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ISO 9000 implementation: a study of manufacturingcompanies in Saudi Arabia

Hesham Magd

University of Stirling, Department of Management and Organisation, Stirling, UK

Nasser Kadasah


Adrienne Curry


Introduction

To compete in todays turbulent competitivebusiness environment and global economy,

organisations are focusing on the satisfaction

of customers needs as a means of obtaining

advantage, and even survival. A major

strategic change is that many organisations

are striving to achieve customer satisfaction

through an emphasis on quality products and

services. This emphasis on quality is not

surprising, because achieving, enhancing

and sustaining competitiveness is dependent

on providing superior quality products and

services to consumers (Lai et al., 2002; Reed et

al., 1999; Carr et al., 1997).Quality has emerged as a strategic

competitive tool for organisational success

(Yong and Wilkinson, 2002; Hansen, 2001).

Organisations cannot afford to ignore the

strategic implications of quality for their

competitive position. As a result, they have

pursued a number of quality philosophies

and initiatives, such as total quality

management (TQM), just-in-time (JIT), The

Shing Prize, The Deming Prize and ISO

9000. The literature suggests that the most

popular quality philosophies are based on

ISO 9000 and TQM, although interest in

TQM appears to be static, while ISO 9000

certifications have grown rapidly in recent

years, from 343 to 643 certificates in 150

countries at the start of 2000 (Heras et al.,

2002). ISO 9000 has been used more and

more throughout Europe, the USA, and

worldwide. It has become a subject of focus

even in many developing countries,

including Saudi Arabia (the focus of this

study). This is because ISO 9000 is focused

on quality control systems in general, ``from

the process of product design to process

design and from production process

through to service after-sale (Motwani et

al., 1996, p. 77). As a result, considerable

progress has been made toward managing

and controlling quality through theimplementation of ISO 9000 (Wayhan et al.,

2002). ISO 9000 standards were found to be

the most prevalent quality approaches used

(Withers and Ebrahimpour, 2001; Lee and

Palmer, 1999).

The literature review offers many diverse

opinions on ISO 9000 in different countries,

but little empirical research has been carried

out in the Arab world, and Saudi Arabia

specifically. Therefore, the purpose of this

study was to assess empirically ISO 9000

implementation in manufacturing companies

in Saudi Arabia. The specific objectives of

the study were to examine:

the benefits of ISO 9000 certification in

Saudi Arabia manufacturing companies;

whether or not the associated costs

outweighed the benefits of ISO 9000

certification;

the manufacturing companies

satisfaction levels with ISO 9000.

Saudi Arabia is one of the top non-OECD

(Organisation for Economic Co-operation

and Development) economies and is the

worlds leading oil exporter. Saudi Arabiancompanies are faced with competition in

domestic and international markets.

Saudi Arabias open door free-market

policy has led giant multinational players

from around the world to this market to

satisfy the demand of Saudi consumers

with disposable income to spend. Thus the

market in Saudi Arabia has become very

competitive a nd complex. Companies find

they are in competition with the high

quality output from countries like America,

and Japan. These competitive forces have

encouraged Saudi companies to implement

ISO 9000.

The Emerald Research Register for this journal is available at

h tt p ://w w w .e m e r a ld in s ig h t.c o m /re s e a rc h re g ist e r

The current issue and full text archive of this journal is available at

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Managerial Auditing Journal18/4 [2003] 313-322

# MCB UP Limited[ISSN 0268-6902][DOI 10.1108/02686900310488258]

Keywords

ISO 9000, Saudi Arabia,

Organizational policy,

Manufacturing industry

AbstractThis study identifies the costs,

benefits and the satisfaction level

with ISO 9000 implementation in

Saudi Arabian firms. A survey of

140 ISO 9000 certified

manufacturing companies was

carried out. The results suggest

that these manufacturing

companies were satisfied with ISO

9000 as far as the benefits gained

from certification and its costs

were concerned. They considered

the benefits of ISO 9000

certification to exceed the costs

of attaining the standards, and

believed that ISO 9000

contributed to organisational

survival and success.
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Literature review

ISO 9000The ISO 9000 standards were introduced in

1987 by the International Organisation for

Standardisation, based in Geneva,

Switzerland (Abraham et al., 2000). It is

acknowledged that ISO 9000 is largely based

on the British Standard BS 5750 (Gourlay,

1994). The ISO 9000 standards are based on

the concept that certain minimum

characteristics of a quality management

system could be usefully standardised, giving

mutual benefit to suppliers and customers,

and focus on process rather than product

quality (Withers and Ebrahimpour, 1998).

