BUACC5931: ISO 9000 Adoption & Factors in China's Service Industry

This report investigates the adoption of ISO 9000 standards in China's service industry and its relationship with financial performance, using data collected in 2008. The study examines the impact of ISO certification on revenue and operating profit, referencing previous research that suggests a positive correlation between ISO 9000 implementation and financial outcomes. Statistical analysis, including independent sample t-tests and one-way ANOVA, reveals significant differences in sales and profits between certified and non-certified industries, with certified industries showing higher averages. However, the study acknowledges limitations, such as the use of single-year data and the influence of other factors on financial performance, suggesting future research should utilize longitudinal data and consider additional variables affecting revenue and profit. The conclusion supports the notion that organizations in China adopting ISO 9000 have experienced financial gains, irrespective of industry type.

Adoption of ISO9000 and
its Relationship with
other Factors in China’s
Service Industry
Presented by :

INTRODUCTION
• ISO 9000 series of quality standards were first published in 1987.
• Initial quality standard was christened ISO 9000:1987.
• Intent of the organization was to frame rules for quality of products and
services with special reference to trade between two organizations or
countries.

Purpose
 Aim of the study is to investigate the adoption of ISO 9000 by
organizations in China.
 Information has been collected from service industries in China in 2008.
The report hypothesis
 Adoption of ISO certification improves the revenue of the industry
 Adoption of ISO certification improves the operating profit of the
industry

Previous Studies
 ISO 9000 are a series of standards intended to improve the quality management
of organizations.
 Zhu, Cordeiro, & Sarkis (2013) found that implementation of the
standard was a consequence of both national as well as
international pressure.
 Wang & Sarkis (2013) found that implementation of ISO 9000
has a positive relation with financial performance of the
organizations.
 Adoption of ISO 9000 certification may lead to an increase in
the number of contracts with both domestic and international
players (Javorcik & Sawada, 2018).
 The performance of the firm may also increase due to the

Previous Studies
Sari (2016) found that there is no difference in sales growth with or
without adoption of the ISO 9000 standard.
Kusumah & Fabianto (2018) found that there was significant
increase in the profitability of organizations after the adoption of
ISO 9000.
Fatima (2014) found that there are significant performance in
sales performance of medium and large industries in Pakistan.
Spasojevic Brkic et al., (2013) found that sales revenue of
organizations at Siberia are significantly related to financial
performance of organizations.

Frequency of Industries ISO
9000 certified
Certification Total
Not Certified 5257
Certified 460
Grand Total 5717

Descriptive statistics of
Revenue of the industries
Certificati
on
Statistics
Average
Standard
Deviation
Minimu
m
Maximu
m
Not
Certified 10133 29617 1000 869176
Certified 29592 55357 1000 629516
Grand
Total 11699 32874 1000 869176

Independent sample t-test for
revenue
Non-
certified Certified
Mean 10133 29592
Variance 877172200 3064389056
Observations 5257 460
df 5715
t Stat -12.334
P(T<=t) two-tail 0.000
t Critical two-tail 1.960
Thus it is found that there are statistically significant differences in sales of certified and non-certified
industries
The average sales of certified industries (29592) is higher than non-certified
industries (10133)

Descriptive statistics of sales of
ISO 9000 certified industries
Industry Average
Standard
Deviation
Storage and Transportation 45134 51602
Telecommunication 43589 37553
Computer Service 31095 58543
Software 35024 75428
Business Service 36279 71001
Research and Development 41581 63144
Specialized technology services 23416 38736
Technology exchange and
promotion 8250 8197
Grand Total 29592 55357

One-way ANOVA for sales of
certified industries
There are statistically no significant differences in the average sales of
ISO 9000 certified industries, F(7,452) = 1.659, p-value = 0.117 at a =
0.05 level of significance.
Source of
Variation SS df MS F
P-
value F crit
Between
Groups
2.83E+
10 7
4.04E+
09 1.324 0.237 2.030
Within
Groups
1.38E+
12 452
3.05E+
09
Total
1.41E+
12 459

Descriptive statistics of Profit of
the industries
Certificati
on
Statistics
Average Standard Deviation
Not-
Certified 1865 6911
Certified 4385 9237
Grand
Total 2068 7158

Independent sample t-test for
profit
Non-
certified Certified
Mean 1865 4385
Variance 47765712 85322831
Observations 5257 460
df 5715
t Stat -7.271
P(T<=t) two-tail 0.000
t Critical two-tail 1.960
Thus it is found that there are statistically significant differences in profit of certified and non-certified
industries
The average profit of certified industries (4385) is higher than non-certified
industries (1865)