uneven geographies of organizational practice: …personal.lse.ac.uk/perkinsr/economic...

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The aim of this article is to explain cross-national variations in the diffusion of ISO9000, a series of voluntary private standardsdeveloped and promoted by the Geneva-based International Organization forStandardization (ISO). Following the release

in 1987 of ISO 9000, take-up advanced mostrapidly in the European Union (EU).Many other developed and developing coun-tries have since adopted the standards, suchthat by December 2001, the end of our studyperiod, 161 countries were host to ISO 9000-

Uneven Geographies of Organizational Practice:Explaining the Cross-National Transfer

and Diffusion of ISO 9000

Eric NeumayerDepartment of Geography and Environment,

London School of Economics and Political Science,Houghton Street, London WC2A 2AE, United Kingdom

[email protected]

Richard PerkinsSchool of Geography, University of Plymouth,

8-11 Kirkby Place, Plymouth PL4 8AA, United [email protected]

Abstract: There is growing recognition that organizational innovations can have amajor influence on the geography of economic activity. Yet, little is known about themechanisms and geographic preconditions underlying their diffusion, particularlyat the global level. In this article, we test a series of hypotheses about the condi-tions under which organizations are most likely to adopt ISO 9000, the internationallyrecognized set of standards for quality management, using panel data for 130countries from 1995 to 2001. Our findings support the idea that transnational networksthat connect different countries at the international level provide conduits for thecross-national transfer of new organizational practices. Thus, exports to the EuropeanUnion, local involvement of transnational corporations (TNCs), European colonialties, and the availability of telecommunications all emerge as statistically significantdeterminants of ISO adoptions. Our findings also underscore the importance ofnational environmental conditions in influencing the receptiveness of organiza-tions to new practices. A low regulatory burden, a high share of manufacturingactivity, high rates of secondary school enrollment, and low levels of productivity arepositively correlated with the number of ISO 9000 certificates. We conclude bydiscussing the implications of our findings for current debates about the mecha-nisms, preconditions, and scales of organizational transfer, diffusion, and conver-gence.

Key words: ISO 9000, standards, cross-national diffusion, globalization, institu-tionalism.

#2314—ECONOMIC GEOGRAPHY—VOL. 81 NO. 3—81301-neumayer

Economic Geography 81(3): 237–259, 2005.© 2005 Clark University. http://www.clarku.edu/econgeography

Authorship of the article is equal. The authors thank three anonymous referees and the editor,Bjørn Asheim, for their many helpful and constructive comments. Eric Neumayer acknowledgesfinancial assistance from the Leverhulme Trust.

238 ECONOMIC GEOGRAPHY JULY 2005

certified facilities. Yet, despite theirgeographic spread, the number of certifiedfacilities remains highly uneven throughoutthe world.

For geographers, such cross-country vari-ations in the take-up of ISO 9000 are ofparticular interest because they provide aunique opportunity to investigate the factorsthat shape the cross-national transfer, diffu-sion, and convergence of organizational inno-vations at the global level. There is growingrecognition that such innovations—ideas,practices, and strategies—can have aprofound influence on the geography ofeconomic activity. Thus, productivity levels,competitiveness, the structure of firms,buyer-supplier relations, and the geographicdistribution of supply chains are all shapedby organizational innovations (Storper 1997;Alänge, Jacobsson, and Jarnehammar1998; Thrift 1998; Bryson 2000; Bathelt andGlückler 2003; Sturgeon 2003).

Despite their obvious importance, rela-tively little is known about the mechanismsand geographic preconditions that underpinthe diffusion of organizational innovations(Gertler 2001). This gap is particularly acuteat the global scale. Hence, although anumber of studies have examined the cross-national transfer of corporate practices, theyhave been based largely on case-studyevidence from a small number of nation-states (Florida and Kenney 1992;Gooderham, Nordhaug, and Ringdal 1999;Kollman and Prakash 2001; Clark,Mansfield, and Tickell 2002). What is more,few of these studies have sought to identifygeneric facilitators and/or barriers (Sturdy2001), focusing instead on nationally idio-syncratic institutions that promote and/orinhibit the acceptance of “imported” ideolo-gies, practices, and strategies (Pauly andReich 1997; Argent 2002; Christopherson2002). In fact, only a handful of studies haveempirically investigated the cross-nationaltransfer of organizational innovations atthe global scale, with the result that manyquestions about the generic mechanisms andpreconditions for organizational convergenceremain unanswered.

A major reason for this gap in the litera-ture is the lack of reliable data. Unlike manytechnological innovations, such as steelfurnaces and telecommunications (Perkinsand Neumayer forthcoming), little compa-rable data exist on the take-up of organiza-tional innovations across multiple countries.An important exception is ISO 9000. TheISO has collected data on national certifi-cation counts since 1993 that have providedvaluable insights into the cross-national diffu-sion of organizational practices at the globalscale.

Given this coverage, it is perhapssurprising that only one previous study inves-tigated the global diffusion of ISO 9000.Adopting a new institutionalist framework,Guler, Guillén, and Macpherson (2002) usedregression analysis to examine the influenceof several hypothesized factors on nationalcertification counts. They found that thenumber of ISO 9000 certificates is positivelycorrelated with levels of inward foreigndirect investment (FDI), governmentalconsumption, wealth, and size of the laborforce. Moreover, suggesting that organiza-tional practices diffuse within networks ofsocial influence, they reported that coun-tries that have close trade ties and/or aresimilar in the products they trade are morelikely to have a similar number of ISO9000 certificates.

In this article, we follow a similar approachbut extend Guler, Guillén, andMacpherson’s (2002) analysis in three impor-tant ways. First, whereas they hypothesizethat the take-up of ISO 9000 is primarilygoverned by institutionalized pressures fororganizational conformity, our analyticalframework recognizes that adoption deci-sions may also be influenced by efficiencymotives. Besides social influence throughnetwork ties, therefore, we test for the influ-ence of several geographic factors that arecommonly hypothesized to influence theprofitability of ISO 9000 certification.Second, in contrast to Guler, Guillén, andMacpherson, we use a lagged dependentvariable that facilitates the identification ofthe geographic determinants of adoption byhelping us to control for self-reinforcing


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bandwagon dynamics. And third, our dataset includes a far-larger number of countries(N = 130), providing a more globally repre-sentative test of the determinants of orga-nizational diffusion. Data limitations meanthat Guler, Guillén, and Macpherson areforced to omit a substantial number of coun-tries from the analysis (N = 85), openingup the possibility of sample selection bias intheir estimations.

The rest of this article is organized asfollows. The next section outlines the origins,nature, and requirements of ISO 9000.The third section briefly reviews the existingtheoretical literature on the diffusion of tech-nological and organizational innovations. Thefourth section develops a series ofhypotheses regarding the determinants ofnational certification counts. The fifthsection describes the data and methods usedin the study, and the sixth section presentsthe results. The discussion and conclusionsare presented in the final section.

The Nature and Implications ofISO 9000

One of the defining features of the globalbusiness environment over the past twodecades has been the emergence of qualityas a key factor in competitive success (vander Wiele, Dale, and Williams 2000; Withersand Ebrahimpour 2000). Accompanying thisso-called quality revolution has been asuccession of organizational innovations thathave been designed to assist firms in qualitymanagement. Originally, these innovations—for example, quality circles, total qualitymanagement (TQM), and just-in-time (JIT)principles—were based on loosely codifiedprinciples that were articulated by consul-tants and management texts. More recently,however, standardized systems of qualitymanagement have been developed, first atthe national level and subsequently at theinternational level.