ISO 9000 certification is not a standardised

package that can be applied in the same way

in every organisation (Singels et al., 2001).

``The standards only recommend the

essential elements of a proper quality

assurance system, without recommending

the ways to apply them (Tsiotras and

Gotzamani, 1996, p. 66). ISO 9000 is a

management control procedure (Yahya and

Goh, 2001), which involves a business in

documenting the processes of design,

production and distribution to ensure that

the quality of its products and services meets

the needs of c ustomers (Quazi et al., 2002; Pun

et al., 1999).

ISO 9000 is a family of standards and

guidelines on how to develop a quality

management system to manage the processes

that affect products or services (Quazi et al.,

2002), and they are voluntary (Calisir et al.,

2001). The family is made up of five separate

standards or guidelines: ISO 9000; ISO 9001;

ISO 9002; ISO 9003 and ISO 9004 (Wayhan et

al., 2002). ISO 9001, 9002 and 9003 are

conformance standards f or quality assurance

systems and relate to supplier-customer

relationships. ISO 9000 and 9004 are

guidelines and relate to the development ofquality systems within the company

(Ragothaman and Korte, 1999). ISO 9001

applies to facilities that design, develop,

produce, install and service their own

products. ISO 9002 applies to firms that

provide goods or services consistent with the

specification furnished by the customer. ISO

9003 applies to final inspection and test

procedures only. Therefore, the objective of

these standards is to provide an effective

quality system reflecting a companys

practices for producing goods and services

that conform to requirements (Pun et al.,1999; Halis and Oztas, 2001).

ISO 9000 is more to do with achieving

conformance to pre-determined standards

than it is to do with instilling the concept of

excellence associated with a customer

responsive management (Davis and Manrodt,

1996), or a customer value delivery

orientation throughout an organisation

(Woodruff, 1997). Najmi and Kehoe (2001) and

Heras et al. (2002) suggested that ISO 9000presents a sound basis for assuring the

customer of the quality of products and

services, as well as the processes that create

them. One of the main requirements for

acquiring the ISO 9000 standard is that a

firms quality system must be documented

(Curkovic and Pagell, 1999). This is generally

at two levels, a quality manual and a

procedures manual (Nwankwo, 2000).

However, the registration process for the ISO

9000 standards consists of an audit of the

implementation of a companys documented

quality system after it has been verified andseen to conform to the requirements of the

applicable ISO 9000 standard. A third party

implements the audit (Ofori and Gang, 2001;

Abraham et al., 2000). Registration is

dependent on periodic follow up audits.

Organisations wishing to remain registered

must always maintain their quality system

compliant to ISO standards.

ISO 9000 and businessperformance

The International Organisation for

Standardisation, National Accreditation

Registrars and third party accreditation

bodies in Europe and the USA all make

claims that ISO 9000 certification leads to

improvements in business performance

(Dick, 2000). The British Standards Institute

(BSI, 2000, p. 1) stated that:

. . . the consequent benefits of registration are,

needless to say, substantial. You should

expect greater responsibility, accountability

and quality consciousness a mong your staff.

Better use of time and resources. Greater

consistency and traceability of product orservice. Less wastage through product or

service failure. Continual improvement to

your quality and efficiency. Improved profit.

Wider market opportunities.

