Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 31473
Impact of ISO 9000 on Time-based Performance: An Event Study

Authors: Chris K. Y. Lo, Andy C. L. Yeung, T. C. Edwin Cheng

Abstract:

ISO 9000 is the most popular and widely adopted meta-standard for quality and operational improvements. However, only limited empirical research has been conducted to examine the impact of ISO 9000 on operational performance based on objective and longitudinal data. To reveal any causal relationship between the adoption of ISO 9000 and operational performance, we examined the timing and magnitude of change in time-based performance as a result of ISO 9000 adoption. We analyzed the changes in operating cycle, inventory days, and account receivable days prior and after the implementation of ISO 9000 in 695 publicly listed manufacturing firms. We found that ISO 9000 certified firms shortened their operating cycle time by 5.28 days one year after the implementation of ISO 9000. In the long-run (3 years after certification), certified firms showed continuous improvement in time-based efficiency, and experienced a shorter operating cycle time of 11 days than that of non-certified firms. There was an average of 6.5% improvement in operating cycle time for ISO 9000 certified firms. Both inventory days and account receivable days showed similar significant improvements after the implementation of ISO 9000, too.

Keywords: ISO 9000, Operating Cycle, Time-based efficiency.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1328136

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 1777

References:


[1] M.V. Uzumeri, ISO 9000 and other metastandards: principles for management practice? The Academy of Management Executive, 1997. 11(1): p. 21-36.
[2] M. Terziovski, D. Samson, and D. Dow, The business value of quality management systems certification. Evidence from Australia and New Zealand. Journal of Operations Management, 1997. 15(1): p. 1-18.
[3] F.M. Aarts and E. Vos, The impact of ISO registration on New Zealand firms' performance: a financial perspective. The TQM Magazine, 2001. 13(3): p. 180-191.
[4] I. Heras, M. Casadesus, and G.P.M. Dick, ISO 9000 certification and the bottom line: a comparative study of the profitability of Basque region companies. Managerial Auditing Journal, 2002. 17(1/2): p. 72-78.
[5] ISO, The ISO Survey - 2005. 2006: Geneva.
[6] ISO, Twelfth cycle: The ISO Survey of ISO 9000 and ISO 14001 Certificates. 2003, ISO: Geneva.
[7] ISO, The ISO Survey - 2004. 2005: Geneva.
[8] S.S. Rao, T.S. Ragu-Nathan, and L.E. Solis, Does ISO 9000 have an effect on quality management practices? An international empirical study. Total Quality Management, 1997. 8(6): p. 335-346.
[9] S. Hill, ISO 9000 certification provides long-term payoff. Quality, 1996. 35(4): p. 66-68.
[10] S.A. Spreha and M.M. Helms, ISO 9000 - a struggle well worth the effort. Production and Inventory Management Journal, 1995. 36(4): p. 46-52.
[11] F. Buttle, ISO 9000: marketing motivations and benefits. International Journal of Quality & Reliability Management, 1997. 14(9): p. 936-947.
[12] E. Naveh and A. Marcus, Achieving competitive advantage through implementing a replicable management standard: Installing and using ISO 9000. Journal of Operations Management, 2005. 24(1): p. 1-26.
[13] C.J. Corbett, M.J. Montes-Sancho, and D.A. Kirsch, The financial impact of ISO 9000 certification: an empirical analysis. Management Science, 2005. 51(7): p. 1046-1059.
[14] A.C.L. Yeung, T.E. Cheng, and K.-h. Lai, An empirical model for managing quality in the electronic industry. Production and Operation Management, 2005. 14(2): p. 189-204.
[15] A.C.L. Yeung, T.C.E. Cheng, and L.-Y. Chan, From customer orientation to customer satisfaction: the gap between theory and practice. IEEE1 Transations on engineering management, 2004. 51(1): p. 85-97.
[16] W.E. Deming, Out of the Crisis: Quality, Productivity and Competitive Position. 1986, New York: Cambridge University Press.
[17] R. Reed, D.J. Lemak, and N.P. Mero, Total quality management and sustainable competitive advantage. Journal of Quality Management, 2002. 5(1): p. 5-26.
[18] R.K. Eskew and D.L. Jensen, Financial Accounting. Firth Edition ed, ed. M.E. Cox, T. Vareris, and P. Rehberger. 1996, New York: The McGraw-Hill Companies, Inc.
[19] B.L. Simmons and M.A. White, The relationship between ISO 9000 and business performance: does registration really matter? Journal of Management Issues, 1999. 11(3): p. 330-343.
[20] B.M. Barber and J.D. Lyon, Detecting abnormal operating performance: the empirical power and specification of test statistics. Journal of Financial Economics, 1996. 41: p. 359-399.
[21] K.B. Hendricks and V.R. Singhal, Does implementing and effective TQM program actually improve operating performance? Empirical evidence from firms that have won quality awards. Management Science, 1997. 43(9): p. 1258-1274.
[22] K.B. Hendricks and V.R. Singhal, The long-run stock price performance of firms with effective TQM programs. Management Science, 2001. 47(3): p. 359-368.
[23] K.B. Hendricks and V.R. Singhal, Quality awards and the market value of the firm: an empirical investigation. Management Science, 1996. 42(3): p. 415-436.