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Does ISO 9000 certification matter for firm performance?

A group matched analysis of Greek listed firms

Efrosini Siougle

a, Claire Economidou

b, Kyriakos Drivas

b, Sophia Dimelis

a

a Department of Informatics, Athens University of Economics and Business, 76 Patission, Athens 10434

b Department of Economics, University of Piraeus, Karaoli & Dimitriou 80, Piraeus 18534

Abstract

This study investigates whether the certification with the International ISO 9000 Quality

Management Standard affects the financial performance of Greek listed firms for the last two

decades. The ISO 9000 certified firms are categorized into two groups: the group of firms

that hold the certification for all the years that are listed and the group of firms that initiate

the certification at some point after entering the stock market. The financial performance of

both certified groups is compared to the financial performance of a control group of non-

certified firms. Furthermore, the effect of the ISO 9000 certification is examined by

comparing the financial performance within the two certified groups. It is also examined

whether the effect of the ISO 9000 certification endures in the long run. Both unmatched and

matched samples were used and coarsened exact matching techniques were employed, as

well as robustness tests on firm sectoral and technology prototypes analysis. The findings

indicate that both groups of certified firms exhibit higher financial performance in

comparison to the group of non-certified firms. The financial effect of the ISO 9000

certification endures in the post-certification period. The effect is more pronounced when

using matched sample procedures. The robustness tests support the evidence.

Keywords: ISO 9000 certification; firm performance; group analysis; matching; coarsened

exact matching

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1. Introduction

The International ISO 9000 Quality Management Standard has received noticeable

worldwide acceptance. An ever growing number of firms devote the effort and the high cost

required to achieve compliance with the ISO 9000 standard and obtain or renew the relevant

certification as a proof of implementing and maintaining a quality management system. In

2013, over one million ISO 9000 certificates were issued across 187 countries (ISO, 2015).

The growing widespread adoption of the ISO 9000 Standard has motivated researchers to

explore whether benefits derive from the relevant certification. A large body of research

focuses on the financial performance benefits associated with the ISO 9000 certification. An

interesting issue concerning the impact of the ISO 9000 certification on firm’s financial

performance is that the results reported by relevant studies appear to be contradictory. A

number of studies report that the ISO 9000 certification is positively related to the financial

performance of adopting firms (e.g. Heras et al., 2002a; Corbett et al., 2005; Sharma, 2005;

Naveh and Marcus, 2005; Benner and Veloso, 2008; Levine and Toffel, 2010; Starke et al.

2012; Ullah et al., 2014; Chatzoglou et al., 2015). Other studies report that the impact of the

ISO 9000 certification on firm’s financial performance is weak or that the financial

performance benefits do not endure in the long run (e.g. Carr et al., 1997; Lima et al., 2000;

Singels et al., 2001; Rahman, 2001; Heras et al., 2002b; Wayhan et al., 2002; Martinez-Costa

and Martinez-Lorente, 2007).

The conflicting results reported by various studies of existing literature allow additional

investigation on the issue of whether financial performance improvements are gained due to

the ISO 9000 certification.

In this study, we seek to investigate whether the ISO 9000 accreditation is an important

factor affecting firms’ current and future performance. In particular, we focus on whether the

possession of an ISO 9000 certification, which is considered indicative of a firm’s quality

management system, is eventually translated into an improvement of the firm’s financial

performance measures.

In doing so, we examine the effect of the ISO 9000 certification on the financial

performance of publicly traded firms by comparing the groups of firms that hold the ISO

9000 certificate with a control group of firms that have never acquired such a certificate,

using both unmatched and matched analysis. Furthermore, the effect of the ISO 9000

certification is examined by comparing the financial performance within the certified

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subgroups of the study. The analysis is based on an original data sample from all firms listed

in the Athens Stock Exchange covering the period 1992 to 2013.

A firm’s financial performance is captured by several measures such as return on equity

(ROE), return on assets (ROA), profit margin (PM) and asset turnover (ATO) ratios. Return

on equity (ROE) provides a measure of profitability attributable to shareholders. Return on

assets (ROA) provides a measure of profitability related to the firm’s total assets.

Furthermore, we disaggregate ROA into the key driver ratios of asset turnover (ATO), which

relates to asset utilization and profit margin (PM), which relates to operating efficiency

(Fairfield et al., 2001; Soliman, 2008).

The contribution of this study to existing literature is three-fold. Firstly, the study

employs a sample consisting of all the firms listed in a less mature stock exchange as

compared to European peers. Secondly, a more profound analysis is performed based on both

unmatched and matched sample procedures employing coarsened exact matching techniques

to match the certified with the control firms, using pre-certification matching criteria.

Furthermore, the sample firms are classified into different technology prototypes and between

the manufacturing and service sectors. Thirdly, the analysis is based on original detailed data

of Greek listed firms from 1992 to 2013, which allows accounting for the impact of

measurable factors such as financial performance variables.

In particular, a novel methodological approach is followed by categorizing firms into

different groups based on the time period that they adopted (or not) the ISO 9000

certification. The first group – always – comprises firms that hold an ISO 9000 when entering

the stock market and are, therefore, certified for all the years that are included in the sample

period. The second group – starters – comprises firms that obtained the ISO 9000 certificate

during some point after entering the stock market. The third group – never – comprises firms

that have never obtained an ISO 9000 certification.

The findings indicate a positive and statically significant association between the ISO

9000 certification and the financial performance measures employed, for most of the

proposed group classifications. The evidence suggests that the ISO 9000 certified firms show

significant improvements in their financial performance in comparison to the non-certified

firms. This finding is in-line with existing studies in the field (e.g. Sharma et al., 2005;

Corbett et al., 2005; Starke et al., 2012; Ullah et al., 2014).

Also, more light is shed regarding the impact of the ISO 9000 certification within the

certified subgroups. The evidence indicates that the certified subgroup of starters is more

benefited from the ISO 9000 certification than the certified subgroup of always.

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Furthermore, a long lasting effect of the ISO 9000 certification on the financial

performance of certified firms is documented. Evidence is provided of a positive and

statistically significant association of the ISO 9000 certification and the financial

performance measures employed, in the three post certification periods. This finding is

consistent with existing literature (e.g. Corbett et al., 2005; Naveh and Marcus, 2005).

More importantly, the findings remain in the same direction regardless of the process:

unmatched or matched samples. The positive and statistically significant association between

ISO 9000 certification and firm’s financial performance is more pronounced in the matched

sample.

