Global perspectives on global standards, CJ Corbett, A Luca, J Pan

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Content: SPECIAL REPORT Global perspectives on global standards a 15-economy survey of ISO 9000 and ISO 14000
This article summarizes findings obtained from a survey of 5 398 ISO 9000 and ISO 14000 certified firms in 15 economies in North America, Europe and Asia. It compares motivations and benefits, and how these differ across countries and business sectors.
W hat does it mean to be a "global" standard ? Of course, the requirements of the standard should be the same in whatever country it is applied ­ which is the case for ISO 9000 and ISO 14000. But most people, in referring to standards being global, would also expect them to be adopted for similar reasons and in similar ways across countries, hence leading to similar benefits. Are ISO 9000 and ISO 14000 global in that sense of the word? To investigate that question, we conducted a survey among certified firms in 15 economies, asking them about their motivations for seeking certification, and about implementation issues and benefits experienced. The survey was administered during 1999-2001. This article summarizes the principal findings. The full survey is available from the authors. In particular, we examine whether motivations and benefits differ across countries and/or across business sectors. If we would
BY Charles J. CORBETT, ANASTASIA M. LUCA, AND JEH-NAN PAN We examine whether motivations and benefits differ across countries and/or across business sectors
find that firms in France sought ISO 9000 certification for substantially different reasons than firms in Taiwan, regardless of their sector of activity, and experienced substantially different benefits, we might infer that ISO 9000 in France does not mean the same as ISO 9000 in Taiwan. Conversely, if we would find that chemical firms across different countries report similar motivations for certification and comparable benefits, though perhaps different from those reported by firms in the electronics industry, we would have more faith in the view of ISO 9000 as being truly global. Below, we present a summary of the survey sample, followed by an analysis of motivations, implementation, and benefits, both by country and by sector. Profile of survey sample The survey was administered in 15 economies by a network of local partners who were responsible for translating the survey, obtaining
ISO management systems ­ January-February 2003
31
SPECIAL REPORT
address lists of certified companies,
The economies surveyed were :
administering the survey, and enter- Australia (ANZ), Canada (CA), France
ing the responses.
(FR), Hong Kong (HK), Indonesia
A total of 5 398 firms responded (SEA), Japan (JP), Republic of Korea
to the survey. Responses for some (KR), Malaysia (SEA), New Zealand
countries were grouped together for (ANZ), Philippines (SEA), Singapore
the rest of the analysis presented (SEA), Sweden (SE), Taiwan (TW),
here, as their sample
Thailand (SEA), Unit-
size was too small to be treated separate-
The food industry
ed States (US). The breakdown of
ly : Australia and New reports the highest scores responses by econo-
Zealand were com-
my is shown in Table 1.
bined and attributed
for seeking
The breakdown of
the abbreviation of ANZ; and Indonesia,
` quality improvements '
responses by industry sector is displayed
Malaysia, the Philip-
in Figure 1.
pines, Singapore, and Thailand were
combined into South-East Asia (SEA). Apart from these two groupings, to which we have assigned "unofficial" abbreviations of their names for the purposes of this article, the other economies are identified in the graph charts by the codes assigned in the InterNational standard for country codes, ISO 3166 .1)
Motivations for seeking ISO 9000 or ISO 14000 certification Let us turn to the motivations for seeking ISO 9000 and ISO 14000 certification. Respondents were asked to rate, on a five-point scale, how important each of a set of 11 possible motivations was in their decision to seek certification.