Quality-management standards have notemerged in isolation. Rather, these standardsare part of a broader trend toward gover-nance through standardization (Abbott and

Snidal 2001; Sturgeon 2003). This trend hasbeen especially pronounced at the globallevel, where growing cross-border economicintegration has heightened the need forcommon standards to facilitate coopera-tion and coordination among firms. In theabsence of a global state, the task ofdesigning, implementing, and enforcingstandards has been increasingly assumed byvarious regional and/or global institutions,some of which are governmental organiza-tions, but many others of which arenongovernmental. The involvement ofnongovernmental organizations in stan-dard setting has gone hand in hand with amore general shift toward private-sectorinvolvement in areas of governance that havetraditionally been occupied by the state(Brunsson and Jacobsson 2000; Coe andYeung 2001; Sassen 1999).

The ISO is the largest and perhapsbest-known private standard-setting body atthe global level. Comprising national stan-dard institutes from 130 countries, itsoverarching goal has been to facilitate inter-national trade and investment by harmo-nizing otherwise diverse and conflictingnational standards with international ones(Stevenson and Barnes 2001). The majorityof the ISO’s standards are technical, definingthe specifications that various productsshould possess. The ISO 9000 series of stan-dards, by contrast, are procedural. Ratherthan standardizing technical specifications,the standards define a comprehensive set ofquality-management practices. Their chiefpurpose is to provide external qualityassurance to customers by demonstrating asupplier’s compliance with a formalizedquality-management system.

The ISO 9000 series was originallyreleased in 1987 and subsequently revisedand updated in 1994 and 2000. It consists offive individual standards. Two of these stan-dards (ISO 9000 and ISO 9004) are so-calledguidance standards that are designed to assistapplicants of ISO 9000 in improving thequality of their systems. The other three(ISO 9001, ISO 9002, and ISO 9003) arecontractual standards that define the basicrequirements for establishing, maintaining,



and documenting a certifiable quality-management system. As of December 2000,these three standards were replaced by asingle one, ISO 9000: 2000. A parallel set ofprocedural standards for environmentalmanagement systems, ISO 14000, wasreleased in 1996.

ISO 9000 is based on a number of prin-ciples for achieving quality. These princi-ples—for example, customer satisfaction,continual improvement, and preventiveaction—are highly generalized, allowing ISO9000 to be readily adapted to the needs ofa wide range of organizations, regardless oftheir function, ownership, or size (Casperand Hancke 1999; Furusten 2000). An orga-nization that wants to become certified to achosen standard must first undergo an audit.Administered by an approved third-partyregistrar, the audit verifies whether the facil-ity’s operations comply with the documentedprocedures that are described in its quality-management system. Subject to a satisfac-tory inspection, a certificate is issued bythe registrar that qualifies the organizationto declare itself ISO 9000 accredited.Periodic surveillance audits are required toensure continued compliance with the stan-dards (Mendel 2002).

The business value of ISO 9000 hasbeen extensively debated in the managementliterature (Dick 2000; van der Wiele, Dale,and Williams 2000; Stevenson and Barnes2001). Supporters have pointed to severalbenefits that accrue to ISO 9000-certifiedorganizations, foremost among which are theexternal benefits of increased customer satis-faction and market share, followed by theinternal benefits of improved operationalefficiency and productivity. In fact, eventhough the ISO 9000 standards wereconceived primarily as a tool for achievingexternal quality assurance, firm-level surveyshave revealed that the internal benefits thatcertified companies enjoy are often greaterthan external ones (Larsen and Häversjö2001). Critics, however, have questioned thealleged benefits of ISO 9000. They havepointed to the high financial costs of certi-fication and have questioned whether the

standards actually contribute to theimproved quality of products and marketcompetitiveness. Suffice it to say, while manystudies have found a positive correlationbetween certification and business perfor-mance (e.g., Withers and Ebrahimpour2000), several others have found that ISO9000 has little or no impact on long-termprofitability (e.g., Wayhan, Kirche, andKhumawala 2002). Thus, it is perhaps notsurprising that doubts persist over the effi-ciency of the standards.

What is clear, however, is that ISO 9000has proved a spectacular success. At the endof 2001, the end of our study period, morethan 510,000 certificates had been issued in161 countries around the world. Yet astriking feature of certification activity is itsgeographically uneven distribution. Europeand the Far East are host to the largestnumber of certificates and account for thebulk of the world’s total (see Table 1). Ona country basis, with more than 66,000certificates, the United Kingdom has thehighest number of ISO 9000-certifiedfacilities, followed by China, with over57,000. Several EU countries, Japan, theUnited States, Australia, and South Koreaalso feature in the top 10 (see Table 2). Anumber of rapidly industrializing countriesin Asia and Latin America have compara-tively high national ISO 9000 counts as well.Elsewhere, enthusiasm for the standards hasbeen far lower. Iran, for example, has only618 certified facilities, and Bangladesh hasa mere 38. Relative to population size,Australia has the highest number of ISO9000 certificates, followed by the UnitedKingdom and various other EU memberstates. A handful of smaller countries,including Israel and Singapore, also havehigh per capita certification counts.

The goal of this article is to explain thesevariations in national certification counts and,in doing so, to advance the understandingof the mechanisms and geographic precon-ditions that underpin the uneven transfer,diffusion, and convergence of organizationalinnovations at the global level. To achievethis goal, we depart from previous cross-


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national diffusion studies, which were basedlargely on qualitative evidence from ahandful of nation-states, and take a quanti-tative approach, using econometric tech-niques to estimate the influence of severalhypothesized variables on certificationcounts for a sample of 130 countries.

Before we present our theoreticallyderived hypotheses, it is important to notethat ISO 9000 is a specific type of organi-zational practice, meaning that our find-ings may not be fully generalizable to otherideas, practices, and strategies that help toshape the geography of economic activity.In particular, because its content and imple-mentation are standardized in a set of writtenrules, we might expect ISO 9000 to be more

geographically mobile than are less-codifiedorganizational innovations.1 In addition, thecentral importance of customer require-ments as a motive for adoption (Anderson,Daly, and Johnson 1999) suggests thatmarket actors are likely to play an unusuallyimportant role in inter- and intracountrydiffusion patterns. Still, we believe that ourstudy makes a valuable contribution to theliterature in that it provides more-general-izable insights into the worldwide spreadof new organizational practices.


Table 1

Regional Share of ISO 9000 Certifications (2001)

X Number of Share of World TotalRegion Certifications (% of Absolute Numbers)

Africa/West Asia 19,751 3.87Central and South America 14,423 2.83North America 50,894 9.97Europe 269,950 52.87Far East 126,779 24.83Australia and New Zealand 28,819 5.65World 510,616 100.00

Source: ISO (2002).

Table 2

Top 10 Countries, by ISO 9000 Certification Count (2001)

Number of Certifications Number of Certifications Share of World TotalCountry (Absolute Numbers) (per 1 Million Inhabitants) (% of Absolute Numbers)

United Kingdom 66,760 1,135.4 13.07China 57,783 45.5 11.32Italy 48,109 830.9 9.42Germany 41,629 505.8 8.15United States 37,026 129.9 7.25Japan 27,385 215.6 5.36Australia 26,750 1,378.9 5.24France 20,919 353.3 4.10Spain 17,749 431.8 3.48South Korea 17,676 373.7 3.46Total 361,786 70.85

Sources: ISO (2002); World Bank (2003).

1 The growing trend toward the standardiza-tion of product and process requirements (e.g.,see Sturgeon 2003), however, suggests that ourfindings have a wider relevance.


Insights on the Diffusion ofOrganizational Innovations

A number of distinct theoretical perspec-tives dominate the literature on diffusion.Broadly speaking, however, they can bedivided into two streams. The first,commonly referred to as the efficient-choiceapproach, argues that decisions to adoptinnovations are based on the performanceand/or profitability of innovations (Davies1979; Rosenkopf and Abrahamson 1999).Variants of this approach assume differentlevels of information. Yet they all model deci-sion makers as rational, calculative agentswho select among alternatives according totheir efficiency.