The findings of the study are robust after controlling for sector and technology prototype

effect. Manufacturing and service ISO 9000 certified firms show better financial performance

than the same sector non-certified firms. High-tech and low-tech ISO 9000 certified firms

exhibit higher return on equity (ROE) and assets utilization (ATO) than the corresponding

non-certified firms.

This study relates to the relevant existing literature in the following aspects: Firstly, this

study relates with studies comparing the performance between ISO certified and matched

non-certified firms (e.g. Corbett et al., 2005; Naveh and Marcus, 2005; Levine and Toffel,

2010; Ullah et al., 2014) as well as between certified groups of firms (e.g. Benner and

Veloso, 2008). Additionally, more detailed comparisons are performed using a specific group

classification that separates ISO certified firms into the groups of always certified firms and

ISO starters. It should also be noted that a matching technique, i.e. the coarsened exact

matching one, has not been applied in the relevant field.

This study is also close to studies examining the impact of the ISO 9000 certification on

the performance of Greek firms (e.g. Tsekouras et al., 2002; Dimara et al., 2004; Ismyrlis and

Moschidis, 2015; Chatzoglou et al., 2015)1. We differentiate from these studies as they either

use survey data or regular data from non-listed Greek firms.

The policy implication of this study is that the acquisition of the ISO 9000 certification is

beneficial to Greek listed certified firms as it creates better prospects for the firms that

operate under a tough business environment.

1A number of ISO 9000 related studies employing data from Greek companies include the following:

Gotzamani and Tsiotras, 2001; Lagodimos et al., 2005; Tzelepis et al., 2006; Gotzamani, 2010; Psomas and

Fotopoulos, 2009; Psomas, 2013.

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The rest of the study is organized as follows: Section 2 presents the literature review and

hypothesis development. Section 3 describes the sample and the data. Section 4 discusses the

research design. Section 5 presents the empirical results. Section 6 presents the robustness

analysis and section 7 concludes the study.

2. Literature review and hypothesis development

Existing literature discusses the effect on firm’s financial performance due to the adoption of

the ISO 9000 certification. As already mentioned, a large body of existing research provides

mixed and conflicting evidence regarding the relationship between ISO 9000 certification and

firm’s financial performance. Various studies argue that there exists a strong and positive

relation while other studies suggest that such a relation is weak or even negative.

The weak or non-existent role of the ISO 9000 certification on firm’s financial

performance is reported by existing studies. The study of Singels et al. (2001), finds that the

performance of the ISO 9000 certified firms is not better than the performance of non-

certified firms. Also, the study of Lima et al. (2000), finds that there is no difference

regarding the financial performance between the ISO 9000 certified firms and a control group

of similar non-certified firms. In the same line, the research of Wayhan et al. (2002), reports

that the impact of ISO 9000 certification on the firm’s financial performance, measured by

ROA, is very limited and this effect quickly fades away over time. Similarly, the study of

Martinez-Costa and Martinez-Lorente (2007), reports that the ISO 9000 certification impact

is negative as certified firms gain less earnings and ROA in the post three-year certification

period. Furthermore, the study of Heras et al. (2002b), reports that the ISO 9000 certified

firms are not benefited from the certification as the certification does not lead to an increase

in their profitability. Additionally, the research of Tsekouras et al. (2002), employing a

sample of 143 Greek firms that adopted ISO 9000 schemes between 1989 and 1993 and

similar non-adopters, finds no effect of the ISO 9000 certification on firm performance.

On the other hand, it appears that more recent studies show a strong and positive

association between ISO 9000 certification and firm’s financial performance. The study of

Sharma (2005), finds that the financial performance of the ISO 9000 certified firms, is

significantly greater in comparison to the financial performance of matched non-certified

firms (especially in profit margin). In the same vein, the study of Corbett et al. (2005), finds

that publicly traded ISO 9000 certified US firms show important abnormal financial

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performance improvements three years after certification, in all cases of the matched control

groups employed.

Furthermore, the research of Naveh and Marcus (2005), finds that the ISO 9000

certification leads to significant improvements in operating performance, in the five year

period following certification regardless of matched control group specification, but this is

not necessarily the case for business performance improvements. Additionally, the study of

Benner and Veloso (2008), finds that performance advantages of the ISO 9000 certification,

associated with ROA and Tobin’s q but not with ROS, are higher for early adopters. Also,

performance gains are higher for firms with medium lever of technological diversity.

Similarly, the study of Levine and Toffel (2010), reports that the ISO 9000 certified firms

experience substantially greater growth after certification concerning sales, employment and

several employee outcomes in comparison to the matched non-certified firms. In the same

line, the research of Ullah et al. (2014), finds that the ISO certified firms present higher labor

productivity and lower cost of sales when compared to a matched control group of non-

certified firms. Moreover, the study of Chatzoglou et al. (2015), finds that the ISO 9000

certification is highly associated with overall financial performance improvements.

From the exposition of the important aforementioned studies in the field, we conclude

that the relation between the ISO 9000 certification and firm’s financial performance is an

open question that deserves further investigation. Therefore, the analysis is started by

investigating the effect of the ISO 9000 certification on the financial performance (as

measured by return on equity, return on assets, profit margin and asset turnover2) of listed

certified firms when compared to a control group of listed non-certified firms, using both

unmatched and matched samples. Therefore, the first hypothesis is formulated as follows:

Hypothesis H1. The financial performance of listed ISO 9000 certified firms does not differ

from the financial performance of listed firms that have never obtained an ISO 9000

certification.

The analysis is continued by further exploring the above H1 hypothesis according to the

group classification proposed in this study. As the ISO 9000 certified firms are classified into

the two certified subgroups of always and starters, the following two hypotheses H1a and

H1b are stated, aiming to investigate the ISO 9000 certification effect on the financial

performance of firms belonging to each of these two certified subgroups:

2 A description of the variables employed in this study is presented in section 3.

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Hypothesis H1a. The financial performance of firms that are ISO 9000 certified for all the

years that are listed (always) does not differ from the financial performance of the non-

certified firms (never).

Hypothesis H1b. The financial performance of the firms that initiate the ISO 9000

certification at some point after entering the stock market (starters) does not differ from the

financial performance of the non-certified firms (never).

