when the p-value is greater than 0.05. It is found
that the percentage of FDI, capital from sate, capital from overseas and return on sales has the
p-value greater than 0.05
Table 7.1: Homogeneity test
Levene Statistic df1 df2 Sig.
sales 203.848 1 5715 0
profit 82.963 1 5715 0
asset 55.638 1 5715 0
percentage of FDI 0.038 1 5715 0.846
capital paid 22.963 1 5715 0
capital from state 4.586 1 5715 0.032
capital from overseas 4.331 1 5715 0.037
capital from other 51.611 1 5715 0
return on sales 0.953 1 5715 0.329
return on asset 38.491 1 5715 0
Test of Homogeneity of Variances
In the below table the column “sig” presents the p-value for the test of hypothesis. If
the p-value is less than 0.05 then it can be said that there is a significant difference between
the mean values. It is found that the p-value is less than 0.05 for the sales, profit, asset, capital
paid, capital from others, return on sales and return on asset. Hence, the mean value of these
variables are significantly different.

12IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Table 7.2: ANOVA table
Sum of Squares df M ean Square F Sig.
Between
Groups
160161880338.600 1 160161880338.600 152.124 .000
Within
Groups
6016971661249.910 5715 1052838435.914
Total 6177133541588.510 5716
Between
Groups
2684884755.287 1 2684884755.287 52.871 .000
Within
Groups
290219762394.457 5715 50782110.655
Total 292904647149.744 5716
Between
Groups
145447897574.869 1 145447897574.869 49.080 .000
Within
Groups
16936433703259.400 5715 2963505459.888
Total 17081881600834.300 5716
Between
Groups
.000 1 .000 .011 .916
Within
Groups
127.525 5715 .022
Total 127.526 5716
Between
Groups
10136119985.222 1 10136119985.222 34.787 .000
Within
Groups
1665225772033.460 5715 291378087.845
Total 1675361892018.680 5716
Between
Groups
257958221.143 1 257958221.143 2.033 .154
Within
Groups
725095541924.392 5715 126875860.354
Total 725353500145.535 5716
Between
Groups
24241609.669 1 24241609.669 1.146 .284
Within
Groups
120863975674.546 5715 21148552.174
Total 120888217284.216 5716
Between
Groups
6351077009.476 1 6351077009.476 46.243 .000
Within
Groups
784904798828.745 5715 137341172.149
Total 791255875838.221 5716
Between
Groups
.695 1 .695 45.556 .000
Within
Groups
87.159 5715 .015
Total 87.854 5716
Between
Groups
1.610 1 1.610 37.238 .000
Within
Groups
247.060 5715 .043
Total 248.670 5716
return on
asset
percentage
of FDI
capital paid
capital from
state
capital from
overseas
capital from
other
return on
sales
ANOVA
sales
profit
asset

13IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Chi-square test
The table 6 presents the result of chi-square test. From the table below it is found
that the chi-square test statistic is equal to 0.723 and the corresponding p-value is 0.669. The
decision rule is to reject the null hypothesis if the p-value of the test statistic is less than the
given significance level which is 0.05 otherwise, retain the null hypothesis. Here, the p-value
for the test statistic is greater than 0.05. This implies there is no association between the
overseas investment and the ISO 9000 certification. So, here it can be concluded that for
overseas investment, it is not necessary to have an ISO 9000 certification to the service firms
of China.
Table 8: Chi-Square Tests
Chi-Square Tests
Value df Asymp. Sig.
(2-sided)
Exact Sig.
(2-sided)
Exact Sig.
(1-sided)
Pearson Chi-Square 0.125 1 0.723
Continuity Correction 0.045 1 0.832
Likelihood Ratio 0.122 1 0.727
Fisher's Exact Test 0.669 0.402
Linear-by-Linear Association 0.125 1 0.723
N of Valid Cases 5717
Correlation
The table 9 presents the value of correlation coefficients between the dependent
variable profit and the independent variables that are asset, equity, capital from different
sources, return from sales and asset, FDI, age of the company and the most important factor,
certification dummy. It is found that the correlation is strong for asset (r=0.562), followed by
the equity (r=0.499) and source of capital (r=0.334, 0.189 and 0.294). The weak correlation is

