BUACC5931: Effects of ISO 9000 Certification on Company Revenue

This report presents an empirical analysis of the effects of ISO 9000 certification on company revenue, exploring its relationship with foreign direct investment (FDI) and other factors. The research aims to determine if ISO 9000 certification encourages FDI and if it impacts a company's profit. The study employs chi-square and linear regression analyses to examine the association between ISO 9000 certification and FDI, and the impact of certification along with other factors such as company age and financial attributes on company profit. The results indicate that ISO 9000 certification does not encourage FDI, but certified firms exhibit higher profits. The study concludes that while ISO certification and FDI are independent, certification positively impacts company profitability.

EFFECTS OF ISO 9000 CERTIFICATION
An empirical analysis of effects of ISO 9000 certification on the revenue along
with other factors.

INTRODUCTION
• ISO 9000 implies a number of international standards for quality
assurance and management.
• This provides the companies easy documentation system to maintain
an effective quality system.
• This quality management systems standard was introduced in 1987.
• This standard is extensively used by the companies all over the world.
• The study wants 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.

RESEARCH OBJECTIVE
• The study mainly focuses on the relationship between adoption of ISO
9000 and other crucial factors.
• The research objectives are set in order to make some significant
recommendation to the management of the company regarding ISO
9000 Certification.
• The study has two main research objectives. These are mentioned
below:
1. Is the foreign direct investment encouraged by the ISO 9000
certification?
2. Is there any impact on profit of the ISO 9000 certified Company?

LITERATURE REVIEW
• 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).

RESEARCH METHODOLOGY
• In order to achieve the research aim, statistical tools and
techniques are used to get evidences for the research hypothesis.
• The chi-square test is performed in order to know if there is any
association between being certified with ISO 9000 and Foreign
Direct Investment.
• Null Hypothesis H0: FDI and ISO Certification are independent to
each other.
• Alternative Hypothesis H1: FDI and ISO Certification are not
independent to each other.

RESEARCH METHODOLOGY
• Linear regression analysis is also performed in order to check the effect
of being certified with ISO 900 along with other factors such as age of
the company and financial attributes on the profit of the company.
• The regression includes the ANOVA test to check the variables can
explain the profit or not.
• Then the t-test to estimate the impact of each variable on profit.
• Null Hypothesis H0: The mean value of the coefficient are not different
from zero.
• Alternative Hypothesis H1: The mean value of the coefficient are
different from zero.

RESULT
• The chi-square test provides the following results:
• The chi-square test statistic is equal to 0.723 where the degrees
of freedom is 1 and alpha is 0.05.
• The corresponding p-value is 0.669 for 2-sided test.
• The p-value is greater than 0.05 and leads to retain the null
hypothesis.
• Thus, FDI and ISO Certification are independent to each other.
• This implies that the ISO certification does not encourage the FDI
in service firms of China.

RESULT
• The correlation table is generated to check the correlation of
attributes with profit.
• The moderate correlation is found for asset (r=0.562), equity
(r=0.499) and capital paid (r=0.473).
• The weak correlation is found for certification dummy (r=0.096),
age of company (r=0.116) and return on asset (r=0.126).
• This all variables are included in the next step of the analysis
which is linear regression.

RESULT
• The ANOVA table in the regression analysis provides the following
results:
• The F test statistic is equal to 453.050 where the degrees of
freedom is 8 and alpha is 0.05.
• The corresponding p-value is 0.00.
• The p-value is less than 0.05 and leads to reject the null
hypothesis.
• This means the independent variables have different means and
they can explain the model or it can be said these all can capture
the variance in profit.

RESULT
• The coefficients table in the regression analysis provides the
following results of t-test:
• The t-test statistic and the corresponding p-values shows that the
null hypothesis should be rejected.
• This means the independent variables have mean values are
different from zero and they have significant impact on the profit
of the service companies in China.
• The significant variables are certification dummy along with age
of the company, return on asset, capitals, equity and asset.

CONCLUSION
• The research objective of the study is to find the impact of ISO
certification on service forms in China.
• The result shows the ISO certification and FDI has no connection
to each other which implies there could be FDI with or without ISO
certification.
• The second objective is to find the impact of ISO certification on
profit.
• The regression result shows that the firms with ISO certificate

REFERENCE
Allur, E., Arana-Landin, G., & Heras Saizarbitoria, I. (2014). Adoption of ISO 9001
quality management standard in Africa. International Journal for Quality
Research, 8(1), 61-72.
Goetsch, D. L., & Davis, S. (2014). Quality management for organizational
excellence: Introduction to total quality.
Lo, C. K., Wiengarten, F., Humphreys, P., Yeung, A. C., & Cheng, T. C. E. (2013).
The impact of contextual factors on the efficacy of ISO 9000 adoption. Journal of
Operations Management, 31(5), 229-235.
Terziovski, M., & Guerrero, J. L. (2014). ISO 9000 quality system certification and
its impact on product and process innovation performance. International Journal
of Production Economics, 158, 197-207.

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APPENDICES

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