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)

Descriptive statistics of Profit of
ISO 9000 certified industries
Industry
Statistics
Average
Standard
Deviation Minimum
Maximu
m
Storage and
Transportation 2533 5481 34 59573
Telecommunication 5817 24756 62 296176
Computer Service 1594 5029 21 64608
Software 2890 6242 22 60697
Business Service 1810 4913 17 120056
Research and
Development 2346 5335 39 51138
Specialised technology
Service 1773 6666 18 159452
Technology exchange and
promotion 1959 8164 20 122800

One-way ANOVA for profit of
certified industries
There are statistically no significant differences in the average profit 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
9.81E+
08 7
1.4E+0
8 1.659 0.117 2.030
Within
Groups
3.82E+
10 452
844740
87
Total
3.92E+
10 459

Limitations and Future
Directions
 Present analysis based on information collected in 2008. Analysis of data of only one
year.
 Benefit of adoption of ISO 9000 on revenue cannot be suitably argued.
 Better analysis would be to use longitudinal data.
 Revenue and profit of an industry is not dependent on just adoption of ISO 9000 but on
other factors also.
 All such factors which have influence on revenue and profit should be investigated.

Conclusion
 Previous studies suggest that organization adopting ISO 9000 quality
standard have had a better financial performance.
 Present study suggests that organization in China which have adopted
ISO 9000 have gained financially (sales and profit).
 Moreover, it is found from the study that organizations irrespective of
industry type have had an improvement in financial performance.

Fatima, N. (2014). Impact of ISO 9000 on business performance in Pakistan: Implications for quality in developing countries. Quality
Management Journal, 21(1), 16-24.
Kusumah, L., & Fabianto, Y. (2018). The differences in the financial performance of manufacturing companies in Indonesia before and
after ISO 9000 implementation. Total Quality Management & Business Excellence, 29(7-8), 941-957.
Sari, R. (2016). Analysis of Financial Performance of ISO 9000 Certified Company (Empirical Study on the Manufacturing Companies
Listed on the Stock Exchange). Business and Entrepreneurial Review, 11(1), 13-22.
Spasojevic Brkic, V., Djurdjevic, T., Dondur, N., Klarin, M., & Tomic, B. (2013). An empirical examination of the impact of quality tools
application on business performance: Evidence from Serbia. Total Quality Management & Business Excellence, 24(5-6), 607-618.
Javorcik, B., & Sawada, N. (2018). The ISO 9000 certification: Little pain, big gain? European Economic Review, 105, 103-114.
Wang, Z., & Sarkis, J. (2013). Investigating the relationship of sustainable supply chain management with corporate financial
performance. International Journal of Productivity and Performance Management, 62(8), 871-888.
Zhu, Q., Cordeiro, J., & Sarkis, J. (2013). Institutional pressures, dynamic capabilities and environmental management systems:
Investigating the ISO 9000–Environmental management system implementation linkage. Journal of environmental management,
114, 232-242
Reference