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Information Asymmetries as Trade Barriers: ISO 9000 Increases International Commerce
Abstract
Spatial, cultural, and linguistic barriers create information asymmetries between buyers and sellers that impede international trade. The International Organization for Standardization's ISO 9000 program is designed to reduce these information asymmetries by providing assurance about the product quality of firms that receive its certification. Based on analyses of a panel of 140 countries from 1994 to 2004, we find that ISO 9000 certification levels are associated with increases in countries' bilateral exports, particularly for developing countries' exports, which may be due to their more severe quality assurance challenges. © 2009 by the Association for Public Policy Analysis and Management.
... The benefits to local industrial development are twofold [41,[46][47][48][49]. Firstly, international quality standards promote productivity (see section 3.2.). ...
... We apply insights from economic theory on quality uncertainty and adapt it to the context of solar PV auctions [46,47,50,[67][68][69]. As mentioned in section 3.1, compliance with international quality standards has been shown to overcome the buyer's insufficient information or lack of trust, for example in international trade [47,67,69] and foreign direct investment [48,68]. ...
... We apply insights from economic theory on quality uncertainty and adapt it to the context of solar PV auctions [46,47,50,[67][68][69]. As mentioned in section 3.1, compliance with international quality standards has been shown to overcome the buyer's insufficient information or lack of trust, for example in international trade [47,67,69] and foreign direct investment [48,68]. International quality standards create trust, as they signal use of state-of-the-art production processes. ...
Solar technology diffuses across the globe as countries transition from fossil to renewable energy. Little solar-specific experience and capacity in newly adopting countries can result in technical failures and lower solar plant performance. This contributes to making the investment in solar plants in newcomer countries risky and may undermine political targets of solar energy deployment. One solution suggested by international organizations is for policymakers in adopting countries to include international quality standards as technical requirements in public auctions. Here, we develop a conceptual framework on how international quality standards could help build a solar sector. As a case study, we analyze the explanatory factors of technical requirements in 100 public auctions of utility-scale solar photovoltaic plants carried out in India between 2013 and 2019. Our findings suggest that more international quality standards are required in auctions in which the government rather than a private actor ultimately carries the commercial risk. On the other hand, local content requirements and attracting foreign investors do not correlate with technical requirements. We argue that using minimal quality standards is unlikely to promote local technological catch-up or attract long-term foreign investments but transfers the techno-commercial risk from the government to the private sector.
... The International Organization for Standardization's main objective is to provide a set of harmonized worldwide technical standards in order to facilitate international exchanges and promote global trade (Clougherty and Grajek 2014). In the early years, international standards like ISO 9000 had proven significant in acting as the determinants of international trade, indeed, more than that of national standards (Clougherty and Grajek 2014;Potoski and Prakash 2009). Specifically, the ISO 9000 Quality Assurance Standards were published by the Technical Committee (TC176) of the International Organization for Standardization in 1979 to provide universal quality management standards and to rectify information asymmetry issues in international trade. ...
... Specifically, the ISO 9000 Quality Assurance Standards were published by the Technical Committee (TC176) of the International Organization for Standardization in 1979 to provide universal quality management standards and to rectify information asymmetry issues in international trade. It has been proven that ISO 9000 can act as an effective driver to increase trade (Potoski and Prakash 2009;Terlaak and King 2006). However, in recent years many experts find that the effectiveness of quality management standards are deteriorating due to a process of institutionalization. ...
... Before the establishment of the ISO 9000, information asymmetry appeared to be an unrecognized barrier within international trade agreements (Potoski and Prakash 2009). In fact, lack of certainty in the credibility of quality impedes international trade and thus should not be an overlooked issue (Grossman 1981;Lavissiere and Rodrigue 2017;Munim and Schramm 2018). ...
Abstract Although the original purpose for quality management standards such as ISO 9000 was to facilitate international trade, their effectiveness is widely questioned recently. In the literature, it has been commonly argued that institutionalization of quality standards as time goes by is a major reason behind their ineffectiveness. We explored this issue by using recent data from stock-listed firms in China. Following previous studies in this area, we examined the impact of quality management standards on the cost-efficiency and sales performance of adopting firms from 2000 to 2014. We explored if such an impact is contingent on the level of institutionalization as evidenced by the time of certifications. We show that the time of quality certifications in China has a negative impact on the effectiveness of standards in improving cost-efficiency. However, we did not find a similar weakening impact on sales performance. Overall, we find evidence of the deteriorating effects of quality management certifications in more recent years.
... The emergence of supply chains, in which suppliers in one country produce intermediate inputs shipped to many countries, has been accompanied by the global diffusion of certifiable international management standards, such as ISO 9000, which focuses on quality, ISO 14000, which addresses environmental management , and recent ethical standards (Prado and Woodside, 2015). These types of voluntary standards help to overcome barriers related to information asymmetries among different actors in the supply chain (Potoski and Prakash, 2009;Cao and Prakash, 2011). ...
... Companies use ISO 9000 as a tool to signal their investment in quality upgrading and quality performance (King et al., 2005;Potoski and Prakash, 2009;Terlaak and King, 2006;Ferro, 2011). Signaling quality characteristics, which are difficult to be observed by customers, are especially important for developing countries because information asymmetries between developed and developing countries are larger than those between countries of a similar level of development. ...
... Macro-level studies focus initially on the diffusion of ISO 9000 (Guler et al., 2002). Clougherty and Grajek (2008) and Potoski and Prakash (2009) investigate the effect of global diffusion of ISO 9000 on FDI and international trade. In particular, Clougherty and Grajek (2008) examine whether ISO 9000 certifications have a 'push' or 'pull' effect on FDI and trade. ...
Companies use standards as a tool to signal their investments in quality upgrading and performance. We argue that the impact of this signal depends on the trust in the accreditation system and the development status of a country. Representing the workhorse of research in international trade, we use a gravity model to examine the trade effects of ISO 9000 diffusion and cooperation in accreditation. The model is estimated by applying a country-pair fixed effects regression approach with instrumental variables and multilateral resistance terms to a panel data set covering a 13-year period from 1999 to 2012. This allows us to test our hypotheses with respect to the moderating role of international cooperation in accreditation on the trade effects of ISO 9000 diffusion. We show that certification promotes trade and that signatories to the Multilateral Recognition Arrangement of the International Accreditation Forum (IAF MLA) trade significantly more. The IAF MLA is of particular importance to the trade among developing countries. For policy makers, our results highlight the importance of support for accreditation institutions in developing countries.
... Related to sustainability, firms' internal sustainability commitments are generally unobserved attributes to external stakeholders. This setting is problematic for market participants who wish to divert their investment toward more sustainable firms (Potoski and Prakash, 2009). Adoption of ISSs decreases information asymmetries between firms and their stakeholders (King et al., 2005) by offering an externally observable signal about the firm's unobserved sustainability activities. ...
... Once certified, firms are required to demonstrate that their ISSs are continually functioning in order to maintain their certification. Certification is costly (Darnall and Edwards, 2006) and requires firms to document and disclose information about less observable aspects of their operations (Potoski and Prakash, 2009), which offers a strong signal of conformance to stakeholder and ISS expectations. By encouraging conformance to societal requirements for better sustainability performance, ISSs help legitimate a firm's operations. ...
Adopting an International Sustainability Standard (ISS) helps firms improve their sustainability performance. It also acts as a credible market "signal" that legitimizes firms' latent sustainability practices while improving their market value. But how do these signals function when firms adopt multiple ISSs? We show that the relationships between firms' ISSs adoption and their market value and their sustainability performance appear positive. However, beyond a tipping point of 2 ISSs, firms' market gains decline, even though their sustainability performance continues to improve until a tipping point of 3 ISSs. Differing tipping points create a gap that we refer to as the "penalty zone"-the place where market value declines, even though firms' actual sustainability performance continues to improve. The penalty zone arises because of imprecisions in market signals and serves as a significant barrier to firms wishing to further their sustainability agenda through additional ISS adoption.
... In the product market, to avoid adverse selection and moral risks, companies should send adequate, effective, and reliable quality signals. If the enterprise obtains the quality certification, it will establish a good reputation and brand image, while allowing consumers to identify the quality is safe and good, i.e., releasing quality signals to consumers (Terlaak and King, 2006;Potoski and Prakash, 2009;Goedhuys and Sleuwaegen, 2013) [22][23][24]. Therefore, the acquisition of quality certification can reflect product quality upgrading, and different levels of quality certification (Chinese product quality certification CCC certification, and international product quality certification ISO 9000) can also reflect different levels of product quality upgrading. ...
... In the product market, to avoid adverse selection and moral risks, companies should send adequate, effective, and reliable quality signals. If the enterprise obtains the quality certification, it will establish a good reputation and brand image, while allowing consumers to identify the quality is safe and good, i.e., releasing quality signals to consumers (Terlaak and King, 2006;Potoski and Prakash, 2009;Goedhuys and Sleuwaegen, 2013) [22][23][24]. Therefore, the acquisition of quality certification can reflect product quality upgrading, and different levels of quality certification (Chinese product quality certification CCC certification, and international product quality certification ISO 9000) can also reflect different levels of product quality upgrading. ...
