performance measures of iso 9001 certified and non-certified manufacturing companies
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Benchmarking: An International JournalPerformance measures of ISO 9001 certified and non-certified manufacturing companiesEvangelos Psomas Dimitrios Kafetzopoulos
Article information:To cite this document:Evangelos Psomas Dimitrios Kafetzopoulos , (2014),"Performance measures of ISO 9001 certified and non-certified manufacturing companies", Benchmarking: An International Journal, Vol. 21 Iss 5 pp. 756 - 774Permanent link to this document:http://dx.doi.org/10.1108/BIJ-04-2012-0028
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Performance measures of ISO 9001certified and non-certifiedmanufacturing companiesEvangelos Psomas and Dimitrios Kafetzopoulos
Business Administration of Food and Agricultural Enterprises,University of Western Greece, Agrinio, Greece
Abstract
Purpose – The purpose of this paper is to compare ISO 9001 certified and non-certifiedmanufacturing companies with regard to performance measures, both financial and non-financial.Design/methodology/approach – A research study was carried out in 140 Greek manufacturingcompanies by means of a questionnaire. The questionnaire was sent by e-mail and it was requestedthat it should be answered by a company representative. Exploratory factor analysis is applied inorder to extract the latent factors of performance measures. The differences between the ISO 9001certified and non-certified manufacturing companies are determined through non-parametric testssuch as the w2-test and the Mann-Whitney U-test.Findings – The ISO 9001 certified manufacturing companies significantly outperform the non-certifiedwith regard to product quality, customer satisfaction, operational, market and financial performance.This is evident in a business environment where an economic downturn and financial crisis dominates.Research limitations/implications – The sub-samples of the responding ISO 9001 certified andnon-certified manufacturing companies are small sized and they are limited to small- and medium-sizedenterprises. The subjective character of the data collected through the company representatives involvesthe risk of receiving biased responses regarding the performance measures. The above limitationssuggest future research recommendations.Practical implications – The increased performance measures of the ISO 9001 certified manufacturingcompanies may motivate the non-certified ones to implement the ISO 9001 standard and apply for thecertification in order to increase their performance and withstand the current economic downturn andfinancial crisis. The present study may also stimulate manufacturing companies to adopt traditional andmodern benchmarking techniques, in an additional effort to improve their businesses and competitiveness.Originality/value – The present study compares performance measures of ISO 9001 certifiedand non-certified manufacturing companies operating under unprecedented circumstances due to thecurrent economic downturn and financial crisis.
Keywords Financial crisis, Performance measures, ISO 9001, Manufacturing companies
Paper type Research paper
IntroductionOwing to the globalization of world trade and the escalating demands for betterproducts and services, competition has become intense worldwide (Islam and Karim,2011). Moreover, nowadays, a financial tsunami has swept across the global economycreating unfavourable and unprecedented economic conditions. Thus, the businessenvironment today is full of turbulence and uncertainties making it unstable. This posesa significant threat to manufacturing companies worldwide which are all strugglingto survive (Ho et al., 2010). Lately these circumstances have been more evident inGreece. To cope with these challenges, manufacturing companies need to adapt theirmanagement style and strategic perspectives (Chareonsuk and Chansa-ngavej, 2008).Among the several possible strategies, those related to the development of qualitymanagement have been favoured by many companies (Trigueros Pina and
The current issue and full text archive of this journal is available atwww.emeraldinsight.com/1463-5771.htm
Received 29 April 2012Revised 27 October 2012Accepted 28 December 2012
Benchmarking: An InternationalJournalVol. 21 No. 5, 2014pp. 756-774r Emerald Group Publishing Limited1463-5771DOI 10.1108/BIJ-04-2012-0028
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Sansalvador Sells, 2008; Han et al., 2009). Many organizations consider the ISO 9001standard as the vehicle to structure and improve their quality management system(QMS) (White et al., 2009). The ISO 9001 standard is also considered as an example ofdispositional benchmarking (Moriarty, 2011). Thus, the adoption of the ISO 9001 QMShas proven to be a persistent and growing phenomenon in manufacturing companies(Dick et al., 2008), applied to all business sectors and all sizes of companies (Zeng et al.,2007; Magd, 2008; Al-Rawahi and Bashir, 2011).
