The effects of ISO 9001 on firms' productive efficiency

Purpose-This work sets out to explore the effects of ISO 9001 on productive efficiency of firms. Design/methodology/approach-A sample of 1,572 firms from three Greek manufacturing industries is used for empirical work. The firms are from the food and beverages industries, the machineries industries as well as from the electrical and electronics appliances manufacturing industries and include both adopters and non-adopters of ISO 9001. A stochastic frontier methodological approach is adopted and the effects of ISO 9001 can be modeled in four ways: as a managerial input alongside the conventional inputs of capital and labor, as a factor affecting technical inefficiency, as an input and a factor affecting technical inefficiency and as having no effect at all. Findings-ISO 9001 operates as a factor affecting technical inefficiency with non-neutral effects on capital and labor. The combined effect of ISO 9001 with capital increases the level of technical inefficiency reflecting adjustment costs incurred when ISO 9001 is adopted. The combined effect of ISO 9001 with labor decreases the level of technical inefficiency reflecting the positive result of ISO 9001 on reducing x-inefficiency. Research hinitations/implications-The analysis isolates the effects of ISO 9001 on capital and labor but specific case studies are necessary in order to reveal managerial best practices that confront negative and support positive effects of ISO 9001 adoption within firms. Originality/value-The paper illustrates that ISO 9001 is a managerial factor reducing productive inefficiency.