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ISO certification, financial constraints, and firm performance in Latin American and Caribbean countries

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  • Ullah, Barkat
  • Wei, Zuobao
  • Xie, Feixue

Abstract

We employ World Bank Enterprise Survey data collected in 2006–2010 for 21,852 firms from 31 Latin American and Caribbean countries to investigate determinants of the adoption of International Organization for Standardization (ISO) certification, the relation between ISO certification and firm financial constraints, and the effect of ISO certification on firm performance. We find that ISO accreditation is positively related to firm size and firm age. Exporters and foreign firms are more likely to adopt ISO certification. We document that ISO-certified firms exhibit significantly lower level of financial constraints and higher labor productivity and lower cost of sales than non-certified firms.

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  • Ullah, Barkat & Wei, Zuobao & Xie, Feixue, 2014. "ISO certification, financial constraints, and firm performance in Latin American and Caribbean countries," Global Finance Journal, Elsevier, vol. 25(3), pages 203-228.
    • Handle: RePEc:eee:glofin:v:25:y:2014:i:3:p:203-228
    DOI: 10.1016/j.gfj.2014.10.003
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    Cited by:

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    2. Oznur Ozdamar & Eleftherios Giovanis & Sahizer Samuk, 2020. "State business relations and the dynamics of job flows in Egypt and Turkey," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 10(4), pages 519-558, December.
    3. Jing Wang & Yunshi Mao, 2020. "Pains and gains of environmental management system certification for the sustainable development of manufacturing companies: Heterogeneous effects of industry peer learning," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 2092-2109, July.
    4. Ullah, Barkat, 2020. "Signaling value of quality certification: Financing under asymmetric information," Journal of Multinational Financial Management, Elsevier, vol. 55(C).
    5. Filomena Pietrovito, 2020. "The Impact of Credit Constraints on International Quality and Environmental Certifications: Evidence from Survey Data," JRFM, MDPI, vol. 13(12), pages 1-14, December.
    6. Ha, Le Thanh & Thanh, To Trung & Thang, Doan Ngoc & Anh, Pham Thi Hoang, 2021. "Bribery, export decisions, and institutional constraints: Evidence from cross-country firm-level data," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 585-612.
    7. Anh‐Tuan Doan & Anh‐Tuan Le & Quan Tran, 2020. "Economic uncertainty, ownership structure and small and medium enterprises performance," Australian Economic Papers, Wiley Blackwell, vol. 59(2), pages 102-137, June.
    8. Yu, Jie & Xiao, Shengsheng, 2023. "Project certification and screening in the reward-based crowdfunding market," Journal of Business Research, Elsevier, vol. 165(C).
    9. Allison, Lee & Liu, Yu & Murtinu, Samuele & Wei, Zuobao, 2023. "Gender and firm performance around the world: The roles of finance, technology and labor," Journal of Business Research, Elsevier, vol. 154(C).
    10. Zhang, Jianhong & Jiang, Jiangang & Noorderhaven, Niels, 2019. "Is certification an effective legitimacy strategy for foreign firms in emerging markets?," International Business Review, Elsevier, vol. 28(2), pages 252-267.
    11. Maria Crescimanno & Claudio Mirabella & Valeria Borsellino & Emanuele Schimmenti & Demetris Vrontis & Salvatore Tinervia & Antonino Galati, 2023. "How Organizational Resources and Managerial Features Affect Business Performance: An Analysis in the Greek Wine Industry," Sustainability, MDPI, vol. 15(4), pages 1-14, February.
    12. Siougle, Efrosini & Dimelis, Sophia & Economidou, Claire, 2019. "Does ISO 9000 certification matter for firm performance? A group analysis of Greek listed companies," International Journal of Production Economics, Elsevier, vol. 209(C), pages 2-11.
    13. Trifković, Neda, 2017. "Spillover Effects of International Standards: Working Conditions in the Vietnamese SMEs," World Development, Elsevier, vol. 97(C), pages 79-101.
    14. Duc-Niem Le & Van-Hoa Nguyen, 2024. "Does Quality Certification or Product Diversification Improve the Performance of Small and Medium Enterprises?," Sustainability, MDPI, vol. 16(5), pages 1-11, February.
    15. Clougherty, Joseph A. & Grajek, Michał, 2023. "Decertification in quality-management standards by incrementally and radically innovative organizations," Research Policy, Elsevier, vol. 52(1).
    16. Ullah, Barkat & Wei, Zuobao & Zhu, Yicheng, 2023. "Can a signal mitigate a dilemma? Quality management standards, corruption, and business ethics," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 701-716.
    17. Xu, Jian & Liu, Yu & Abdoh, Hussein, 2022. "Foreign ownership and productivity," International Review of Economics & Finance, Elsevier, vol. 80(C), pages 624-642.
    18. Rocca Espinoza, Salustiano Eduardo & Duréndez Gómez-Guillamón, Antonio, 2017. "Factores determinantes que explican el acceso a la financiación bancaria: un estudio empírico en empresas peruanas," Small Business International Review, Asociación Española de Contabilidad y Administración de Empresas - AECA, vol. 1(1), pages 11-34, July.
    19. Quan Tran & Anh‐Tuan Doan & Thao Tran, 2021. "Small and medium enterprises' credit access, ownership structure and job development," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 710-735, December.
    20. Prosper F. BANGWAYO-SKEETE & Winston R. MOORE, 2015. "Entry Into Export Markets And Quality Certifications: Evidence From Developing Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(2), pages 17-34.
    21. Frederick Kibon Changwony & Anthony Kwabena Kyiu, 2024. "Business strategies and corruption in small‐ and medium‐sized enterprises: The impact of business group affiliation, external auditing, and international standards certification," Business Strategy and the Environment, Wiley Blackwell, vol. 33(1), pages 95-121, January.
    22. Mihaela Iona?cu & Ion Iona?cu & Marian Sacarin & Mihaela Minu, 2017. "Exploring the Impact of ISO 9001, ISO 14001 and OHSAS 18001 Certification on Financial Performance: The Case of Companies listed on the Bucharest Stock Exchange," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 19(44), pages 166-166, February.

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    More about this item

    Keywords

    ISO certification; Financial constraint; Firm performance; International standard; Latin America; Caribbean countries;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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