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Factors Affecting the Implementation Effectiveness of ISO 9000

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Factors Affecting the Implementation
Effectiveness of ISO 9001(2000) Standard and
its Impact on Business Results
P. Wickramasuriya
A. S. Dharmasiri

Abstract

Quality management has an ever increasing importance in the business world today and
implementing ISO 9000 standard is one of the most popular methods adopted by organizations
in this regard. In Sri Lanka also, more and more numbers of organizations are receiving ISO
certification show an increasing trend. Although many organizations are successful in achieving
the certification, their business performances do not reflect the effects of the certification in a
uniform manner. This study looks into the factors that could lead to this situation and tries y to
establish what kind of factors help to improve the implementation effectiveness and the link
between the ISO 9000 implementation and business performance. Findings indicate that factors
like customer oriented behavior, organizational culture, measurement and monitoring of
processes, processes and procedures, employee satisfaction and commitment are the key factors
present in these organizations, while factors like approach to implementing the standard,
leadership and involvement of top management, company image and employee involvement
have a low level of presence. In all three cases employees have a strong perception that there is a
link between the ISO implementation and profitability, but none of the companies measures it in
monetary terms. The conclusion is that by concentrating more on the low presence factors, the
implementation effectiveness can be enhanced to improve the quality management system, and
profitability as well.

Key Words : ISO 9000 Standard, Quality Management, Implementation Effectiveness

P.Wickramasuriya is a management consultant at the National Institute of Business Management. She

possesses over 10 years' experience in both public and private sector organizations and her research interests
are in the areas of management, productivity and quality. She holds a B.Sc. (Special) degree and an MBA
degree from the University of Colombo.
Dr. Ajantha Dharmasiri is Senior Faculty Member and Management Consultant, Postgraduate Institute of
Management, University of Sri Jayewardenepura, Colombo 08, Sri Lanka. Tel: +94 112689639 (office), +94
777766687 (mobile), +9431 2222689 (residence), Fax: +94 112689643, URL: www.pim.lk and Adjunct Faculty
in International HRM, Price College of Business, University of Oklahoma, USA.

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Sri Lankan Journal of Management
Volume 15, Nos. 2 , 3 & 4

1. Introduction

ISO 9001:2000 is a standard developed by the International Organization for Standardization

(ISO) for management of quality in service and manufacturing organizations. ISO is a network
of national standards institutes of 157 countries, one member per country, with a Central
Secretariat in Geneva, Switzerland, that coordinates the system. It is a non-governmental
organization, and its portfolio, according to ISO statistics, October 2007, comprised more
than 16,500 standards.

ISO 9000 was first released in 1987 and updated twice in 1994 and 2000 respectively. This
standard specifies the requirements for any organization to demonstrate its ability to provide
products or services that meet customer expectations consistently. With the recent
developments in the field of quality management, the drive towards business excellence is
centered mainly on the concept of quality. Quality management focuses on providing
confidence that requirements for quality are met all the time, and hence producers of goods
or services must assure their customers of the quality of products and services offered. When
it comes to quality, ISO 9001:2000 standard has a key role, not because it has a global presence,
but it also has universal applicability; it addresses quality assurance efforts at an international
level.

The standard provides a framework for developing and implementing a quality assurance
system in an organization. “The impact of the standards worldwide has been so extensive that
it is virtually impossible to bid for international manufacturing contracts if a company is not ISO
9000 registered”, (Karapetrovic, 1999). This clearly indicates the global presence and acceptance
of ISO 9000 standard.

The ultimate aim of achieving the quality standard is to improve the quality of the products or
services, and to make an improvement in the bottom line in relation to competitiveness,
productivity, and market share, and in other words, an improvement in business results. As
quoted by Park, (2007), “The ISO 9000 (2000) provides an excellent framework for quality
management and organizations do benefit from it” (Chan et al., 2002; Liebesman and Mroz,
2002). This has aroused the interest of researchers, which can be seen in their studies on the
nature of the relationship between the ISO implementation and business results.