14IMPACT OF ISO 9000 CERTIFICATION IN CHINA
found for FDI (r=0.064 and 0.076). These implies that the profit of the service firm is deeply
associated with the variables that have strong correlation.
Table 7: Correlation table
certificatio
n dummy
employee
number
master
and
doctor
bachelor diploma high
school other sales
certification dummy 1 .221** .164** .281** .220** .069** 0.001 .161**
employee number .221** 1 .393** .638** .697** .720** .559** .471**
master and doctor .164** .393** 1 .577** .237** .050** -0.006 .295**
bachelor .281** .638** .577** 1 .533** .100** -0.016 .437**
diploma .220** .697** .237** .533** 1 .293** .070** .423**
high school .069** .720** .050** .100** .293** 1 .461** .261**
other 0.001 .559** -0.006 -0.016 .070** .461** 1 .096**
sales .161** .471** .295** .437** .423** .261** .096** 1
profit .096** .407** .249** .355** .368** .246** .080** .762**
asset .092** .337** .224** .275** .262** .205** .122** .549**
equity .087** .303** .253** .278** .216** .181** .087** .468**
capital paid .078** .272** .169** .244** .195** .173** .083** .423**
capital from state 0.019 .141** .102** .128** .147** .087** -0.002 .260**
capital from overseas 0.014 .090** .095** .078** .051** .075** 0.014 .184**
capital from other .090** .225** .111** .201** .123** .139** .117** .295**
return on sales -.089** -.101** -.043** -.078** -.078** -.053** -.058** -.041**
return on asset -.080** -.053** -.033* -.052** -0.025 -0.02 -.040** 0.016
percentage of FDI 0.001 .099** .100** .131** .088** 0.015 0.017 .095**
FDI dummy 0.005 .106** .098** .143** .086** 0.021 0.019 .103**
age of company in years .111** .207** .132** .190** .130** .126** .082** .134**
profit asset equity capital
paid
capital
from state
capital
from
overseas
capital
from
other
certification dummy .096** .092** .087** .078** 0.019 0.014 .090**
employee number .407** .337** .303** .272** .141** .090** .225**
master and doctor .249** .224** .253** .169** .102** .095** .111**
bachelor .355** .275** .278** .244** .128** .078** .201**
diploma .368** .262** .216** .195** .147** .051** .123**
high school .246** .205** .181** .173** .087** .075** .139**
other .080** .122** .087** .083** -0.002 0.014 .117**
sales .762** .549** .468** .423** .260** .184** .295**
profit 1 .562** .499** .473** .334** .189** .294**
asset .562** 1 .864** .686** .427** .235** .497**
equity .499** .864** 1 .787** .544** .315** .501**
capital paid .473** .686** .787** 1 .672** .311** .690**
capital from state .334** .427** .544** .672** 1 .054** 0
capital from overseas .189** .235** .315** .311** .054** 1 0.01
capital from other .294** .497** .501** .690** 0 0.01 1
return on sales .189** .089** .090** .082** .044** 0.015 .071**
return on asset .126** -.142** -.108** -.114** -.052** -.039** -.101**
percentage of FDI .064** .082** .093** .091** -0.007 .441** -.033*
FDI dummy .076** .110** .132** .116** 0.019 .432** -0.018

15IMPACT OF ISO 9000 CERTIFICATION IN CHINA
age of company in years .116** .133** .111** .094** .073** 0.008 .063**
return on
sales
return on
asset
percentag
e of FDI
FDI
dummy
age of
company
in years
certification dummy -.089** -.080** 0.001 0.005 .111**
employee number -.101** -.053** .099** .106** .207**
master and doctor -.043** -.033* .100** .098** .132**
bachelor -.078** -.052** .131** .143** .190**
diploma -.078** -0.025 .088** .086** .130**
high school -.053** -0.02 0.015 0.021 .126**
other -.058** -.040** 0.017 0.019 .082**
sales -.041** 0.016 .095** .103** .134**
profit .189** .126** .064** .076** .116**
asset .089** -.142** .082** .110** .133**
equity .090** -.108** .093** .132** .111**
capital paid .082** -.114** .091** .116** .094**
capital from state .044** -.052** -0.007 0.019 .073**
capital from overseas 0.015 -.039** .441** .432** 0.008
capital from other .071** -.101** -.033* -0.018 .063**
return on sales 1 .555** -.051** -.050** -.058**
return on asset .555** 1 -.046** -.057** -.103**
percentage of FDI -.051** -.046** 1 .934** -.036**
FDI dummy -.050** -.057** .934** 1 -.030*
age of company in years -.058** -.103** -.036** -.030* 1
Discussion and Managerial Advices
The chi-square test concludes that for overseas investment, it is not necessary to have
an ISO 9000 certification to the service firms of China. Here, it is recommended to the firms
that to attract the overseas investment there is no need of ISO certification. They should focus
on other factors that may have impact on attracting the FDI (Prado-Román et al. 2015).
However, the regression result shows that the greater impact on profit is found from the
return on asset followed by the certification. Here, ISO certificate raises the profit. This is
because of better quality management which is approved by the certificate of ISO 9000.
Limitation and Further Research
There are few limitation of this study and the most important limitation is related to
the sample data. For the first research hypothesis, 50% of data should be collected from those