A number of recent studies have examined

the impact of ISO 9000 implementation on

organisational performance and suggested

that the adoption of ISO 9000 has been

justified in terms of many benefits associated

with its implementation. Sun (1999)

investigated ISO 9000 certification in

Norwegian companies and found that it was

significantly correlated with quality results,especially the reduction of defective products

and customer complaints, and the

improvement of business performance such

as profitability and productivity. Tan and

Lim-Teck Sia (2001) investigated the benefits

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of ISO 9000 among a sample of 100 Malaysian

companies. The study found a number of

benefits: improved communication within

the organisation (78 per cent); improved

product quality (63 per cent); increasedprocess efficiency (53 per cent); improved

human resource management (41 per cent);

reduction in production costs (31 per cent);

increased market share (12 per cent) and

improved export potential (12 per cent). The

UK research of Mann and Kehoe (1994) noted

that quality certification was associated with

improved business performance at the

operational level, while Buttles (1996) survey

of 1,220 certified UK companies found that

improving operations as well as marketing

gains were claimed by most of the firms

following quality certification. Similarfindings were found by Casadesus et al.s

(2000) study of 500 Spanish firms. Further

afield in Singapore, Quazi and Padibjo (1998)

found, in addition to marketing gains,

improvements in product quality.

Another study reported by Heras et al.

(2001) demonstrated that organisations which

have implemented ISO 9000 systems have

managed to achieve continuous enhancement

and improvement and a better-run

organisation. Sissell (1996) surveyed 1,880

respondents and found that 95 per cent of

companies had reported internal benefitssuch as better documentation, greater quality

awareness by employees, enhanced internal

communication and increased operational

efficiency, while 85 per cent had experienced

external benefits such as higher perceived

quality, competitive advantage, reduced

customer quality audits, improved customer

demand, increased market share and quicker

product to market. A study conducted by

Zhang (2000) reported that registered firms

tended to achieve improvement in employee

morale and personal accountability for job

performance as a result of employeesunderstanding their role in the total process.

However, recent empirical studies have

concluded that the most important benefits

sought from ISO 9000 are profit

improvements, process improvements and

marketing benefits (Wayhan et al., 2002; Aarts

and Vos, 2001; Eklof et al., 1999). Moreover,

financial benefits have been found in certified

companies; they had a significantly higher

rate of return than before they were certified

(Heras et al., 2002). Supporting evidence from

Lee et al. (1999) indicates that the majority of

organisations investigated were happy withthe benefits derived from ISO 9000. A high

percentage of the companies agreed with the

following benefits having been a chieved:

clearer work procedures (96 per cent);

improved quality of products and services (88

per cent); improved team spirit (77 per cent); a

better control of subcontractors (73 per cent);

increased efficiency (65 per cent) and less

customer complaint (62 per cent). The

implementation of ISO 9000 is a vital

component in achieving business

performance and customer satisfaction in

organisations (Leung et al., 1999; Rahman,

2001; Escanciano et al., 2001; McAdam and

Canning, 2001).

There is, however, some evidence that

being ISO 9000 registered does not guarantee

improved performance due to the high

explicit and implicit costs associated with

implementation. Stevenson and Barnes (2001)

identified four factors that tend to generate

costs in achieving ISO 9000: time, training,

consultants and the registration itself.

According to Street and Fernie (1993) and Mo

and Chan (1997), many manufacturers found

ISO 9000 registration too expensive, time

consuming, too formalised and impersonal.

The costs of ISO 9000 tend to vary depending

on the suitability and efficiency of existing

systems and the competence of the staff (Mo

and Chan, 1997). Therefore, the cost of ISO

9000 certification has been identified as a

major complaint against the standard

(McTeer and Dale, 1994; Stevenson and

Barnes, 2001).

Research methodology

This research is exploratory since it is

mainly about investigating ISO 9000

implementation among certified

manufacturing companies in Saudi Arabia.

This study was designed to cover as broad a

range of the heterogeneous certified

population as possible, therefore, a

questionnaire was used as the basis for

primary data collection. This method was

chosen because it is a cheaper and quickerprocedure than interviews, and more

appropriate when dealing with sensitive

issues because it offers respondents complete

autonomy and confidentiality (Babbie, 1998).

A questionnaire was developed based on an

extensive review of the literature on ISO

9000. Much care was taken in designing the

questionnaire to achieve the required

objectives and eliminate bias. To facilitate

subsequent analysis, it was decided to

formulate closed questions, with a fixed

range of possible answers. In this way, all

those surveyed replied within the samerestricted range and it was easier to make a

comparative analysis of participants

opinion. The questionnaire design relied on

the use of a five-point Likert scale to

ascertain the degree of agreement or the

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extent of respondent evaluation, and to

establish numeric results for statistical

analysis. Having designed the

questionnaires, a pilot study was conducted

using seven quality managers in the city of

Jeddah. The piloting was carried out using

face to face interviews. Based on their

responses, certain adjustments were made to

the wording of the questionnaire, to improve

clarity in the final draft; 140 questionnaires

were distributed to quality managers. This

method was chosen to ensure the highest

possible response rate because of the small

size of the population in general, which had

been suggested by lead assessors conducting

registration in Saudi Arabia to be some 140

certified manufacturing companies.