The purpose of companies implementing QMS is to improve operational andfinancial performance, and then get competitive superiority in a climate of intensecompetition. More specifically, a QMS can generate improved products, reduced costs,more satisfied customers and better financial performance (Su et al., 2008). If the ISO9001 QMS is correctly implemented and understood, as opposed to being used justas a marketing and promotional tool, there seem to be significant benefits to be derivedfor the organizations that do so – both internal and external (Sampaio et al., 2009).Moreover, improving performance is a never-ending process and organizationsshould strive to achieve it to attain the optimal level of cost and profit, as well asincrease customer satisfaction and goodwill, and gain potential future business. Hence,the process of measuring and redesigning manufacturing performance measures needsto be monitored and the implementation plans reviewed often (Parthiban and Goh,2011). Similarly, Gomes and Yasin (2011), state that organizations which have beencompetitive in certain regional/local marketplaces and want to enter the global arenamust pay closer attention to their performance measurement and managementprocesses. In this context, for an organization to be able to compete effectively, it mustmeasure, track, monitor, improve and benchmark the different aspects of performanceagainst internal, competitive and external proven benchmarks. However, Sousa et al.(2006) identify a gap between theory and practice: the small- to medium-sizedenterprises (SMEs) recognize the importance of performance measurement, withoutusing it significantly.
Since its advent, ISO 9001 has been an important research topic within managementjournals (Prajogo, 2011). The review of the bibliography shows that the main studiesof the effects of ISO 9001 certification on business results have reported differentand sometimes conflicting conclusions ( Jang and Lin, 2008; Prajogo, 2011; Marin andRuiz-Olalla, 2011; Ilkay and Aslan, 2012). In other words, while many businesses havebenefited, many others have failed to achieve quality and competitive benefits throughISO 9001, which means that not all companies are able to take advantage of thecertification (Lin and Jang, 2008; Kim et al., 2011). Similarly, the most important studiesthat have analysed the effects of ISO 9001 certification on the economic-financialresults of companies generate conflicting results (Alic and Rusjan, 2010; Marinand Ruiz-Olalla, 2011; Sampaio et al., 2011a, b). So, some authors conclude that thereis a positive relationship between ISO 9001 certification and companies’ financialimprovement, while others do not find evidence to support such a relationship(Sampaio et al., 2011a, b).
Given the economic and social relevance of the ISO 9001 phenomenon, morefact-based and statistically oriented studies should be conducted in this area (Sampaioet al., 2011a). Moreover, according to Parthiban and Goh (2011), performancemeasurement has not received much attention from researchers and practitioners.Thus, the ways and means of accurately measuring the performance is perceived asbeing an increasingly important field of research for both organizations and academicsalike. Sampaio et al. (2011a, b) state that there seems to be room for conducting
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additional work in order to analyse what the real impact of ISO 9001 certification overfinancial and business performance is from a long-term perspective and whether“quality organizations” are indeed more profitable and competitive than thosewhich are non-certified. According to Wu and Chen (2011), it is unclear whether ISO9001 certified enterprises can effectively achieve the expected performance and if theydemonstrate better performance than the companies that are uncertified. Arumugamet al. (2008) also suggest future research through the collection of data from non-ISO9001 manufacturing organizations, in order to have a more comprehensive study of theentire manufacturing industry. Llach et al. (2011) suggest future research to analyse theimpact of the current economic crisis on ISO 9001 certification, while Franceschini et al.(2010) propose that the following question be answered in future research studies: willcompanies try to find in the quality certification the solution to enable them to face thefinancial crisis successfully or will they deal with their financial troubles by cuttingcosts, thus abandoning the certification? Further research is also called for on ISO 9001benefits based on the recently released standard (ISO 9001:2008), since there is lessresearch related to this release and some possible new benefits of this release may nothave been recognized or emphasized (Rusjan and Alic, 2010).
In order to fill this gap and contribute to the literature, this study aims at comparingISO 9001:2008 certified and non-certified manufacturing companies with regardto performance measures, both financial and non-financial. It is worth noting that thisstudy focuses on manufacturing companies operating under conditions of economicdownturn and financial crisis. The exploratory factor analysis (EFA) is applied toextract the latent factors of the performance measures. Non-parametric tests such asthe w2-test and the Mann-Whitney U-test are used for comparison purposes.
The rest of the paper is structured as follows: in the first part, the literature isreviewed and the research hypothesis is formulated. In the next part, the methodologyof a research study carried out in Greek manufacturing companies is described. This isfollowed by the analysis and the respective results. In the next part, the results arediscussed and the conclusions and the managerial implications are presented. Finally,the limitations of the study and the future research proposals are presented.
Literature reviewCompany performance measuresPerformance measurement is recognized as an important part of the manufacturingstrategy literature (Parthiban and Goh, 2011), and it is suggested that multipledimensions of company performance be considered where possible, including bothfinancial and non-financial measures (Robinson et al., 2005; Han et al., 2009). Managersshould evaluate the results deriving from the implementation of ISO 9001 from a broadperspective, considering not only financial indicators but also the results of otheractivities that may eventually help them improve the financial results of their companies.This would allow managers to obtain a more global and critical vision of the resultsachieved (Marin and Ruiz-Olalla, 2011). Goncharuk and Monat (2009) state that, anenterprise must measure and monitor generic key performance indicators (KPI) forits processes and divisions in order to identify its basic problems and this should be anongoing management responsibility. KPIs may include parameters such as a customersatisfaction index, revenue growth, profit growth, total or partial measure productivity,per cent on-time shipment, or rate of new product introduction (Goncharuk and Monat,2009). According to Staughton and Johnston (2005), there is recognition in the widerperformance measurement literature, that there is a need to employ a greater mix or
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range of measures than those associated with efficiency and cost and of better processesto capture and display those measures. Thus, there is a move for this mix of measures togo beyond the “hard” traditional operational performance objectives, and to embracefinancial, developmental and external measures (Staughton and Johnston, 2005).