The existing literature lacks the classification of product quality upgrading levels and ignores the effect of product quality upgrading at different hierarchical levels on firms' export performance. Based on this, this paper takes Chinese manufacturing exporters as the research subjects, using panel fixed effects and instrumental variables methods, and empirically examines the effect of product quality upgrading (and product quality upgrading at different levels) on firms' export performance using the 2000-2013 China Import and Export Customs Database, the China Industrial Enterprises Database, and a self-curated product quality upgrading database. The results of the research show that the number of Chinese manufacturing exporters that have upgraded their product quality is increasing. The mean and the level of product quality upgrading are both constantly elevating. Product quality upgrading has a significant positive effect on export performance, and the positive effect of product quality upgrading on export performance is greater for high-level product quality upgrading than for low and medium-level product quality upgrading. The positive effect of product quality upgrading on export performance is greater for state-owned enterprises, small enterprises, and enterprises in central and western regions. The empirical results help to refine the understanding of the export growth effect brought by product quality upgrading and provide micro evidence for China's "Great Power of Quality" strategy.
... 6. For IR scholarship that takes efficient markets as a baseline, see Fearon (1996), Milner (1997, Potoski andPrakash (2009), andPowell (1999). In the subfield of comparative political economy, examples include Alesina (1988), Alesina et al. (1989), Koremenos (2005), Lohmann (1992), and Pollack (1997). ...
... 6. For IR scholarship that takes efficient markets as a baseline, see Fearon (1996), Milner (1997, Potoski andPrakash (2009), andPowell (1999). In the subfield of comparative political economy, examples include Alesina (1988), Alesina et al. (1989), Koremenos (2005), Lohmann (1992), and Pollack (1997). ...
Behavioral IR is enjoying newfound popularity. Nonetheless, attempts to integrate behavioral research into the larger project of IR theory have proven controversial. Many scholars treat behavioral findings as a trove of plausible ad hoc modifications to rational choice models, thereby lending credence to arguments that behavioral IR is merely residual, empirical, and hence not theoretical. Others limit their research to cataloging outcomes consistent with the basic tenets of behavioral models. Although this expands the empirical base, it is insufficient for theoretical progress. In this article, I explore various answers to the question of when rational choice or behavioral assumptions should guide efforts to build IR theory. I argue that no single answer trumps all others. Examining the various conditions under which actors reason highlights the importance of macrofoundations. Macrofoundations condition the effects of microprocesses and help identify relevant scope conditions for both rational choice and behavioral models of decision-making. Examining the various purposes of IR theory also provides answers to the question of when rational or behavioral assumptions are likely to be most useful. Although many behavioral scholars premise the relevance of their findings on claims of empirical realism, I argue that under certain conditions, deductive theorizing on the basis of as-if behavioral assumptions can lead to powerful theories that improve our understanding of IR and may help decision-makers promote desired ends.
... According to Cao and Prakash (2011), when competition is fierce, the motivation to adopt international standard certification as a signaling mechanism is even greater. These incentives for exporters in developing countries may be higher due to poor reputation and large differences in the quality of exported products (Cao & Prakash, 2011;Halkos, Nomikos, & Skouloudis, 2021;Potoski & Prakash, 2009). Prior studies also show that global competition can accelerate the adoption of ISO 9000 (Mangiarotti & Riillo, 2013;Potoski & Prakash, 2009). ...
... These incentives for exporters in developing countries may be higher due to poor reputation and large differences in the quality of exported products (Cao & Prakash, 2011;Halkos, Nomikos, & Skouloudis, 2021;Potoski & Prakash, 2009). Prior studies also show that global competition can accelerate the adoption of ISO 9000 (Mangiarotti & Riillo, 2013;Potoski & Prakash, 2009). In addition, competition from informal sectors may cause obstacles for registered firms. ...
This paper examines whether R&D, exports, and competition affect the adoption of international standard certification in ASEAN. Although prior studies recognized the importance of R&D, exports, and competition in determining a firm’s decision to adopt international standards, they often focused on a single determinant of this activity. Hence, this study tries to incorporate three important internal and external factors in a comprehensive study. The current study investigates these questions by analyzing the data from a valid sample of appropriately 4,000 firms in the manufacturing industries in eight countries in ASEAN in 2015-2016. The study utilizes a multilevel mixed-effects logit model for estimation to take into account the hierarchical nature of our data set. The results show that firms with R&D activities tend to adopt more international standard certificates. We also find that exports are highly important, while competition from the informal sector does not show association with firms’ innovativeness. These findings remain valid after endogenous and robustness testing using the propensity score matching method.
... Related to sustainability, firms' internal sustainability commitments are generally unobserved attributes to external stakeholders. This setting is problematic for market participants who wish to divert their investment towards more sustainable firms (Potoski and Prakash, 2009). Adoption of ISSs decreases information asymmetries between firms and their stakeholders (King et al. 2005) by offering an externally observable signal about the firm's unobserved sustainability activities. ...
... Once certified, firms are required to demonstrate that their ISSs are continually functioning in order to maintain their certification. Certification is costly (Darnall and Edwards, 2006) and requires firms to document and disclose information about less observable aspects of their operations (Potoski and Prakash, 2009), which offers a strong signal of conformance to stakeholder and ISS expectations. By encouraging conformance to societal requirements for better sustainability performance, ISSs help legitimate a firm's operations. ...
... Due to intense global competition, such incentives are likely to be higher for a developing country, where information asymmetries and reputational problems are critical among firms. In this case, buyers associate the quality of the seller with the generally poor reputation of the country where it is located (Potoski and Prakash 2009;Otsuki 2011;Bangwayo-Skeete and Moore 2015). Encouraging companies to increase transparency regarding their sustainable practices to different stakeholders, including government authorities, investors and insurance companies, is therefore crucial for their trust (Castka and Prajogo 2013;Ikram et al. 2020). ...
... The second set was λ c , which reflected the time-invariant, country-level effects that might impact on certification, such as institutional environment and regulations, as well as financial and human resource constraints that might hinder the general market functioning (Massoud et al. 2010;Ullah et al. 2014;Goedhuys and Sleuwaegen 2016). Moreover, country fixed-effects might reflect the fact that firms in countries with poor reputation would have more incentive to go out of their way to get internationally certified, in order to gain access to external markets relative to the firms located in markets that would not make them look as low quality (Potoski and Prakash 2009;Otsuki 2011;Bangwayo-Skeete and Moore 2015). The third was η t , which reflected any time-specific shocks simultaneously affecting all countries. ...
Environmental and quality management practices are extremely relevant for a firm’s development and international recognition. However, dealing with the standards required and obtaining an international standards certification involves costs for employee training, procedure documents, and third-party audit fees that must be paid in advance by companies. This paper attempts to analyze the impact of difficulties in accessing external financing on the likelihood of possessing the standards and the certification, for firms based in 64 countries. A crucial aspect in uncovering such a causal effect is the potential endogeneity of financial constraints with respect to international standards certification. I address this issue by adopting a bivariate probit model and a set of firm-level instrumental variables. The empirical results showed that financially constrained firms were less likely to possess the standards required and the associated international certification, and that this impact was more relevant for small and young firms.
... External benefits result from a reduction of transaction costs, as certificates would signal that the firm is a reliable partner, with a better-quality reputation, raising credentials in the marketplace (Djupdal. and Westhead 2015;Sleuwaegen 2013, 2016;Potoski and Prakash 2009;Terlaak and King 2006). As a result, the external benefits of certification can be seen in sales increases, usually due to the expansion of trade and export activities (Henson and Jaffee 2006;Henson et al. 2011;Maertens and Swinnen 2009;Masakure et al. 2011;Potoski and Prakash 2009). ...
... and Westhead 2015;Sleuwaegen 2013, 2016;Potoski and Prakash 2009;Terlaak and King 2006). As a result, the external benefits of certification can be seen in sales increases, usually due to the expansion of trade and export activities (Henson and Jaffee 2006;Henson et al. 2011;Maertens and Swinnen 2009;Masakure et al. 2011;Potoski and Prakash 2009). ...
... Erosleek ez duten informazio baliagarria dute ekoizleek, eta ondorioz desabantaila egoeran aurki daitezke ekoizle horien aurrean (Toffel, 2005). Dena den badirudi enpresen arteko harremanetan borondatezko erregulazio programen erabilera garrantzitsuagoa dela, enpresek erabiltzaile edo azken kontsumitzaileekin izaten dituzten harremanetan baino (Hudson eta Jones, 2003;Prakash eta Potoski, 2009;Toffel, 2005). ...
... Atal honen ondorio gisa, arestian aipatutako Prakash eta Potoski-k (2009) zehazten dute informazio asimetriak murriztu, eta ondorioz jarduera ekonomikoa eta komertziala sustatzera bideratutako borondatezko nazioarteko programen ahalmena gutxietsi dela (Prakash eta Potoski, 2009). ...
Corporate self-regulation is a phenomenon that has been widely disseminated in recent years. In this contribution we will focus on the analysis of two scholarly perspectives that have analyzed this issue: the theory of clubs and the theory of information asymmetries. The clubs provide valuable information about the activities of their members reducing information asymmetries. Successful clubs induce their members to voluntarily undertake actions for environmental improvement with greater commitment than they would do unilaterally, and very often motivate the adoption of environmental self-regulation tools as the international standard ISO 14001 for environmental management or the EMAS Regulation. This article aims to analyze the general and specific criticism that is made to these private self-regulation tools.
... While developed countries like New Zealand have successfully created proper certification systems, for their honey, it is very difficult for developing countries to repeat the same due to a lack of competent certifying authorities. Due to a lack of competent authorities capable of distinguishing between superior and lower quality products, firms capable of producing higher quality products are in a disadvantageous position when bargaining for price [14]. Moreover, the cost of measuring honey quality parameters is also a major cause of concern in the case of developing countries. ...