16IMPACT OF ISO 9000 CERTIFICATION IN CHINA
companies which have ISO certificate or an alternative way is to choose the firms in such
way so that 50% of the sample has overseas investment. This is very crucial in order to
increase the goodness of the test. The result for second research hypothesis shows that the
model can only predict the 38.8% variance in profit. It can be said that there must be few
variables which can raise the prediction power of model so that it can predict more variance
in profit.
It is very important to choose the sample size efficiently and wisely to get an
unbiased, consistent and efficient results. Again, there is needed a wide scale of study on the
relevant literature review to get the exposure of other variables that have impact on the profits
of the service firm in China.

17IMPACT OF ISO 9000 CERTIFICATION IN CHINA
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19IMPACT OF ISO 9000 CERTIFICATION IN CHINA

20IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Appendices
Appendix 1
Statistics
certification
dummy
industry code 2 FDI dummy
N Valid 5717 5717 5717
Missing 0 0 0
certification dummy
Frequency Percent Valid Percent Cumulative
Percent
Valid
not certified 5257 92.0 92.0 92.0
certified 460 8.0 8.0 100.0
Total 5717 100.0 100.0
industry code 2
Frequency Percent Valid Percent Cumulative
Percent
Valid
storage and transportation 392 6.9 6.9 6.9
Telecommunication 184 3.2 3.2 10.1
computer services 365 6.4 6.4 16.5
software 390 6.8 6.8 23.3
Business services 2722 47.6 47.6 70.9
Research and Development 222 3.9 3.9 74.8
Specialized technology
services 1200 21.0 21.0 95.8
Technology exchange and
promotion 242 4.2 4.2 100.0
Total 5717 100.0 100.0
FDI dummy
Frequency Percent Valid Percent Cumulative
Percent

21IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Valid
NO FDI 5546 97.0 97.0 97.0
with FDI 171 3.0 3.0 100.0
Total 5717 100.0 100.0

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Appendix 2
Group Statistics
certification dummy N Mean Std. Deviation Std. Error Mean
employee number not certified 5257 40.096 65.2575 .9000
certified 460 100.530 129.4643 6.0363
master and doctor not certified 5257 1.102 4.7131 .0650
certified 460 4.541 11.7346 .5471
bachelor not certified 5257 9.489 23.2663 .3209
certified 460 38.830 55.5883 2.5918
diploma not certified 5257 11.337 20.9502 .2889
certified 460 30.996 44.4401 2.0720
high school not certified 5257 11.626 28.7108 .3960
certified 460 19.524 51.9213 2.4208
other not certified 5257 6.537 25.9229 .3575
certified 460 6.639 26.6531 1.2427
sales not certified 5257 10132.882 29617.0930 408.4825

42IMPACT OF ISO 9000 CERTIFICATION IN CHINA
certified 460 29591.670 55356.9242 2581.0299
profit not certified 5257 1865.256 6911.2743 95.3211
certified 460 4384.667 9237.0358 430.6790
asset not certified 5257 14981.120 53574.9231 738.9117
certified 460 33524.543 63491.0664 2960.2862
equity not certified 5257 6899.356 30642.0610 422.6190
certified 460 16772.570 33693.4026 1570.9630
capital paid not certified 5257 4371.795 16971.7150 234.0759
certified 460 9267.013 18155.2378 846.4923
capital from state not certified 5257 1138.287 11427.3417 157.6073
certified 460 1919.215 9187.6249 428.3752
capital from overseas not certified 5257 329.608 4650.8603 64.1452
certified 460 569.004 3953.4485 184.3305
capital from other not certified 5257 2903.899 11278.1255 155.5493
certified 460 6778.793 15922.0607 742.3699
return on sales not certified 5257 .194 .1234 .0017
certified 460 .154 .1242 .0058
return on asset not certified 5257 .229 .2110 .0029
certified 460 .167 .1684 .0079
percentage of FDI not certified 5257 .024 .1494 .0021
certified 460 .025 .1491 .0070