The second set of approaches, widely asso-ciated with the new institutionalism ineconomic sociology, reject the idea of prof-itability and/or performance as the primarymotive behind the adoption of innovations.Although they accept that early decisions toadopt innovations may be influenced by effi-ciency considerations, they argue that lateradopters are characteristically driven by arange of social pressures to adopt similarorganizational practices. These pressuresmay have little to do with enhancingeconomic and/or technical performance andmore to do with maintaining external legit-imacy.

In a seminal piece, DiMaggio and Powell(1983) described three such social pres-sures—coercive, mimetic, and normative—that shape the demand for innovations andproduce organizational convergence.Coercive pressures operate when firms are“compelled or mandated through regulationor exchange” (Mendel 2002, 419) to conformto specific practices. Mimetic isomorphismarises when organizations imitate thebehavior of others (Haveman 1993;Rosenkopf and Abrahamson 1999), whereasnormative pressures refer to the influenceof professionals who define norms of rationalaction and prescribe “best-practice” solu-tions (Galaskiewicz and Wasserman 1989;Abrahamson 1996).

Institutionalist, inefficient-choiceapproaches have dominated the recent liter-

ature on the diffusion of organizational prac-tices. In fact, in the only previous study toinvestigate the global spread of ISO 9000,Guler, Guillén, and Macpherson (2002)developed a new institutionalist frameworkto model cross-national transfers.Underpinning the choice of new institu-tionalist approaches is the observation thatthe economic returns from organizationalinnovation are often ambiguous. Hence, theemphasis on the norms, rhetoric, and ideolo-gies of best practice, which are assumed toshape decisions to adopt innovative practicesunder complex and uncertain conditions(DiMaggio and Powell 1983).

We agree that institutional pressures arelikely to play a leading role in the diffusionof ISO 9000. Besides, their influence hasbeen convincingly documented in a numberof recent qualitative and quantitative studiesof the diffusion of organizational innovations,both within and across nation-states(Zbaracki 1998; Guler, Guillén, andMacpherson 2002; Nelson and Gopalan2003). Yet, we argue that new institution-alist approaches are “underrationalized”(Strang and Macy 2001, 156) and thateconomic considerations are likely toshape the decision to adopt quality-manage-ment standards. Indeed, the findings of somestudies seem to support this interpretation,suggesting that both institutional and effi-ciency motives may explain diffusionprocesses involving organizational innova-tions (Mansfield 1993; Hislop, Newell,Scarborough, and Swan 1997; Kogut andParkinson 1998).

Our analytic framework, therefore, notonly recognizes a central role for institu-tionalized norms, expectations, and rulesin explaining diffusion patterns, but isopen to the possibility that efficiency mayinfluence decisions to adopt new organiza-tional practices. Put simply, while managerscan be induced, coerced, or regulated toadopt ISO 9000, the extent to which theyare receptive to these pressures will partlybe a function of profitability. Of course, thisdoes not mean that managers are fullyrational, always optimizing agents. They arenot (Dicken and Malmberg 2001). Yet, it


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would be surprising if geographic factors thatinfluence efficiency—or, indeed, the supplyof information about profitability and/orperformance—did not affect rates of adop-tion.

Combining these perspectives—economicand new institutionalist—the followingsubsections outline a series of hypothesesabout the conditions that promote and/orinhibit ISO certification in which the unit ofanalysis is the nation-state. Our hypothesesare divided into two broad categories. Thefirst are concerned with transnationalnetwork ties that connect geographicallydispersed territories, firms, and managersand provide a conduit for the internationaltransfer of organizational innovations. Thesecond are concerned primarily withcountry-level environmental conditions thatinfluence the receptiveness of firms to neworganizational practices.

Transnational Network Ties

Networks have received growing atten-tion from economic geographers over thepast decade. Underlying this interest hasbeen the recognition that firms areembedded in a complex set of relationalnetworks that link customers, suppliers, anda host of governmental and nongovern-mental organizations. Networks createopportunities for interaction, learning, andinfluence and are therefore seen as providinga central context for the production, shaping,and transfer of new ideas, knowledge, andpractices (Gertler 2001; Bathelt and Glückler2003). Much of the focus of recent work ingeography, of course, has been on relationalnetworks at the subnational level, specifi-cally among actors within city-regions (e.g.,Florida 1995; Morgan 1997; Keeble andWilkinson 1999; Benner 2003). Yet there isgrowing awareness that interactions throughnetworks at the international level also shapepatterns of geocorporate behavior (Amin andThrift 1992; Clark, Mansfield, and Tickell2001; Coe and Yeung 2001; Dicken andMalmberg 2001; Sturgeon 2003).

One of the most important transnationalnetworks is created by international trade.

Although trade flows are primarily associ-ated with the exchange of goods and services,there are two reasons why we may expectthem to influence the cross-national transferof organizational innovations. First, networksof trade connect customers in one countrywith suppliers in another and provide achannel for the transmission of coercivesupply-chain pressures (Coe and Yeung2001; Smith 2003). Porter (1990) describedhow sophisticated and demanding buyers inhome markets, acting through value chains,can act as catalysts for improving productquality, productivity, and competitiveness ofdomestic firms. The exercise of coercivepower by influential buyers and its influenceon organizational behavior have also beenobserved at the cross-national level. Thus,Hughes (2000) documented how Kenyanfloricultural suppliers are required to meetstrict requirements regarding productionprocesses, quality, and so forth that are setby major retail multiples in the UnitedKingdom. Anecdotal evidence has suggestedthat similar supply-chain pressures havebeen a significant factor in the take-up ofISO 9000. Many certified firms, especiallylarge and/or multinational ones, routinelyspecify ISO 9000 as a contractual condi-tion of supply (Casper and Hancke 1999).Hence, firms that export a large share oftheir output have significant incentives toadopt the standards. This situation no doubtexplains the results of firm-level surveys that“market access” and “customer require-ments” are lead motives for certificationactivity (Vloeberghs and Bellens 1996; Buttle1997; Ebrahimpour, Withers, and Hikmet1997; Chittenden, Poutziouris, and Mukhta1998).

A second way in which trade may influ-ence the cross-national pattern of organi-zational practice is by increasing thefrequency of formal and informal interac-tions among actors in different countries (c.f.Granovetter 1973). These interactionsprovide opportunities for cross-nationallearning about the technical performanceand/or profitability of specific organizationalinnovations (Gertler 2001). They alsosupport mimetic-type behavior whereby



organizations imitate the practices of othersthey perceive as especially legitimate and/orsuccessful (DiMaggio and Powell 1983).Through trade-based interactions, firms maylearn from and, moreover, emulate the prac-tices of their high-reputation foreign coun-terparts (Arias and Guillén 1998).

Taken jointly, these arguments stronglysuggest that countries that export a highershare of their output to markets with manyISO 9000 certificates will have more certifi-cates. One key market in this respect is theEuropean Union. Member states, such asSweden, France, and Germany, were earlyadopters of ISO 9000 and have since diffusedthe standards throughout their economicstructure. As a result, although it accountedfor a mere 5 percent of the world’s popula-tion, the EU 152 was host to nearly half theglobal number of ISO 9000 certificates in2001. Given the popularity of ISO 9000,we expect that firms that export to theEuropean Union will be more likely to learnabout it and will be influenced to adopt ISO9000 as a model of best practice. What ismore important, perhaps, is that exportersare likely to face strong demand-side pres-sures to adopt ISO 9000 from EU customers.Indeed, according to several observers, theformal adoption of conformity-assessmentprocedures by the European Commissionin 1989, which allowed European firms torefuse goods and/or services from non-ISOregistered organizations, made ISO 9000 ade facto standard for firms wishing to accessthe European market (Tanner 1998; Withersand Ebrahimpour 2000; Mendel 2002). Thisinterpretation is consistent with Corbett(2003), who found that supply-chain pres-sures by early adopters in Europe played animportant role in the transfer and diffusionof ISO 9000 to later adopters in othercountries and regions, which leads toHypothesis 1:

Hypothesis 1. Countries that export a largershare of their goods and services to the EU arelikely to have more ISO 9000 certificates.