Table 1 : response rates by economy 1) For more information on ISO 3166, see the following location on the ISO Web site : http://www.iso.org/iso/en/ prods-services/iso3166ma/index. html
Country
Number of forms mailed
Number of usable Response responses rate received
ISO 9000
ISO 14000
Australia (ANZ) Canada (CA) France (FR) Hong Kong (HK) Indonesia (SEA) Japan (JP) Korea (KR) Malaysia (SEA) New Zealand (ANZ) Philippines (SEA) Singapore (SEA) Sweden (SE) Taiwan (TW) Thailand (SEA) US (US) Total
2 607 561 2 000 1 200 200 5 000 1 361 200 288 200 200 268 2 142 200 5 000 21 427
550 198 445 131 9 2 261 120 10 61 53 15 135 456 15 939 5 398
21,10 % 35,29 % 22,25 % 10,92 % 4,50 % 45,22 % 8,82 % 5,00 % 21,18 % 26,50 % 7,50 % 50,37 % 21,29 % 7,50 % 18,78 % 25,19 %
540 185 440 124 7 114 2 221 10 57 51 13 135 446 15 906 5 264
92 110 29 20 3 72 575 4 13 16 10 51 223 4 178 1 400
32 ISO Management Systems ­ January-February 2003
SPECIAL REPORT
40%
Figure 1 : Breakdown by
35%
business sector
30%
ISO 9000
25% ISO 14000 20%
15%
10%
5%
Figure 2 : Motivations for
CoCmo0mm%puuntiecar teiooqnrusippemriepnhteEolreraSclstermonicicosnductMoreschaniAcuatl omation
Food PlastiCchemical
TextilePhMaermtaal ceutical
Others 0
0.02
seeking ISO 9000 certification ­ by economy 0.04 0.06 0.08 0.1 0.12 0.14
In some countries, respondents
Cost reductions
ANZ
have a tendency to report high scores
across the board, while others tend to
CA
be more modest. To correct for that, we compute "relative motivations", by dividing each respondent's score
Quality improvements
FR
for each motivation by the sum of the scores for all motivations for that respondent. That way, for each respondent, all motivations must add
HK
Marketing
advantage
JP
up to 1.
Figures 2 and 3 show how the motivations for ISO 9000 vary across
Customer pressure KR
countries and sectors. Although the charts contain too much information to be easy to read, some trends are clear.
SEA
Many competitors
certified
SE
Overall, the main motivations for
seeking ISO 9000 certification are "quality improvements" and "corporate image", and to a slightly lesser extent, "marketing advantage" and
Benefits experi-
TW
enced by others
US
" customer pressure ". This pattern returns both when looking across
Avoid potential export barrier
countries or across sectors.
The food industry reports the
highest scores for seeking "quality improvements" and for "capturing
Capturing workers' knowledge
workers' knowledge", suggesting that
firms in this industry were the most motivated by process-related reasons.
Relations with authorities
The Textile Industry reports the
highest score for seeking " cost reductions ". Firms in the semiconductor
Relations with communities
industry reported the highest scores
for "customer pressure" and "many
competitors certified ", suggesting that the external pressure for ISO 9000
Corporate image
certification is most strongly felt in
ISO Management Systems ­ January-February 2003
33
SPECIAL REPORT
Cost reductions
Quality improvements Marketing advantage
Customer pressure
Many competitors Communications certified
computer equipment
or peripherals
Benefits
Electronics experienced by
others
Semiconductors
Mechanical Automation
Avoid potential export barrier
Food
Plastic Chemical
Capturing workers' knowledge
Textile Metal
Relations with authorities
Pharmaceutical
Others
Relations with communities
Corporate image 34 ISO Management Systems ­ January-February 2003
Figure 3 : Motivations for seeking ISO 9000 certification ­ by business sector that sector. Respondents in the food sector gave the lowest score for " many competitors certified ". However, one should be careful not to read too much into these differences between industries. Perhaps the most striking observation is how similar the relative motivations are across such fundamentally different activities. Figures 4 and 5 show that the analysis for ISO 14000 is similar to that for ISO 9000. The main motivations for seeking ISO 14000 certification are "environmental improvements" and "corporate image" and, to a lesser extent, "marketing advantage" and improved The categories in which firms report receiving the highest benefits from ISO 9000 certification are ` quality improvements ', ` customer satisfaction', ` improved procedures ' and ` corporate image' "relations with communities". "Customer pressure" scores lower for ISO 14000 than for ISO 9000. Firms in the industrial automation sector expect to achieve the highest "marketing advantage", and experience the most "customer pressure" to seek certification. The communications and semiconductor sectors give the highest scores to "many competitors certified". Respondents in the Pharmaceutical industry were considerably more motivated by improving "relations with authorities" for both ISO 9000 and ISO 14000; they were also the least motivated by achieving "cost reductions ". The same note applies here as
SPECIAL REPORT 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 Cost reductions Environmental improvements Marketing advantage Customer pressure Many competitors certified Benefits experienced by others Avoid potential export barrier Capturing workers' knowledge Relations with authorities Relations with communities Corporate image Figure 4 : Motivations for seeking ISO 14000 certification ­ by economy
Cost reductions Environmental improvements Marketing advantage Customer pressure Many competitors certified Benefits experienced by others Avoid potential export barrier Capturing workers' knowledge Relations with authorities Relations with communities
ANZ CA
FR HK
Figure 5 : Motivations for seeking ISO 14000 certification ­
Corporate image
by business activity
JP KR SEA SE TW US
CommuCnomicapoutritoeprneesriqpEuhlieeprmcatlersontnicSsemicondMueccthoarsnicAaul tomatiFoonod
Plastic ChemicalTextile Metal
PharmaceOutthiecarsl
ISO Management Systems ­ January-February 2003
35
SPECIAL REPORT
Figure 6 : Proportion of employees trained ­ by economy
for ISO 9000: the similarities in relative motivations between sectors are perhaps the most striking observation from Figure 5.