Based on the above suggestions, authors such as Garg and Ma (2005), Meybodi(2009), Lai (2010) and Agues and Hajinoor (2012), study company performance basedon multiple measures, including both financial and non-financial. Hence, consistentwith previous research, the present study also relies on multiple measures of performancerelated to product quality, customer satisfaction, operational, market and financialperformance (Table I).
Research hypothesis formulationThe ISO 9001 standard provides an effective way of implementing a QMS based onwhich products conform to quality requirements (Quazi et al., 2002; van der Wieleet al., 2005). Similarly, Aldowaisan and Youssef (2006) note that the standard providesa company with a framework for establishing a robust QMS that assures product
Performance measures Supporting literature
Product qualityProduct quality performance Su et al. (2008), Chi et al. (2009), Avella and Vazquez-Bustelo
(2010), Agues and Hajinoor (2012)Product conformance to specifications Gonzalez-Benito (2005), Kathuria et al. (2010a, b), Agues and
Hajinoor (2012)Consistent and reliable products Su et al. (2008), Chi et al. (2009), Avella and Vazquez-Bustelo
(2010), Agues and Hajinoor (2012)Operational performanceCompany productivity Feng et al. (2008), Salaheldin (2009), Kohlbacher (2010)Company efficiency Wang et al. (2004), Kathuria et al. (2010a, b)Process effectiveness Carmignani (2008), Sharma and Kodali (2008),
Salaheldin (2009)Customer satisfactionCustomer satisfaction from after salesservices
Lofgren et al. (2008), Chen (2009), Musa et al. (2010)
Customer satisfaction from productcharacteristics
Lofgren et al. (2008), Chen (2009), Musa et al. (2010),Chiarini (2011)
Customer loyalty Tracey et al. (2005), Lofgren et al. (2008), Sheng and Liu(2010)
Market performanceCompany image in the market Gonzalez-Benito (2005), Prieto and Revilla (2006), Chi et al.
(2009), Ho et al. (2010)Market share Skrinjar et al. (2008), Chi et al. (2009), Avella and Vazquez-
Bustelo (2010), Ho et al. (2010), Agues and Hajinoor (2012)Entrance to new markets Skrinjar et al. (2008), Chi et al. (2009), Ho et al. (2010)Financial performanceSales growth Prieto and Revilla (2006), Rajaguru and Matanda (2009),
Chi et al. (2009), Ho et al. (2010), Avella and Vazquez-Bustelo(2010)
Net profit Chi et al. (2009), Rajaguru and Matanda (2009), Avella andVazquez-Bustelo (2010), Ho et al. (2010), Moneva and Ortas(2010).
Cash flow from operations Ahmad et al. (2004), Moneva and Ortas (2010)
Table I.Company performance
measures and thesupporting literature
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quality. Rusjan and Alic (2010) also refer to improvements in product quality throughthe ISO 9001 QMS. In other words, ISO 9001 certification has a value that is to a largeextent transferable to product quality. Thus, ISO 9001 can be seen as a means ofimproving internal processes and product quality (White et al., 2009). This is due to itsfocus on improving operational performance and establishing a culture of continuousimprovement in order to produce products efficiently and effectively (Kim et al., 2011).Dick (2009) also mentions increased operational efficiency as a benefit from ISO 9001,while, similarly, Jang and Lin (2008) state that the implementation of ISO 9001 directlyand positively influences operational performance. From a customer perspective, ISO9001 certification creates positive customer sentiment for manufacturing industries,promotes long-term customer support and enhances customer satisfaction and loyalty(Wu and Liu, 2010). Similarly, according to Magd (2008), Dick (2009) and Chiarini(2011), the most common benefits of implementing ISO 9001 include improvement ofcustomer satisfaction. With regard to the market route, improved product quality,on-time delivery and customer satisfaction result in improved market performance( Jang and Lin, 2008). Dick (2009) and White et al. (2009), state that an important benefitof ISO 9001 is a company’s ability to increase its domestic and overseas market share.From a financial perspective, it has been revealed that ISO 9001 certification leads toincreased profitability (Wu and Liu, 2010). According to Srivastav (2011), the positiverelationship between ISO 9001 certification and company financial performance issupported in the literature.
