The past decades have witnessed a widespread diffusion of management standards in various sectors of the manufacturing industry worldwide. These standards are seen as a new “management technology”, which is likely to have a profound impact on operations management. Quality management standards such as ISO 9000 and ISO/TS 16949 are particularly widely adopted in the global supply chain. Yet rigorous empirical research on this area is very limited. In particular, previous research studies did not look beyond traditional operational indicators to examine the wider organizational implications of quality standards, nor did they consider the factor of institutionalization – a social construction process by which quality management standards become instilled with symbolic value among various internal and external stakeholders (Glover et al., 2014; Sartor et al., 2016).
Institutionalization refers to the social construction process thereby the structural models, policies and practices of firms become instilled with value (Dubey et al., 2015) and eventually “taken-for-granted” by different stakeholders (Selznick, 1996; Tolbert and Zucker, 1983). Institutional theorists (e.g., DiMaggio and Powell, 1983; Meyer and Rowan, 1977) argue that the institutionalization of organizational systems often scarifies efficiency criteria, leading to unintended consequences. Ironically, conformity to institutionalized rules confers organizational legitimacy, which serves as a means to achieve certain objectives (Dacin et al., 2007; Sine et al., 2007; Ye et al., 2013). Strategic compliance to institutional norms is considered as an instrumental means to achieve certain organizational purposes, leading to positive performance outcomes (Sandholtz, 2015). In fact, the contradictory organizational consequences in the institutionalization of management systems like ISO 9000 are one of the most intriguing research topics in operations management.
In this research we look into some important consequences of the institutionalization of ISO 9000 – a quality certification that has emerged as an important common operational practice in the global supply chain (Guler et al., 2002; Heras-Saizarbitoria and Boiral, 2015). We seek to investigate if ISO 9000 certification really makes organizations more effective, or such technical objectives are distorted due to institutionalization (Boiral, 2003). We look into the wider organizational implications, including operational efficiency, sales revenue, shareholder value, and senior executive compensation. We conduct this research using longitudinal data of manufacturing firms in the U.S. from 1988 to 2006 when the standard was increasingly institutionalized in the U.S.
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implications: A longitudinal analysis