The impact of ISO 9001 on the asset returns of 9 manufacturing companies

Abstract

The aim of this study was to analyse the impact that ISO 9001 certification has on the financial performance of manufacturing companies in South Africa. Garvin (1984) developed a theoretical model that established the link between quality management and increased profitability. Previous studies have shown mixed results but most indicated that the ISO 9001 quality management standard can improve sales as well as profitability. This study analysed financial data from nine ISO 9001 certified companies and used the difference-in-differences method to detect abnormal increases in profitability. The study found no significant increase in profitability. The erratic nature of the profitability of the companies analysed indicates that poor implementation might be preventing certified companies from realising the potential benefits of ISO 9001 certification.