Transnational production networks,centered on and around transnational corpo-rations (TNCs) and their subsidiaries, consti-tute another business network that supportsthe diffusion of organizational innovationsat the global level. Gertler (2001, 11), forexample, stated that, “foreign direct invest-ment (FDI) constitutes arguably the mostactive channel available to firms to promotethe circulation of new practices.” Supportingsuch claims is a substantial body of work thathas documented how TNCs have beeninstrumental in the transfer, adoption, anddiffusion of new technologies, knowledge,and organizational practices in hosteconomies (Florida and Kenney 1992; Liand Yeung 1999; Potter, Moore, and Spires2002; Hayter and Edgington 2004).

This work has suggested that TNCs accel-erate the cross-national transfer and within-country diffusion of new organizational inno-vations in two ways. First, they contributedirectly to the take-up of new practices,deploying “standardized” organizationalprocedures, structures, and strategiesthroughout their regional and/or globalnetwork of operations. Clark, Mansfield, andTickell (2001), for example, described howa growing number of German TNCs areimplementing common accounting stan-dards, in both their domestic and overseasoperations. A similar process may account,in part, for the global spread of ISO 9000.Reports have indicated that many largeTNCs have adopted ISO 9000. Moreover,they are adopting the standards on a corpo-rate-wide basis, since ISO 9000 offers a flex-ible and widely accepted system of qualitymanagement and assurance (Yahya and Goh2001; Mizuno 2002).

A second way in which TNCs influencethe spread of new organizational practicesis by acting as a catalyst for adoption bydomestic firms. As influential and potentiallydemanding buyers of goods and services(Porter 1990; Potter, Moore, and Spires2002; Hayter and Edgington 2004), transna-tionals can prompt take-up directly,compelling local suppliers to meet specificprocedural standards. For example, Ivarssonand Alvstam (2004), described how, as a


2 The EU 15 prior to the accession of the 10new member states in May 2004.

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qualifying criterion, Volvo’s suppliers ofcomponents are required to meet specificstandards regarding, among other things,internal quality systems. Given that TNCshave been at the forefront of adopting ISO9000, we expect that similar requirementshave driven certification activity amongupstream suppliers.

TNCs may also stimulate certificationamong domestic firms by acting as norma-tive models of best practice. Their size,observability, and profitability mean thatTNCs are more likely to be seen as legiti-mate and/or successful (Haveman 1993).Thus, managers of domestic firms mayimitate ISO 9000 certification by TNCs toassociate themselves with the strategicchoices of these high-reputation counter-parts (Abrahamson 1996). Similarly, inter-acting with local TNC affiliates and/orsubsidiaries, domestic firms may learn aboutthe existence and/or benefits of ISO 9000.Supporting this idea, Potter, Moore, andSpires (2002) found that the informal sharingof ideas, views, and information is a centralmechanism through which new practiceshave diffused from foreign investors todomestic firms in the UK manufacturingsector.

Through these processes, therefore, thelocal involvement of transnationals is likelyto be conducive to the diffusion of ISO 9000.Indeed, previous cross-country evidencecorroborated this thesis, finding a positivestatistical relationship between the certifi-cation of both ISO 9000 and ISO 14001 andinward investment by TNCs (Guler, Guillén,and Macpherson 2002; Neumayer andPerkins 2004), hence Hypothesis 2:

Hypothesis 2. Countries with more inwardinvestments by TNCs are likely to have ahigher number of ISO 9000 certificates.

Of course, it is not only contemporarylinkages that may influence patterns of diffu-sion, but also historical ones. Arias andGuillén (1998, 115) noted that historicalinterdependencies have largely been over-looked in the literature on cross-nationaldiffusion. Yet, given the durable nature of

economic, social, and political institutions(Gertler 1995), there are sound reasons tosuppose that they will continue to influencethe transfer of organizational innovationsacross national borders.

Particularly significant in this respect iscolonialism, which was experienced by allbut a handful of today ’s developingeconomies. Although the majority of colonieshave since gained independence, there isplenty of evidence to suggest that theycontinue to enjoy close economic, political,and social ties with the former colonialpowers. Neumayer (2003), for instance,demonstrated that patterns of bilateral aidremain heavily influenced by former colo-nial linkages. These and other ties arelikely to prove important channels fororganizational diffusion across nationalboundaries, particularly from developed todeveloping countries, reflecting the unequalpower relations “between colonizer and colo-nized, dominator and dominated in theworld system” (Frenkel and Shenhav 2003,1541). Arias and Guillén (1998), for example,described how the exchange of students,managers, and professionals as part of bilat-eral aid schemes during the post–World WarII period led to the transfer of economicpractices from Europe and the United Statesto developing countries.

Applied in the present context, theseinsights suggest that we should expect ex-colonies of developed economies with a highnumber of ISO 9000-certified facilities tohave a higher number of certificates. In prac-tice, these countries are likely to be formercolonies of EU member states, especiallyones that were under colonial control for aprolonged period. As is shown in Table 1,the European region is host to over half ofthe world’s ISO 9000 certificates and, more-over, was a pioneer in the early diffusion ofthe standards, which leads to Hypothesis 3:

Hypothesis 3. Countries that spent a longerperiod under European colonial rule are likelyto have a higher number of ISO 9000 certifi-cates.



At a more general level, we expect thatthe cross-national transfer and diffusion ofnew organizational innovations will be influ-enced by the extent to which social actors inone country communicate with their coun-terparts in others. Empirical work has shownthat early adopters are characteristicallymore cosmopolitan than are late adopters(Rogers 1995). By interacting with a widerrange of actors outside their immediatesocial system, cosmopolitan actors are morelikely to be exposed to informationaland/or social influences that promote theadoption of innovations (O’Neill, Pouder,and Buchholtz 1998). Extending theseinsights to cross-national diffusion processesinvolving organizational innovations suggeststhat the transfer and adoption of ISO 9000will be shaped by the availability of cross-country communications media. Access totelephones, faxes, e-mail, and the Internetincreases the likelihood of interactionsbetween adopters and potential adoptersin different nation-states and, therefore, ofdistanciated learning (Guillén 2001; Aminand Cohendet 2004). Indeed, given thatthere are no internationally recognizedsubstitutes for ISO 9000, we expect genericcommunications channels to assume partic-ular importance in the worldwide spreadof the standards, as stated in Hypothesis 4:

Hypothesis 4. Countries with a greater avail-ability of telecommunications media are likelyto have a higher number of ISO 9000 certifi-cates.

Characteristics of the NationalEnvironment

Organizational innovations diffuse notonly between nation-states, but also withinthem (True and Mintrom 2001). In additionto transnational networks, therefore, weexpect the characteristics of the nationalenvironment to influence their geographicspread. Of particular importance in thisrespect is the state. Despite the popularimage of policies, practices, and strategiesbeing imposed from above by global actors,

there is growing recognition that the stateretains considerable influence in shaping thetrajectory of organizational convergence(Argent 2002; Park 2003). The state canresist homogenizing pressures by, forexample, mandating compliance withnational (as opposed to international) stan-dards of organizational practice.Alternatively, it can actively support theimport and diffusion of foreign practices by,for instance, providing relevant information,training, and financial support to potentialadopters (Arias and Guillén 1998). The liter-ature strongly supports the idea that the statehas had a major influence in the context ofISO 9000. Driven by the belief that ISO9000 certification can enhance industrialcompetitiveness, governments have encour-aged the take-up of the standards. In thiscapacity, they have offered firms technicaland/or financial assistance, primarily to lowerthe economic costs of implementation andregistration (Mizuno 2002). They have alsoadvanced ISO 9000 as a model of best prac-tice using promotional materials, such asbrochures and seminars, that highlight the“success stories” of efficient adoptions(Mendel 2002).