Honey is an important food on a global scale. It has deep roots in many cultures and is extensively traded worldwide. In this article we have attempted to examine global honey trade from 1961 to 2022. The purpose of this research was to understand the socio-economic, environmental and geopolitical dynamics that affect its movement from production hubs to consumer markets. This study emphasizes the complex interplay of ecological systems, technological breakthroughs, trade regulations, and consumer tastes that shape it. Accordingly, our analysis shows that honey trade has been consistently growing in all continents but with significant differences as regards the volumes and values of trade among regions. Spearman’s rho test reveals different degrees of monotonic growth trends across these regions. Further, we checked for instability across continents using core variables and performed longitudinal analysis of Trade Balance Index. Empirical evidence has been used to find out what factors could be behind changes in global honey trade dynamics. This research is intended to give valuable insights into the development processes, patterns and implications of honey trading for scholars, industry practitioners and policy makers.
... Through its important functions of quality signaling, definition of a common procedural language and conflict resolution, certification enables organizations to reduce transaction costs, overcome the liability of foreignness and shorten possible spatial, linguistic and cultural barriers (Liu and Xie, 2020;Pacheco et al., 2022), as well as to demonstrate the reliability of the processes performed and the products or services offered. In this sense, the certification of international standards should be seen as a decentralized institution that allows companies to communicate qualitative performance that is not directly observable (Terlaak and King, 2006;Potoski and Prakash, 2009;Goedhuys and Sleuwaegen, 2016), overcoming the information asymmetries typical of business relationships. ...
Purpose
There is a strong consensus among scholars that the international competitiveness of companies strongly depends on the support of institutions, which reduces uncertainty in transactions by giving form to economic interactions, while less attention was paid to the role of international standards within this context. This study intends to propose its contribution by deepening the role of process certifications in the competitiveness and internationalization strategies of companies, with specific reference to the wood-furniture sector.
Design/methodology/approach
Data were collected using a questionnaire survey distributed via computer-assisted web interviewing (CAWI) methodology and sent to a sample of 2,845 Italian companies which operate in the wood-furniture industry, using simple random sampling. Thanks to the survey administration, 228 companies participated to the survey.
Findings
The study shows that it is companies operating in international markets that define this tool as relevant; this underlines how certification is seen as a kind of business card for entering international markets. In this context, the role of business leadership emerges as fundamental in the practical definition of the objectives to be set by adopting a quality management systems and in the subsequent commitment to obtain them.
Originality/value
Up to now, the literature has taken these elements into analysis mainly considering the consumers' perspective. In sectors with a higher content of innovation, technology and design, such as the wood-furniture sector, the literature appears to be poor in terms of contributions.
... CABs are essential pillars of the quality infrastructure: their services contribute to the safety and reliability of products and services [9] and play a fundamental role in innovation [10]. They are a cornerstone of trade by establishing trust and transparency [11][12][13][14][15]. CABs essentially provide a critical link between regulators, industry, and markets [16]. ...
The COVID-19 pandemic posed new and manifold challenges to organizations and their operations worldwide. Conformity assessment bodies (CABs), such as testing or medical laboratories, certification, and inspection bodies, were also affected by the associated disruptions. Their role in this crisis is highly relevant, as CABs are essential pillars of the quality infrastructure: their activities ensure that products and services meet requirements as defined in standards and regulations, thereby contributing to their safety and reliability. The question arises of how CABs and their operations were affected by the pandemic and how they responded. To this end, we present the results of an international survey of 986 CABs of all types in Germany, the UK, Italy, and New Zealand. Overall, CABs reported, on average, a reduction in demand for their services during the pandemic, facing restrictions in all countries. In addition, the pandemic had an overall negative impact on the CABs’ investment and innovation activities. However, investments in digital infrastructure were increased as a countermeasure, with CABs reporting a higher need for digitalization. The paper highlights and discusses results from in-depth analyses relevant to policymakers and industry alike.
... The impact of International Quality Standard Certification on a firm in participating in export participation has been the subject of recent research using macro data. Research done by Potoski and Prakash finds that ISO 9000 certification levels are associated with increases in countries' i atera exports, particularly in the case of developing countries, which may be due to the relative severity of their quality assurance challenges (Potoski & Prakash, 2009). In a similar study, Clougherty and Grajek find that ISO diffusion has no effect in developed nations but enhances exports from developing countries (Clougherty & Grajek, 2008). ...
Export is considered the backbone of a country's economy. Export plays a vigorous role in the economic growth of a country. But a company's decision of becoming an export firm has certain constraints. This paper examines The International Quality Standard Certification (IQSC) and the firm's participation in the export market of Egypt and Ethiopia. By considering the volume, Egypt is one of the top exporters in Africa, while Ethiopia is considered an average exporter. We tend to find why some countries' firms try to export more while others are less. Does the International Quality Standard Certification (IQSC) matter for firms' participation in the export market? How different are the characteristics of exporting firms in different countries? What other factors determine the firms' participation in the export market. We found that firms having IQSC export more than the firms that don't have IQSC and they have a comparative advantage. Due to economies of scale and higher efficiency, large firms have an advantage over small and medium firms in exporting to international markets. The firm's age is not an important factor for the probability to export. Productive, aged, foreign-owned and large firms usually export more than their counterparts.
... The certification obtained from ISO 9001 can convince a potential or foreign customer that a company has internal procedure to serve as a reliable supply chain partner and for those with the capacity and an interest to export. Market and trade access has been offered as demonstrated by the ISO 9001 certification and to maximize the values of the sales of export (Henson & Masakure, 2009;Potoski & Prakash, 2009). ...
There have been inconsistent findings in the literature concerning the relationships between quality management and sustainable performance. Hence, this research has prompted a further investigation of the effect of other variables that may better explain the nature of these links. The main purpose of this study is to investigate the mediating and moderating effects of organizational excellence and environmental regulation and
policy (ERP), respectively, on the relationship between total quality management (TQM) and sustainable performance (SP). Human resources management (HRM), service design (SD), information and analysis (IA), continuous process improvement (CP), benchmarking (BM), management leadership (ML), and quality assurance (QA) as TQM elements considered in this study were mediated and moderated with their respective relationships with sustainable performance. Questionnaires were distributed to 303 Malaysian food and beverage companies. 98 questionnaires were returned and used in the analysis using the PLS-SEM. The results of this study revealed that effective BM, CPI, SD, QA, and IA as TQM elements have a positive and significant effect on sustainable
performance on one hand and organizational excellence as a significant mediator of ML, CPI, SD, HRM, and IA to sustainable performance on another hand. In contrast, the results indicated an insignificant moderating effect of environmental regulation and policy on the relationships between TQM practices and sustainable performance. This study supported
the premises of the contingency and the institutional theory by reaffirming the importance of excellence for any successful strategic implementation in enhancing sustainable performance through the implementation of quality practices. The developed framework of this study can be employed by policy and decision-makers. Managers in the industry should consider the importance of this model when implementing any practice in the future. For future research, it is recommended that a longitudinal study is carried out to evaluate the impact of TQM, organizational excellence, and ERP on SP.
... Looking at benefits, reducing information asymmetry is one of the main expected advantages of having a certificate: the larger the information gap, the larger the potential benefits from its reduction, the more likely a firm is to find it strategic to become certified (King et al., 2005). This can be the case in industries where capabilities and quality are hard to observe, such as in technology-intensive sectors (Terlaak & King, 2006), or when parties are physically, culturally, and linguistically distant, as in the case of firms engaging in international trade through export or participation into global value chains (Potoski & Prakash, 2009). ...
Using two waves (2013, 2015) of the Micro, Small, and Medium sized Enterprises (MSMEs) survey of Vietnamese manufacturing firms, this paper first explores what drives firms’ decision to have a domestic standards certificate, taking into account a rich number of factors related to the cost and expected benefits of certification as well as institutional factors. It further explores the presence of a positive and significant effect of domestic certificates on firm growth, testing whether these serve as signalling devices for desirable attributes under information asymmetry. Evidence is indeed found for a signalling effect of domestic standards certification, being stronger for female-run businesses. Results hold even when controlling for international certifications.
... Standards are especially essential for global supply chains and international trade: governments negotiate Mutual Recognition Agreements (MRAs) based on internationally agreed standards; international auctions (e.g., wool) require products to be tested by accredited laboratories. Firms need to comply with various product and process standards and in doing so gain access to international markets [4,5] and signal their capabilities [6]. The opening quote of this paper introduces yet another important aspect of standardization: standards can also impact the acceptance of new and innovative products (such as sustainable products), or, more broadly, affect the competitiveness of firms. ...
The progress towards sustainable development could be accelerated by the adoption of progressive technologies and the development of new “green” products. The anecdotal evidence suggests that the acceptance of these products is, in part, affected by the development and acceptance of new standards as well as by the management of standardization in firms. Yet, there is a lack of a clearly focused research agenda that would systematically address the management of standardization in firms–particularly from a sustainability perspective. This paper addresses this gap and develops a research framework that is organized in three areas—intrafirm capabilities (the role of standards in the development of firms’ capabilities in—and through—standardization-related activities), interorganizational relationships (the role of standards in the development of interorganizational relationships) and accountability (the role of standards for accountability in firms and supply chains). Each area provides a set of representative research questions for future research. The paper also aims to encourage scholars in the field to address standardization from a strategic perspective, to develop an understanding about the complex nature of the management of standardization and trace its economic and sustainability consequences.