Another interesting question would be to investigate the effect of the ISO 9000

certification within the population of the certified firms. In particular, we seek to examine

which of the two ISO 9000 certified subgroups of our study (always or starters) is more

benefited from the ISO certification. A comparison between two ISO 9000 certified groups is

performed by the study of Benner and Veloso (2008), which separates the certified firms into

early and late adopters based on the year that the majority of firms on the industry obtained

the ISO 9000 certification. As no previous studies differentiate the ISO 9000 certified firms

according to the group classification proposed in this study, the second hypothesis is stated as

follows:

Hypothesis H2. Firms that are ISO 9000 certified for all the years that are listed (always) and

firms that initiate the ISO 9000 certification at some point after entering the stock market

(starters) are equally benefited from the ISO 9000 certification.

Furthermore, we seek to investigate whether the effect of the ISO 9000 certification lasts

in the long run, using both matched and unmatched samples. This issue has been examined

by various studies of existing literature providing mixed and contradictory results. The study

of Naveh and Marcus (2005), finds significant operating performance improvements, in the

five year period following the ISO 9000 certification. The study of Corbett et al. (2005),

concludes that the improved financial post certification performance lasts in the long run.

Also, the work of Levine and Toffel (2010), reports that the after certification growth lasts in

the long run for most indicators employed in their study. However, the research of Wayhan et

al. (2002), concludes that the effect of the ISO 9000 certification on firm’s financial

performance quickly fades away over time. Furthermore, the study of Casadesus and

Karapetrovic (2005), finds that the ISO 9000 certification benefits have decreased over time.

Similarly, the study of Karapetrovic et al. (2010), finds an overall gradual decrease over time

in the ISO 9000 certification benefits. Mixed evidence of previous studies motivates us to

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further investigate the long run performance issue and thus the third hypothesis is developed

as follows:

Hypothesis H3. The ISO 9000 certification is not related with long run financial performance

benefits for the certified firms.

As the group approach of this study classifies the ISO 9000 certified firms into the

always and starters subgroups, the hypothesis H3 can be further explored by the following

two hypotheses H3a and H3b:

Hypothesis H3a. The ISO 9000 certification is not related with long run financial

performance benefits for firms that are certified for all the years that are listed (always).

Hypothesis H3a. The ISO 9000 certification is not related with long run financial

performance benefits for firms that initiate the certification at some point after entering the

stock market (starters).

3. Sample description and data

The study sample consists of all the firms traded in the Athens Stock Exchange during the

period from 1992 to 2013. Data regarding the ISO 9000 certification were manually collected

from various publicly available sources such as the websites of listed firms, the web sites of

certification agencies, ISO 9000 certification announcements in the press, direct contacts with

the firms as well as from library archives for the older firms. Data for the financial

performance measures were collected from the DataStream database.

Firms not having available financial performance data are excluded from the sample. To

be consistent with existing literature, we further exclude financial firms3 and firms with

negative book value of equity (Fama and French, 1992). Imposing the above criteria leaves us

with a sample of 183 listed firms.

The sample of firms that hold an ISO 9000 certification is partitioned into two certified

subgroups: the group of firms that are certified during the total sample years – always – and

the group of firms that firstly initiate the ISO certification at a given point during the sample

period – starters4. As non-certified firms are considered those listed firms that have never

acquired an ISO 9000 certification – never group.

3Similarly, in the study of Starke et al. (2012) all financial institutions are excluded from the sample.

4It should be noted that the group of firms that lose their ISO 9001 certification – switchers group – is not

included in the analysis, since a very limited number of publicly traded firms acquired an ISO 9001 certification,

which was revoked at some later point during the sample period. Therefore, the treated firms of this sample

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Based on this group classification, 127 of the 183 firms are ISO 9000 certified and the

rest 56 are non-certified. The always group constitutes the 25,7% (47 firms), the starters

group the 43,7% (80 firms) and the never group the 30,6% (56 firms) of the sample.

Furthermore, the sample firms are classified into different technology prototypes and

between the manufacturing and services sectors. Firms belonging to the high-technology

prototypes constitute the 32,7% of the sample while firms belonging to the low-tech

technology prototypes the 68,3% of the sample. Firms belonging to the manufacturing sector

constitute the 71,9% of while firms belonging to the services sector the 28,1%.

Outcome variables

Return on equity (ROE) and return on assets (ROA) are employed as measures of a firm’s

financial performance. Return on equity (ROE) provides a measure of profitability

attributable to shareholders. Return on assets (ROA) provides a measure of profitability

related to the firm’s total assets. Furthermore, we disaggregate return on assets into the key

driver ratios of asset turnover (ATO), which relates to asset utilization and profit margin

(PM), which relates to operating efficiency (Fairfield et al., 2001; Soliman, 2008).

Definitions of the outcome variables used in this study are described as follows:

ROE = Return on equity= Net income in year t divided by common equity in year t-1.

ROA = Return on assets = Operating income in year t divided by total assets in year t-1.

PM = Profit margin = Operating income in year t divided by sales in year t.

ATO = Asset turnover = Sales in year t divided by total assets in year t.

Matching covariates

The analysis is performed in both unmatched and matched samples. For the matching

procedure5, three covariates the year prior to the initial certification year are employed: the

size of the firm (SIZE); the age of the firm (AGE); earnings per share (EPS), a business

performance measure. Year t is stated as the year of the initial certification, and year t-1 as

the year prior to the certification year.

The size of the firm is measured by the logarithm of total assets in the year before the

year of the initial certification (t-1). Various studies in existing literature (e.g. Adams, 1999;

continue to retain the ISO 9000 certification after the first granting, by renewing the certification. This practice

is consistent with Sharma et al. (2005). 5 The procedure followed for the development of the matched sample of this study is presented in section 4.2

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Tsekouras et al., 2002; Sharma et al., 2005; Starke et al., 2012) relate firm size to ISO 9000

certification6.

The age of the firm is created by taking the natural logarithm of the difference of the

foundation year of the firm from the year prior to the certification year. In recent literature,

the study of Ullah et al. (2014) concludes that ISO certification is positively related to firm

age and older firms are more likely to achieve an ISO certification in comparison to younger

firms. Also, the research of Hudsona and Orviska (2013) notes that the probability of a firm

acquiring an ISO certification increases as the firm grows older.

The business performance measure of earnings per share of the firm is measured by the

ratio of net income to the number of shares the year prior to the certification year. The use of

pre-certification performance measures as matching covariates is adopted by a number of

studies (e.g. Lima et al., 2000; Corbett et al., 2005; Naveh and Marcus, 2005; Lo et al., 2009;

Levine and Toffel, 2010)7.

Descriptive statistics of the variables are presented in Table 1.

