Impact of iso 9001 quality certification on the financial performance of organizations listed at the Nairobi stock exchange

Abstract

The academic literature offers two approaches to explain how quality management practices could have an effect on business performance. First, the operational view highlights that firms adopting quality management schemes such as ISO 9001, improve their performance as a result of the prevention of production process failures and that the costs linked to quality improvements must be seen as investments, and the benefits from those investments are reflected in firm performance measures leading to the achievement of important financial and organizational gains. The study shows that certified companies had better results not only after certification but also prior to the certification date. The values of sales, size, operation expenses and earnings per share three years before and after certification however shows no significant differences implying that the good performance was visible in the companies before and after ISO 9001 certification. The analysis however showed a significant difference between ISO 9001 certified and non-certified firms. There was a significant difference in the mean values of the variables between certified and non-certified firms except for operating expenses. Based on the high values of the variables among the ISO 9001 certified firms, this implies that ISO 9001 certification had such a significant impact on general firm financial performance.