State actors have also created coercivepressures for certification. This processbegan in 1989 when the European Unionmade the pioneering decision to incorporateISO 9000 into its “Global Approach toTesting and Certification” and subsequent“New Approach Directives.” By permittingmanufacturers to meet conformity require-ments using ISO 9000, the EuropeanCommission provided a powerful incentivefor certification among European firms, aswell as their suppliers (Mallak, Bringelson,and Lyth 1997; Anderson, Daly, and Johnson1999; McCalman, Wilkinson, and Brouthers2000). Evidence suggests that govern-ments in other countries have since gone onto list the standards in their conformity-assessment procedures. A growing numberhave also incorporated ISO 9000 into public-sector procurement guidelines (Beattie andSohal 1999). For these reasons, we antici-pate that countries whose governments aremore involved in the economy in terms of


VOL. 81 NO. 3 ISO 9000 247

governmental consumption, governmentalproduction of goods and services, andgovernmental ownership of production facil-ities will have a higher certification count,which leads to Hypothesis 5:

Hypothesis 5. Countries with high levels ofgovernmental involvement in the economy arelikely to have more ISO 9000 certificates.

Yet the state’s influence on the diffusionof new organizational innovations is poten-tially ambiguous. While governments canprovide positive incentives to “download”and diffuse new practices through, forexample, procurement specifications, theycan also indirectly deter their uptake.Thus, when governmental intervention nega-tively affects financial returns—for instance,because firms are subject to an elaborate,complicated, and burdensome regulatoryprocess—organizations are unlikely to makesignificant long-term investments. The sameis to be expected when governments increasethe uncertainty of investments through theuneven application of regulations and/orcorruption. Conversely, when the regulatoryburden on firms is comparatively low and/orregulations are applied in a uniform way,firms are more likely to make large invest-ments in new organizational practices,including ISO 9000, which involves asubstantial up-investment and, moreover,one whose returns are likely to be realizedover the longer term (Bierão and SarsfieldCabral 2002). This point leads to Hypothesis6:

Hypothesis 6. Countries with a lower regula-tory burden imposed on the private economyare likely to be hosts to a larger number of ISO9000 certificates.

More generally, by influencing the realand/or anticipated financial returns from effi-ciency-enhancing organizational practices,we expect productivity levels to have animpact on certification activity. Althoughmarket requirements routinely emerge asthe lead motive for ISO 9000, surveys haverevealed that “productivity” and “efficiency”are significant reasons for seeking certifi-

cation (Buttle 1997). Productivity motivesare likely to be especially important amongorganizations that are characterized by lowlevels of productivity. Such organizations areunlikely to have exploited many low-cost,high-return investments in operationalefficiency. Consequently, we predict thatthey will earn a higher financial return fromISO 9000, which is well suited to identifyingand realizing productivity-enhancing invest-ment opportunities, as is stated inHypothesis 7:

Hypothesis 7. Countries with lower levels ofproductivity are likely to have a higher numberof ISO 9000 certificates.

Organizational resources are anotherfactor that is known to influence the adop-tion of new practices (Florida, Atlas, andCline 2001). Of particular significance in thisregard is human capital. Firms with better-educated workforces are not only more likelyto have knowledge of new organizationalpractices, but are likely to find it cheaperto implement them. As we noted earlier, theprocedural requirements of ISO 9000 areextensive, particularly in terms of planning,monitoring, and documentation. Hence, weanticipate that the profitability of ISO9000 will be sensitive to educational levels,with firms with poorly educated work-forces finding it especially difficult and costlyto achieve certification, as stated inHypothesis 8:

Hypothesis 8. Countries with higher educa-tional levels are likely to have a higher numberof ISO 9000 certificates.

The receptiveness of firms to specificorganizational practices, strategies, and stan-dards is also likely to depend on the firms’economic sector. Certain innovations willclearly be of greater value to organizationsin some economic sectors than those inothers. ISO 9000, for example, is likely to beof most benefit to manufacturing firms. Theimportance of quality to the safety andreliability of their output means thatmanufacturers are often subject to coer-cive pressures from upstream buyers.



Markets for many manufacturing goods,especially standardized and/or internation-ally traded ones, are also highly pricecompetitive. As a result, manufacturing firmsface especially strong pressures to cut costs,providing an additional motive for adoptingefficiency-enhancing organizational prac-tices. This situation is likely to favor ISO9000, which, in addition to improving thequality of products, is well suited to identi-fying and realizing cost savings through oper-ational improvements (Larsen and Häversjö2001). Together, these points suggest thatISO counts will be higher in manufacturing-based economies, a predication that has beensupported by reports that certificationactivity has proceeded most rapidly in theindustrial sector (Chittenden, Poutziouris,and Mukhta 1998; Acharya and Ray 2000;Brown 2004), which leads to Hypothesis 9:

Hypothesis 9. Countries with a greater shareof manufacturing in their gross domesticproduct (GDP) are likely to have more ISO9000 certificates.

Research DesignOur dependent variable is the number

of ISO 9000-certified facilities at the nationallevel (ISO 2001, 2002), normalized by popu-lation size to make the counts comparableacross different-sized countries(ISO9000PC). National ISO certificationcounts are available from 1993 onward.We lose the first year because of the inclu-sion of the lagged dependent variable in theregressions. Moreover, since the 1993 and1994 data refer to the mid-year rather thanthe end of the year, we restrict our sampleto the period 1995–2001, all of which referto end-of-year counts.3 Data for ISO 9000are available for 2002, but many of ourexplanatory variables are not, with the resultthat we are forced to omit this year from theanalysis.

To test the influence of transnationalnetwork ties on national certification counts,we use four explanatory variables. The firstis the value of exports of goods and servicesto the then-15 EU member states relativeto the exporting country ’s GDP(EU15EXPGDP). For the EU countries,this variable refers to exports to the other 14EU states. These data are taken from theOrganization for Economic Cooperation andDevelopment (2003). The second variable,the stock of FDI relative to GDP (FDI-STOCKGDP) as reported by the UnitedNations Conference on Trade andDevelopment (2003), is a better measure ofthe overall level of TNC involvement in hosteconomies than is the potentially volatileannual FDI inflows and hence is well suitedto testing our hypothesis. The third variableis the number of years a developing countryhas been under European colonial rulebetween 1900 and 1960 (COLONY), asdocumented by Alesina and Dollar (2000).The fourth variable is the number of maintelephone lines per 100 inhabitants (TELE-PHONESPC) as a proxy for the availabilityof telecommunications, with data taken fromthe International TelecommunicationsUnion (2003).

Characteristics of the national environ-ment are captured by a set of five vari-ables. First, we use a subcomponent of theHeritage Foundation’s (2003) Index ofEconomic Freedom, which ranks coun-tries on a 1–5 scale according to the govern-ment’s general involvement in the economy(GOVINVOLVEMENT). Countries aregraded with respect to (1) the level ofgovernmental consumption as a percentageof the economy, (2) the extent of govern-mental ownership of businesses and indus-tries, (3) the share of governmental revenuesfrom state-owned enterprises, (4) govern-mental ownership of property, and (5) theeconomic output produced by the govern-ment. Higher values imply greater govern-mental involvement. Although this variablemeasures general governmental involve-ment, another subcomponent of the Indexof Economic Freedom provides a measureof the regulatory burden imposed on private


3 For 1995, we include the lagged value of thedependent variable from mid-1994, however, toavoid a further reduction in the sample size.