... In this regard, Cao and Prakash (2011) found that the pressures that emanate from commercial competitors that have adopted ISO 9001 induce exporters located in less developed countries to join this quality certification system. They argued that the problems of information on product quality are likely to be more important for developing exporting countries (Chiang and Masson, 1988;Potoski and Prakash, 2009;Cao and Prakash, 2011). Martincus et al. (2010) studied the ways in which certification affects the exports of companies, and found that ISO 9001 certification is associated with an increase in exports in terms of countries-destination, which means that there is a relationship but only with certain destination countries. ...
Purpose
This study has the main aim of analyzing the influence of six factors on ISO 9001 implementation: Economic Development, Exporting to Europe, Reputation, Competitiveness, Innovation and Business Sophistication. As a complement, a new factor relating to quality by country has been added: the World Quality Scoreboard.
Design/methodology/approach
Hypotheses are proposed that establish a (positive or negative) linear relationship between the diffusion of ISO 9001 and the indicators of the different factors analyzed in each country. The SPSS program was used to evaluate the hypotheses using data from 2009 to 2018.
Findings
The results indicate strong positive relationship for the country's economic development only when countries with low levels of income are considered. For the rest of the variables, the results indicate that their behavior varies according to the degree of development of the countries. When only developed countries are considered, significant and negative correlations are obtained for reputation, competitiveness, innovation and business sophistication, while considering the group of less developed countries, the results are reversed. The new World Quality Scoreboard has the same behavior whereas regarding exports; we did not obtain conclusive results.
Originality/value
This study adds important information on the studying of ISO 9000 phenomenon diffusion/evolution by analyzing the effect of six variables on the degree of implementation of the ISO 9001 standard in different countries. This information is interesting for companies and certification bodies across the world because it allows a better understanding of the reasons and conditions of implementing a quality management system.
... The decision to adopt a management system standard is driven by internal or external reasons [8]. The benefits of certification include regulatory compliance [32], meeting customer requirements [33], internal improvements [34], [35], access to markets [36], and innovation performance [37]. Although the motives for seeking certification to ISO 9001 and ISO 14001 are quite similar, the adoption of the latter is often determined by the regulatory environment [38]. ...
In the light of digitalization and recent EU policy initiatives, information is an important asset that organizations of all sizes and from all sectors should secure. However, in order to provide common requirements for the implementation of an information security management system, the internationally well-accepted ISO/IEC 27001 standard has not shown the expected growth rate since its publication more than a decade ago. In this article, we apply web mining to explore the adoption of ISO/IEC 27001 through a series of 2664 out of more than 900 000 German firms from the Mannheim Enterprise Panel dataset that refers to this standard on their websites. As a result, we present a ‘‘landscape’’ of ISO/IEC 27001 in Germany, which shows that firms not only seek certifications themselves but often refer on their websites to partners who are certified instead. Consequently, we estimate a probit model and find that larger and more innovative firms are more likely to be certified to ISO/IEC 27001 and that almost half of all certified firms belong to the information and communications technology (ICT) service sector. Based on our findings, we derive implications for policy makers and management and critically assess the suitability of web mining to explore the adoption of management system standards.
... Standards and certification schemes assure credibility of the production process and inform about product quality and safety, as well as about the social and environmental conditions of the production process. This illustrates the signalling role of standard certificates, which are used strategically to raise the firm's credentials in the marketplace by indicating to external parties that the firm is a reliable supplier and partner (Goedhuys and Sleuwaegen 2013;Henson and Jaffee 2006;Potoski and Prakash 2009;Terlaak and King 2006). One of the signalling benefits is the reduction in transaction and search costs, that is, the time and resources customers need to identify eligible suppliers. ...
This chapter investigates the scope for international private standards to play a role in reducing business risk among the small and medium enterprises in Vietnam. Business risk is measured as variability in revenue, variability in customer base, practice of making informal payments, and temporary firm closure. The results show lower levels of business risk among certified firms, especially for firms in the middle deciles of the risk distribution. This finding is robust to the use of different business risk measures. Certification also correlates negatively with risk for technologically advanced firms, as well as firms located in rural areas and northern provinces of Vietnam. The results suggest that firms could find protection from business downsides by investing in internationally recognized quality management tools.
... Second, the rise of transnational private standards stipulates that businesses include particular safety features in their products, maintain certain financial reserves, or keep records about their chemical inputs or labor conditions at every step along the entire supply chain (Potoski and Prakash 2009;Buthe and Mattli 2011;Buthe 2004;Cutler 1999). In accordance with a similar logic as the global supply chains, if businesses are already engaged in beyond-compliance activities because of their adherence to transnational private standards, it becomes less costly to participate in other forms of voluntary compliance (Arimura et al. 2011). ...
This article demonstrates the explanatory power of an expanded policy stream, as part of Kingdon’s Multiple Streams Framework. Product substitutes, corporate social responsibility, the global economy, and the market maverick rationalize the incentives under which regulators, consumers, businesses, and environmental NGOs interact to explain the formation of two landmark voluntary programs on mercury and arsenic use, respectively. Arsenic and mercury are ranked first and third, respectively, on the US Environmental Protection Agency’s priority list of hazardous substances. In both cases, the existence of a product substitute that performed on par with the original product but generated less negative environmental impact motivated the private sector to go beyond compliance in their environmental management. Notwithstanding, the push and pull of variables in the problem, politics, and policy streams, and the interplay of diverse actors led to the emergence of diverse forms of voluntary programs. In the mercury case, an industry association steered the technocratic process of the chlor-alkali industry’s voluntary stewardship program, which led to marginal reductions in toxic chemical use, as part of the global phase-out of mercury already under way. By contrast, in the arsenic case, an environmental activist campaign successfully compelled the pressure-treated wood industry to concede to a voluntary cancelation of chromated copper arsenate, an arsenic compound, in residential uses. Subsequently, arsenic use fell to levels not seen since the 1920s. In both cases, strong coalition building—the former by businesses and the latter by environmental NGOs—combined with a fragmented or nonexistent opposing side shaped the final form of each voluntary program.
... These private governance initiatives allowed firms, NGOs and developed country governments to address some of the negative consequences of economic integration, without significantly limiting its scope (Bartley 2007;Fransen 2011;Knudsen and Moon 2017). 1 Some brands, including Knights Apparel, Apple, Levi Strauss & Co. and Nike, sought to define themselves as leaders in responsible production (Bartley et al. 2015;Berliner et al. 2015b). Firms based in developing countries used participation in global voluntary schemes to signal commitments to protecting workers and the environment (Berliner and Prakash 2014;Cao and Prakash 2011;Potoski and Prakash 2009). Indeed, Distelhorst and Locke (2018) find that manufacturing firms' compliance with labor and environmental standards is associated with a significant increase in purchases by supply-chain partners (also see Görg et al. 2016). 2 Research on effectiveness of these voluntary private governance schemes typically finds that they fall short in protecting workers, for a variety of reasons (Applebaum and Lichtenstein 2016, Berliner and Prakash 2015). ...
Most research on private governance examines the design and negotiation of particular initiatives or their operation and effectiveness once established, with relatively little work on why firms join in the first place. We contribute to this literature by exploring firms’ willingness to participate in two recent, high-profile private initiatives established in the aftermath of the Rana Plaza disaster in the Bangladesh ready-made garment (RMG) sector: the Accord on Building and Fire Safety and the Alliance for Worker Safety in Bangladesh. Using novel shipment-level data from U.S. customs declarations, we generate a set of firms that were “eligible” to join these remediation initiatives. We are able to positively attribute only a minority of US RMG imports from Bangladesh to Accord and Alliance signatories. Firms with consumer-facing brands, publicly-traded firms, and those importing more RMG product from Bangladesh were more likely to sign up for the Accord and Alliance. Firms headquartered in the USA were much less likely to sign onto remediation plans, especially the Accord.
... Standards and certification schemes assure credibility of the production process and inform about product quality and safety, as well as about the social and environmental conditions of the production process. This illustrates the signalling role of standard certificates, which are used strategically to raise the firm's credentials in the marketplace by indicating to external parties that the firm is a reliable supplier and partner (Goedhuys and Sleuwaegen 2013;Henson and Jaffee 2006;Potoski and Prakash 2009;Terlaak and King 2006). One of the signalling benefits is the reduction in transaction and search costs, that is, the time and resources customers need to identify eligible suppliers. ...
... Boys and Grant (2010) found that ISO 14001 certification was associated with larger export volumes from the international level. Similar studies regarding the adoption of ISO 9001, such as Neumayer and Perkins (2009) and Potoski and Prakash (2009) also stressed the important role of trade in the international diffusion of certification. ...
This article aims to investigate the influences of trade and environmental issues on ISO 14001 certification in developing countries, focusing on how ISO 14001 certification is affected at macrolevel. Based on the panel data from 65 developing countries over the period 1999-2016, this study confirms the existence of long-run cointegrating relationships between ISO 14001 adoption, trade openness, and environmental pressures by using panel estimation techniques. The results from fully modified ordinary least squares (FMOLS) reveal the positive impacts of trade openness and environmental pressures on ISO 14001 adoption. The results from causality analysis show no causal relationship between ISO 14001, trade openness, and environmental pressures in whole panel; instead the relationship varies for different regions of developing countries.
... Standards have direct and indirect impacts on competition and an industry's technology development trajectory. They increase competition by enlarging markets through reduction of inter-firm transaction costs and reducing barriers to entry, facilitating development of complementary and compatible products (Albrecht et al., 2003;Clougherty & Grajek, 2008;David & Greenstein, 1990;Farrell & Saloner, 1986;Hussinger & Schwiebacher, 2015;Potoski & Prakash, 2009;Simcoe et al., 2009). Setting a standard ''freezes'' the technology, codifying a generation of development and precluding competing approaches until the standard is supplanted by another (Ernst, 2011). ...
