In a recently published article my co-author and I present an investigation of the relationship between motivation for ISO 9000 certification and internalization of practices underlying ISO 9000 standards. Survey data from 281 ISO 9001 certified manufacturing and service organizations in Australia is used to test the research hypotheses of the study. The results suggest that internalization of practices underlying ISO 9000 standards is affected by functionalist and institutionalist drivers. Specifically, functionalist drivers refer to internal motives of an organization that are aimed at enhancing the functional and process competence, whereas, institutional drivers reflect the influence of external entities, such as competitors, customers and regulatory agencies, on ISO 9000 implementation within an organization.
We find that internalization of ISO 9000 standards is positively associated with operational performance, and operational performance, in turn, is positively associated with business performance. A closer examination by splitting the sample between high and low performing firms reveals that internalization of ISO 9000 standards is associated with both functionalist and institutionalist motives in low performing firms, whereas only functionalist driver influence the internalisation of ISO 9000 standards in high performing firms.
The study emphasizes the need to recognize the different motives for implementing ISO 9000 standards within organizations. For a firm that is currently performing lower than the industry average, it is important to move away from pursuing ISO 9000 as an institutional legitimacy. Instead, it should be the basis for creating a commitment towards properly internalizing ISO 9000 practices in the internal processes of the firm. Although the institutional pressures to be certified to ISO 9000 will always exist, the focus needs to be on what can be done internally to enhance firms’ operational performance by using the guidelines prescribed by ISO 9000 standards. We find that a high performing firm crosses the stage of satisfying institutional pressure. Having seen the benefits of ISO 9000 adoption, these firms embark on continuous improvement, thereby increasing their operational performance.
The results of this study confirm the performance implications of implementing ISO 9000 standards. Firms need to be careful in their choice of the performance metric that they consider for evaluating the efficacy of ISO 9000 standards. We did not find support for the direct impact of internalisation of ISO 9000 standards on business performance, measured in terms of sales, market share and profits. Instead, we find that lasting improvement in business performance requires that the basic tenets of the management systems underlying ISO 9000 standards be directed towards improving product quality, reducing cost, improving delivery and innovation performance. Improvement in business performance would follow as a result of improved operations. This study therefore helps managers to develop realistic expectations on ISO 9000 implementation as well as the route which firms need to take before they can see the real benefits of the standard.
Source: Nair, A. and Prajogo, D. 2009. Internalization of ISO 9000 Standards: The Antecedent Role of Functionalist and Institutionalist Drivers and Performance Implications. International Journal of Production Research, Vol. 41, No. 16, 4545-4568.