Based on the above, it is apparent that the ISO 9001 certified companies derivesignificant benefits through the QMS implementation. These benefits concern differentperformance measures of a company such as those related to product quality, customersatisfaction, operational, market and financial performance. The benefits of theISO 9001 certified companies have also been determined through comparing thesecompanies with non-certified companies (Koc, 2007; Dick et al., 2008; Marin andRuiz-Olalla, 2011). By contrast, the studies of Rahman (2001) and Lima et al. (2000) do notsupport performance differences between ISO 9001 certified and non-certified companies.
Bearing in mind the above literature review, the research proposals suggested bymany authors as well as the purpose of the present study, the following researchhypothesis is formulated:
RH1. ISO 9001 certified manufacturing companies outperform the non-certified interms of performance measures related to product quality, customer satisfaction,operational, market and financial performance.
MethodologyQuestionnaire developmentA research study was carried out in Greek manufacturing companies by means ofa questionnaire. In order to develop a structured questionnaire, performance measureswere identified in the literature with regard to the following dimensions: productquality, customer satisfaction, operational, market and financial performance (Table I).The initial version of the questionnaire was reviewed by academics and professionals(Conca et al., 2004; Fynes et al., 2005). Based on their recommendations and in order toimprove the clarity and understanding of the questions, a few of them were re-phrased.Moreover, the questionnaire was pilot-tested (Conca et al., 2004; Fynes et al., 2005;Singh, 2008) on 20 manufacturing companies in Greece proving its appropriatenessand achieving the content validity of the performance dimensions. The final version of
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the questionnaire consists of questions on the company profiles and the performancemeasures. Respondents were asked to indicate the degree of agreement or disagreementwith these statements, using a seven-point Likert scale, where 1 represented “stronglydisagree” and 7 represented “strongly agree”.
SampleUsing a simple random sampling, a sample of 750 manufacturing companies wasselected from the database of ICAP (the largest business information and consultingfirm in Greece). Focusing solely on manufacturing companies helps control anyconfounding factors that might enter into the analyses by having both manufacturingand service companies (Martinez-Costa et al., 2009). The questionnaire was sent out toall these companies by e-mail and it was requested that it should be answered by thecompany representative. Finally, 140 completed questionnaires were received back – aresponse rate of 18.7 per cent. Based on whether the responding companies have beencertified according to ISO 9001 or not, two sub-samples of companies are created: theISO 9001 certified (80 companies) and the non-certified (60 companies).
Similarly to the methodology used by Singh (2008) and Lau et al. (2010), in order toassess the potential of non-response bias, the early and late responding companieswere compared in terms of the number of their employees and the questionnaireitems. No statistically significant differences were found between these two groups.The second method used to assess non-response bias was through telephone interviewsof a randomly selected group of non-responding companies (Singh, 2008). The interviewresults showed that the major reason for the companies not participating in the researchstudy was lack of time. So, from the above it is apparent that non-response bias is notlikely to be an issue in the final sample. It is also worth noting that comparingthe 20 pilot-tested and the 140 surveyed manufacturing companies in terms of theperformance measures, no statistically significant differences were found. It is, thus,apparent that the performance measures of the companies not included in the finalresearch sample do not involve biased responses.
Since the questionnaire was completed by a single respondent from each participatingcompany, the common method variance had to be checked to ensure that the data hasno major problems. For this reason, the single-factor test was applied, as in many otherempirical studies such as those of Lau et al. (2010) and Prajogo (2011). This test was runby loading all the items – performance measures into a principal component analysis andforcing them into one latent factor. This method produced poor results as indicated bythe 28 per cent of the variance extracted, while many items suffered from poor factorloadings, which fell below 0.5. Thus, it is apparent that the common method variance isnot a substantive problem in this study.
Data analysisEFA is applied in order to extract the latent factors of the performance measures. EFAprovides the statistical tool for analysing the structure of the interrelationships(correlations) among a large number of variables (performance measures) by definingsets of variables that are highly inter-correlated, known as latent factors (Hair et al.,2005). Both the principal component and maximum likelihood method are used in orderto extract the latent factors. As far as the factor rotation method is concerned, themost widely used orthogonal varimax rotation method (Hair et al., 2005) is used in thepresent study. Moreover, the oblique rotational method is used, as it is more realistic,because the theoretically important underlying dimensions (latent factors) are not
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assumed to be uncorrelated with each other (as in the case of the Orthogonal rotationmethods) (Hair et al., 2005).