Research since the 1980s has considered the economic and innovation impacts of technology standards policies. This paper extends the research on the impact of standardization policies to consider how the policies themselves, as they govern how the standards are created, determine standards’ impact on emerging economies’ economic performance and innovation capabilities. Using four cases of digital technology standardization in China, this paper finds that combinations of government financial and market support and openness to domestic and foreign contributors determines how and when digital standardization begets positive technological and economic impacts for firms. This paper contributes to our understanding of international technology upgrading in emerging economies, as well as suggesting policies for successful economic upgrading in large emerging economies.
... In particular, the impact of certification has been classified as 'external' or 'internal' (Sampaio, Saraiva, and Guimarães Rodrigues 2009;Heras-Saizarbitoria and Boiral 2013). External benefits result from a reduction of transaction costs, as certificates signal that the firm is a reliable partner, with a better reputation, raising credentials in the marketplace (King, Lenox, and Terlaak 2005;Terlaak and King 2006;Potoski and Prakash 2009;Goedhuys and Sleuwaegen 2013;Djupdal and Westhead 2015). ...
Using a rich panel dataset of small and medium scale manufacturing enterprises (SMEs) active in the manufacturing sector in Viet Nam, this paper investigates the drivers of firm productivity, focusing on the role played by international management standards certification. We test the hypothesis that, accounting for technological innovation (product and process) and other variables related to technological capabilities, international standards are conducive to higher productivity, through improved management practices and business organization. In line with the requirement of continuous improvement implied by most international standards, the main findings show that the possession of an internationally recognized standard certificate leads to significant productivity premium. We further find that the effect of certification on productivity is particularly strong for firms with technological innovation, located in southern provinces, and operating in more scale-intensive industries.
... For many MNEs, their GVCs consist of hundreds of firms with multiple tiers of suppliers, making it difficult to coordinate with suppliers across different countries and regions. However, there are cultural, geographic, and linguistic barriers between developing countries and developed countries that create information asymmetries (Potoski and Prakash 2009). ...
Michida, Humphrey and Nabeshima summarize the main ideas in the collection and the contribution of each of the papers. Focusing specifically on food safety standards and product-related environmental regulations (PRERs) adopted in the EU, they argue that these regulations and standards have increased in stringency and have extended the use of the preventive controls. Such controls create challenges for both governments and businesses in Asian countries. If these challenges are not addressed, the regulations may act as barriers to trade. The chapter identifies how the different chapters in the book contribute to analyzing the responses of both regulatory authorities and businesses in developing Asia to these challenges.
... Government policies promoting both quality management and an institutional positive attitude to ISO 9001 are likely to be two important factors for this phenomenon [29]. The intensity of trade has also been highlighted as a major reason for a country high ISO 9001 certification intensity [30,31]. For a given country, population and gross national income have been identified as two significant variables that influence the quality management systems certification diffusion [32]. ...
This exploratory research aims to study the reasons for the low implementation level of Six Sigma within Portuguese Small and Medium Enterprises. The results suggest that ISO 9001 certification, and Lean Management, are still regarded as enough for company success. The descriptive analysis and the statistical tests performed led to the conclusion that there are no significant differences for the motivations not to implement Six Sigma between small and medium companies. The qualitative research with focus groups highlighted that SMEs aiming for fast improvement results focus more on Lean Management and Kaizen, by using Five S methodology, visual management at shop floor level and basic quality tools. However, there are different views concerning Six Sigma applicability and value for SMEs, suggesting the need for further in depth research. Within this context, the edition of ISO 9001:2015 International Standard with an increased emphasis on process approach and the achievement of the quality management system objectives is a relevant opportunity for using Six Sigma to streamline processes and enhance customer satisfaction and business results.
... Firms operating in corrupt countries may fear that their products are tarnished by the country's reputation and may join voluntary programs to offset this reputational damage. Consequently, there is some evidence that joining voluntary programs such as ISO 9001 may allow developing countries that have poor reputations for quality to enhance trade (Potoski and Prakash, 2009). Hence, we do not see reputational benefits of joining a program to be mainly ideational; they have concrete material payoffs. ...
How does strength of domestic NGOs influence participation in
the Covenants of Mayors program? Launched by the European
Commission in 2008, this program invites local and regional
authorities to voluntarily commit to implementing EU climate
change and energy policies. We focus on the transitional
countries of Eastern Europe and Eurasia to examine whether
the strength of their domestic NGOs correlates with cities’
decisions to participate in this transnational program. To operationalize
NGO strength, we suggest thinking of it as a stock
variable that cumulates over time, instead of a single-year, flow
variable. With country year as the unit of analysis, we examine
the percentage of urban population covered by the Covenant
across a panel of 26 transitional economies for the period
2008–2014. We find that the key variable of interest, cumulative
NGO strength, is a statistically significant predictor of
program participation, even after controlling for domestic
and international factors, including the salience of international
NGOs and the years since the country began the formal
process to join the European Union.
... The impact of standards on working conditions can also come indirectly from the influence on firm profitability. While standards increase operational costs through, for example, investments in infrastructure and worker training, the implementation of standards is likely to result in better market access, higher product quality or increased productivity (Henson & Humphrey, 2010;Potoski & Prakash, 2009). Combined, these could yield higher prices and higher returns if the wage share of the increased value added does not go down. ...
Private international standards are commonly applied to improve market access and competitiveness. While most studies focus on trade effects and organizational outcomes, very few studies look at the effect of standards on employees. Using a three-year matched employer–employee panel dataset, this paper finds that the application of management standards improves working conditions in small and medium enterprises (SMEs) in Vietnam. Certified firms pay higher wages on average, implying that the adoption of standards could boost labor productivity. They are also more likely to offer formal contracts, illustrating that benefits from standards also have non-monetary aspects. These effects come from higher investment in employee training, adherence to national labor laws, and engagement of non-technical workforce. There is, however, no systematic impact of standards on the provision of fringe benefits, such as paid sick leave and health, social, unemployment, and accident insurance. The estimation accounts for endogenous matching of workers with firms and unobserved heterogeneity using an instrumental variable approach. The study reveals unexpected benefits from certification.
Purpose
This study aims to develop and test a framework of the antecedents to and performance outcomes of exporters’ use of different services offered by Internet-based Business-to-Business (I-B2B) platforms.
Design/methodology/approach
We test the model based on a unique survey dataset of 350 Chinese exporters who subscribed to Alibaba.com, a major I-B2B platform.
Findings
Drawing on the signaling theory, export and I-B2B platform literature, we develop a typology of exporters’ use of services offered by I-B2B platforms. We find that the extent to which firms have cost efficiency advantages, adopt an export diversity strategy, operate under high levels of psychic distance and experience high levels of domestic regulatory uncertainty are all positively related to exporters’ use of I-B2B platform services. The use of those services is either positively or negatively related to export success depending on the services in question. The magnitudes of these performance relationships are contingent on the exporters’ transparency strategies.
Originality/value
This is the first study to examine the antecedents to and consequences of exporters’ use of the services offered by I-B2B platforms.
This chapter reviews the theory of international trade and development, the rationale for trade barriers, and how countries, including those of Africa, have dealt with trade barriers. Three main perspectives on international trade theory are reviewed. They are classical, neoclassical, and Marxist and Marxian perspectives.
Both classical and neoclassical trade theories favor free trade and see it as beneficial to all parties. Both explain that trade occurs because of comparative advantage. However, for classical trade theory, comparative advantage is based on the labor theory of value, while for neoclassical trade theory, comparative advantage is based on factor endowments. The weaknesses observed within the neoclassical trade theory of factor endowments have given rise to two additional variations of neoclassical trade theory. The first is firm-based theory, which shifts the agency in international trade from states to firms, with an emphasis on why and how firms trade. The second is the new trade theory, which embraces real-world contexts of economic operations such as oligopolies and imperfect competition and, for that reason, even advocates for state intervention in trade, contrary to the ideals of free trade.
Marxist and Marxian trade theory agrees with the classical and neoclassical trade theory about the benefits of free trade. However, Marx in particular sees free trade as a vehicle for the impending crisis of capitalism that would transition society into socialism. Extension of Marx’s ideas sees trade as a vehicle of imperialism, unequal development, and dependency. In spite of all the benefits espoused by free trade, international trade still has many barriers commonly classified as tariff and non-tariff barriers. As a result, there have been constant efforts by countries worldwide—including those of Africa to deal with these barriers. These have included various international agreements.
Previous studies have shown an ambivalent relationship between standards and innovation while emphasizing the need to clarify the relationship and uncover their possible causal link. This paper revisits the standard-innovation relationship with the ISO 9001 standard, and patents applications as indicators of standards and innovation, respectively. Using a panel dataset of 81 countries covering the period 1993-2019, we find that ISO 9001 certification is positively associated with innovation. Our fixed-effects and system GMM estimates show that doubling the number of ISO 9001 certificates obtained at the national level increases innovation by 1.3-2.2%. The results vary according to the edition of the standard and the countries’ level of development, whereby developed countries seemed to benefit more from the international quality management standards. The paper also suggests that official development assistance (ODA) may be a vehicle through which wealthier countries can help developing ones harness the benefits of standardization.