A total of 97 completed questionnaires were

collected, of which 14 were unusable, leaving

83 for analysis, representing a response rate

of 59.2 per cent. The response rate was

satisfactory, as Saunders et al. (1997)

suggested the response rate of the delivery

and collection method to be between 30 per

cent and 50 per cent. Following the data

collection stage, the responses were coded to

enable them to be computer processed. The

statistical package for the social sciences

(SPSS) for windows computer programme

was used to achieve the best results.

Research results and analysis

Profile of the certified firms in Saudi ArabiaThe total number of employees working in

each firm determined the size of the firms in

the study. Certified firms in Saudi Arabia are

largely small- and medium-sized firms with

at least 300 workers (65.5 per cent, of which

only 21.7 per cent of the total were small

firms). Certified organisations employing

more than 300 employees represented 38.6 per

cent of the total sample. Small- and medium-sized firms in Saudi Arabia constituted the

largest portion of respondents. However, in

terms of ownership, Figure 1 suggests that

the majority of firms were joint ventures

with foreign corporations abroad,

representing a large percentage of 45.8 per

cent. This could mean that such firms are

concentrating o n international markets,

since exporting to certain countries may

require an ISO certificate. In addition, joint

ventures are influenced by their mother

companies or partners abroad, which are

more aware of ISO and more developed interms of ISO registration. Saudi private firms

ranked second, representing 38.6 per cent of

the sample. This relatively large percentage

is not unusual, since the majority of

organisations in Saudi Arabia are privately

owned. The remaining 15.6 per cent is madeup of companies owned by the government

and private sector and Saudi corporate.

With respect to the Saudi companies

involvement in export, the vast majority of

firms in the study (89.2 per cent) were

involved in export to different degrees, while

11.3 per cent of the sample were not involved

in export at all. Export involvement is

identified to be an important factor

associated with ISO 9000 implementation

since one very important criterion associated

with exporting is that of obtaining ISO 9000

certification.In terms of ISO certification type, 63.9 per

cent of certified manufacturing companies in

Saudi Arabia were registered to ISO 9002,

while the remaining 36.1 per cent were

registered to ISO 9001, almost two thirds of

firms registered to ISO 9002 and one-third to

ISO 9001. This is due to the fact that a large

percentage of the Saudi firms were joint

ventures (45.8 per cent) and such firms

received design and technology support (ISO

9001 deals with design issues) from their

foreign partners. Therefore, the design issue

was usually not dealt with in Saudi firms.This might be the most important reason

why the majority of firms were registered to

ISO 9002.

Figure 2 shows that the vast majority of

manufacturing firms in Saudi Arabia (84.1 per

cent) have been registered for less than five

years and 8.5 per cent have been registered to

ISO for less than one year. Manufacturing

firms registered to ISO for between one and

three years represented 37.8 per cent of the

total sample, while 37.8 per cent had been

registered to the standard for between three

and five years. Firms with ISO certificationfor more than five years represented 15.9 per

cent of the total sample. It is clear that ISO

9000 certification in Saudi Arabia is a

relatively new concept. The majority of

certified manufacturing companies were

Figure 1

Classification of ISO 9000 certification by

ownership status

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located in Jeddah (32.5 per cent), Riyadh (21.7

per cent) and Jubail (16.9 per cent).

Benefits gained from ISO implementationAny management plan and certification

demands that, once it has been executed, the

degree of effectiveness must be tested in

order to evaluate whether or not the pre-

established objectives and expectations have

been met. The present study suggested 20

possible benefits of ISO 9000 and asked

participants to rate the extent to which ISO

affected such elements. The rating was from

``crucial effect to ``no effect. The results are

illustrated in Table I.