Insert Table 1 about here

4. Research design

This section describes how to perform the unmatched and matched analysis of this study

based on the proposed group classification. The unmatched analysis involves comparing the

performance of the ISO 9000 certified groups with a control group of non-certified firms

irrespectively of the different characteristics of the compared firms. The matched analysis

involves comparing the relevant groups (the ISO certified group versus the non-certified) by

including those certified and non-certified firms that share similar characteristics based on

specific pre-certification matching criteria such as firm size, firm age and business

6According to a number of studies, ISO 9000 certification is positively related to firm size and larger firms are

more likely to achieve ISO certification in comparison to small firms (e.g. Carr et al., 1997; M. Adams, 1999;

Heras et al., 2002b; Tsekouras et al., 2002; Lagodimos et al., 2005; Hudson and Orviska, 2013; Ullah et al.,

2014). On the other hand, a number of studies conclude that some financial benefits of the ISO 9000

certification are stronger in smaller than in larger firms (e.g. Docking and Dowen, 1999; Levine and Toffel,

2010). Furthermore, the study of Starke et al. (2012) argues that companies large or small are equally benefited

from the ISO 9000 certification. 7 The studies of Lima et al. (2000) and Corbett et al. (2005) use the pre-certification operating performance

measure of ROA as a matching covariate. The study of Naveh and Marcus (2005) also uses the pre-certification

business performance measure of book-to-market ratio. The study of Lo and Chang (2009) uses the pre-event

performance measure of operating cycle time. The study of Levine and Toffel (2010) uses average lagged levels

of injury rates, costs, payroll, employment, wages, sales, and occupational riskiness as matching criteria.

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performance measure. The matching procedure is performed by employing coarsened exact

matching techniques.

4.1 Hypothesis testing models

To tackle the first hypothesis H1, which states that the financial performance of the ISO 9000

certified firms does not differ from the financial performance of the non-certified firms, the

following equation (1) is estimated:

(1)

where the variable yit is the financial performance measure used i.e. return on equity (ROE);

return on assets (ROA); profit margin (PM); asset turnover (ATO). The variable ISOALLSit is a

dummy variable comprising all the groups of our study. Meaning that the ISOALLSit variable

takes a) the value of one for all the years of the always firms, b) the value of zero for all the

years of the never firms and c) the value of one in the initial certification year and the

subsequent years and zero in the years prior to the initial certification for the starters.

To test the more specific hypothesis H1a, which states that the financial performance of

firms that are ISO 9000 certified for all the years that are listed (always) does not differ from

the non-certified firms, the following equation (2) is estimated:

(2)

where the variable yit is as defined in the previous equation. The variable ISOALWAYSit is a

dummy variable taking the value of one for all the years of the always firms and the value of

zero for all the years of the never firms.

Furthermore, to test the more specific hypothesis H1b, stating that the financial

performance of the firms that initiate the ISO 9000 certification at some point after entering

the stock market (starters) does not differ from the non-certified firms, the following

equation (3) is estimated:

(3)

where the variable yit is as defined in the previous equations. The variable ISOSTARTERSit is a

dummy variable taking the value of one in the year that each starter firm obtains its initial

ISO 9000 certification and the years following the initial certification, and zero in the years

prior to the initial certification year.

Coefficient α1 of equation (1) captures the effect of ISO 9000 certification on the

financial performance of firms that hold an ISO 9000 certificate (full sample of all certified

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firms) in comparison to the control group of never firms. Coefficients β1 and γ1 of equations

(2) and (3) capture the effect of ISO 9000 certification on the financial performance of the

always and starters group when compared to the control group of the never firms

respectively.

In order to test hypothesis H1, equation (1) is estimated by comparing the ISO 9000

certified firms to the control group of non-certified (never) firms. In order to test hypothesis

H1a, equation (2) is estimated by comparing the group of always firms to the control group of

never firms. To test hypothesis H1b, equation (3) is estimated by comparing the group of

starters to the control group of never.

Furthermore, in order to test hypothesis H2, which states that the two certified

subgroups, always and starters, are equally benefited from the ISO 9000 certification, the

following equation (4) is estimated:

𝑦𝑖𝑡 = 𝛿0 + 𝛿1𝐼𝑆𝑂𝐴𝐿𝑊+𝑆𝑇𝐴𝑅𝑇𝑖𝑡 + 𝛿2 𝐼𝑆𝑂𝐴𝐿𝑊+𝑆𝑇𝐴𝑅𝑇𝑥 𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆𝑖𝑡 + 𝑒𝑖𝑡 (4)

where the variable ISOALW+STARTit is a dummy variable indicating the always and starters

groups. The variable ISOALW+STARTxSTARTERSit is an interaction between the

ISOALW+STARTit dummy variable and the dummy variable STARTERS. The dummy variable

STARTERS indicates the firms that belong to the starters group by taking the value of one

for all the years of each starter firm and zero otherwise. Coefficient δ2 of the interaction term

captures any differences between the two certified subgroups.

Furthermore, in order to test hypothesis H3 of whether the effect of the ISO 9000

certification endures in the long run for the full sample, the following equation (5) is

estimated, by separating the post certification period into three periods (post period 1: one to

three years post certification; post period 2: four to six years post certification; post period 3:

seven to nine years post certification):

𝑦𝑖𝑡 = 휀0 + ∑ 휀𝑠 3𝑆=1 𝐼𝑆𝑂_𝐴𝐿𝐿𝑖𝑡+𝑠 + 𝑒𝑖𝑡 (5)

where the variable yit is as previously defined. The term ∑ 휀𝑠𝐼𝑆𝑂_𝐴𝐿𝐿𝑡+𝑠3𝑠=1 indicates the

three dummy variables for the three post-certification periods, where s={s1, s2, s3}. The first

dummy variable ISO_ALLt+s1 takes the value of one in the years of the first post certification

period of the certified firms and zero otherwise. The second dummy variable (ISO_ALLt+s2)

takes the value of one in the second post certification period and zero otherwise, The third

dummy variable (ISO_ALLt+s3) takes the value of one in the third post certification period

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and zero otherwise. Coefficients εs1, εs2, εs3 capture the effect of the ISO 9000 certification on

each of the three post certification periods for the full sample.