Benefits obtained, once the standard is implemented, have been identified by many
researchers. Casadesus and Gimenez (2000) quote, “According to a study in 160 Australian
companies (Brown and Van der Wiele,1995) the benefits obtained with the certification are
as follows: increase of company quality awareness, increase of product quality awareness,
improvement of company management, improvement of customer relations, improvement
of products and services offered, improvement of relations within the organization, increase
in customer satisfaction, and increased respect from competitors. The fact that ISO 9000
certification benefits the company is confirmed in many other researches carried out on
numerous firms throughout the world. Adanur and Allen, who conducted a survey amongst
150 textile companies in 1995, identified five benefits of ISO 9000: reduced customer
complaints and improved supplier quality, better involvement of people, restriction of inferior
quality products from being shipped, increased business, and reduced costs. Another survey

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 Factors Affecting the Implementation
Effectiveness of ISO

carried out among 43 ISO certified Turkish textile companies in 2005 by Calisir et al. reported
increased product quality, reduced error/defect rate in production, and increased overseas
market share as the benefits of certification. Based on the results of the above mentioned
research carried out in different countries, one can conclude that certification for the ISO
9000 standard will improve the performance of an organization in many different ways. The
literature also shows some results which are contrary to these findings.

A group of such researchers, Tersiovski et al. (2003), found in a survey carried out among ten
certified Chinese organizations that “ISO 9000 certification did not show a significantly
positive relationship with organizational performance” Tian & Tam, (2007). On the contrary,
they found that standard implementation had some adverse effects on the organization like
increased operations costs and reduced product quality. The fact that ISO 9000 standard does
not improve organizational performance is observed by other researchers also. “In Spain
there are around 6,000 companies with this certificate, but they have not always obtained the
same results” Casadesus & Gimenez, (2000). The exact reason for these contradictory results
creates a gap for the researcher to investigate and report in order to suggest a solution.

“The impacts of and effects of ISO 9001:2000 certification appeared to vary from country to
country and from organization to organization” Park, (2007). This could be due to either the
presence of factors which affect the implementation effectiveness of the standard or mediator
effect. Research done to study these factors is very limited, and it is of significant value as the
number of organizations receiving certification is on the rise, according to the ISO Survey
results published in 2007. Sri Lanka needs to carve a niche for its goods and services in the
global market, if it wants to be stronger, economically. Since other countries already have a
benefit over our country in the areas of labor costs and availability of raw materials, we must
find a strategy that is unique in the market, to maintain the competitive edge. The best path
for this is through the philosophy of quality. When we look at all the quality initiatives, the
most commonly applied and widely recognized is the ISO 9001:2000 Standard, according to
the literature and ISO Survey results, 2007.

2. Literature Review

The growing trend in many organizations looking to certification could be due to fulfilling
their customer requirements (mostly overseas customers) or due to other external pressures
(most other competitors gaining certification). This fact is confirmed in the research conducted
by Erel and Ghosh (1997) and Raynor and Porter (1991) which reported that customer pressure
(or marketing factors) is the major driving force behind ISO 9000 series certification. When
top management takes a decision to implement the standard due to such reasons, the
organization or the employees may not be ready for the change. This could easily lead to the
creation of implementation barriers within the organization which can reduce the
implementation effectiveness, and hence its effect on business performance.

Organizations get certified for ISO 9001:2000 standard for many reasons, one of the most
important of which is to improve their business performance through consistent quality in
the products or services. Research done previously (Tian & Tam, 2007; Casadesus & Gimenez,

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Sri Lankan Journal of Management
Volume 15, Nos. 2 , 3 & 4

2000; Park, 2007) indicates that improvement of organizational performance is not common
to all organizations, once they receive the certification for ISO 9001:2000 standard, as expected.
From a study conducted in Ireland, it was revealed that “among respondent organizations
that had been awarded ISO 9000, 93 per cent believe that it had improved their reputation
and 90 per cent that it resulted in better products or services” (Drew & Healy,2006). But, the
results of an extensive study by Terziovski et al., (1996) of 1,341 manufacturing sites were
contradictory. They concluded that “the presence or absence of ISO 9000 certification is a
poor indicator of organizational performance and quality as measured by defect rates, warranty
costs, and other key measures such as full on-time delivery” Calisir.F., (2007). This contradiction
leads to the belief that the difference in the performance could be due to the presence of
certain factors within these organizations.