VOL. 81 NO. 3 ISO 9000 249

businesses (REGBURDEN), again rankedon a 1–5 scale. A country is rated 1 if its regu-lations are straightforward and applieduniformly to all businesses and corruptionis nearly nonexistent, whereas it is rated 5if the government impedes the creation ofnew businesses, corruption is rampant, andregulations are applied randomly.

The third variable in this group is the grosssecondary-school-enrollment ratio, used asa proxy for the national level of education(%SECONDEDUCATION). These dataare taken from the World Bank (2003) andUNESCO (2003). Ideally, we would haveliked to use a variable that measured theeducational status of the workforce directly,but the only measure that fits this descrip-tion has poor cross-country availability, sowe resort to secondary school enrollment.The manufacturing share of GDP(%MANUFACT), the fourth variable, istaken from the World Bank (2003) and iscomplemented by data provided by theCentral Intelligence Agency (2002). For ourmeasure of economic productivity, we useGDP in purchasing power parity (PPP),divided by the size of the labor force(GDPPERWORKER). All data are from theWorld Bank (2003).

Finally, as an additional control variable,we include total GDP in PPP (GDP). In the

absence of data on the number of facilitiesin a country, we realistically assume that thenumber of potential adopters is a functionof total economic size. Countries with morefacilities are also more likely to host innov-ative, early adopters who experiment withISO 9000 and subsequently influence othersto adopt the standards (Rogers 1995). Table3 provides summary descriptive statisticalinformation on the variables. With regard topotential multicollinearity problems, wecomputed variance inflation factors anddid not find a reason for concern (theaverage factor is only 2.91).

We estimated the following model:

lnyit = � + �1lnyit-1 + �2xit + �tTt + vit (1)

where the subscript i represents eachcountry in year t, y is the number of ISO9000 certifications, and x is the vector ofexplanatory variables. The dependent vari-able is logged in order to reduceheteroscedasticity and to render its distrib-ution less skewed. To do so, we were forcedto add 1 to the absolute number of ISO 9000counts, since the log of zero is undefined.For the explanatory variables, we had to takethe log of the total GDP variable. Its distri-bution is extremely skewed, and its relationto ISO 9000 counts is log linear, suggestingthat the number of certifiable firms increases


Table 3

Descriptive Statistical Information on Variables (N = 899)

X StandardVariable Mean Deviation Minimum Maximum

ln ISO9000PC –4.61 2.23 –6.91 0.32ln ISO9000PC (lagged) –5.04 2.41 –11.70 0.26ln GDP 24.40 1.92 19.64 29.82EU15EXPGDP 0.01 0.05 0.00 0.59FDISTOCKGDP 23.99 28.97 0.04 271.57TELEPHONESPC 19.92 21.32 0.00 78.00COLONY 23.35 27.45 0.00 60.00GOVINTERVENTION 2.63 0.85 1.00 5.00REGBURDEN 3.25 0.89 1.00 5.00%MANUFACT 17.92 8.99 3.48 60.00%SECONDEDUCATION 66.70 34.37 5.30 152.70GDPPERWORKER 15.69 22.98 0.23 132.58


with total economic size, but at a decreasingrate.4 The year-specific dummy variables Tcapture general developments, such as risingworldwide levels of awareness about thestandards, and correct for unobserved timeeffects. The vit is a stochastic error term. Weestimate equation (1) with Beck and Katz’s(1995) popular and commonly applied time-series cross-sectional estimator with panel-corrected standard errors. The error term ispresumed to be heteroskedastic and contem-poraneously correlated across countries.Beck and Katz provided Monte Carloevidence that this estimator typicallyproduces more conservative estimates ofstandard errors than does the alternativeestimator, feasible generalized least squares.The time dimension is somewhat shorterthan in typical applications of Beck andKatz’s estimator, but using a random-effectsestimator instead leads to practically iden-tical results.5

The use of a lagged dependent variablehas several advantages. First, and mostimportant, it allows us to control for self-reinforcing diffusion dynamics, whereby thenumber of previous adoptions positivelyinfluences subsequent ones (Rosenkopf andAbrahamson 1999). Such dynamics havebeen well documented (Guler, Guillén, andMacpherson 2002; Neumayer and Perkins2004; Perkins and Neumayer 2004) andare likely to have a major impact on thegeographic pattern of ISO 9000 certifica-tion. Second, by using a lagged dependentvariable, we are able to reduce any auto-correlation substantially. Third, the laggeddependent variable is correlated with poten-tially omitted variables. No econometricmodel is ever complete, and several poten-tial determinants of ISO 9000 certificationare difficult to capture. Inclusion of thelagged dependent variable thus tends to miti-

gate potential omitted variable bias (Finkel1995). We have data available for a largepanel of 130 countries. Table 4 lists the coun-tries that were included in the sample.

ResultsTable 5 presents our estimation results.

As expected, the lagged dependent variableis positive and highly statistically significant,the inclusion of which also accounts for thehigh R-squared value. That is, our estima-tions suggest that the number of past ISO9000 adoptions has a major impact on subse-quent certification activity, a finding that isconsistent with the idea that patterns ofgeocorporate change are cumulative andpath dependent (Coe and Yeung 2001;Bathelt and Glückler 2003). Although ourresults say nothing about the underlyingdrivers of this relationship, it is most likelythe product of bandwagon-type dynamics.Thus, a larger user base will most likelyenhance the supply of information aboutISO 9000, increasing the probability ofnonadopters learning about the standards,whereas accumulated experience with ISO9000 is likely to reduce the implementa-tion costs for late adopters, raising theprofitability of the standards and theeconomic incentive to certify. Similarly, coer-cive pressures to adopt ISO 9000 are likelyto increase with the number of certificatesas a growing population of certified firmsplace contractual requirements on theirdomestic suppliers.

Still, the estimated coefficient of thelagged dependent variable is lower than 1,suggesting that the spread of ISO 9000 isnot simply driven by self-reinforcing band-wagon dynamics. Other factors are clearlyimportant in the geographic pattern of ISO9000 certification. One is the size of theeconomy. We estimate that largereconomies, as measured by GDP, have moreISO 9000-certified facilities. Given thatlarger economies are likely to have a greaternumber of potential adopters of quality-management systems than are smaller ones,this result makes sense.


4 If it was not entered in logged form, thetotal GDP would be negative and significant,which makes no sense.

5 Unfortunately, we could not use a fixed-effectsestimator, since there simply is not enough over-time variation in the data. The major variationis cross sectional.

VOL. 81 NO. 3 ISO 9000 251

Our econometric estimations also stronglysupport the idea that transnational networkties have influenced the uneven transfer anddiffusion of ISO 9000 at the global level.As anticipated, exports to the EU 15(EU15EXPGDP) and the FDI stock (FDI-STOCKGDP) are positively and statisticallysignificantly correlated with national ISO9000 counts. Stated differently, countriesthat are more integrated into the globaleconomy—through international trade andinvestment—are likely to have more certi-fied facilities. These results are broadlyconsistent with those of Guler, Guillén, andMacpherson (2002), who similarly estimatedthat trade and investment patterns influencethe geography of certification, but werederived from a more globally representativesample of 130 countries.

