In a recent paper my co-authors and I investigate the relationship between internalization of ISO 9000 practices and the development of intellectual capital within organizations. We posit that intellectual capital, which comprises of human capital, organizational capital, and social capital, leads to improved processes in an organization. Process improvement, in turn, results in superior operational performance.The research model is as follows:
Using a sample of 321 ISO 9001 certified organizations, the hypothesized relationships are tested by means of the structural equation modeling technique. The results of this study show that performance benefits from the internalization of ISO 9000 standards occurs mainly through the development of human and organizational capital, and the consequent improvement in business processes.
The results of this study show that We show how continuous improvement initiatives in the ISO 9000 internalization process result in enhanced use of information to improve products and processes as well as in development of human capital. Internalization of ISO 9000 initiates training and development programs for the workforce, and documentation and storage requirements for the knowledge dissemination throughout the organization. As a result, the organization becomes a medium of proficient knowledge sharing and socialization of the competent employees. These factors enable the firm to move toward superior performance. This indicates that managers should focus on internalization of ISO standards instead of merely aiming for ISO 9000 certification. This helps in boosting confidence of employees and enhancing their effectiveness in performing tasks. It also results in more consistency in terms of the way various activities are performed within an organization.
Knowledge management practices resulting from internalization of ISO 9000 standards create norms and procedures as to how the knowledge is stored and disseminated in the organization. The employees refer to the codebooks, which are basically the stored knowledge, and rely on each other to achieve
process improvement. Effective development of organizational and human resource capabilities with the help of internalized ISO 9000 standards enable an organization to outcompete other firms. This study shows that the implementation of ISO 9000 is not simply about complying with the requirements and attaining the certification; rather, it is concerned with the intellectual structure of the firm.
Understanding this issue represents a real step forward in developing capabilities since the focus is now on the effectiveness of the quality system for the entire organization as against solely the “conformance” of processes to the prescriptions of ISO 9000 standards. A quality management system, such as ISO 9000 standards, must be focused on internalizing knowledge about processes and the steps needed for process improvement as against merely on compliance to set procedures. Therefore, while ISO 9000 certification does not provide competitive value on its own due to its imitability, the internalization process provides a good platform for intellectual capital building, if managed properly.
In conjunction with the aforementioned point, the findings of the study point to the need for balancing knowledge with competent workforce within the quality management system as both human resources and knowledge storage devices, routines and emergent network structures are potential assets for organizations. Given the differences in their nature, each of these types of assets will require unique kinds of investments. The findings of this study emphasize the importance of building
complementarities mainly between organizational capital and human capital, which will together produce more effective and unique capabilities for organizations.
Source: Ataseven, C., Prajogo, D., Nair, A. (2014). “ISO 9000 Internalization and Organizational Commitment - Implications for Process Improvement and Operational Performance.” IEEE Transactions on Engineering Management, 61(1), 5-17.