Additionally, in order to test the more specific hypothesis H3a of whether the effect of

the ISO 9000 certification endures in the long run for the always group, the following

equation (6) is estimated:

𝑦𝑖𝑡 = 𝜎𝜏0 + ∑ 𝜎𝜏𝑠3𝑆=1 𝐼𝑆𝑂_𝐴𝐿𝑊𝐴𝑌𝑆𝑖𝑡+𝑠 + 𝑒𝑖𝑡 (6)

where the variable yit is as previously defined. The term ∑ 𝜎𝜏𝑠𝐴𝐿𝑊𝐴𝑌𝑆𝑖𝑡+𝑠3𝑠=1 indicates the

three dummy variables for the three post-certification periods for the always group.

Coefficients στs1, στs2, στs3 capture the effect of the ISO 9000 certification on each of the three

post certification periods for the always group.

Finally, in order to test the more specific hypothesis H3b of whether the effect of the ISO

9000 certification endures in the long run for the starters group, the following equation (7) is

estimated:

𝑦𝑖𝑡 = 휁0 + ∑ 휁𝑠3𝑆=1 𝐼𝑆𝑂_𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆𝑖𝑡+𝑠 + 𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆_𝐼𝑁𝐼𝑇𝐼𝐴𝐿𝑖𝑡 + 𝑒𝑖𝑡 (7)

where the variable yit is as previously defined. The term ∑ 휁𝑠 𝐼𝑆𝑂_𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆𝑖𝑡+𝑠3𝑠=1

indicates the three dummy variables for the three post-certification periods for the starters

group. The variable STARTERS_INITIALit is a dummy variable taking the value of one in

the year of the initial ISO 9000 certification for the starters and zero otherwise. Coefficients

ζs1, ζs2, ζs3 capture the effect of the ISO 9000 certification on each of the three post

certification periods for the starters group.

In all the above equations, (1) to (7), year and industry dummy variables are included

in order to control for year and industry effects.

4.2 Developing the matched sample

As already stated, the analysis is started using unmatched samples by including in the

relevant group comparisons non-similar treated and control firms. This may lead to

comparing firms that have different market characteristics. Therefore the problem of

selectivity bias in estimating the abovementioned equations needs to be addressed (it can be

argued that better performing firms self-select into adopting the ISO 9000 certification).

14

To mitigate the self-selection problem, a matching method should be employed. In this

analysis, Coarsened Exact Matching (CEM)8 is employed, as the method of matching treated

certified firms to similar non-certified control firms according to specific covariates. The goal

is to find for each treated firm one control firm that is “closest” or “most similar” on all the

covariates used for the matching. In this way the basic difference between the treatment and

the control group is the ISO 9000 certification. Improvements in the financial performance of

certified firms can be attributed to the ISO 9000 certification as the certified treated and the

non-certified control firms share similar characteristics.

The matching procedure is performed using pre-certification matching criteria i.e. similar

firm characteristics the year before the initial certification year (t-1), an approach followed by

a number of studies (e.g. Lima et al., 2000; Corbett et al., 2000; Naveh and Marcus, 2005)9.

The precertification matching covariates employed in this study i.e. firm size, firm age and

earnings per share, were previously described in section 3. We follow the procedure proposed

by Iacus et al. (2012) in order to perform the matching between the firms of the starters

group and the firms of the control never group based on the above-mentioned characteristics.

5. Empirical results

5.1 Unmatched sample results

The first goal of this study is to compare the financial performance of the ISO 9000 certified

listed firms with the control group of non-certified listed firms (never) using unmatched

samples. This goal is further expanded by comparing each of the two certified subgroups,

always and starters, with the control group of never firms. Furthermore, in order to examine

whether the effect of the ISO 9000 certification tends to endure in the long run, the

performance between the certified and non-certified groups is compared in three post

certification periods (period1: one to three post certification years, period2: four to six post

certification years and period3: seven to nine post certification years). Another goal of this

study is to compare the financial performance within the two certified subgroups, always and

never. The empirical results of the analysis in unmatched samples are presented in Tables 2, 3

and 4 of the following sections.

8Iacus et al. (2012) present the properties and benefits of using Coarsened Exact Matching (CEM) method. The

routine of CEM is found in the Stata .do file by Blackwell, Iacus, and King (2009). 9 The studies of Lima et al. (2000), Corbett et al. (2000) and Naveh and Marcus, (2005) compare the

performance of certified to non-certified firms which have similar characteristics the year prior to the ISO 9000

certification year.

15

5.1.1 Performance comparison across groups in unmatched samples

The findings for all certified firms (full sample of certified firms) when compared to the

never group (equation 1) are presented in Table 2 Panel A. Table 2 Panel B presents the

findings for the always group when compared to the never group (equation 2), while Panel C

presents the findings for the starters group when compared to the never group (equation 3).

Insert Table 2 about here

The empirical evidence presented in Panel A Table 2 reveals an α1 positive and

statistically significant coefficient (equation 1) indicating a positive association between the

ISO 9000 certification and firm’s financial performance for all the four measures used in the

analysis - ROE, ROA, PM and ATO. ISO 9000 certified firms achieve higher financial

performance in comparison to firms that have never obtained the ISO 9000 certification.

The empirical evidence presented in Panel B Table 3 indicate a statistically significant

association between ISO 9000 certification and return on assets (ROA) as well as profit

margin (PM) for the always group when compared to the non-certified firms (never) (β1

coefficient of equation 2).

The evidence presented in Panel C Table 2, indicate the same positive and statistically

significant relationship between ISO 9000 certification and starters financial performance for

all the four measures used in the analysis - ROE, ROA, PM and ATO (γ1 coefficient of

equation 3). The starters group appears to outperform the non-certified firms in all the

financial performance measures employed.

Therefore, the total ISO 9000 certified firms exhibit higher financial performance in

comparison to the firms that have never obtained an ISO 9000 certification.

5.1.2 Performance comparison within the certified groups

Table 3 presents the empirical results by comparing the performance within the two certified

subgroups (always and starters) (equation 4).

Insert Table 3 about here

The findings presented in Table 3 suggest that the starters group is more benefited from

the ISO 9000 certification when compared to the always group in terms of ROE and ATO

(positive and statistically significant association at the 5% and 1% level of significance

respectively, coefficient δ2 of equation 4). There is no difference in the financial performance

of the two certified groups (starters and always) in terms of ROA and PM. So, firms that

16

initiate the ISO 9000 certification after entering the stock market (starters) exhibit better

financial performance, in terms of ROE and ATO, in comparison to the always certified

firms. Therefore, the benefits deriving from the ISO 9000 certification have been realized

earlier for the always whereas for the starters this takes place at later years.