Numerous studies have focused on the factors that affect successful implementation of
various quality management concepts such as Total Quality Management (TQM). The researcher
did not come across any literature addressing the factors which affect successful
implementation of ISO 9001:2000 standard and, therefore, this is an area that needs to be
studied. Since the standard was revised in the year 2000, and has acquired a new structure,
studies done on the earlier versions are not valid for the current situation.

At the same time, why some organizations show improvements in their results after the
certification, while others fail to do so is a research area which needs to be investigated
further. However, the lack of research dealing with empirical relationships between quality
certification and its operational and strategic outcomes has prevented the creation of a road
map that can be used by managers of companies to achieve a higher level of implementation
effectiveness.

3. Methodology

The selection of cases was done so as to maximize the learning outcome of the study within
the given time period. The unit of analysis was the organization. For the study three cases
were selected from the packaging industry, based on whether they have ISO 9001:2000
standard certification and their level of performance. The study was conducted among the
packaging companies belonging to rigid and flexible categories, which were registered in the
directory published by the Sri Lanka Institute of Packaging. Three companies were selected:
Packwell Lanka Ltd, Econopack Ltd, and Printcare Plc, which are identified as company A, B
and C from this point onwards.

All three companies were in the ‘large’ category with more than 200 employees, and there
were similarities in the technology and the machinery used. Some of the salient features of
the three companies are outlined in the Table below, including general information like the
capacity, market, commitment towards quality, quality motivation for seeking registration and
number of years spent since certification.

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 Factors Affecting the Implementation
Effectiveness of ISO

Table 1: Comparison of company profiles

Company A Company B Company C

No. of full time 200 250 300

employees

Production Capacity 850MT/month 550Mt/month 900MT/month

Market Local Indirect Exporters Indirect Exporters

Top Management Yes Yes Yes

Committed
Customer requested No Yes Yes
certification
Position of MR Executive-directly Executive- reports to Manager - Reports to
reports to MD Production Manager Snr Mgr Production
Year of Certification 2003 2002 & 2006 1999

Key reasons for Internal improvements, Customer pressure Customer pressure,

registration competitive edge, Competitive edge Internal Process
export qualifier Quality improvement improvements,

In-depth interviews were conducted with five employees selected from each company, with
the help of two separate interview guides prepared for managerial and non-managerial
employees. Employees were selected from both managerial and non-managerial categories,
and in all three cases, the management representative was among them. Interviews were
conducted at one point in time, many years after the implementation of the ISO 9001:2000
standard. The questions were designed to gather the opinions of respondents:

• About the implementation of ISO 9001:2000 at the time of the study, and
• Retrospectively about the implementation of ISO 9001:2000 standard at the
onset of the implementation.

3.1 Data Analysis

Prior to the analysis, all the audio - taped interviews were transcribed along with observations.
The template approach was used for analyzing the collected interview data. This approach is
considered by King (1998) as appropriate for collecting and analyzing unstructured data, i.e.,
text, and producing a list of codes, i.e., template, representing different themes. Therefore,
this method is also known as thematic coding or code book analysis. This method is a flexible
method which allows the researcher to customize its application depending on the context
and requirements (King, 1998).