Sunulan çalışma, Türkiye ve Türk Cumhuriyetlerinin standardizasyon ve sertifikasyon açısından durumunu inceleyerek değerlendirme amacını taşımaktadır. Bu amaca temel teşkil etmek üzere ISO tarafından yıllık olarak yayımlanan yönetim sistemi standartlarına ilişkin sertifikasyon verilerinin analizine gidilmiş, ayrıca sonuçların GSYH verileriyle uyumluluğu ele alınmıştır. Çalışmanın diğer amacı, anılan standartların Mevzuatta nasıl yer aldığına ilişkin bir analiz yürütülerek Türkiye’nin konumunun Mevzuat ile ilişkilendirilmesidir. Literatür taramasında tespit edilen bu iki boşluğun doldurularak literatüre katkıda bulunulması hedeflenmiştir. Analizlerde “ISO Survey“verileri, IMF’nin Ekonomik Görünüm Veritabanı ve T.C. Cumhurbaşkanlığı Mevzuat Bilgi Sistemi ikincil veri kaynağını oluşturmuştur. Önerileri içeren değerlendirmeler ayrıntılarıyla sunulmuş, uygulanabilecek geliştirmeler üzerinde durulmuştur.
The impact of the implementation of ISO norms in the firms’ performance has been evaluated considering indicators which are nor easily quantified such as the organizational efficiency or indicators easily measurable such as the stock value or CEO compensation, but that are not directly linked to the implementation of ISO norms in a firm. This study uses customer orientation, product innovation and leadership as quantifiable items that play an important role in the overall firm’s performance. The study uses data from the Portuguese firms and will attest whether the implementation of ISO norms can be beneficial for the firms’ customer performance. The existing literature has presented different conclusions on the impact of the ISO norms in the firms’ performance also due to the type of adoption that the firms use when implementing the ISO norms.KeywordsISO normsCustomer performanceQuality managementProduct innovationLeadership
Previous studies have shown an ambivalent relationship between standards and innovation while emphasizing the need to clarify the relationship and uncover their possible causal link. This paper revisits the standard-innovation relationship with the ISO 9001 standard, and patents applications as indicators of standards and innovation, respectively. Using a panel dataset of 81 countries covering the period 1993-2019, we find that ISO 9001 certification is positively associated with innovation. Our fixed-effects and system GMM estimates show that doubling the number of ISO 9001 certificates obtained at the national level increases innovation by 1.3-2.2%. The results vary according to the edition of the standard and the countries’ level of development, whereby OECD countries seemed to benefit more from the international quality management standards more than non-OECD countries. The paper also suggests that official development assistance (ODA) may be a vehicle through which wealthier countries can help those from the Global South harness the benefits of standardization.
Given the increasing sensitivity of buyers in the richer countries towards quality of goods they consume, low-quality exports largely constrain export-growth of the developing countries. This Element documents the attempts to estimate cross-country quality variations and reviews the demand side and supply side explanations for the low-quality phenomenon. It examines how trade policies can incentivize export-quality upgrading, and discusses the underlying channels through which a reverse causality from export-quality upon within-country income or wage inequality may develop.
Global supply chains rely on the compliance and safety of their products, processes, and facilities. These vital services (often referred to as ‘quality assurance’ or ‘conformity assessment’ services) are provided by Conformity Assessment Bodies (CABs). This empirical study explores the impact of the COVID-19 pandemic on CABs as well as their response to the resulting challenges. Data was gathered through an online survey among all accredited CABs in Germany, which resulted in 555 valid responses. Taking a resilience perspective, we reveal that CABs were hit hard by the disruptions caused by the pandemic, albeit to different degrees, in part due to their type of services, size, and sectors served. Furthermore, we find that contingency plans do not directly cushion order declines (as the main indicator of the economic impact of the pandemic) but rather indirectly through helping CABs respond more quickly, which in turn mitigates their order declines. However, our results show that contingency plans can also have adverse effects if they hinder flexible reaction to the crisis. The findings of our study help managers and policymakers learn from the COVID-19 pandemic and improve the resilience of the conformity assessment sector and quality assurance in the event of future crises.
Using a comprehensive dataset of firm-level export transactions from China Customs, this paper investigates whether mandatory International Financial Reporting Standards (IFRS) convergence promotes Chinese firms’ export activities. We find that compared with private firms which were not immediately required to comply with the new accounting standards in 2007, listed firms experienced a significant increase in their exports after converging with IFRS. The positive effect of IFRS convergence on exports only occurred when firms traded with IFRS countries and when they were non-state-owned enterprises. The findings are robust to a battery of sensitivity tests. We contribute to the literature on the real economic effects of IFRS harmonisation by documenting its role in enhancing international trade and global product market integration.
Según el Génesis de la Biblia (s.f., ed. 2009), la Torre de Babel fue construida por la humanidad para alcanzar el cielo, por lo que Yahvé confundió la lengua de los hombres. Este acontecimiento les llevó a dejar la torre inacabada y a que se marcharan en todas direcciones*; al parecer, esta es una realidad cuando se habla de calidad. En este texto se exponen las definiciones sobre calidad y otros conceptos relacionados, elaborados por autores emblemáticos del tema, incluyendo el impacto que esta noción tiene en el montaje de sistemas de gestión y formalización a través de procesos de certificación. En primera instancia, se aborda el concepto de calidad, incluyendo elementos históricos claves para su comprensión como la calidad en Japón, la calidad total, la calidad y la administración y los antecedentes del sistema de gestión. Luego se realiza una presentación de argumentos, base de la reflexión, que aportan a la necesidad imperiosa de la comprensión de la calidad, como asunto clave debido a su abordaje por presión o por voluntad, hacia un camino de certificación organizacional. Esto con el fin de abogar por la creación de un marco -campo- conceptual fortalecido que hoy se ha convertido en un paradigma, eliminando así la Torre de Babel que se pretende exponer.* El tema expuesto en la Biblia se retoma en el siglo XVI como símbolo del orgullo humano, advirtiendo de sus peligros, así como del fracaso de la racionalidad clásica frente a lo divino.
This study investigates signaling value of internationally-recognized quality certification in improving firm’s access to external finance for 39,638 mostly small and medium-sized firms in 137 countries. We find that certified firms have better access to external finance as compared to otherwise equal uncertified firms. Certified firms use more bank finance and equity capital while uncertified firms rely more on informal sources of finance. Quality certification helps firms to credibly signal their unobserved quality to creditors and investors, reduce informational asymmetry, and have better access to external finance. We also find that the signaling value of quality certification is stronger in presence of greater information asymmetry. Smaller firms and firms in less developed economies and financial systems benefit more from certifications by gaining better access to external finance.
This paper contributes to the home (market) bias literature where administrative or political borders limit trade across borders. Home bias is well documented at the national and subnational level. To sort out macro (e.g., location characteristics) and micro (e.g., enterprise characteristics) factors behind home bias, we use small‐ and medium‐sized enterprise (SME) data from Vietnam. Using the fractional multinomial logit model, we find that the proportion of SME sales outside of their home markets is positively associated with enterprise size, age, number of business association memberships, and the distance of SMEs' most important supplier. In contrast, the proportion of SME sales to neighboring provinces is negatively associated with the share of SME production for final consumption. Besides enterprise‐level frictions, market characteristics matter too. The proportion of SME sales to customers in their home markets is negatively associated with home or neighboring provinces' governance quality while the proportion of sales to customers in neighboring provinces is positively associated with these areas' governance quality. These suggest that good governance frees SME resources for use in selling to less familiar markets.
Research since the 1980s has considered the economic and technological impacts of technology standards policies. This paper extends the research on the impact of these policies to consider how the policies themselves, specifically how the standards are created, to determine the technological and economic impact of standards in emerging economies. Using four cases of technology standardization in China, this paper finds that a combination of government support-financial and implementation commitment-and openness-to domestic and foreign contributors-is essential for ensuring positive technological and economic impacts for firms. This paper contributes to our understanding of international technology transfer and upgrading, as well as policies for economic upgrading.
The adoption of ISO management standards has significantly increased over the last decade in developing countries, especially in Africa. Between 2014 and 2015, the number of certifications in the African continent increased by 20% for ISO 9001 and 19% for ISO 14001. Despite this rapid increase in absolute terms, ISO certifications in Africa remain relatively underdeveloped with about 1% of the total number of ISO 9001 and ISO 14001 certifications worldwide. The objective of this study is to highlight the barriers to the adoption of ISO management standards in the African context and to analyse their appropriateness with the specificities of African cultures and organizational practices. Several barriers are highlighted: the weak institutional framework, the ineffectiveness of donor-funded programs, the lack of human and financial resources, the low participation in the development of ISO management standards, and corruption. In addition, certain specificities of the local cultures in African countries, particularly oral tradition, paternalism, hierarchical distance, collectivism, strong tolerance to uncertainty, and attachment to traditions, may be in opposition to the values embodied in ISO management standards. These specificities require an effort to adapt ISO management systems to African realities in order to promote their substantial rather than symbolic integration within organizations. This work contributes to the existing literature by analyzing the institutional, economic and cultural barriers to the adoption of ISO management standards in Africa. Implications for both professionals and public authorities are also discussed.
Chapter 10 examines the relationship between the diffusion of the quality management standard, ISO 9001, and the adoption of the environmental management standard, ISO 14001, in Vietnam and Malaysia. It shows that businesses in both countries that received requests from customers about their usage of chemical substances were also more likely to have adopted ISO 9001. If these requests from customers arise from Product Related Environmental Regulation on Chemicals (PRERCs), this suggests that PRERCs promote the diffusion of ISO 9001 in developing countries. In addition, given that businesses that have adopted ISO 9001 are more likely to adopt ISO 14001, then PRERCs also indirectly promote the diffusion of ISO 14001 in developing countries. This link may have important implications for the pollution haven hypothesis.