By examining the results in Table I,

increased quality awareness (4.25) and

improved efficiency of the quality system

(4.16) seemed to be the principal positive

outcomes and benefits from ISO 9000 in

manufacturing companies in Saudi Arabia. It

seems clear that ISO 9000 had acted as an

alarm to all employees, signalling the

importance of quality in their organisations.

This supports the claim of Yung (1997) that

ISO 9000 provides quality awareness.

Improvement of quality system efficiency is a

tangible direct effect since ISO 9000 includes

mainly requirements for a better quality

system. The improvement of the quality of

products ranked fourth among all benefits,

which was reasonable since ISO is not

designed to address the quality of product but

the efficiency of the quality system. However,

an efficient quality system may contribute to

a better quality of product. In addition, ISO

contributed to better customer care since the

two elements associated with customers

ranked third and sixth. Those elements were

an improvement in customer service and a

reduction in customer complaints. The

marketing benefits of ISO 9000 were not

among the leading ones.

Comparing the findings on the main

positive outcomes of ISO 9000

implementation in Saudi Arabia to other

studies, Erel and Ghosh (1997), Buttle (1997),

Dissanayaka et al. (2001), Escanciano et al.

(2001), Leung et al. (1999) and Calisir et al.(2001) looked at the main benefits of ISO 9000

implementation. These studies were similar

to the present study and they suggested that

the most important benefits gained from

implementing ISO 9000 were: increased

Figure 2

Duration of ISO 9000 registration

Table I

Benefits of ISO 9000 implementation

R a n k B e n e f i t s M e a na

S t d . d e v .

1 I n c r e a s e d q u a l i t y a w a r e n e s s i n t h e f i rm s 4 . 2 5 0 . 6 6

2 Im p r o v e d t h e e f f ic i e n c y o f t h e q u a l i t y s y s t e m 4 . 1 6 0 . 7 6

3 Im p r o v e d c u s t o m e r s e r v i c e 3 . 6 7 0 . 9 1

4 Im p r o v e d t h e q u a l i t y o f p r o d u c t s 3 . 5 7 1 . 1 3

5 Im p r o v e d in s p e c t io n m e t h o d s a n d t im e t o p r o d u c e f in is h e d g o o d s 3 . 5 3 1 . 1 7

6 R e d u c e d c u s t o m e r c o m p la i n t s 3 . 4 6 1 . 0 2

7 Im p r o v e d in s p e c t io n m e t h o d s a n d t im e t o r e c e iv e in c o m in g m a t e r ia l s 3 . 4 2 1 . 1 7

8 Im p r o v e d t h e q u a l i t y o f i n c o m i n g m a t e r i a l s 3 . 3 6 1 . 0 6

9 R e d u c e d d e f e c t i v e r a t e a n d w a s t e s 3 . 3 2 0 . 8 9

1 0 Im p r o v e d s t a f f m o t i v a t i o n 3 . 3 0 1 . 0 0

1 1 Im p r o v e d e m p l o y e e r e l a t i o n s 3 . 1 4 1 . 1 0

1 2 Im p r o v e d t h e s p e e d o f g o o d d e l i v e r y 3 . 1 3 1 . 0 4

1 3 Im p r o v e d p r o d u c t i v i t y 3 . 0 6 1 . 1 0

1 4 Im p r o v e d s u p p l i e r r e l a t i o n s 3 . 0 2 1 . 1 0

1 5 M a in t a i n e d / g a in e d m a r k e t s h a r e 2 . 9 8 1 . 1 8

1 6 Im p r o v e d p r o c e s s d e s i g n 2 . 9 4 1 . 3 6

1 7 R e d u c e d c o s t s 2 . 8 7 0 . 9 5

1 8 Im p r o v e d p r o f i t a b i l i t y 2 . 7 5 1 . 1 0

1 9 Im p r o v e d p r o d u c t d e s i g n 2 . 5 4 1 . 3 8

2 0 I n c r e a s e d e x p o r t s 2 . 3 8 1 . 3 1

N o t e :a

T h e s c a le is 5 = c r u c i a l e f fe c t ; 4 = g r e a t e f f e c t ; 3 = s o m e e f f e c t ; 2 = l i t t le e f fe c t ; 1 = n o e f fe c t

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quality awareness, improved efficiency of the

quality system; improved customer service;

use of ISO as a promotional tool; improved

product and service quality and improved

supplier relations. However, it is evident that

an increase in quality a wareness represented

the most important benefit in Saudi Arabia,

Turkey (Erel and Ghosh, 1997) and Wetern

Australia (Brown and Van der Wiele, 1995).