5.1.3 Performance long run comparison across groups in unmatched samples

Table 4 presents the empirical findings of the comparison between the certified groups of the

proposed classification and the control group of never-certified firms in each of the three post

certification periods.

Insert Table 4 about here

The findings presented in Table 4 Panel C suggest that the effect of the ISO 9000

certification on return on equity (ROE), return on assets (ROA) and profit margin (PM)

continues to exist in the second post certification period for the starters group. Even more,

for the starters the lasting effect for the profit margin measure (PM) is still evident in the

third post certification period (statistically significant at the 5% level of significance).

For the all certified firms (Panel A Table 4) and the always group (Panel B Table 4) the

ISO 9000 effect is more pronounced in the first post certification period, where we observe a

statistical significant association of the return on equity (ROE) and return on assets (ROA)

measures with the ISO 9000 certification. For the all certified group the positive and

statistically significant effect of the ISO 9000 certification on firm’s financial performance

endures in the second post certification period for the measure of return on assets (ROA).

5.2 Matched sample results

The second goal of this study is to compare the financial performance of the ISO 9000

certified firms with a control group of non-certified firms using matched sample procedures.

Tables 5, 6, 7 and 8 present the empirical results of the analysis in the matched sample of

starters and never firms.

The matched sample analysis is started by comparing the starters group with the control

group of never firms. Table 5 presents the differences in the means for all the variables that

are used in the analysis the year prior to the initial certification year. The differences are

tabulated for both the unmatched and matched sample.

Insert Table 5 about here

In the matched sample (Table 5 Panel B), of the 80 starters, 67 firms are successfully

matched to 67 never firms (84%). The results presented in Table 5 Panel B reveal that the

17

matching procedure is effective, since the mean values of starters and never show no

significant differences the year prior to the initial certification year, in terms of the three

matching covariates employed (size, age and firm business performance).

In the unmatched sample, Table 5 Panel A, the comparison of the performance between

ISO starters and never firms reveals that on average the two groups are different. The ISO

starters have higher mean values than the never group in all the variables, outcome and

matching, except for the age variable. In the age variable we observe that firms that have

never obtained an ISO 9000 certification are on average older than starters.

5.2.1 Performance comparison in the matched sample

Table 6 presents the empirical results of re-estimating equation (3) to examine the effect of

the ISO 9000 certification on firm’s financial performance using the matched sample of the

starters and the never firms.

Insert Table 6 about here

The results presented in Table 6 further support the findings that starters achieve higher

performance in comparison to firms that have never obtained an ISO 9000 certification. The

statistically significant association between all firm’s performance measures employed -

ROE, ROA, PM, ATO - and ISO 9000 certification continues to exist even after controlling

for the possible selection bias effect of the unmatched sample. The evidence provided

supports the conclusion that the financial performance of listed firms that initiate the ISO

9000 certification at a given point after entering the stock exchange (starters) is improved in

comparison to the financial performance of the matched non-certified control group of non-

certified firms (never).

5.2.2 Performance long run comparison in the matched sample

Table 7 presents the results of re-estimating equation (7) to examine whether the effect of the

ISO 9000 certification lasts in the long run, using the matched sample of starters and never

groups.

Insert Table 7 about here

The empirical evidence presented in Table 7 is in accordance with the previous

suggestion that the ISO 9000 certification effect continues to exist even after the first post

certification period. The matching procedure reveals that the lasting ISO 9000 effect

18

continues to be apparent in the second post certification period for all the financial

performance measures (ROE, ROA, PM and ATO) employed in the study (as reported in

Table 4 Panel C for the unmatched sample). Moreover, in the third post certification period is

proved to be statistically significant not only for the profit margin measure (PM) (as

supported in the unmatched sample in Table 4 Panel C) but also the return on equity (ROE)

and the asset turnover (ATO) measures. Therefore, the effect of the ISO 9000 certification on

the firm’s financial performance endures in the long run. The effect of the certification on

return on assets (ROA) and profit margin (PM) is evident from the year of the ISO initiation.

6. Robustness analysis

To increase the confidence in the results obtained previously, a robustness analysis is

performed in this section. In particular, a sector analysis is suggested by classifying firms into

manufacturing and services. Furthermore, a technology prototype analysis is suggested by

classifying firms into high-tech and low-tech.

6.1 Sectoral analysis

Table 8 presents the empirical results of the sectoral analysis in the unmatched samples.

Insert Table 8 about here

The empirical results of Table 8 Panels A and B, indicate that manufacturing and service

certified firms exhibit better financial performance in comparison to the same sector non-

certified firms. Furthermore, the findings indicate that there are some differences in the

performance of service firms compared to the manufacturing firms. The services firms show

a positive and statistically significant relationship between the ISO 9000 certification and all

four financial performance measures for all the group comparisons (all certified versus never,

always versus never, starters versus never) with only the exception of asset turnover (ATO)

in the always firms when compared to the never firms. The manufacturing firms show

positive and statistically significant coefficients for the three out of four measures in the

starters group when compared to the never group (with the exception of profit margin – PM).

Table 9 presents the empirical results of the sectoral analysis in the matched sample of

the starters and never groups.

19

Insert Table 9 about here

The findings presented in Table 9 indicate that, the financial performance of the starters

group is superior to the financial performance of the matched never group even after

controlling for the sector effect. The results are more pronounced in the matched sample.

Particularly, in the matched sample, the manufacturing firms show a positive and statistically

significant relationship between ISO 9000 certification and all four financial performance

measures. The services show the positive and statistically significant relationship for three

out of the four measures (with the exception of ROE).

6.2 Technology prototypes analysis

Table 10 presents the empirical findings of the technology prototypes analysis in unmatched

samples, while Table 11 presents the empirical findings of the same analysis in the matched

sample of starters and never groups.

Insert Table 10 about here

The empirical findings presented in Table 10 for the unmatched sample indicate that

certified firms differ from non-certified firms (never) both for high-tech and low-tech

classification in the performance measures related to the assets utilization. A statistically

significant association of the return on assets (ROA) ratio is noticed in all the treatment

groups (always, starters) relative to the never control group. This finding is more apparent in

the case of starters relative to never, where we notice that apart from ROA there are

significant differences in the asset turnover (ATO) and profit margin (PM) ratios as well,

which conclude to a significant return on equity (ROE).

In the matched sample the empirical findings presented in Table 11 support the previous

suggestions. Both high-tech and low-tech certified firms (always, starters) differ from the

control never firms regarding return on assets (ROA) and its components (PM and ATO).