The non-parametric tests are used in order to compare the 80 ISO 9001 certified andthe 60 non-ISO 9001 certified manufacturing companies. The criteria by which thenon-parametric tests are chosen are the following (Nachar, 2008): first, the small size ofthe above sub-samples (80 and 60, respectively); second, the fact that the test variableis ordinal (medians of the two groups); and finally, the fact that the assumption of themultivariate normality in each sample seems to be violated. The w2-test is used inorder to compare the sub-samples of the manufacturing companies with regard to theirsize (the number of employees). Furthermore, the Mann-Whitney U-test for themedians is used in order to make comparisons between the ISO 9001 certified andnon-ISO 9001 certified manufacturing companies with respect to the latent factors ofthe performance measures. It is worth noting that comparing the medians and meanvalues of each latent factor of the performance measures, no statistically significantdifferences are determined, thus supporting the use of the medians as the test variableof each Mann-Whitney U-test.
The Mann-Whitney U-test is a statistical test of the difference between thedistributions of data collected from unmatched groups (the ISO 9001 certified andnon-ISO 9001 certified manufacturing companies) and it compares the distributions ofthe ranks of the performance scores. The null hypothesis that is tested stipulates that,as far as the performance dimensions are concerned, the two groups come fromthe same population. In other terms, it stipulates that the two independent groupsare homogeneous and have the same distribution regarding the performancedimensions (Nachar, 2008). The MannWhitney U-test initially implies the calculation ofa U statistic for each group. These statistics have a known distribution under the nullhypothesis. Mathematically, the MannWhitney U statistics are defined as follows, foreach group (Nachar, 2008):
Ux ¼ nxnyþ nx nxþ 1ð Þð Þ=2ð Þ � Rx
Uy ¼ nxnyþ ny nyþ 1ð Þð Þ=2ð Þ � Ry
where nx is the number of observations or participants in the first group, ny is thenumber of observations or participants in the second group, Rx is the sum of the ranksassigned to the first group and Ry is the sum of the ranks assigned to the second group.Following the calculation of the U statistics and the determination of an appropriatestatistical threshold (a), the null hypothesis can be rejected or not (Nachar, 2008).
A flow chart describing the steps of the above mentioned methodology is shownin Figure 1. The statistical package SPSS 17 is used for data processing.
ResultsThe company profilesThe vast majority of the responding manufacturing companies, based on the numberof their employees, are SMEs (92.8 per cent). More specifically, the respondingcompanies can be further categorized as follows: micro (o10 employees, 32.9 per cent),small (11-50 employees, 36.4 per cent) and medium-sized companies (51-250 employees,23.5 per cent). However, 7.2 per cent of the responding companies are not SMEs (4251employees). It is worth noting that most of the participating companies had also beencertified according to the old versions of the ISO 9001 standard.
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Comparing the ISO 9001 certified manufacturing companies (80) and the non-ISO 9001certified (60) with regard to the company size (w2-test), statistically significantdifferences are observed (Table II). More specifically, micro and small enterprisesmake up the vast majority of the non-ISO 9001 certified manufacturing companies.In the sub-sample of the ISO 9001 certified companies, the majority of them are small tomedium sized. Hence, the independence of the two sub-samples is evident.
EFA of the performance measures and comparison resultsThe company performance measures identified in the literature are used as the basisfor an EFA. The result is the establishment of five latent factors (Table III). These latentfactors are explained using measured variable loadings and can be labeled as follows:customer satisfaction, product quality, financial performance, operational performanceand market performance (Table III). It is worth noting that both factor extractionmethods (principal component and maximum likelihood) and both factor rotationmethods (orthogonal varimax and oblique) give almost the same results with regard tothe total variance explained and the factor loadings. Table III shows that all but one ofthe factor loadings are greater than 0.65. Thus, the squared factor loadings indicatethat a satisfactory proportion of measured variance is explained by the respective
Questionnaire development
Questionnaire review by academicsand professionals
Questionnaire pilot test on a sample ofmanufacturing companies
Simple random sampling of manufacturingcompanies from the population
Addressing the questionnaire and receipt of thecompleted questionnaire
Checking the non-response bias
Checking the common method variance
Data Analysis
• Exploratory Factor Analysis• χ2-test• Mann-Whitney U-test
Figure 1.Steps of the proposed
methodology
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latent factor. Although factor loadings of 70.30-70.40 are minimally acceptable,values greater than 70.50 are generally considered necessary for practical significance(Hair et al., 2005). Moreover, loadings of 70.45 and 70.50 are considered statisticallysignificant for sample sizes of around 150 and 120, respectively (Hair et al., 2005).Given that the sample size in this study is 140, it is apparent that the factor loadings arepractically and statistically significant.
