Assessing the Impact of Internationally Recognized Quality Standards on the Business Performance of Firms

Chathurika Rajapaksha, Jagath Chaminda Edirisinghe

Abstract


Internationally recognized quality standards are obtained by many firms with the intention of enhancing their corporate reputation. A question prevails whether this decision ultimately addresses the establishment’s main financial objective of shareholder wealth maximization. The objective of this study is to examine the impact on the business performance of firms through certification and also to identify the factors that influence a firm to obtain international quality standards. Secondary data obtained from 606 firms from Sri Lanka is analysed using a Treatment Effects Model. The results reveal that obtaining quality standards has a significant positive impact on business performance of firms. We find higher probability of adoption of quality standards for firms in the food industry. Experience of the top management, firm size, investment on research and development, new technology, new logistic and business processes also increases the probability of obtaining certification.

Keywords


Firm performance, Quality standards, Treatment effects model

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International Journal of Economic Practices and Theories (IJEPT) ISSN: 2247 – 7225 (online)