Our econometric estimations do not tellus why a European export orientation andexposure to international investment encour-

ages firms to adopt ISO 9000. Yet, on thebasis of evidence from case studies, wesuspect that there are two underlying drivers.The first, and most important, is coercion.Contractual requirements that were imposedby business customers are likely to haveprovided a major impetus for certification.As we noted earlier, many large TNCshave adopted ISO 9000 and, moreover, arerequiring their suppliers to certify to thestandards. Hence, it makes sense that coun-tries with a larger stock of FDI shouldhave more ISO 9000 certificates. Similarly,the high number of ISO 9000-compliantfirms, together with the formal incorpora-tion of the standards into the EuropeanUnion’s conformity-assessment procedures,strongly suggests that exporters to memberstates are likely to face strong pressures tocertify to ISO 9000. These market-basedpressures most likely explain the highernumber of certificates in countries that


Table 4

List of Countries in the Sample

AlbaniaAlgeriaArgentinaArmenia AustraliaAustriaAzerbaijanBahrainBangladeshBarbadosBelarusBelgiumBelizeBeninBoliviaBotswanaBrazilBulgariaBurkina FasoBurundiCambodiaCanadaCape VerdeChadChileChina

ColombiaCongo (Rep.)Costa RicaCôte d’IvoireCroatiaCyprusCzech RepublicDenmarkDominican RepublicEcuadorEgyptEl SalvadorEstoniaEthiopiaFinlandFranceGambiaGeorgiaGermanyGhanaGreeceGuatemalaGuineaGuinea-BissauGuyanaHong Kong (China)

HungaryIcelandIndiaIndonesiaIranIrelandItalyJamaicaJapanJordanKazakhstanKenyaKuwaitKyrgyz RepublicLaosLatviaLebanonLesothoLithuaniaLuxembourgMadagascarMalawiMalaysiaMaliMaltaMauritania

MauritiusMexicoMoldovaMongoliaMoroccoMozambiqueNamibiaNepalNetherlandsNew ZealandNicaraguaNigerNorwayOmanPakistanPanamaPapua New GuineaParaguayPeruPhilippinesPolandPortugalRomaniaRwandaSaudi ArabiaSierra Leone

SingaporeSlovak RepublicSloveniaSouth AfricaSouth KoreaSpainSri LankaSwazilandSwedenSwitzerlandSyriaTajikistanTanzaniaTogoTrinidad and TobagoTunisiaTurkeyUgandaUnited Arab EmiratesUnited KingdomUnited StatesUruguayVenezuelaVietnamZambiaZimbabwe


export a higher share of their output to theEuropean Union.

A second set of drivers are informationaland ideational in nature. Interacting withISO 9000-certified buyers in the EuropeanUnion, and/or certified TNCs in hosteconomies, managers are likely to learnabout the existence, benefits, and/or prof-itability of the standards, which may stimu-late certification activity (Gertler 2001;Guler, Guillén, and Macpherson 2002).Alternatively, domestic managers may mimictheir European Union and/or multina-tional counterparts with whom they interact,

adopting ISO 9000 in order to align them-selves with externally defined norms of bestpractice (Abrahamson 1996). Previous case-study research suggested that these mech-anisms are important vehicles for the diffu-sion of new ideas, knowledge, and practices(Hughes 2000; Potter, Moore, and Spires2002), and there is little to suggest that theyhave not also been influential in thegeographic spread of ISO 9000.

Further empirical support for theassumed importance of transnationalnetworks in the global diffusion of new orga-nizational practices is that telecommunica-tions and colonial linkages influence thepattern of ISO 9000 certification. The percapita availability of telephones (TELE-PHONESPC) and the length of time acountry has been under European colonialrule (COLONY) are both positive correlatesof certification counts. Again, our estima-tions do not allow us to draw definitiveconclusions about underlying mechanisms,although the results are intuitively plausible.Telecommunications provide an opportu-nity for potential adopters to learn aboutorganizational practices from adopters inother countries. It is hardly surprising, there-fore, that countries with a higher density oftelephones have more ISO 9000 certificates.The relationship between certificationactivity and former European colonial statusis equally plausible. Europe has led in theadoption of ISO 9000, driven, in large part,by the decision by the European Union toincorporate the standards into its conformityprocedures. Ongoing and often close tiesbetween European states and their formercolonies are likely to facilitate the transferof information, norms, and the like regardingthe standards, stimulating certificationactivity in developing countries.

Consistent with our predications, andmoving beyond the determinants hypothe-sized by Guler, Guillén, and Macpherson(2002), we also found that characteristicsof the national environment influencepatterns of organizational diffusion. In partic-ular, we found a positive and statisticallysignificant relationship among nationalISO 9000 counts, enrollment rates in


Table 5

Estimation Results

Variable Result

ln ISO9000PC (lagged) 0.730(10.18)**

ln GDP 0.084(4.71)**

EU15EXPGDP 0.700(4.33)**

FDISTOCKGDP 0.001(2.07)*

TELEPHONESPC 0.015(6.77)**

COLONY 0.001(2.63)**

GOVINTERVENTION –0.008(0.65)

REGBURDEN –0.070(2.57)**

%MANUFACT 0.009(8.54)**

%SECONDEDUCATION 0.003(2.65)**

GDPPERWORKER –0.003(2.80)**

Observations 899Countries 130Adjusted R-squared 0.95

Note: The dependent variable is the logged numberof ISO 9000 certifications per million inhabitants.The absolute z-statistics are in parentheses. OLSestimation is with panel-corrected standard errors.Constant and year-specific time dummies areincluded, but coefficients are not reported.* Significant at the .05 level.** Significant at the .01 level.

VOL. 81 NO. 3 ISO 9000 253

secondary education (%SECONDEDU-CATION), and share of manufacturing inGDP (%MANUFACT) and a negativesignificant relationship among nationalISO 9000 counts, regulatory burden(REGBURDEN), and economic produc-tivity (ln GDPPERWORKER). Drawingcausal inferences from these statisticalrelationships is difficult. However, given thatall four factors have the potential to influ-ence the profitability of certification, wesuspect that economic considerationspredominate.

Thus, firms with better-educated workersare more likely to be aware of the exis-tence of ISO 9000 through, for example,their links with professional associations.Moreover, they are likely to find imple-menting a documented quality managementsystem less costly than their counterpartsin countries with poorly educated workers.The negative relationship between produc-tivity and certification is also most likelyrooted in the economic returns from adop-tion. Quality-management systems are wellsuited to identifying and realizing low-cost,high-return operational improvements.However, because firms in more productivecountries will have exploited many of thesegains, it makes sense that the potentialeconomic returns, and hence the willingnessof firms to invest in ISO 9000, will belower under conditions of high productivity.

The economic incentive to adopt ISO9000 is also likely to be affected by thestyle of business regulation. Burdensome,erratic, and/or corrupt regulatory interven-tions by governments reduce the economicincentive to make costly, long-term invest-ments. Therefore, it is hardly surprising thatthey should act as a deterrent to adoptingISO 9000, whose setup costs are high andwhose financial returns are realized only overthe longer term. Differences in the finan-cial returns from certification may alsoexplain why countries with a higher share ofmanufacturing in GDP have more ISO 9000certificates. Manufacturing firms are morelikely to benefit from cost savings byimplementing quality-managementsystems—through, for example, the reduced

use of materials—than are firms in, say,the financial sector. These offsetting bene-fits may be expected to increase the will-ingness of profit-seeking managers to absorbthe costs of implementing and certifying ISO9000. Reinforcing these incentives aresupply-chain pressures which are known tobe the most advanced in the manufac-turing sector.

One surprising result is the statisticallyinsignificant and negative coefficient forGOVINT. This finding contradicts ourhypothesis, which suggested that countrieswith higher levels of governmental consump-tion are likely to have more ISO 9000 certifi-cates. It is also counter to the findings ofGuler, Guillén, and Macpherson (2002), whoestimated a positive and statistically signifi-cant relationship between ISO 9000 countsand governmental consumption. Whatexplains this apparent disparity? Onepossible answer is our larger sample of coun-tries. Because of data limitations, Guler,Guillén, and Macpherson (2002) were forcedto omit a large number of, presumably,developing countries from their sample.Although governments of low-income coun-tries consume a substantial share of GDP,there is little evidence to suggest that theyhave driven ISO 9000 certification throughprocurement and conformity requirements.Therefore, while governments may well havedriven certification in a number of devel-oped countries, their overall influence at theglobal level is comparatively small.