The reliability of the latent factors is confirmed, according to Hair et al. (2005),through Cronbach’s a coefficients (Table IV). All these coefficients indicate acceptableto good reliability, with even the lowest value of 0.680 being within the lowestacceptable limit of Cronbach’s a coefficient (0.6 to 0.7) (Hair et al., 2005). The constructvalidity of the latent factors is confirmed, according to Hair et al. (2005), by evaluatingthe convergent validity (factor loadings of respective measured items 40.58, average
non-ISO 9001 certified ISO 9001 certifiedVariables n1¼ 60 n2¼ 80
Company size (number of employees)*o10 56.7 15.011-50 35.0 37.551-250 6.60 36.34251 1.7 11.2
Note: *Statistical significant at po0.001 (w2-test)
Table II.Company size of theISO 9001 certified andnon-certified companies
Kaiser-Meyer-Olkin¼ 0.799 Factors
Measured variablesCustomer
satisfactionProductquality
Financialperformance
Operationalperformance
Marketperformance
Factor loadingsCustomer satisfaction fromproduct characteristics 0.856Customer satisfaction from aftersales services 0.853Customer loyalty 0.843Consistent and reliable products 0.837Product conformance tospecifications 0.837Product quality performance 0.793Cash flow from operations 0.864Sales growth 0.795Net profit 0.778Company efficiency 0.810Company productivity 0.785Process effectiveness 0.750Market share 0.840Entrance to new markets 0.654Company image-reputation 0.580Eigenvalue 5.15 2.07 1.68 1.21 1.03Cumulative variance % 34.35 48.15 59.37 67.43 73.80
Note: aPrincipal component factor extraction method and orthogonal varimax rotation method
Table III.Exploratory factoranalysis of theperformance measuresa
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variance extracted (AVE) 40.49), the discriminant validity (AVE4 Corr2) (Tables IIIand IV), the face-content validity (the questionnaire was developed based on anextensive literature review, a pilot study and review by academics) and the nomologicalvalidity (significant correlations between the latent factors).
Comparing the ISO 9001 certified manufacturing companies (80) and the non-ISO9001 certified (60) with regard to the latent factors of the performance measures(Mann-Whitney U-test for the medians of the two groups), statistically significantdifferences are observed with regard to product quality, customer satisfaction,operational, market and financial performance (Table V). The statistically significantdifferences between the two groups are also evident from the level of the mean valuesof the latent factors (Table VI). More specifically, it is apparent that the performancedimensions of the ISO 9001 certified companies are significantly higher than those ofthe non-certified companies.
Latent factors Cronbach’s a Average variance extracteda (AVE) (Corr)2b
Customer satisfaction 0.873 0.72 0.203Product quality 0.855 0.68 0.234Financial performance 0.759 0.66 0.131Operational performance 0.733 0.61 0.192Market performance 0.680 0.49 0.234
Notes: aAVE¼P
li2/n (number of items i¼ 1,y, n, li¼ factor loading); bcorr2: the highest squared
correlation between the factor of interest and the remaining factors
Table IV.Model reliability
and validity
Non-ISO 9001 certified n1¼ 60 ISO 9001 certified n2¼ 80Factors Sig. Mean rank Mean rank
Product quality * 65.03 77.36Customer satisfaction * 63.57 76.70Operational performance * 61.78 75.01Market performance ** 60.02 74.95Financial performance ** 53.17 68.80
Notes: *,**Statistically significant differences at po0.05; po0.01 (Mann-Whitney U-test)
Table V.Comparison of the
performance of theISO 9001 certified andnon-ISO 9001 certified
companies – MannWhitney U-test
Non-ISO 9001 certified n1¼ 60 ISO 9001 certified n2¼ 80Factors Mean values Mean values
Product quality 5.77a 6.06Customer satisfaction 5.46 5.77Operational performance 5.09 5.38Market performance 4.94 5.37Financial performance 3.83 4.17
Note: a1, “strongly disagree” and 7, “strongly agree”
Table VI.Performance measures
of the ISO 9001 certifiedand non-ISO 9001
certified companies
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DiscussionThe findings of the present study regarding the company size confirm the findings ofPsychogios and Szamosi (2007) and Panigyrakis et al. (2009), according to which thesize of the Greek manufacturing companies in general is quite small. The small-medium size of the Greek companies may be justified due to their family orientation(Psychogios and Szamosi, 2007). The present study also reveals that the ISO 9001certified manufacturing companies seem to be larger in size than the non-certified ones.Similarly, the majority of the ISO 9001 certified manufacturing companies studied byPsomas et al. (2011) are more medium to large sized than micro to small sized.
Comparing the two sub-samples of the manufacturing companies created basedon the criterion of ISO 9001 certification, it is apparent that the certified companiesperform better than the non-certified ones with regard to measures relating tothe internal business environment. More specifically, the product quality level andthe operational results of the ISO 9001 certified companies are better than those of thenon-certified. It seems that the process approach of the ISO 9001 standard, especiallyof the last version (ISO 9001:2008), makes companies more process oriented andas a result quality and operational performance are improved. Furthermore, this ispositively reflected in the external business environment of the certified companies,making customers more satisfied and the company’s market share greater. Hence, it isapparent that the non-financial performance measures of the internal and externalbusiness environment are significantly higher in the companies implementing aQMS compared to those that do not implement such a system. As a result, this factis positively reflected in the financial performance measures of the manufacturingcompanies and justifies the statistically significant difference between the ISO 9001certified and non-certified companies with regard to financial performance.
