An Empirical Study On The Relationship Of ISO9000 Certification And Competitive Advantage

Quality and quality related issues such as TQM or ISO 9000 have been a topic of research interest in the business field for sometime. Quality management practices are seen as a competitive advantage. Proponents of such practices stress the promise of better quality leads to higher revenues, decreases costs, and increased profits. But research has not consistently borne out these prospects. Moreover, the expectation of universal benefits is not consistent with research highlighting the important role of firm-specific capabilities in sustaining competitive advantage.Globalization results in both pressure and drivers for Chinese enterprises to improve their Quality performance. In china, thousands of organizations have adopted ISO 9000 programs. But the study of quality management especially ISO 9000 programs in China is still in its infancy, which is far from the operation practices of China as one of big manufacturing nations and the biggest ISO adoption nation in the world. It is urgent to conduct more studies in this field. In this paper, the effect of ISO 9000 certification on financial performance is examined. We gather publicly available financial data of both ISO9000 certified and non-certified companies to test the hypotheses. Event study and Panel analysis were used in the testing of the hypotheses. The results of this study were mixed. We find that Firms that were ISO 9000 certified have greater market performance, but we failed to support the hypotheses that ISO9000 can improve efficiency and profitability for the Chinese firm. Furthermore, we find that early ISO9000 adopters have great financial performance than the late adopters in the manufacturing industries.