Journal of Industrial Engineering and Management

 

 

Benefits of the ISO 9001 and ISO 14001 standards:

A literature review

 

Juan José Tarí¹, José Francisco Molina-Azorín², Iñaki Heras³

¹University of Alicante, ²University of Alicante, ³The University of the Basque Country UPV/EHU (Spain)

 

 

Received: May 2012

Accepted: September 2012

 

 

Tarí, J.J., Molina-Azorín, J.F., & Heras, I. (2012). Benefits of the ISO 9001 and ISO 14001 standards: A literature review. Journal of Industrial Engineering and Management, 5(2), 296-322. http://dx.doi.org/10.3926/jiem.488

 
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Abstract:

Purpose: The purpose of this paper is to determine the similarities and differences between the benefits derived from implementing the ISO 9001 and the ISO 14001 standards.

Methodology/Approach: The paper reviews the literature using an electronic search in the ScienceDirect, ABI/Inform, Emerald databases to identify papers focusing on the adoption of the ISO 9001 and 14001 standards and the benefits derived from implementing them.

Findings: The paper identifies 82 articles about ISO 9001 and 29 about ISO 14001. Although some differences can be observed between the benefits considered by ISO 9001 and 14001, there is a great degree of coincidence in the benefits studied. The review suggests 13 benefits as the most usually analyzed (including environmental performance for the case of the ISO 14001 standard) by scholars. It is suggested that both standards have clear benefits on operational, people and customer results and that the effects on financial performance are inconclusive.

Limitations/implications: One limitation of this paper is that the works identified are conditioned by the search strategy used. In addition, other key words could be included in future studies such as operational, market, quality, financial performance, and customer satisfaction in order to expand this search.

Originality/Value: The main contribution is that the paper identifies the literature gap and future research proposals with regard to the benefits of the ISO 9001 and ISO 14001 standards.

 

Keywords:  ISO 9001, ISO 14001, benefits, performance, literature review

 
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1. Introduction

Quality management (QM) and environmental management (EM) are business practices that may benefit companies. As several empirical studies show, implementing QM effectively influences firm performance positively (Powell, 1995; Samson & Terziovski, 1999; Huarng & Chen, 2002; Kaynak 2003; Parast, Adams & Jones, 2011; Shahin & Dabestani, 2011). Firms that implement QM focus on providing more value for their customers and improving the efficiency of processes. Continuous improvement of processes and product quality leads to increased revenues (through product reliability) and reduced costs (through process efficiency). In turn, customer satisfaction leads to increased revenues because it enables the firm to gain a market advantage (Kaynak, 2003; York & Miree, 2004). Similarly, EM affects firm performance positively (Klassen & McLaughlin, 1996; King & Lenox, 2002; Al-Tuwaijri, Christensen & Hughes, 2004; Moneva & Ortas, 2010). This positive effect results from the positive impact on firm costs and differentiation levels. Pollution prevention allows savings in input and energy consumption, and increases demand among environmentally sensitive consumers (Miles & Covin, 2000).

In this context, management system standards (MSSs) have enjoyed enormous success over the last years, both in the sphere of QM (ISO 9001) and in that of EM (ISO 14001). The first MSS appeared within the context of QM, and more specifically, in the sphere of quality assurance, which according to the definition in the ISO 8402 standard, is the set of all those planned and systematic actions applied within the framework of a Quality System, to provide adequate confidence that a product or service will satisfy given requirements for quality (ISO, 1994). By the end of 2010 at least 1.109.905 ISO 9001 certificates had been granted in a total of 178 countries worldwide, which nearly tripled the number of certificates at the end of 2000 (ISO, 2011). After the success of the ISO 9000 standards, there followed the ISO 14000 family of standards on environmental issues. Over the last years, ISO 14001 certification has experienced a great international growth (Marimón, Casadesús & Heras, 2010). Suffice it to say that, if by the end of 1999 14.106 certificates had been issued worldwide, by the end of 2010 the number of ISO 14001 certificates was 250.972 (ISO, 2011).

As various authors point out (e.g., Delmas, 2001; Braun, 2005), the ISO 9001 and 14001 standards do not refer to the compliance with a given goal or result. In other words, they are not performance standards measuring the quality of a firm’s products or services or a firm’s environmental results; rather, they are standards setting out the need to systematize and formalize a large number of corporate processes within a set of procedures, and to document such implementation. It must also be remembered that the implementation of this type of standard is a voluntary one, although in some sectors it has de facto become an obligatory measure, given the coercive influence of customers (Braun, 2005; Mendel, 2006).