It is worth noting that the rating of the financial performance measures in both thesub-samples of companies (certified and non-certified) is lower than the rating ofthe non-financial performance measures. However, this is not unexpected, given theeconomic downturn and the unprecedented financial crisis that has dominated inGreece lately. Thus, it can be said that the current financial crisis has undoubtedlyinfluenced the financial situation of the Greek manufacturing companies, however,it has not influenced the non-financial situation, or at least not to the same degree. Thisis evident in both the ISO 9001 certified and non-certified companies. Moreover, giventhat the rating of the financial performance measures is statistically higher in theISO 9001 certified companies, it is apparent that the current economic crisis has nothad the same negative consequences on the ISO 9001 certified companies as on thenon-certified ones with regard to their financial performance.
Based on the above discussion, we accept the above research hypothesis. In otherwords, the ISO 9001 certified companies outperform the non-certified in terms of theperformance measures related to product quality, customer satisfaction, operational,market and financial performance.
Similar to the present study, the results of the study of Wu and Chen (2011) showthat the ISO 9001 certified manufacturing companies demonstrate significantly higherperformance than companies without ISO 9001 certification, in all aspects of performance(customer, internal process, learning and growth perspective). The results of the presentstudy regarding the increased product quality level and operational results of the ISO9001 certified companies (compared to non-certified) are also in accordance with theresults of the studies of Sun (1999), Koc (2007), and Marin and Ruiz-Olalla (2011).Contrary to the present study findings, Sun (1999) and Rahman (2001) did not observe
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different results between ISO 9001 certified and non-certified companies with regard tocustomer satisfaction. Neither did Rahman (2001) find significant differences with respectto process control and the number of customers. However, this may be explained by thefact that the above authors refer to the old versions of the ISO 9001 standard, whilethe present study refers to the revised version ISO 9001:2008, which is more process andcustomer oriented than the old versions. Moreover, the ISO 9001 certified companiesparticipating in the present study may be more experienced in implementing the QMSthan the certified companies participating in the studies of Sun (1999) and Rahman(2001), enabling them to derive more benefits. However, it seems that this is not the caseas far as the companies studied by Ilkay and Aslan (2012) are concerned. This is obviousgiven that comparing the performance of ISO 9001 certified and non-certified companies,Ilkay and Aslan (2012), contrary to the present study, do not find any statisticallysignificant difference in terms of the overall performance. The only significant differencedetected between certified and non-certified companies concerns, similar to the presentstudy findings, the financial performance (Ilkay and Aslan, 2012). The present studyfindings are also similar to the findings of the studies of Sun (1999), Yahya and Goh(2001) and Wu and Chen (2011), according to which the ISO 9001 certified companiesare more profitable than the non-certified. Dick et al. (2008) also found that the salesgrowth of the ISO 9001 certified companies is consistently better than the respectivegrowth of the non-certified. By contrast, Lima et al. (2000) and Rahman (2001) did notobserve different results between certified and non-certified companies in terms ofeconomic-financial results. Koc (2007) also did not mention any difference with respectto production costs.
Based on the above discussion, it is apparent that the subject and the purposeof the present study do not differ significantly from those of similar studies carriedout worldwide until now. Furthermore, the present study’s findings are similar to therespective findings of some previous studies and dissimilar to the findings of someother studies. Nevertheless, the present study tries to respond to specific researchproposals identified in the recent literature. It is an up-to-date, fact-based and statisticallyoriented study, conducted in the area of the revised version of the ISO 9001 standard(ISO 9001:2008) and the performance measurement. Through this study, longitudinalevidence is provided for the fact that the “quality organizations” derive more benefitsthan the others (non-ISO 9001 certified). Furthermore, focusing solely on manufacturingcompanies, a more comprehensive study of the entire manufacturing industry isprovided. Although the above mentioned issues support the contribution of the presentstudy to the existing body of literature, the most important issue supporting thestudy’s originality and value concerns the fact that the present study was conducted ina business environment where an unprecedented economic downturn and financial crisisdominates. So, based on the present study’s findings it is apparent that manufacturingcompanies should try to find in the quality certification the solution to enable them to facethe financial crisis successfully. In other words, even though manufacturing companiesare operating in a period of huge financial crisis, they should manage their activitieswithin the framework of quality provided by the ISO 9001 standard.
ConclusionsHaving in mind the ample experience that the certified manufacturing companies have inimplementing the ISO 9001 QMS and the fact that the revised ISO 9001:2008 standard ismore oriented to processes, customer satisfaction and continuous improvement, than theold versions, it is a presumable result that the benefits the companies derive from ISO 9001
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implementation are significantly high. However, a significant finding that is revealed fromthe present study is that, nowadays, in a period of economic downturn and financialcrisis, the ISO 9001 certified manufacturing companies significantly outperform thenon-certified with regard to product quality, customer satisfaction, operational, marketand financial performance.