43IMPACT OF ISO 9000 CERTIFICATION IN CHINA

44IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Appendix 3
Test of Homogeneity of Variances
Levene Statistic df1 df2 Sig.
sales 203.848 1 5715 .000
profit 82.963 1 5715 .000

45IMPACT OF ISO 9000 CERTIFICATION IN CHINA
asset 55.638 1 5715 .000
percentage of FDI .038 1 5715 .846
capital paid 22.963 1 5715 .000
capital from state 4.586 1 5715 .032
capital from overseas 4.331 1 5715 .037
capital from other 51.611 1 5715 .000
return on sales .953 1 5715 .329
return on asset 38.491 1 5715 .000
ANOVA
Sum of Squares df Mean Square F Sig.
sales
Between Groups 160161880338.6
00 1 160161880338.6
00 152.124 .000
Within Groups 6016971661249.
912 5715 1052838435.914
Total 6177133541588.
513 5716
profit
Between Groups 2684884755.287 1 2684884755.287 52.871 .000
Within Groups 290219762394.4
57 5715 50782110.655
Total 292904647149.7
44 5716
asset
Between Groups 145447897574.8
69 1 145447897574.8
69 49.080 .000
Within Groups 1693643370325
9.430 5715 2963505459.888
Total 1708188160083
4.299 5716
percentage of FDI
Between Groups .000 1 .000 .011 .916
Within Groups 127.525 5715 .022
Total 127.526 5716
capital paid
Between Groups 10136119985.22
2 1 10136119985.22
2 34.787 .000
Within Groups 1665225772033.
460 5715 291378087.845
Total 1675361892018.
681 5716
capital from state Between Groups 257958221.143 1 257958221.143 2.033 .154
Within Groups 725095541924.3
92
5715 126875860.354

46IMPACT OF ISO 9000 CERTIFICATION IN CHINA
Total 725353500145.5
35 5716
capital from overseas
Between Groups 24241609.669 1 24241609.669 1.146 .284
Within Groups 120863975674.5
47 5715 21148552.174
Total 120888217284.2
16 5716
capital from other
Between Groups 6351077009.476 1 6351077009.476 46.243 .000
Within Groups 784904798828.7
45 5715 137341172.149
Total 791255875838.2
21 5716
return on sales
Between Groups .695 1 .695 45.556 .000
Within Groups 87.159 5715 .015
Total 87.854 5716
return on asset
Between Groups 1.610 1 1.610 37.238 .000
Within Groups 247.060 5715 .043
Total 248.670 5716
Robust Tests of Equality of Means
Statistica df1 df2 Sig.
sales Welch 55.450 1 482.255 .000
profit Welch 32.623 1 504.965 .000
asset Welch 36.937 1 517.802 .000
percentage of FDI Welch .011 1 542.836 .916
capital paid Welch 31.067 1 531.608 .000
capital from state Welch 2.927 1 590.730 .088
capital from overseas Welch 1.505 1 576.160 .220
capital from other Welch 26.099 1 500.104 .000
return on sales Welch 45.106 1 541.462 .000
return on asset Welch 54.282 1 592.837 .000
a. Asymptotically F distributed.
Appendix 4
Case Processing Summary
Cases
Valid Missing Total
N Percent N Percent N Percent

47IMPACT OF ISO 9000 CERTIFICATION IN CHINA
certification dummy * FDI
dummy 5717 100.0% 0 0.0% 5717 100.0%
certification dummy * FDI dummy Crosstabulation
Count
FDI dummy Total
NO FDI with FDI
certification dummy not certified 5101 156 5257
certified 445 15 460
Total 5546 171 5717
Chi-Square Tests
Value df Asymp. Sig. (2-
sided)
Exact Sig. (2-
sided)
Exact Sig. (1-
sided)
Pearson Chi-Square .125a 1 .723
Continuity Correctionb .045 1 .832
Likelihood Ratio .122 1 .727
Fisher's Exact Test .669 .402
Linear-by-Linear Association .125 1 .723
N of Valid Cases 5717
a. 0 cells (0.0%) have expected count less than 5. The minimum expected count is 13.76.
b. Computed only for a 2x2 table

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49IMPACT OF ISO 9000 CERTIFICATION IN CHINA