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Sri Lankan Journal of Management
Volume 15, Nos. 2 , 3 & 4

Figure 1: Development process of the template for data analysis

Code all transcripts using the codes. New

codes added / existing codes deleted if
necessary

Clusters were decided after reviewing

literature

Codes, categorized into clusters

Determine cluster frequencies and

identify the factors

The interview data gathered were coded using 79 codes, and then they were clustered using
the available literature whenever possible. Then cluster frequencies were calculated for each
company separately

3.2.1 Organizational Factors

Figure 2 shows a comparison of organizational factors for the three companies. For the factors
of organizational culture, measurement and monitoring of processes, processes and

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 Factors Affecting the Implementation
Effectiveness of ISO

procedures, all three companies indicate high frequencies which are comparable. For the
following factors; information and communication systems, company image, and other
management initiatives, company B indicates a very low frequency.

3.2.2 People Factors

Figure 3 shows a comparison of people factors which were identified for the three companies.
For all four factors; - customer oriented behavior, employee satisfaction, commitment, and
employee involvement - the highest frequency is shown by company C, which has the
highest level of implementation effectiveness. Company A closely follows except in customer
oriented behavior where it leads. Company B has registered the lowest frequency for all the
four factors and especially employee satisfaction, which is drastically low.

3.2.3 Environmental Factors

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Sri Lankan Journal of Management
Volume 15, Nos. 2 , 3 & 4

According to figure 4, company C, with the highest level of implementation effectiveness,

indicates the highest frequencies for all the environmental factors, except for internal (work)
environment, where company A has registered the highest frequency. Company B, which has
the lowest level of implementation effectiveness, indicates the lowest frequencies for all the
environmental factors.

3.2.4 Implementation Effcectiveness

Figure 5 shows a comparison of implementation effectiveness among the three companies.

This clearly indicates that company C shows higher frequencies for all four factors and Ccompany
A shows similar frequencies for customer oriented behaviour and employee satisfaction,
while the frequencies for measurement, and monitoring of processes, and processes and
procedures, are lower than those of company C. Company B shows the lowest frequency for
customer oriented behavior and employee satisfaction, while measurement and monitoring
of processes and processes and procedures are equal or higher than those of the other two
companies.

According to this analysis, company C shows the highest level of implementation effectiveness,
while company A follows very closely. Company B indicates the lowest level of implementation
effectiveness out of all three companies.

Company B Company A Company C

Low Implementation Effectiveness High

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 Factors Affecting the Implementation
Effectiveness of ISO

Table 2: Comparison of implementation effectiveness with identified factors

Company C Company A Company B

Implementation High Medium Low

Effectiveness
Organizational Factors

Factors with Highest ΠMeasurement & ΠOrganizational ΠOrganization

Frequencies monitoring of culture
processes ΠInformation &
ΠProcesses & communication
procedures system
ΠHuman resources
development
ΠLeadership
ΠCompany image
ΠApproaches to
implementing ISO
ΠRewards system
ΠOther
management
initiatives

Factors with Lowest ΠOrganization ΠMeasurement & ΠOrganizational

Frequencies monitoring of culture
processes ΠInformation &
ΠProcesses & communication
procedures system
ΠHuman resources ΠCompany image
development ΠApproaches to
ΠLeadership implementing ISO
ΠApproaches to ΠOther
implementing ISO management
ΠRewards system initiatives

People Factors

Factors with Highest ΠCustomer oriented

behavior

Frequencies ΠEmployee
satisfaction
ΠCommitment
ΠEmployee
involvement

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Sri Lankan Journal of Management
Volume 15, Nos. 2 , 3 & 4

Factors with Lowest ΠCustomer oriented

Frequencies behaviour
ΠEmployee
satisfaction
ΠCommitment
ΠEmployee
involvement

Environmental Factors
Factors with Highest ΠMotivation ΠInternal (work)
Frequencies ΠExternal environment
environment

Factors with Lowest ΠMotivation

Frequencies ΠExternal
environment
ΠInternal (work)
environment

Implementation Effectiveness
Factors with Highest ΠCustomer oriented
Frequencies behavior
ΠEmployee
satisfaction
ΠMeasurement &
monitoring
ΠProcesses &
procedures