ISO 9000 ISO 14000 Figure 7 : Proportion of employees trained ­ by business sector
Proportion of employees trained We asked the respondents what percentage of their employees received training ­ again on a fivepoint scale ranging from one, indicating 0-20 % of employees, to five, indicating 81-100 %. Figures 6 and 7 show the average responses to this question, by country and by sector. The proportion of employees trained was generally similar for ISO
CoCmommpuunticeartieoqonursippmereipnht eoErrlaelcstSreomniiccsonductoMrsechaniAcaultomation
Food
PlasticChemical Textile
PMheatraml aceutical
Others
9000 and ISO 14000 ; overall, in most countries, the proportion trained for ISO 14000 was slightly higher. This may reflect the fact that ISO 14000 more often covers an entire site or company, while ISO 9000 certifications could have more limited scope. More striking is the variation across countries: firms in Canada, Sweden, and the US report training the highest proportion of employees, with those in Japan and Korea reporting the lowest proportions. As always, one needs to be careful in interpreting such findings as an indication that implementation has been more or less thorough in certain countries, as there is always a possibility of country-level differences in survey response behaviour. For instance, respondents in Japan may simply be more likely to provide a cautious estimate of the proportion of employees trained, while those in Canada might apply a looser definition of " training ". However, these differences are striking enough to warrant further investigation. There is more consistency in the proportion of employees trained across sectors than there is across countries. Again, most firms report slightly higher degrees of training for ISO 14000 than for ISO 9000. Benefits of ISO 9000 and ISO 14000 certification We asked the respondents how much benefit they had received from certification for 13 categories, on a five-point scale, ranging from one for "no benefits" to five for "very substantial benefits ". The results for ISO 9000 are shown in Figures 8 and 9, by country and by sector ; Figures 10 and 11 (page 38) show the analogous results for ISO 14000. Overall, the categories in which firms report receiving the highest benefits from ISO 9000 certification are "quality improvements", "customer satisfaction", "improved procedures" and "corporate image".
36 ISO Management Systems ­ January-February 2003
Others
SPECIAL REPORT 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 Cost reductions Productivity Quality
Cost reductions Productivity
Pharmaceutical
Metal
Environmental
Quality
Textile
Chemical
On-time delivery Customer satisfaction Market share Profit margin
Environmental On-time delivery Customer satisfaction
Plastic
Food
Automation
Electronics Semiconductors Mechanical
Procedures
ANZ
Morale
CA Authorities
FR Communities
HK Image JP
KR
Figure 8 : Benefits from ISO 9000 certification ­ by economy
SEA
SE
TW
US
Figure 9 : Benefits from ISO 9000 certification ­ by business sector
Market share
Profit margin Procedures
Morale Authorities
Communities
Image
ISO Management Systems ­ January-February 2003
37
or peripherals
Computer equipment
Communications
SPECIAL REPORT 0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 Cost reductions
Productivity
Quality
Environmental
On-time delivery Customer satisfaction Market share
Profit margin Procedures
ANZ
Morale
CA Authorities
FR Communities
HK Image JP
KR
Figure 10 : Benefits from ISO 14000 certification ­ by economy
SEA
SE
TW
US
Figure 11 : Benefits from ISO 14000 certification ­ by business sector
38 ISO Management Systems ­ January-February 2003
Cost reductions Productivity Quality Environmental On-time delivery Customer satisfaction Market share Profit margin Procedures Morale Authorities Communities Image
Communications
Computer equipment
Electronics Semiconductors Mechanical
Automation
Food
Plastic
Chemical
Textile
Metal
Pharmaceutical
Others
or peripherals
SPECIAL REPORT
The pattern is fairly consistent Canada and the US report the highest
across countries, with some excep- benefits from improved procedures.