Comparison among the results of Saudi

Arabia, Turkey (Erel and Ghosh, 1997),

Western Australia (Brown and Van der

Wiele, 1995), and the UK (Buttle, 1997)

suggested that the most common and

significant benefits among the studies were:

an improvement in customer service;

an improvement of the quality systems

efficiency; and

an improvement of product quality.

In order to condense the number of benefits

and group them into factors and identify any

existing relationship between factors in each

group, factor analysis of the benefits of ISO

9000 was used through the principal

component approach with varimax rotation.

The analysis resulted in five factors (see

Table II), each of which included a number of

benefits of ISO. Benefits that had loadings of

0.65 or greater based on the sample size were

chosen (Hair et al., 1995). ISO 9000implementation benefits were reduced to 11

under five factors. In order to test the factor

analysis, the Kaiser-Meyer-Olkin test (KMO)

is an indicator of how well suited the sample

data is for such analysis and its value is less

than 1. The acceptable value should be

between 0.5 and 0.99. The KMO value was

good (0.853), indicating that the data were

suitable for factor analysis and,

consequently, that the factor analysis was

valid and reliable. The second test was

Batletts test of sphericity, which measures

the correlation among variables. The test was

significant (0.000), which means that there

was a correlation among the benefits of ISO

9000 in the Saudi Arabian study.

Costs of ISO 9000 implementationThe costs of ISO 9000 implementation have

been criticised (Curkovic and Pagell, 1999).

Recent studies have confirmed that ISO 9000

registrations are too expensive, too time

consuming, too formalised and impersonal

and that costs are greater than the benefits

derived (Augustyn and Pheby, 2000;

Stevenson and Barnes, 2001; Dick, 2000; Street

and Fernie, 1993). This section focuses on

three cost issues:

1 Internal costs (costs of training,

reorganisation, hiring new employees,

education, etc.).

2 Consultancy fees (fees paid to external

consultants).

3 Registration agencies fees (fees requested

by the registration agencies for

application, p re-assessment audit, auditand surveillance visits).

From Table III it is clear that the highest

costs associated with ISO 9000

implementation in Saudi Arabia were the

internal costs that resulted from firms re-

organising themselves for certification. The

Table II

Factor analysis of the benefits of ISO 9000

B e n e f i t s o f I S O 9 0 0 0 L o a d i n g s

F a c t o r 1 : I n t e r n a l b e n e f it s e ig e n v a lu e = 3 . 4 4 6 : p e r c e n t a g e o f v a r ia n c e = 1 7 . 2 3 0 )

I m p r o v e d s t a ff m o t iv a t io n 0 . 7 6 1I m p r o v e d c u s t o m e r s e r v ic e 0 . 7 1 5

I n c r e a s e d q u a li t y a w a r e n e s s w i t h in t h e f ir m 0 . 7 1 4

I m p r o v e d e f fi c ie n c y o f t h e q u a li t y s y s t e m 0 . 6 7 9

F a c t o r 2 : M a r k e t in g b e n e f i t s e ig e n v a lu e = 3 . 1 6 8 : p e r c e n t a g e o f v a r i a n c e = 1 5 . 8 3 8 )

M a i n t a in e d / g a in e d m a r k e t s h a r e 0 . 8 2 1

I n c r e a s e d e x p o r t s 0 . 7 3 2

F a c t o r 3 : E ff ic i e n c y b e n e f i t s e ig e n v a l u e = 3 . 0 4 4 : p e r c e n t a g e o f v a ri a n c e = 1 5 . 2 2 2 )

I m p r o v e d s p e e d o f g o o d d e l iv e r y 0 . 8 0 3

R e d u c e d c o s t s 0 . 7 0 4

I m p r o v e d s u p p li e r r e la t io n s 0 . 6 5 1

F a c t o r 4 : I n s p e c t io n b e n e f it s e ig e n v a lu e = 3 . 0 4 1 : p e r c e n t a g e o f v a r ia n c e = 1 5 . 2 0 5 )