Factors with Lowest ΠMeasurement & ΠCustomer oriented

Frequencies monitoring behavior
ΠProcesses & ΠEmployee
procedures satisfaction

4. Discussion and Conclusions

According to the findings of this study, some of the factors have a high impact on the
implementation effectiveness of ISO 9000 standard, while other factors have a low impact on
the same. They are:

Organizational factors

™ Organizational factors with high impact

• Approaches for implementing ISO 9001:2000

• Company image
• Other management initiatives

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 Factors Affecting the Implementation
Effectiveness of ISO

™ Organizational factors with low impact

• Organization

People factors

™ People factors with high impact

• Customer oriented behavior

• Commitment
• Employee involvement
• Employee satisfaction

™ People factors with low impact

• None

Environmental factors

™ Environmental factors with high impact

• Motivation for implementation of ISO 9001:2000 standard

• External environmental conditions

™ Environmental factors with low impact

• None

The results of this study does not show a clear link between the business results and ISO 9000
implementation, but there is a strong belief among managerial as well as non-managerial
staff that the implementation improves profits. This fact cannot be proved or disproved as
none of the companies measure their profitability in relation to the ISO 9000 implementation.
The researchers think that this is an area which can be improved, and which should be
improved, if the organization needs to create more interest among the top levels of
management regarding ISO implementation. A suitable tool should be developed for each
level of employment to measure profitability with relevance to ISO standard and their
performance.

“On one hand, it is argued, quality management systems are a necessary foundation for other
quality initiatives such as total quality management” (Taylor, 1995). This may be the case in
developed countries like the United Kingdom, where they use ISO certification as a stepping
stone in their quality journey, heading for total quality. But in Sri Lanka, this is not a common
thing. It was obvious from the responses given by the three companies that were studied,
that none of the companies even mentioned during the interviews that it had an intention to
go beyond ISO 9000 level, towards total quality.

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 Sri Lankan Journal of Management
Volume 15, Nos. 2 , 3 & 4

5. Further Research

Findings of this research point to several further research areas. Further research needs to be
done to identify all the factors relevant for effective implementation of the ISO 9000 standard,
and to gain a better understanding of the relationships that exist between these factors and
ISO implementation. Once all the factors and their relationships are identified, an innovative
and successful implementation strategy can be developed that will help not only to implement
ISO standard effectively, but improve financial performance of the company with the help of
the standard.

References

Adanur, S. and Allen, B. (1995). First results on the effects of ISO 9000 in the US textile industry.
Benchmarking for Quality Management & Technology, 2 (3), 41 - 52

Calisir, F. (2007). Factors affecting service companies’ satisfaction with ISO 9000. Managing
Service Quality,17 (5), 579-593

Calisir, F. and Mohammad, A. (2005). A survey of total quality management in Iran: Barriers to
successful implementation in health care organizations. Leadership in Health Services, 18 (3),
18 - 24

Casadesus, M. and Gimenez, G. (2000). The benefits of the implementation of the ISO 9000
standard: empirical research in 288 Spanish companies. The TQM Magazine, 12 (6), 432-441

Drew, E. and Healy C. (2006). Quality management approaches in Irish organizations. The TQM
Magazine, 18 (4), 358-371

Erel, E. and Ghosh, J.B. (1997). ISO 9000 implementation in Turkish industry. International
Journal of Operations and Production Management, 17 (12), 240 – 252

Karapetrovic, S. (1999). ISO 9000: the system emerging form the vicious circle of compliance.
The TQM Magazine, 11 (2), 111-120

Park, D.J. (2007). Business values of ISO 9000:2000 to Korean shipbuilding machinery
manufacturing enterprises. International Journal of Quality & Reliability Management, 24(1),
32-48

Taylor, W.A. (1995). Senior executives and ISO 9000. International Journal of Quality & Reliability
Management, 12 (4), 40 – 57

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