A new global activism is shaming the world's top companies into enacting codes of conduct and opening their Third World factories for inspection. But before you run a victory lap in your new sweatshop-free sneakers, ask yourself: Do these voluntary arrangements truly help workers and the environment, or do they merely weaken local governments while adding more green to the corporate bottom line?
This paper examines how widely held country images affect attitudes towards a country's products and services and ability to attract investment, businesses and tourists. It assesses the role of strategic marketing management in promoting the country's image, attractiveness and products.Journal of Brand Management (2002) 9, 249-261; doi:10.1057/palgrave.bm.2540076
Standards have become one of the most important nontariff barriers to trade, especially national product standards that specify design or performance characteristics of manufactured goods. Divergent national standards often inhibit trade, whereas regional and international standards increasingly serve as instruments of trade liberalization. Consequently, the setting of international standards—seemingly technical and apolitical—is rapidly becoming an issue of economic and political salience. But who sets international standards? Who wins, who loses? This article offers a fresh analytical approach to the study of international standards, which the authors call the institutional complementarities approach. It builds on insights from realism and the “Battle of the Sexes” coordination game but emphasizes complementarities of historically conditioned standardization systems at the national level with the institutional structure of standardization at the international level. It posits that, after controlling for other factors that influence involvement in international standardization, differences in institutional complementarities play a critical though largely accidental role in placing firms from different countries or regions in a first- or second-mover position when standardization becomes global. The authors illustrate the insightfulness of this approach through statistical analyses of the first scientific set of data on standards use and standardization, collected by the authors through an international online survey.
The rapid growth of regional trading relationships in Europe, Asia, and Latin America has raised policy concerns about their impact on excluded countries and on the global trading system. Some observers worry that the multilateral system may be fracturing into discriminatory regional blocs. Others are hopeful that regional agreements will go beyond what was achieved in the Uruguay Round and instead become building blocks for further global liberalization and WTO rules in new areas. Jeffrey Frankel shows through extensive empirical analysis that the new breed of preferential trade arrangements are indeed concentrating trade regionally. He then assesses whether regional blocs are "natural" or "supernatural"--that is, whether they enhance or reduce global welfare. He concludes that a move to complete liberalization within blocs, with no reduction in barriers between blocs, would push the trading system into the supernatural zone of an excessive degree of regionalization. More balanced patterns of liberalization, however, give favorable outcomes. He considers regionalism at two levels: both the formal trading arrangements that are already in effect, and the broader continent-sized groupings that are under discussion (the Americas, Europe, and the Asia Pacific). Frankel's study also assesses the political and economic dimensions of regionalization and its implications for world economic prospects and public policy. In conclusion, Frankel proposes several policy prescriptions for pursuing partial regional liberalization among blocs as a stepping stone toward global free trade.
We study the global diffusion of ISO 9000 and ISO 14000 certification using a network diffusion framework. We start by investigating the presence and nature of contagion effects by defining alternative cross-country networks and testing their relative strength. Second, we study how the rate of diffusion differs between the two standards and between early- and later-adopting countries. Third, we identify which countries had more influence on diffusion than others. Empirically, we build a diffusion model which includes several possible cross-country contagion effects and then use Bayesian methods for estimation and model selection. Using country by year data for 56 countries and nine years, we find that accounting for cross-country influences improves both the fit and the prediction accuracy of our models. However, the specific cross-country contagion mechanism is different across the two standards. Diffusion of ISO 9000 is driven primarily by geography and bilateral trade relations, whereas that of ISO 14000 is driven primarily by geography and cultural similarity. We also find that the diffusion rate of ISO standards is higher for later-adopting countries and for the later ISO 14000 standard. We discuss several implications of our findings for the global diffusion of management standards.
We model and experimentally examine the board structure-performance relationship. We examine single-tiered boards, two-tiered boards, insider-controlled boards, and outsider-controlled boards. We find that even insider-controlled boards frequently adopt institutionally preferred rather than self-interested policies. Two-tiered boards adopt institutionally preferred policies more frequently but tend to destroy value by being too conservative, frequently rejecting good projects. Outsider-controlled single-tiered boards, both when they have multiple insiders and only a single insider, adopt institutionally preferred policies most frequently. In those board designs where the efficient Nash equilibrium produces strictly higher payoffs to all agents than the coalition-proof equilibria, agents tend to select the efficient Nash equilibria. Copyright 2008, Oxford University Press.
We extend the economic theory of regulation to allow for strategic self-regulation that preempts political action. When political "entry" is costly for consumers, firms can deter it through voluntary restraints. Unlike standard entry models, deterrence is achieved by overinvesting to raise the rival's welfare in the event of entry. Empirical evidence on releases of toxic chemicals shows that an increased threat of regulation (as proxied by increased membership in conservation groups) indeed induces firms to reduce toxic releases. We establish conditions under which self-regulation, if it occurs, is a Pareto improvement once costs of influencing policy are included. Copyright 2000 by the University of Chicago.
This compilation of papers for principal papers session PP-03 at the AAEA 1998 Annual Meeting assesses the current status of the organic agriculture industry in the United States. Paper topics address production, market and certification issues faced by the industry, research challenges and emerging conditions shaping domestic and international markets.
Not surprisingly, big countries trade more than small countries. In this paper we use data on shipments by 110 exporters to 59 importers in 5,000 product categories to ask: how? Do big countries trade larger quantities of a common set of goods (the intensive margin), a larger set of goods (the extensive margin), or higher quality goods? We find that the extensive margin accounts for two-thirds of the greater exports of larger economies, and one-third of the greater imports of larger economies. Richer countries export more units at higher prices. These calculations are useful for distinguishing features of trade models that correspond more or less well to the data. Models with Armington national product differentiation do not feature the extensive margin, and wrongly predict that greater output will be accompanied by worse terms of trade. 'Krugman' style models with firm level product differentation fare better, but must be modified to include quality differentiation and fixed costs of trading to match all of the facts. Estimates based on these modifications imply that differences in goods' quality could be the proximate cause of about 25% of country differences in real income per worker.
Voluntary programs have become widespread tools for governments and nongovernmental actors looking to improve industry's environmental and regulatory performance. Voluntary programs can be conceptualized as club goods that provide nonrival but potentially excludable benefits to members. For firms, the value of joining a green club over taking the same actions unilaterally is to appropriate the club's positive brand reputation. Our analysis of about 3,700 U.S. facilities indicates that joining ISO 14001, an important nongovernmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 is effective because its broad positive standing with external audiences provides a reputational benefit that helps induce facilities to take costly progressive environmental action they would not take unilaterally.
In this paper, examined are the three broad issues related to ISO 9000. These are: (1) European competitiveness, (2) the market perception of the company's fitness, and (3) the status of the organization's internal health.
This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: “Business in under-developed countries is difficult”; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of “insurability,” on the liquidity of durables, and on brand-name goods.
Abstract The past few years have witnessed an increasing global interest in ISO 9000 standards. Thousands of companies have already been certified. However, doubts have been raised about the effectiveness of ISO 9000 standards for infusing quality within organizations. In this paper, we empirically explore, in the international context, the relationship between ISO 9000 and the level of quality management practices and quality results. Our findings indicate that ISO 9000 registered companies exhibit higher levels of quality leadership, information and analysis, strategic quality planning, human resource development, quality assurance, supplier relationships, customer orientation and quality results.
Using data on bilateral trade flows from both before and after World War II, this article examines the impact of the General Agreement on Tariffs and Trade on trade between its members and on the system of interwar trade blocs. It shows that the distribution of the benefits produced by the GATT was much more highly skewed than conventional wisdom assumes. The article also shows that the gold, Commonwealth, Reichsmark, and exchange-control blocs exerted positive and significant effects on trade after 1945. The authors attribute these effects to the bargaining protocol that governed successive rounds of GATT negotiations, the signature element of the postwar trade regime.
Proponents of iso 9000 certification claim that it is a low-cost signal of a firm's commitment to quality and a meaningful component of total quality management (TQM). Critics claim that it has little relation to TQM and is a tariff on international trade. We test the hypothesis that firms obtain ISO 9000 certification to comply with government and customer demands by estimating a probit model of the certification decision. The results support the view of proponents of ISO 9000. After controlling for regulatory and customer pressures to obtain ISO 9000, other factors related to quality management and quality-based competition explain the adoption decision.
Recent research concludes that membership in the GATT/WTO had no effect on foreign trade. By mistakenly classifying many countries as outsiders, even though they had rights and obligations under the agreement, this work systematically underestimates the effect of GATT. We correct the downward bias in previous estimates. Our analyses show that GATT substantially increased trade, and that its effects were relatively stable across countries and over time.
Environmental and labour standards have become an important international trade issue. This article examines and ranks alternative trade policy responses available to an importing country with concerns over such standards. While a full import embargo may sometimes be preferable to allowing unrestricted access to unlabeled noconforming imports, a partial embargo that allows imports which demonstrably conform to the standard is always a better policy; and labeling solutions, which separate conforming and non-conforming imports, are typically better still. Consequently, full import embargoes based on non-conformity with labour or environmental standards are poor policy choices and should generally remain prohibited by WTO rules.