I m p r o v e d in s p e c t io n m e t h o d s a n d t im e t o p r o d u c e fi n is h e d g o o d s 0 . 7 6 4I m p r o v e d in s p e c t io n m e t h o d s a n d t im e t o r e c e i v e in c o m in g m a t e ri a l s 0 . 7 5 0

F a c t o r 5 : Q u a li t y b e n e f it s e ig e n v a lu e = 2 . 0 0 6 : p e r c e n t a g e o f v a r ia n c e = 1 0 . 0 3 2 )

R e d u c e d d e fe c t a n d w a s t a g e r a t e s 0 . 7 3 4

N o t e s : S t a s t i c a l t e s t s : K M O = 0 .8 5 3 ; B a r t l e t t : a p p r o x im a t e c h i -s q u a r e = 9 2 1 . 5 6 7 ; d f = 1 9 0 ; s ig . = 0 . 0 0 0

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average internal costs among all firms were

more than 208,000 Saudi Riyals (SR, 1

Sterling is equivalent to 6 Saudi Riyals),

representing 66.8 per cent of a ll three sources

of costs. However, it can also be seen that thecost of registration represented the lowest

cost, with organisations in Saudi Arabia

paying more money to get themselves ready

for ISO 9000 certification. In comparing

findings from this result to the USA, Irwin,

Dun and Bradstreet Information Services

(1996) investigated the costs of ISO 9000

implementation in the USA, and suggested

that internal costs were the highest costs

associated with ISO 9000 implementation,

while registration fees were the lowest. Their

study was similar to the present study in

Saudi Arabia (see Figure 3). Therefore, Irwinand Dun and Bradstreet Information

Services (1996) support the findings from the

present study.

A cross-tabulation was performed,

classifying the participant companies into

their respective size (small, medium and

large), in order to determine the average

costs according to the size of the

participating firms. This analysis reveals

that the bigger the firm, the higher the cost of

implementing ISO 9000. The greater

differences occurred in terms of internal

costs, which were still the major costs of ISO9000 implementation among the different

sizes of organisations.

In order to determine and evaluate the

benefits and costs of ISO 9000 implementation

in Saudi Arabia, respondents were provided

with six alternatives in order to evaluate

benefits gained from ISO 9000 versus the

costs of implementation. Moreover, they

were given the opportunity to refrain from

judgement if they were not sure whether or

not the benefits of registration outweighed

the costs involved. Table IV shows that the

majority of certified companies in Saudi

Arabia considered the benefits gained from

ISO 9000 certification to have exceeded the

costs of implementation. Therefore, it is

evident that certified companies in Saudi

Arabia had a strong positive opinion about

the benefits of ISO 9000 when compared with

the costs of implementation.

Evaluation of ISO 9000This section intends to evaluate ISO 9000 in

Saudi Arabia by determining the level of

satisfaction Saudi firms felt with ISO 9000. By

examining Figure 4, it is clear that the

majority of the certified manufacturing firms

in Saudi Arabia were generally satisfied with

the standard, where 43 per cent of the

respondents were very satisfied with the

standard and 51.9 per cent of the participants

were satisfied with it.

These findings from Saudi industry

concerning levels of satisfaction with the

standard support the claims of many scholars

who have written about ISO 9000, such as

Johnson (1997), Yung (1997) and MacAdam and

Canning (2001). In addition, these findings

support the findings of Vloeberghs and Bellens

(1996) in their study of ISO 9000 in Belgium.

They found that 65 per cent of the Belgian

respondents were satisfied with ISO 9000 and

22 per cent were very satisfied with it. The

conclusion here is that both sets of findings

were close in that there was a high level of

satisfaction in both countries with ISO 9000.

Two statistical procedures (comparing the

mean and the Kruskal-Wallis test) were

performed to determine the level of

satisfaction with ISO 9000 among small,

medium and large organisations in Saudi

Arabia. The results of this analysis suggest

that the larger the firms the higher their

level of satisfaction with ISO 9000. This

means that large firms tended to be more

satisfied with ISO 9000 than smaller ones.