Discussion and ConclusionsAccording to Bryson (2000, 157–58),

“Central to the geography of economicactivity should be an understanding of thetransfer of management ideas and tech-niques into and between companies.” Thisarticle has investigated the mechanisms andgeographic preconditions underpinning suchtransfers at the global level. Using panel datafor 130 countries, we applied econometrictechniques to estimate the influence ofseveral hypothesized variables on theadoption of ISO 9000, the internationally



recognized series of quality-managementstandards.

A particular advantage of our quantitativeapproach is that it allowed us to identifygeneric facilitators of and/or barriers to thediffusion process. Previous geographic workhas done a poor job in this respect. Drawingon case-study evidence from a small numberof economies, researchers have been mainlyconcerned with identifying country-specificsocioinstitutional characteristics that accountfor the acceptance or, more often, rejec-tion of “imported” organizational innovations(e.g., Christopherson 2002; Argent 2002).We sought to move beyond this focus onnational specificity by performing a much-needed systematic analysis of organizationaldiffusion across a large number of developedand developing countries. Of course, ourlarge-sample, econometric approach wasconstrained by the availability of measurableproxies and, moreover, could not providethe kind of contextual detail afforded byprevious small-sample, qualitative studies.Nevertheless, it usefully complements theseapproaches, although we stress that ourquantitative methodology is in no way supe-rior.

Our results advance current under-standing of the mechanisms and geographicpreconditions underlying the cross-nationaltransfer and within-country diffusion of neworganizational innovations in several ways.First, they confirm the role of networks,specifically, transnational networks, in theinternational spread of organizational prac-tices (Hughes 2000; Dicken and Malmberg2001; Gertler 2001; Smith 2003; Sturgeon2003). They suggest that relational networksthat link actors in different nation-statesfunction as conduits for the transfer of infor-mation, norms, and coercive pressuresand, in doing so, provide a central contextfor the cross-national diffusion of new orga-nizational innovations. The importance ofnetworks, of course, is hardly new toeconomic geographers. However, while thepredominant focus of recent work hasbeen on interaction, learning, and influencethrough social networks at the subnationallevel (e.g., Benner 2003), our work points to

the possibility of similar processes operatingthrough networks at the internationallevel.

This is not to say that the domestic contextis irrelevant. To the extent that the mostimportant determinant of national certifi-cation counts is the existing number ofISO 9000 certificates, the results of ouranalysis suggest that domestic learning andinfluence are paramount. Despite thesupposed primacy of global forces, patternsof geocorporate change remain cumula-tive, path dependent, and predominantlylocal (Gertler 1995; Coe and Yeung 2001;Bathelt and Glückler 2003). Still, the factthat telecommunications, export ties, andcolonial ties all emerge as statistically signif-icant determinants of national certificationcounts strongly indicates that distanciatedlearning and influence are real (Amin andCohendet 2004).

Our findings therefore suggest that propo-nents of the learning-region approach(e.g., Morgan 1997) are right to highlight thecentral importance of geographic prox-imity in organizational learning. Yet, byneglecting global ties, they risk underspa-tializing the sources of geocorporate change.Our findings point to the need for a multi-scalar perspective, one that recognizes thatlearning and influence operate on a varietyof scales, from local to global (Coe andYeung 2001; Sturgeon 2003).

Our findings also reinforce the importanceof the spatial configuration of networks inthe uneven diffusion of organizational prac-tices. Transnational networks are not ubiq-uitous. Rather, as Coe and Yeung (2001, 375)reminded us, “they are highly uneven andembedded in specific places.” Our econo-metric estimations suggest that the unevenway in which transnational networks areinserted into territories has an influence ongeographic patterns of organizational prac-tice. Thus, inward investment, telecommu-nications, EU export linkages, and colonialties all emerged in our study as statisticallysignificant determinants of national ISO9000 certification counts. Our study thuscontributes to a growing body of relationaleconomic geography that emphasizes the


VOL. 81 NO. 3 ISO 9000 255

importance of networks and, moreover, theirinherent spatiality, in explaining the unevenoutcomes of economic globalization (Coeand Yeung 2001; Dicken, Kelly, Olds, andYeung 2001; Bathelt and Glückler 2003).

Our empirical analysis also indicated amajor role for the domestic context in theuneven geography of organizational prac-tice. Again, the idea that national environ-mental characteristics influence the diffu-sion of knowledge, ideas, and practices is notnew. Our specific contribution, however, isto re-emphasize the importance of theeconomic. On the basis of the observationthat our country-level environmental vari-ables—share of manufacturing in GDP,economic productivity, regulatory burden,and human capital—all potentially influencethe cost-benefit ratio of certification, weargue that the domestic context is importantthrough its influence on the economicreturns to adoption.

The apparent role of economic factors issignificant for two reasons. First, it suggeststhat the influence of the domestic environ-ment is not restricted to institutional vari-ables, which have been widely implicated inprevious geographic research as constrainingorganizational convergence (Pauly and Reich1997; Argent 2002; Christopherson 2002;Cox 2004). Other, arguably more mundane,characteristics are also important. Theyinclude various country-level variables—thestructure of the economy, the level of humancapital, and so on—that collectively influ-ence the financial costs and benefits ofnew organizational practices. Of course,recognizing that economy, culture, andsociety are coproduced, we do not suggestthat institutional characteristics do notmatter in the uneven global diffusion of newideas, practices, and strategies. They clearlydo (Gertler 2001). Nevertheless, our find-ings reinforce recent critiques of the“cultural turn,” cautioning against explana-tions in economic geography that exclusivelyprivilege the “socioinstitutional” over theeconomic (Martin and Sunley 2001).

The influence of the economic in thediffusion of ISO 9000 is also potentiallysignificant, since it challenges existing theo-

ries of new institutionalism. These theoriesreject the idea of rational, profit-maximizingaction and instead maintain that the take-upof new organizational practices is governedprimarily by managers’ quest for legiti-macy (Abrahamson 1996). The findingspresented here do not entirely contradictthis position. Indeed, the influence of, forexample, TNCs, suggests that institutional-ized pressures for conformity may play animportant role in the spread of new prac-tices. Our results equally suggest, however,that efficiency considerations are also signif-icant. That is, in addition to questions oflegitimacy, calculative managers may payattention to economic costs, benefits, andprofitability in deciding whether to adoptnew organizational practices.

Taken together, then, our results reinforcethe findings of recent studies that havesuggested that organizational convergenceat the global level is both uneven and contin-gent (Coe and Yeung 2001; Gertler 2001;Cox 2004; Poon and Thompson 2004). Nodoubt, globalization—the intensification ofeconomic, political, and social linkages at theinternational level—has increased themobility of organizational innovationacross national boundaries. Yet, as evidencedby significant variations in the take-up ofISO 9000 at the country level, increasedmobility does not imply cross-national orga-nizational convergence. One reason for thesecontinuing differences, of course, is that thespatial pattern of cross-national intercon-nection is itself highly geographically uneven.Flows of inward investment into territo-ries, the availability of telecommunica-tions, and so on vary significantly acrossthe globe. Another reason, and one thatresonates with the findings of previousresearch, is that certain national environ-ments are more favorable to the take-up oforganizational innovation than are others. Infact, given far-reaching geographic variationsin these determinants, it is perhaps unsur-prising that spatial unevenness is a persis-tent feature of organizational transfer, diffu-sion, and convergence at the global level.



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