tions. Firms in the US report relative-
The same pattern arises when bro-
ly high benefits from " improved pro- ken down by sector. Textile firms
cedures", followed
report the largest
by firms in Australia,
cost reductions from
Canada, and France. The key benefits obtained ISO 14000 certifi-
Japanese firms report from ISO 14000 certification cation. Pharmaceu-
considerably higher
tical respondents
benefits in "employ- are improved environmental report the highest
ee morale" than firms in other countries. Respondents in
performance and improved corporate image, followed
benefits from improved relations with authorities, and the
Hong Kong report higher benefits from "improved relations
by improved procedures, relations with authorities,
lowest benefits with respect to employee morale and corpo-
with authorities". The pattern is also quite constant across sectors, except
and relations with communities
rate image. Conclusion
that pharmaceutical firms report con-
By and large, the patterns we find
siderably higher benefits from are consistent across countries, for
improved relations with authorities. most of the factors we study. Though
This reflects the fact that the pharma- there are, inevitably, variations across
ceutical industry is subject to far countries, these differences are rela-
more stringent quality regulations by tively small and certainly not large
Government agencies than firms in enough to indicate substantially dif-
other business sectors.
ferent "versions" of management sys-
tems built on ISO 9000 or ISO 14000.
The authors
Dr. Charles J. Corbett is Assistant Professor of Decisions, Operations and Technology Management at the Anderson School at UCLA, California, USA. E-mail [email protected] ucla.edu
Dr. Anastasia M. Luca is Postdoctoral Scholar at the Anderson School at UCLA. E-mail [email protected] ucla.edu
Dr. Jeh-Nan (Jack) Pan is Professor and Chairman of the Department of Statistics of the School of Management at National Cheng Kung University in Tainan, Taiwan. E-mail [email protected]
Overall, the key benefits obtained from ISO 14000 certification are improved environmental performance and improved corporate image, followed by improved procedures, relations with authorities, and relations with communities. Firms in
The one notable exception is the proportion of employees trained. Here, we find substantial variation across countries, which calls for further examination. If this reflects differences in interpretation of the survey question across countries, there is
ISO Management Systems ­ January-February 2003
39
SPECIAL REPORT
of course no problem. However, if it ment. Having the certification does
reflects true differences in breadth not actually increase market share or
and depth of implementation of ISO profits, but not having it will lead to a
9000 and ISO 14000, that might cast decrease in market share or profitabil-
some doubt on the assertion that the ity.
standards are truly implemented in a
Secondly, perhaps the most impor-
standardized manner worldwide.
tant ISO 9000 benefit of all is
It is instructive to compare the improved procedures. The survey did
motivations for seek-
not explicitly ask
ing certification with
about improved pro-
the benefits achieved. Recall that the main motivations for seek-
Following a structured and
cedures as a motivation for seeking certification, but anecdotal
ing ISO 9000 certification were quality
disciplined approach
evidence from interviews with certified
improvements, mar-
almost inevitably
firms suggest that, in
keting advantage and corporate image. These
does lead
many cases, these benefits were not
expectations are, by and large, met : the main benefits experi-
to valuable process improvements
anticipated, but proved very helpful. This is, in fact,
enced are quality
characteristic of any
improvements, improv-
structured process
ed customer satisfaction, and improvement effort: one does not
improved image. The same is true for know in advance how the efforts will
ISO 14000.
pay off, but following a structured
However, two points are worth not- and disciplined approach almost
ing. Firstly, the improved customer inevitably does lead to valuable
satisfaction does not appear to lead to process improvements.
equally large benefits in terms of mar-
ket share or profit margin. This may
reflect the fact that ISO 9000 certifica-
tion is often considered a require-
Acknowledgements
We are grateful to ISO Central Secretariat (www.iso.org), to the University of California Pacific Rim Research Program, and to the Center for International business Education and Research at the Anderson School at UCLA for their Financial support, and to WorldPreferred (www.worldpreferred.com) for sharing the North American certification data with us. We are also very grateful to our survey partners : Mile Terziovski, Rob Klassen, Olivier Aptel, TY Lee,
Kazuhiro Asakawa, Phares Parayno, Carlos Romero, Hosun Rhim, and Jens Dahlgaard. We would also like to acknowledge the excellent research assistance provided by Theresa Jones, Susana Medina, and Marнa J. Montes. Finally, we are of course highly grateful to the respondents for sharing their ISO 9000 and ISO 14000 experiences with us.
40 ISO Management Systems ­ January-February 2003

CJ Corbett, A Luca, J Pan

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