Can businesses voluntarily adopt progressive environmental policies? Most environmental regulations are based on the assumption that the pursuit of profit leads firms to pollute the environment, and therefore governments must impose mandatory regulations. However, new instruments such as voluntary programs are increasingly important. Drawing on the economic theory of club goods, this book offers a theoretical account of voluntary environmental programs by identifying the institutional features that influence conditions under which programs can be effective. By linking program efficacy to club design, it focuses attention on collective action challenges faced by green clubs. Several analytic techniques are used to investigate the adoption and efficacy of ISO 14001, the most widely recognized voluntary environmental program in the world. These analyses show that, while the value of ISO 14001's brand reputation varies across policy and economic contexts, on average ISO 14001 members pollute less and comply better with governmental regulations.
Certification of organic products serves three functions. First, it assures consumers that a product that is not observably different from nonorganic food was grown, processed, and packaged according to rules that limit or ban synthetic inputs and that protect the environment. Second, it assures producers that unscrupulous use of the term organic does not defraud them of price premiums and market share that can be earned from certified foods. Third, it makes the market more efficient by reducing information asymmetry along the marketing channel from producer to consumer. With expansion of markets, distance and time increase information asymmetry about products. The evolution of multiple labels with differing certification requirements gave rise to accreditation schemes. Whereas certifiers verify that the producers and processors meet their standards, accreditors check that minimum requirements are incorporated in the standards that certifiers use. Accreditors need legal authority or broad market recognition to harmonize and enforce minimum standards. For this reason, most accreditors are national or transnational (EU) government entities. Formal acceptance of a certifier's standards by an accreditor permits free entry into markets overseen by the accreditor. Lack of equivalence of standards across accreditors hinders market access and substantially increases transactions costs. Harmonization of U.S. standards with those in major markets would improve trade.
The ISO 9000 series of quality management systems standards is widely diffused, with over 560,000 sites certified in 152 countries (as of December 2003). Anecdotal evidence suggests that global supply chains contributed to this diffusion, in the following sense. Firms in Europe were the first to seek ISO 9000 certification in large numbers. They then required their suppliers to do likewise, including those abroad. Once the standard had thus entered other countries, it spread beyond those firms immediately exporting to Europe to be adopted by many other firms in those same countries. This paper empirically examines the validity of this view of the role of supply chains in global diffusion of ISO 9000. To do so, we decompose the statement that “supply chains contributed to the global diffusion of ISO 9000” into a series of four requirements that must be met in order for the original statement to be supported. We then use firm-level data from a global survey of over 5,000 firms in nine countries to test the hypotheses that correspond to these requirements. Our findings are consistent with the view that ISO 9000 did diffuse upstream through global supply chains. In short, this means that firms that export goods or services to a particular country may simultaneously be importing that country’s management practices. We conclude by suggesting how these findings might form the basis for future research on the environmental management systems standard ISO 14000.
Key words: ISO 9000; ISO 14000; quality management; supply chains; diffusion; global; empirical; survey.
We show that a gravity model explains international transactions in financial assets at least as well as goods trade transactions. Our results support the hypothesis that informational asymmetries are responsible for the strong negative relationship between asset trade and distance. This result is very important for theories of asset trade, portfolio adjustments and home bias. We strengthen it by investigating the roles of explicit informational variables, as well as distance, in explaining separately cross-border trade in corporate equities, corporate bonds, and government bonds.
Theory suggests that certification with a management standard may reduce information asymmetries in supply chains and thereby generate a competitive advantage for certified firms. This article uses an 11-year panel of U.S. manufacturing facilities to test whether certification with the ISO 9000 Quality Management Standard generates a competitive advantage. Results suggest that certified facilities grow faster after certification and that operational improvements do not account for this growth. Results also indicate that the growth effect is greater when buyers have greater difficulty acquiring information about suppliers.
This paper develops and tests several hypotheses relating to ISO 9000 quality system certification process using data collected in a cross-sectional study undertaken in Australia. Multivariate analysis is used to analyze the quantitative data and test the hypotheses. Our findings show that there is a significant and positive relationship between the manager’s motives for adopting ISO 9000 certification and business performance. Those organizations that pursue certification willingly and positively across a broad spread of objectives are more likely to report improved organizational performance. The individual element found to contribute most to business performance was customer focus. The principal motivation to pursue ISO 9000 certification was found to come from customer pressure. Auditing style was found to have an insignificant (positive or negative) effect on business performance. The ability of the new ISO 9001-2000 standard to capture and meet the conformance and performance requirements of the organization as part of a continuous improvement strategy will be a prime determinant of the extent to which managers embrace or reject ISO 9000 certification in the 21st century.
Does leaving a currency union reduce international trade? We answer this question using a large annual panel data set covering 217 countries from 1948 through 1997. During this sample a large number of countries left currency unions; they experienced economically and statistically significant declines in bilateral trade, after accounting for other factors. Assuming symmetry, we estimate that a pair of countries that starts to use a common currency experiences a near doubling in bilateral trade.
Country-of-origin reputations are endogenized in this paper and it is shown that otherwise identical countries can be correctly perceived as differing in their percentage of high-quality producers. These self-fulfilling reputations determine not only the average quality of a country’s exports but also the type of products in which a country specializes. Hence, the pattern of international trade can be determined by this ‘reputational comparative advantage’. An inferior country-of-origin reputation leads to lower national welfare, therefore, several trade and industrial policies that can improve country-of-origin reputation are examined.
This paper furnishes robust evidence that the WTO has had a strong positive impact on trade, amounting to about 120% of additional world trade (or US$ 8 trillion in 2000 alone). The impact has, however, been uneven. This, in many ways, is consistent with theoretical models of the GATT/WTO. The theory suggests that the impact of a country's membership in the GATT/WTO depends on what the country does with its membership, with whom it negotiates, and which products the negotiation covers. Using a properly specified gravity model, we find evidence broadly consistent with these predictions. First, industrial countries that participated more actively than developing countries in reciprocal trade negotiations witnessed a large increase in trade. Second, bilateral trade was greater when both partners undertook liberalization than when only one partner did. Third, sectors that did not witness liberalization did not see an increase in trade.
For over 40 years, the gravity equation has been a workhorse for cross-country empirical analyses of international trade flows and — in particular — the effects of free trade agreements (FTAs) on trade flows. However, the gravity equation is subject to the same econometric critique as earlier cross-industry studies of U.S. tariff and nontariff barriers and U.S. multilateral imports: trade policy is not an exogenous variable. We address econometrically the endogeneity of FTAs. Although instrumental-variable and control-function approaches do not adjust for endogeneity well, a panel approach does. Accounting econometrically for the FTA variable's endogeneity yields striking empirical results: the effect of FTAs on trade flows is quintupled. We find that, on average, an FTA approximately doubles two members' bilateral trade after 10 years.
A substantial amount of theoretical work predicts that quality plays an important role as a determinant of the global patterns of bilateral trade. This paper develops an empirical framework to estimate the empirical relevance of this prediction. In particular, it identifies the effect of quality operating on the demand side through the relationship between per capita income and aggregate demand for quality. The model yields predictions for bilateral flows at the sectoral level and is estimated using cross-sectional data for bilateral trade among 60 countries in 1995. The empirical results confirm the theoretical prediction: rich countries tend to import relatively more from countries that produce high-quality goods.
This paper presents specification tests that are applicable after estimating a dynamic model from panel data by the generalized
method of moments (GMM), and studies the practical performance of these procedures using both generated and real data. Our
GMM estimator optimally exploits all the linear moment restrictions that follow from the assumption of no serial correlation
in the errors, in an equation which contains individual effects, lagged dependent variables and no strictly exogenous variables.
We propose a test of serial correlation based on the GMM residuals and compare this with Sargan tests of over-identifying
restrictions and Hausman specification tests.
"Voluntary programs have become widespread tools for governments and non-governmental actors looking to shape industry behavior. Voluntary programs can be conceptualized as club goods that provide non-rival but potentially excludable benefits to members. For firms, the value of joining an effective green club over taking the same actions unilaterally is to appropriate the club's positive reputation with stakeholders. Our analysis of about 3,800 US facilities indicates that joining ISO 14001, an important non-governmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 's efficacy stems from its relatively open membership standards and its focus on management systems that provide participants with private benefits while addressing the root causes of regulatory non-compliance. Many government sponsored voluntary programs may be designed to fail because their rigid standards exclude all but highly compliant firms and their focus on performance standards ignores key causes of regulatory non-compliance."
I. Introduction, 1.—II. Context of the model, 3.—III. Consumer specifications and market equilibrium in the case of fixed
breakdown probabilities, 5.—IV. Breakdown probabilities set by profit considerations, 11.—V. Conclusion, 19.—Appendix, 20.
I. Introduction, 488. — II. The model with automobiles as an example, 489. — III. Examples and applications, 492. — IV. Counteracting
institutions, 499. — V. Conclusion, 500.
Consumers evaluate product quality with information signals such as brand name giving an advantage to established firms over other firms even when introducing a new product. Another signal is 'country of origin' and, as high-income countries focus more heavily on higher quality goods, there is a tendency for consumers to associate quality with a country's income per capita. Thus new firms from developing countries face particular problems in export markets. International standardization offers a potential solution to their problem. However, analysis of the use of ISO 9000 suggests that it is difficult to eliminate the informational asymmetry. Copyright © 2003 John Wiley & Sons, Ltd.
There is a simple robust variance estimator for cluster-correlated data. While this estimator is well known, it is poorly documented, and its wide range of applicability is often not understood. The estimator is widely used in sample survey research, but the results in the sample survey literature are not easily applied because of complications due to unequal probability sampling. This brief note presents a general proof that the estimator is unbiased for cluster-correlated data regardless of the setting. The result is not new, but a simple and general reference is not readily available. The use of the method will benefit from a general explanation of its wide applicability.