Conclusion

ISO 9000 certifications in Saudi Arabia have

started to grow rapidly, as has been the case

in many other countries. Although theexperience of ISO 9000 implementation has

been tested and evaluated, though only to a

limited extent in many countries, no study

has been focused on Saudi Arabia. Therefore,

this study was carried out to examine ISO

Table III

Costs of implementing ISO 9000 in Saudi Arabia in Saudi Riyals (SR) a

N o . T y p e s o f c o s t s A v e r a g e

P e r c e n t a g e o f

t o t a l a v e ra g e s

1 I n t e r n a l c o s t s f o r t h e f i r m 2 0 8 , 2 1 2 . 1 2 6 6 . 8 02 C o n s u l t a n c y f e e s 6 5 , 5 9 5 . 5 0 2 1 . 1 0

3 R e g i s t r a t i o n a g e n c i e s f e e s 3 7 , 6 8 8 . 6 2 1 2 . 1 0

T o t a l a v e r a g e s 3 1 1 , 4 9 6 . 2 4 1 0 0 . 0 0

N o t e : a 1 s t e r l i n g = 6 S a u d i R iy a l s a p p r o x i m a t e ly

Figure 3

Comparison between Saudi Arabia and the USA in the costs of ISO 9000

implementation

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9000 implementation in manufacturing

companies in Saudi Arabia. To achieve the

purpose of the study, 140 questionnaires were

distributed to all possible known firms

holding an ISO 9000 certificate. A total of 97questionnaires were returned, of which 83

were considered usable, representing a

response rate of 59.2 per cent.

With regard to ISO certification type, 63.9

per cent of certified manufacturing

companies in Saudi Arabia were registered

to ISO 9002, while the remaining 36.1 per cent

were registered to ISO 9001. None of the

respondents were registered to ISO 14000 for

environmental management. This may imply

that Saudi industry is less concerned about

the environment, but this could, in fact, be

because industry has not grown to such anextent that it poses a threat to the

environment. In addition, the main reason

could be a lack of awareness in industry

about the environment, an unwillingness to

bear extra costs for this purpose, and the

absence of regulations relating to

environmental issues in the country. The

study also suggested that the vast majority of

manufacturing firms in Saudi Arabia (84.1

per cent) had been registered to ISO for less

than five years, and 8.5 per cent for less than

one year. ISO 9000 certification in Saudi

Arabia is a relatively new concept. Exportinvolvement has been identified to be an

important factor associated with ISO 9000

implementation since one very important

prerequisite for exporting is that of obtaining

ISO 9000 certification.

An increase in quality awareness, an

improvement in quality system efficiency

and an improvement in customer service

were found to be the most important benefits

gained from ISO 9000 implementation. Yung

(1997) has supported these findings.

Moreover, Erel and Ghosh (1997) in Turkey,

and Brown and Van der Wiele (1995) in

Western Australia found that creating

quality awareness was the most important

benefit of ISO 9000 implementation, as in the

case of Saudi Arabia. Factor analysis was

used to group the benefits, which resulted in

five factors representing all of the benefits:

these were internal benefits, marketing

benefits, efficiency benefits, i nspection

benefits and quality benefits.

With regard to the cost of ISO 9000

implementation in Saudi Arabia, the study

revealed that internal costs were the highest,

representing approximately 67 per cent of

total costs, followed by consultancy fees,

making up 21 per cent, while the fees of

registration agencies accounted for only 12

per cent. Further analysis was performed to

determine the average costs in each size of

participating f irm. This analysis suggested

that the smaller the firm, the lower the costs

of implementation and vice versa, and the

greater the difference between size of firmthe more this was reflected in terms of

internal costs. Internal costs were still the

major costs of ISO 9000 implementation

among the different sizes of organisations.

When evaluating the level of satisfaction

with ISO 9000 in Saudi firms, it was found

that the majority of the respondents seemed

to be satisfied with the standard. Moreover,

the larger the firm, the more likely they were

to be satisfied with the standard and would

tend to recommend it to others.

It is safe to conclude that Saudi firms have

identified the standards as formalisedsystems for evaluating the ability of their

organisations to design, produce and deliver

quality products and services. They have also

been identified as important to achieve

organisational success and long term

survival in the Saudi economy.

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T o t a l 8 2 1 0 0 . 0 0

Figure 4

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