Nevertheless, we notice that in the matched sample (Table 9) ROA differences generate

higher return on equity only for the high-tech group.

Insert Table 11 about here

20

7. Conclusions

This study examines the effect of the ISO 9000 certification on the financial performance of

all Greek listed firms from 1992 to 2013. The firm’s financial performance is measured by

return on equity (ROE), return on assets (ROA), profit margin (PM) and assets turnover

(ATO). The analysis is conducted by categorizing the firms into groups based on whether

they hold an ISO 9000 certification (certified firms) or not (non-certified firms) and by

further categorizing the firms within the certified group to those that always hold an ISO

9000 certification and to ISO starters. The analysis is performed using both unmatched and

matched sample procedures. The matching procedure between the ISO 9000 certified firms

and the control group of non-certified firms is performed by employing coarsened exact

matching techniques using pre-certification matching criteria i.e. firm size, firm age and

earnings per share, a business performance measure. Prior literature is also extended by

comparing the performance within the certified subgroups of the study (always and starters).

Furthermore, it is explored whether the ISO 9000 certification effect lasts in the long run

within the proposed group classification. Finally, robustness tests are conducted by

examining the effect of the ISO 9000 certification in the manufacturing and service sectors

and between high-technology and low technology firms in the proposed group classification.

The findings suggest that the ISO 9000 certified firms (both the starters and always

groups) exhibit significantly greater financial performance in comparison to the firms that

have never obtained an ISO 9000 certification. Evidence is provided that the starters are

more benefited from the ISO 9000 certification than the always. Also, a long lasting effect of

the ISO 9000 certification on the firms’ financial performance is documented.

The findings remain in the same direction regardless of the process: unmatched or

matched samples. The effect of the ISO 9000 certification is even more pronounced when

using matched sample procedures.

The findings are robust after controlling for the sector and technology prototype effect.

The results may differentiate across samples due to differences in market characteristics,

sizes, structures and technology regimes.

21

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25

Tables

Table 1. Descriptive Statistics

Variables Mean Median Stdev Min Max

ISO 0.593 1 0.491 0 1

ROE 0.054 0.042 0.192 -0.561 0.894

ROA 0.042 0.033 0.082 -0.181 0.350

PM 0.005 0.048 0.300 -2.259 0.436

ATO 0.840 0.676 0.726 0.003 4.902

SIZE 11.566 11.460 1.425 8.563 15.792

AGE 40.504 38 19.685 12 103

EPS 0.166 0.081 0.485 -1.041 2.490

Notes.

N= 2.651 total firm year observations.

26

Table 2. Performance comparison across groups in unmatched samples

Panel A: All_CertifiedNever

Dependent variables

ROE ROA PM ATO

ISO

certification

0.0230**

(0.009)

0.0140***

(0.000)

0.0519***

(0.000)

0.0848**

(0.005)

R2 0.21 0.29 0.17 0.31

Panel B: AlwaysNever

ROE ROA PM ATO

ISO

certification

0.0117

(0.347)

0.0146**

(0.002)

0.0972**

(0.001)

0.0216

(0.538)

R2 0.26 0.35 0.17 0.48

Panel C: StartersNever

ROE ROA PM ATO

ISO

certification

0.0356***

(0.000)

0.0162***

(0.000)

0.0675***

(0.000)

0.1202***

(0.001)

R2 0.20 0.29 0.16 0.28

Notes.

A description of the variables is presented in section 3.

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

27

Table 3. Performance comparison within the certified subgroups

StartersAlways

𝑦𝑖𝑡 = 𝛿0 + 𝛿1𝐼𝑆𝑂𝐴𝐿𝑊+𝑆𝑇𝐴𝑅𝑇𝑖𝑡 + 𝛿2 𝐼𝑆𝑂𝐴𝐿𝑊+𝑆𝑇𝐴𝑅𝑇𝑥 𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆𝑖𝑡 + 𝑒𝑖𝑡

Dependent variables

ROE ROA PM ATO

ISO certification 0.0004

(0.963)

0.0121**

(0.002)

0.0614***

(0.000)

0.0128

(0.658)

ISOALW+START x STARTERS 0.0319***

(0.000)

0.0027

(0.465)

-0.0139

(0.195)

0.1016***

(0.000)

R2 0.22 0.29 0.17 0.31

Notes.

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

28

Table 4. Performance long run comparison across groups in unmatched samples

Panel A: All_certifiedNever - 𝑦𝑖𝑡 = 휀0 + ∑ 휀𝑠 3𝑆=1 𝐼𝑆𝑂_𝐴𝐿𝐿𝑡+𝑠 + 𝑒𝑖𝑡

Dependent variables

ROE ROA PM ATO

ISOALL_period1 0.0338*

(0.013)

0.0180**

(0.002)

0.0166

(0.189)

0.0872

(0.050)

ISOALL_period2 0.0190

(0.076)

0.0096*

(0.032)

0.0194

(0.109)

0.0462

(0.270)

ISOALL_period3 0.0111

(0.271)

0.0060

(0.152)

0.0218

(0.128)

0.0332

(0.393)

R2 0.21 0.29 0.17 0.31

Panel B: AlwaysNever - 𝑦𝑖𝑡 = 𝜎𝜏0 + ∑ 𝜎𝜏𝑠3𝑆=1 𝐼𝑆𝑂_𝐴𝐿𝑊𝐴𝑌𝑆𝑖𝑡+𝑠 + 𝑒𝑖𝑡

ROE ROA PM ATO

ALWAYS_period1 0.0376*

(0.037)

0.0280**

(0.001)

-0.0511

(0.138)

0.0395

(0.542)

ALWAYS_period2 0.0033

(0.808)

0.0063

(0.292)

-0.0543

(0.070)

0.0047

(0.919)

ALWAYS_period3 0.0075

(0.573)

0.0077

(0.134)

-0.0261

(0.569)

0.0016

(0.965)

R2 0.26 0.35 0.17 0.47

Panel C: StartersNever - 𝑦𝑖𝑡 = 휁0 + ∑ 휁𝑠3𝑆=1 𝐼𝑆𝑂_𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆𝑖𝑡+𝑠 + 𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆_𝐼𝑁𝐼𝑇𝐼𝐴𝐿𝑖𝑡 + 𝑒𝑖𝑡

ROE ROA PM ATO

STARTERS_initial 0.0408

(0.068)

0.0303**

(0.003)

0.0408*

(0.020)

0.1010

(0.231)

STARTERS_period1 0.0373*

(0.025)

0.0196**

(0.004)

0.0195

(0.368)

0.1231*

(0.026)

29

STARTERS_period2 0.0372**

(0.008)

0.0180**

(0.002)

0.0536**

(0.004)

0.0993

(0.091)

STARTERS_period3 0.0242

(0.078)

0.0107

(0.061)

0.0632**

(0.004)

0.0812

(0.162)

R2 0.20 0.30 0.16 0.28

Notes.