Given this “non-performance” orientation of standards, a large number of studies have analyzed the benefits that may be obtained through ISO 9001 and ISO 14001 certification and implementation. In addition, some scholars have carried out literature reviews on these standards separately (Psomas & Fotopoulos, 2009; Sampaio, Saraiva & Rodrigues, 2009). Therefore it is interesting to analyze both standards jointly, due to the fact that both standards have many similarities in terms of their structure and dissemination processes (Corbett & Kirsch, 2001; Corbett, 2006; Marimón, Casadesús & Heras, 2006; Molina-Azorín, Tarí, Claver-Cortés & López-Gamero, 2009). However, to the best of our knowledge there are no literature reviews about empirical studies analyzing the benefits arising from these two standards in one single study. The purpose of this paper is to determine the similarities and differences between the benefits derived from implementing the ISO 9001 and the ISO 14001 standards (implemented separately). Based on this literature review the paper suggests future research proposals related to the measurement of certification, its interiorization and selection effect.

The paper is structured as follows. Firstly, in the methodology section, the search strategy is described. Then, the studies that have analyzed the benefits of the ISO 9001 and ISO 14001 standards are mentioned. In the discussion and conclusions section, the benefits of the two standards are compared, and some important issues are examined, such as the ISO measurement (interiorization) and selection effect in order to suggest future research proposals.

2. Methodology

The paper performs a literature review in order to identify empirical studies related to ISO 9001 and its benefits, and ISO 14001 and its benefits. Thus, a computer search of the ScienceDirect, ABI/Inform and Emerald databases was conducted. In the field of ISO 9001, a search was made for works that related the expressions “ISO 9000”, or “ISO 9001” and “performance” or “benefits” or “profitability” in the title or the abstract of the paper. In the field of EM, the computer search was made for works that related the expressions “ISO 14000”, or “ISO 14001” and “performance” or “benefits” or “profitability” in the title or the abstract of the paper. The list of references given in the papers found in the electronic search was also reviewed. Theoretical papers and those based on anecdotal evidence or case studies were eliminated.

The computer search found 82 empirical papers regarding the benefits of ISO 9001. These 82 articles are reviewed in order to identify the most common benefits of the implementation of the ISO 9001 standard based on the literature, as shown in the following section.

Following the same criterion, 29 papers were identified regarding the benefits of ISO 14001 and, as in the case of the ISO 9001 standard benefits, the most common ones are identified. Then, the paper examines the similarities and differences between the two groups of benefits and makes proposals for future research.

 

3. Benefits of the ISO 9001 standard

Many scholars have analyzed the benefits of the ISO 9001 standard in several performance dimensions (e.g. operational benefits, customer results, etc.). In this context, Table 1 shows which of these benefits are dealt with by each of the 82 studies examined, classified into the following 13 benefits:

• Market share (MS)
• Exports (EX)
• Sales and sales growth (SG)
• Profitability (P)
• Improvement in competitive position/competitive advantage (CA)
• Improvement in systematization (improved documentation, work procedures, clarity of work, improvement in responsibilities) (S)
• Efficiency (productivity, savings in costs, reduction in mistakes and rework, shorter lead time, improved management control) (EF)
• Improved quality in product/service (PQ)
• Improved image (I)
• Improvements in employee results (motivation, satisfaction, teams, communication, knowledge) (EMP)
• Improved customer satisfaction (reduction in complaints, etc.) (CUS)
• Improved relationships with suppliers (SUP)
• Improved relationships with authorities and other stakeholders (STA)

The present work identifies these 13 benefits because they are those most commonly analyzed by the 82 articles reviewed (see Table 1).

 

Table 1. Benefits of the ISO 9001 standard

Table 1 shows that the three benefits most frequently analyzed by researchers are improved efficiency, improved customer satisfaction and improvements in relations with employees. These are followed by profitability and improved systematization. Other benefits attained by many firms, as analyzed by the studies, are an improvement in market share and sales, image, product/service quality and exports. Conversely, the three benefits least studied are an improvement in competitive position, improved relations with suppliers and improved relations with authorities and other stakeholders.

In order to analyze these benefits arising from the ISO 9001 standard, some authors examine its effects through a list of benefits, whereas others base themselves on, or even propose, a classification of such benefits. Such is the case of Lee (1998), who classifies benefits into benefits gained with respect to internal operations (better team spirit, less staff conflict, reduced wastage, increased efficiency, shorter lead time), benefits gained with respect to customer relations (improved sales through new customers, longer contracts with existing customers, less control from existing customers, fewer complaints from existing customers), and benefits gained with respect to subcontractor relations (subcontractors to become certified, better relations with subcontractors, more stringent control over subcontractors).

Nield and Kozak (1999) show that the benefits of the standard may be the following: operational benefits (improved operating systems, enhanced operating practices), marketing benefits (improved customer satisfaction, gained competitive edge, nation-wide recognition), human resources benefits (gained more committed work force, reduction in staff turnover).