Managerial implicationsGiven that the Greek manufacturing companies operate in a business environmentthat is characterized by an economic downturn and financial crisis, it is worth themanagers of manufacturing companies taking into consideration the findings ofthe present study. In other words, the study findings carry a significant managerialmessage. The importance of this message is increased by the fact that the current crisisis not only reflected in the Greek business environment but unfortunately all overEurope, or at least in many other countries. The findings revealed from the presentstudy, according to which, even in a period of significant economic downturn andfinancial crisis, ISO 9001 implementation is indeed a dynamic managerial tool forperformance improvement, should make company executives and policy makersincorporate into company policy and culture the principles of quality management andmore specifically the ISO 9001 principles. In other words, in case they find themselvesfacing a financial crisis, managers of manufacturing companies all over the worldshould pursue ISO 9001 implementation and benefit from the structured organizationand the documented procedures provided by the QMS, in order to improve theirperformance measures. In doing so, the foundations can be laid for a company towithstand the downturn, survive and be more competitive.
Comparing similar organizations based on a recognized set of standard indicators,gives also the essence of the benchmarking technique (Wait and Nolte, 2005), and morespecifically partly describes one of the primary types of benchmarking used today, theperformance benchmarking (Asrofah et al., 2010). It is worth noting that all definitionsof benchmarking are based on the idea of evaluating the performance of an organizedsystem by comparing it to exogenous entities (Shahalizadeh et al., 2009). The presentstudy may stimulate, especially non-ISO 9001 certified companies, to adopt benchmarkingnot only by simply comparing the performance measures among companies butfurthermore by understanding how company processes work, including observingand studying methods (Longbottom, 2000). Thus, manufacturing companies, motivatedby the basic idea of the present study, can adopt a benchmarking technique that is morethan just gathering data on how well a company performs against others, but a methodthat identifies new ideas and new ways to improve processes (Asrofah et al., 2010).In doing so, manufacturing companies can evolve benchmarking from being backwardlooking static performance measures to more forward looking business processes (Anandand Kodali, 2008), adopting in such a way the process benchmarking (Asrofah et al., 2010).Furthermore, manufacturing companies, either ISO 9001 certified or not, can approach allnew developments in benchmarking including internal, competitive, process/functional,strategic, global and competence/network benchmarking (Moriarty and Smallman, 2009),which depict the modern benchmarking concepts (Hong et al., 2012). In other words,new lead, forward looking and predictive benchmarks can be developed to supportperformance measurement activities (Moffett et al., 2008). Managers of manufacturingcompanies should take into consideration that benchmarking – through various qualitymanagement models – has become a pre-eminent business and organizational way ofsurviving in today’s highly competitive environment (Soltani and Lai, 2007). So, motivated
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from the present study, managers of manufacturing companies should give benchmarkingthe attention needed.
Limitations and future research recommendationsThe study presented in this paper suffers from some limitations. The sub-samples ofthe responding ISO 9001 certified and non-certified manufacturing companies aresmall and they are limited to SMEs. Thus, large-sized companies are not adequatelycovered in the study. The subjective character of the data collected through companyrepresentatives, involves the risk of receiving biased responses regarding the performancemeasures.
Future research is recommended using bigger samples of ISO 9001 certified andnon-certified manufacturing companies that would incorporate more large-sizedcompanies. In doing so, the differences can be determined between ISO 9001 certifiedand non-ISO 9001 certified large companies, or between small-medium and large-sizedcompanies (whether certified or not), with respect to performance measures. It is alsosuggested these studies be based on objective measures, especially with regard tocompany financial performance (e.g. financial indexes). Finally, it is worth examiningwhether there are significant differences between certified and non-certified companieson a longitudinal basis, especially in the Greek business environment (e.g. in a postcrisis period) or in countries that face similar financial problems to Greece.
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About the authors
Dr Evangelos Psomas is a Research Assistant in the Department of Business Administration ofFood and Agricultural Enterprises at the University of Western Greece. He received a PhD inTotal Quality Management at the University of Ioannina, Greece, in 2008. He has dealt withissues of management and marketing and has worked as a Teaching Assistant at the Universityof Ioannina and Technological Educational Institute of Epirus. His research interests include:total quality management, quality assurance, food safety management, human resource management,supply chain management, agribusiness and food marketing. Dr Evangelos Psomas is thecorresponding author and can be contacted at: [email protected]
Dr Dimitrios Kafetzopoulos is a Research Assistant in the Department of BusinessAdministration of Food and Agricultural Enterprises at the University of Western Greece. Hisresearch interests include: quality management, quality assurance, food safety management.
To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints
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