Initial: the year of the ISO 9000 acquisition

Period_1: one to three years post certification

Period_2: four to six years post certification

Period_3: seven to nine years post certification

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

30

Table 5. Comparison of starters and never groups the year prior to the initial certification year: unmatched and

matched samples

Panel A:

Unmatched sample

Panel B:

Matched sample

Starters

(N=80)

Never

(N=800)

t-stat for the

mean

differences

Starters

(N=67)

Never

(N=67)

t-stat for the

mean differences

ROE t-1 0.134 0.033 (-3.5366)*** 0.143 0.085 (-1.5435)

ROA t-1 0.078 0.029 (-4.3280)*** 0.071 0.057 (-0.8659)

PM t-1 0.072 -0.082 (-1.9670)** 0.073 0.096 (0.9637)

ATO t-1 0.926 0.760 (-1.3887) 0.903 0.964 (0.3731)

Size t-1 11.410 11.194 (-2.5067)*** 10.910 11.024 (0.6274)

Age t-1 40.034 45.758 (1.9906)** 36.196 36.136 (-0.0273)

EPS t-1 0.334 0.134 (-2.8346)*** 0.266 0.213 (-1.0068)

Notes.

For the comparison of starters and never in the unmatched sample, we include in the sample all the years of the never firms and the year prior to the initial

certification year for the starters.

For the comparison of the starters and never in the matched sample, we include the year prior to the certification year for each starter and the matched never firm.

Year t is the year of the initial certification for starters, and year t-1 is the year prior to the initial certification year.

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

31

Table 6. Performance comparison in the matched sample

StartersNever

Dependent variables

ROE ROA PM ATO

ISO certification 0.0357***

(0.000)

0.0128***

(0.001)

0.0665***

(0.001)

0.2013***

(0.000)

R2 0.25 0.36 0.16 0.32

Notes.

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

32

Table 7. Performance long run comparison in the matched sample

StartersNever

𝑦𝑖𝑡 = 휁0 + ∑ 휁𝑠3𝑆=1 𝐼𝑆𝑂_𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆𝑖𝑡+𝑠 + 𝑆𝑇𝐴𝑅𝑇𝐸𝑅𝑆_𝐼𝑁𝐼𝑇𝐼𝐴𝐿𝑖𝑡 + 𝑒𝑖𝑡

Dependent variables

ROE ROA PM ATO

STARTERS_initial 0.0394 0.0289** 0.0425** 0.0899

STARTERS_period1 0.0356* 0.0167* 0.0269 0.1126*

STARTERS_period2 0.0320* 0.0149** 0.0504*** 0.1236*

STARTERS_period3 0.0277* 0.0073 0.0662*** 0.1402*

R2 0.24 0.36 0.16 0.31

Notes.

Initial: the year of the ISO 9000 initiation

Period_1: one to three years post certification

Period_2: four to six years post certification

Period_3: seven to nine years post certification

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

33

Table 8: Sectoral analysis in unmatched samples

Panel A: Manufacturing Panel B: Services

Dependent variables Dependent Variables

Panel A: All_certifiedNever -

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0155

(0.068)

0.0104**

(0.005)

0.0257*

(0.046)

0.0369

(0.166)

0.0556*

(0.032)

0.0293**

(0.001)

0.1407***

(0.000)

0.2407*

(0.018)

R2 0.26 0.32 0.14 0.31 0.16 0.25 0.23 0.33

Panel B: AlwaysNever -

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0089

(0.487)

0.0141**

(0.005)

0.0798*

(0.011)

0.0195

(0.611)

0.0582

(0.173)

0.0265*

(0.025)

0.2012**

(0.008)

0.0764

(0.074)

R2 0.29 0.33 0.09 0.43 0.24 0.41 0.23 0.51

Panel C: StartersNever -

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0263**

(0.006)

0.0107**

(0.009)

0.0258

(0.174)

0.0640*

(0.033)

0.0721*

(0.013)

0.0366***

(0.000)

0.1989***

(0.000)

0.2895*

(0.021)

R2 0.25 0.33 0.14 0.26 0.14 0.25 0.21 0.32

Notes. t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

34

Table 9. Sectoral analysis in the matched sample

StartersNever

Panel A:

Manufacturing

Panel B:

Services

Dependent variables Dependent Variables

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0342***

(0.000)

0.0083*

(0.033)

0.0624***

(0.000)

0.1551***

(0.000)

0.0568

(0.067)

0.0346***

(0.001)

0.0702**

(0.004)

0.3582**

(0.005)

R2 0.26 0.34 0.17 0.26 0.23 0.37 0.15 0.38

Notes. t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

35

Table 10. Technology prototypes analysis in unmatched samples

Panel A: High-tech Panel B: Low-tech

Panel A: All_certifiedNever

Dependent variables Dependent Variables

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0273 0.0119* 0.0289* 0.03214 0.0192 0.0144** 0.0637*** 0.1117**

R2 0.20 0.35 0.17 0.23 0.23 0.27 00.17 0.33

Panel B: AlwaysNever

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0208 0.0161* 0.0400 -0.0830 0.0047 0.0131* 0.1351** 0.1132**

R2 0.22 0.34 0.059 0.31 0.30 0.37 0.18 0.52

Panel C: StartersNever

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0502** 0.0151* 0.0254 0.1488** 0.0267* 0.0156** 0.0891*** 0.1049*

R2 0.21 0.39 0.23 0.22 0.21 0.25 0.16 0.28

Notes.

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%

36

Table 11. Technology prototypes analysis in the matched sample

StartersNever

Panel A:

High-tech

Panel B:

Low-tech

Dependent variables Dependent Variables

ROE ROA PM ATO ROE ROA PM ATO

ISO

certification

0.0861*** 0.0187*** 0.0245* 0.3625*** 0.0087 0.0091 0.0908*** 0.1081*

R2 0.26 0.41 0.24 0.31 0.28 0.35 0.17 0.33

Notes.

t-statistics: *significant at 10%; **significant at 5%; ***significant at 1%