The ISO 9000 series of quality management systems standards, introduced in 1986, has been adopted at over 560,000 locations worldwide. Anecdotal evidence suggests that firms can achieve internal benefits such as quality or productivity improvements or that certification can help firms maintain or increase their market share, or both. Others argue that the standard is too generic to cause performance improvement but can be seen as a signal of good management. In this paper, we track financial performance from 1987 to 1997 of all publicly traded ISO 9000 certified manufacturing firms in the United States with SIC codes 2000–3999, and test whether ISO 9000 certification leads to productivity improvements, market benefits, and improved financial performance. We employ event-study methods, matching each certified firm to a control group of one or more noncertified firms in the same industry with similar precertification size and/or return on assets. We find that firms’ decision to seek their first ISO 9000 certification was indeed followed by significant abnormal improvements in financial performance, though the exact timing and magnitude of this effect depend on the specification of the control group. Three years after certification, the certified firms do display strongly significant abnormal performance under all control-group specifications. The degree to which the precise results vary across control-group specifications indicates that event studies should always include extensive sensitivity analysis, for instance matching by size and performance separately and jointly, using both single firms and portfolios as controls.

This paper analyzes how national institutional factors affect the adoption of the international environmental management standard ISO 14001, using a panel of 139 countries from 1996 to 2006. The analysis emphasizes that during the emerging phase of the standard, the potential lack of consensus within the constituents of the national institutional environment concerning the value of a new standard could send mixed signals to firms about the standard. The results show that in the early phase of adoption, regulative and normative forces within the institutional environment can work against each other. Results also show that regulative or coercive forces play a relatively more important role in the early phase of adoption of the standard than in the subsequent phases of diffusion. In the later phases of diffusion of ISO 14001, normative forces, such as the diffusion of other management standards, as well as factors related to trade, play a more important role. Because of the similarities between environmental management standards and corporate social responsibility standards, this study can help identify some of the challenges for diffusion of ISO management standards in the area of social responsibility.