Factors affecting the incidence and intensity of standards certification evidence from exporting firms in Pakistan

This article explores the incidence and intensity of certification of Pakistani exporting firms across a range of quality assurance programs. Using firm-level data, the firm's certification status is modelled using Heckman's two-step procedure. The first-stage results using a probit model show that the likelihood of certification is determined by the sector, the firm's awareness of trade standards, the level to which the firm's markets are diversified, external pressure for certification and the firm's primary export market. The intensity of certification is treated as the number of standards a firm has invested in, which can be seen as ordered into distinct categories, such that an ordered probit model can be applied, correcting for sample selection bias. The results show that the number of standards to which a firm is certified is influenced by firm size, a firm's primary export markets, level of awareness of trade standards and level of market diversification. Overall, the results suggest that certification can be enhanced through increased private and institutional incentives, such as reducing transactions costs in the fisheries and agro-processing sectors, as well as increased regulatory enforcements in supply chains and support for raising the technical capacity of the sector.