BUACC 5931: Determinants of ISO 9000 Adoption & Firm Performance

This report investigates the relationship between ISO 9000 adoption and the financial performance of service firms, utilizing data from the National Bureau of Statistics of China's Economic Census. The study employs descriptive and inferential statistics, including correlation and multivariate regression analysis, to assess the impact of ISO 9000 certification on key financial indicators such as sales, profits, total assets, and total capital. Findings indicate a positive correlation between ISO 9000 certification and financial performance, with certified companies demonstrating higher mean profits. The report advises managers to consider ISO 9000 registration to improve financial outcomes and to focus on sales-enhancing strategies. Research limitations include the absence of guidance for non-registered companies and the focus on older ISO 9000 versions, suggesting avenues for future research to explore updated standards and implementation steps.

Contents covered
• What is ISO
• Introduction
• Literature review
• Methodology
• Results
• Discussion and managerial advice
• Research limitations

Purpose for the report
• The main purpose for this report was to develop understanding of the
determinants of adopting ISO 9000 and the impacts of adopting it on
the financial performance on the companies.

What is ISO 9000
• This is the quality management system developed to assist
organizations to meet the customers and stakeholders’ needs when
meeting the regulatory and statutory requirements in relation to the
product services.
• ISO is an acronym for International Standards for Organizations

Introduction
• ISO 9000 was developed and introduced in the year 1987
• Since its introduction over 1 million of firms have registered with ISO
9000 in over 187 countries.
• It outlines the management strategies for quality management of the
firms
• The management outlines were directed towards meeting the
customers’ desires through improving the quality of products.
• Can be applied by any organization irrespective of the size of the firm
and not specific for any organization

Report objectives
• The two specific objectives met by the report were;
1. To evaluate the effects of adopting ISO 9000 in the financial
performance of the service firms
2. To evaluate the importance of certification of the firms with ISO
9000 on their management

Research questions
• Questions answered in the report included;
1. What are the effects of adopting ISO 9000 in the financial
performance of the service firms?
2. What are the importance of the certification of the firms with ISO
9000 on their management?

Literature review
• Literatures show that financial performance of the firms had improved
since their certification with ISO 9000
• ISO 9000 component effects are related to the achievements of the
firm’s financial benefits
• Indirect methods through conceptual formwork are applied for
measuring the financial performance
• Majority of the ISO 9000 welfares are external in nature instead of
internal
• Adoption of ISO 9000 by the companies should be for development
purposes for maximum profits

Methodology
• Census method was used by the National Bureau Statistics of China to
collect data from the service firm population
• Target population
• Data collection technique
• Data analysis

Target population
• The population covered by the census was 5717 companies
• Both certified and uncertified companies with ISO 9000 were
censured
• Census covered a period from 2004 to 2008

Data collection techniques
• Data were collected from the firms through the use of questionnaires
• Questionnaires were structured with both open and closed ended
questions which resulted to qualitative and quantitative data

Data analysis
• Collected data was entered in excel organized and transferred into SPSS for
data analysis
• Quantitative data analysis methods were applied such as descriptive
statistics i.e. mean and standard deviation to visualize the data properties
• Inferential statistics used in the report were Pearson’s correlation to check
for the correlation between selected attributes and multivariate regressions
analysis was used to check for the effects of the independent variables such
as (Kstate, Kother, ROS, ROA, FDIpercent and agefirm) on the dependent
variable Kpaid in understanding the firm’s financial performance and to
draw conclusion from the model outcome.

Results and findings
• Descriptive analysis included the cross tabulation between the
certification of the companies against the year
• Inferential statistics to draw conclusion from the census data.