Casadesús and Giménez (2000) show that these benefits are people results (work satisfaction, suggestions system, health/safety, turnover, absenteeism), operation results (errors and defects; order processing; reliability; costs; on-time-delivery; cost savings; lead time; stock rotation), customer results (customer satisfaction; complaints; repeat purchases) and financial results (market share; sales; return on sales; return on assets).

Casadesús, Jiménez and Heras (2001) classified benefits as internal benefits and external benefits. Internal benefits are the following: work satisfaction, safety at work, suggestions system, absence from work, salaries of workers, safety and reliability, on-time delivery, order processing, number of errors, stock rotation, quality costs, cost savings. As external benefits they find the following: customer satisfaction, number of complaints, number of repeat purchases, market share, sales per employee, return on assets, return on sales.

Casadesús and Karapetrovic (2005) find that these benefits may be related to financial results (increased sales, returns on investment, market share, and sales per employee), operational results (reduced logistic costs, improved supplier relationship, increased inventory turnover, fewer non-conformities, compliance with delivery dates, and shorter lead time) and customer-related results (loyalty purchases, customer satisfaction, and fewer complaints).

Similarly, other scholars use two general groups of benefits related to operational performance and financial performance (Naveh & Marcus, 2004; Briscoe, Fawcett & Todd, 2005). For example, for operational performance Naveh and Marcus (2004) show defect rate, cost of quality, productivity, on-time delivery and customer satisfaction, while Briscoe et al. (2005) list defect rate as a percent of production, cost of quality, productivity, and on-time delivery. For financial performance both studies show market share, sales, and export growth.

Based on this review, in general terms, the ISO 9001 standard creates benefits related to customer satisfaction (for instance, fewer complaints and improved customer satisfaction) (e.g., Casadesús & Karapetrovic, 2005; Singh, 2008), improvement in staff management issues (for instance, more training for employees) (e.g., Gupta, 2000; Renuka & Venkateshwara, 2006) and improved efficiency, documentation and clear knowledge of tasks by employees (e.g., Chow-Chua, Goh & Wan, 2003; Magd, 2008). These results indicate that most firms experience improvement in these issues, due to the fact that the ISO 9001 standard allows them to reduce mistakes and rework, save on costs and improve the management of the firm. Many firms also attain these benefits because ISO 9001 allows for an improvement of the documentation and work procedures, and a greater clarity of work. Other benefits obtained by many firms are an improved image and an improved service or product quality, because the fact that they possess a certificate enhances their image in the eyes of their customers. In turn, the greater control exercised upon their internal processes allows them to improve the quality of the product or service.

Similarly, several studies provide evidence of certified firms outperforming non-certified firms (Heras, Dick & Casadesús, 2002; Corbett, Montes-Sancho & Kirsck, 2005; Sharma, 2005). This improvement is attributed largely to improvement in internal business processes. In this context, other studies also show that ISO 9001 certification is not associated with significant financial performance in the longer term, or that there is no significant difference between the impacts of quality management on financial performance for firms with and without ISO 9001 certification (Häversjö, 2000; Singels, Ruël & van de Water, 2001, Tsekouras, Dimara & Skuras, 2002).

These ideas indicate that, although there are firms that do succeed in improving their financial results (for instance, their market share and their sales, because the quality certificate opens the door to certain customers), there are many others that do not manage to attain any improvement. Therefore, as the studies show, there is not such an unquestionable relationship between the standard and the financial results.

Consequently, the impact of ISO 9001 on firm performance was more mixed compared with the impact of QM on firm performance, which was much more unanimous (Martínez-Costa Martínez-Lorente & Choi, 2008). Therefore, the clearest benefits are those influencing the internal performance or operational results, customer results and people results, while the effects on financial results are inconclusive.

4. Benefits of the ISO 14001 standard

As in the ISO 9001 standard field, the benefits associated with the implementation and certification of the ISO 14001 standard have also been extensively analyzed in the academic literature. The main benefits identified in the empirical literature are presented in Table 2 following the classification shown in Table 1, but in addition to these an extra specific benefit has been identified, environmental performance (ENVP), because scholars have used it extensively.

Table 2 shows that the three benefits most considered by the studies identified are environmental performance, efficiency and profitability. Other benefits which have also merited great attention are improved image, improvement in customer satisfaction, improved staff results, improved competitive edge and improved relations with stakeholders. Conversely, the benefits least considered in the empirical studies analyzed are improved sales, improved product quality and increased market share.

As was the case with the studies on ISO 9001, some studies analyzing the ISO 14001 standard have also proposed several groups of benefits. For instance, Poksinska Dahlgaard and Eklund (2003) pointed out three groups of benefits: internal performance benefits (cost reductions, environmental improvements, increased productivity, increased profit margin, improved internal procedures, improved employee morale), external marketing benefits (improved corporate image, increased market share, increased customer satisfaction, increased on-time delivery to customers) and relations benefits (improved relations with communities, improved relations with authorities).