Quality management standard impact over employees, board structure and managerial training.

Serban, Claudia ; Tiron-Tudor, Adriana ; Man, Mariana 等

1. INTRODUCTION

The approach that we used was a "difference in differences" one that analyzes common shocks affecting each industry. If appropriate, we also check on the company's features which may vary over time such as size and changes in terms of occupational mixture. Our conclusion is that those who support the ISO standard have higher rates of survival of their companies, their sales and employment increase, and salary growth than the matched control groups of the companies that do not embrace ISO. Hence, the supporters of ISO tend to report no injury rates (in terms of employees' compensation claims) in the periods following their implementation of the ISO standard, and we find no evidence that a company s total or average injury costs improved or became wore after implementation. Also, we study the impact that managerial adequate training has upon ISO 9001 implementation, how it actually determines the implementation and which the effects are over the plant.

Therefore, we continue by assessing the weight a Board Structure has on the plant's corporate governance system (supposing ISO 9001 adopters), this time considering Romania as a case study.

2. LITERATURE REVIEW

There is a careful and empirical studies have examined the way the implementation of ISO 9001 quality management standard affects workers' outcomes and practice. The majority of these studies examine the impact of ISO 9001 on producers in the United States. Terlaak and King (2006) find that the factories that adopt ISO 9001 normally increase their production. Others consider that the ISO 9001 certification is associated with subsequent abnormal returns along a host of financial metrics including stock prices (Corbett et al., 2003; Sharma, 2005).

Different studies observed that benefits are more important among small companies and among those who do not have quite a high level of technological means, and/or among early adopters (Benner and Veloso, 2008). There were opinions that ISO 9001 decreases the waste generation of the companies along with toxic chemical emissions which means that by adopting the quality management standard one could obtain positive spillover effects which can improve the environmental management practices. Naveh and Erez (2006) noticed from the survey data that by implementing ISO 9001 it increases the workers' productivity and attention to detail, but it does not support innovation.

3. RESEARCH INFORMATION

Firms that adopt a quality management system that complies with ISO 9001 normally improve their documentation of operating procedures, procedures for corrective action and training. In order to get certified in accordance with ISO 9001 standard, a plant has to hire an accredited third-party auditor to certify that the plant has (1) written procedures for all significant operations, (2) monitoring, training, and other procedures implemented in order to ensure that written procedures are complied with, and (3) implemented procedures for continuously improving its other procedures. This requirement has implications for training, decision-making, and incentives with respect to low-level workers.

Because the typical scope of an ISO 9001 certification is a single plant, but injury data from the workers' compensation system are available primarily at the company level, we facilitate the linking of ISO certification data to injury data by restricting the sample to single-plant firms.

We measure each company's annual injury rate as the number of injuries it reported to claim workers' compensation, using WCIRB data. In the models, we employ the log of one plus the injury rate. We also obtained from WCIRB data each company's total annual workers' compensation injury costs (in dollars) and annual total payroll (in dollars). To reduce the effect of outliers, we took the log of these injury costs after adding $1,000.

To understand the intuition behind this measure, if an employer in a given year has a workforce that is in occupations that, on average, have twice the state-wide workers' compensation costs, average occupational riskiness for that firm-year would be twice the state average. For each year, we calculated each firm's average wage as annual total payroll.

4. THE SELECTION MODEL

The self-selection process is extremely relevant for the research, because we (as in the initial Levine & Toffle study) try to assess the total payroll measure as being a function of overtime payment and shift premiums (PPR pure premium rates set on the basis of worker extra-costs per each occupation). Therefore, we again computed the function called f meaning a plant's occupational hazard in a certain given year (with slight modifications, on the same sample):

Average occupational hazardousness ft = ft payroll

[SIGMA] payroll x Pure Premium Rate x Nb employees ft c (1)

where Pure Premium Rate c is the 2007 workers' compensation rate per 100 USD of payroll for a certain occupation class (here, code c) and payroll measurement equals total payroll per employee.

Hence, in order to be able to determine and analyze all causal effects the Quality Management Standard may have at plant-level, we need to compare again the shifts and variations in salaries, total sales, wages/payroll, average occupational risk, and post-implementation costs among post-certificated companies (plants relative to the initial and our sample). To assess the impact of adoption, we conduct a difference-in-differences analysis by estimating the following model for each outcome Yit at firm i in year t:

Yit = [alpha]i + [beta] x ISOit + [sigma]j [gamma]j x Xjit + [delta]t x yeart + [epsilon]it + a (2)

where [alpha]i is a complete set of firm-specific intercepts. The variable ISOit is an indicator variable coded one in years after a firm is ISO-certified. Of primary interest is its coefficients p and a (not contained by Levine&Toffel's initial model), the estimated effect of achieving certification. We also include a full set of year dummies (yeart).

Depending on the outcome variable being estimated, we include in Xjit controls for the firm's current log of: payroll, employment, sales, average occupational riskiness, or number of injuries. We also employ a variation of this specification that refines the ability to measure the effects of certification. In Equation 2, the single post-certification dummy variable estimates an overall average change in outcome levels, pre- to post-adoption.

5. OUTCOMES

FIRM-OUTCOMES. The results for the difference-indifferences evaluation model of employment and sales employ the matched sample, using years in which both the ISO adopter and match survived. Employment is about 10 percentage points higher in ISO-certified workplaces after certification (b= 10.3%, p < 0.01) than at the comparison firms.

EMPLOYEE-OUTCOMES. The results of the evaluation model for employee outcomes reveal that total payroll at ISO firms grew about 17.7% more than at the matched control firms (SE = 1.7%, p < 0.01). This increase grew steadily over time from 14% in years 1-3 to 36% in years 7-9. The number of injuries, a count variable, is analyzed with a negative binomial regression model with conditional firm effects. To ensure an appropriate comparison, we included in this sample only those pairs of employers where the adopter and matched non-adopter both reported at least one injury.

The results indicate that adoption did not predict a higher or lower number of injuries (conditioning on employment and other control variables). We included the following as controls: the log of each firm's average employment and average payroll for post-match years, region dummies, and industry dummies. Recall that the matched set of adopters and non-adopters used in this regression and all regressions had similar (and statistically indistinguishable) injury rates during the years prior to the match.

As an extension, we examined whether adopters and non-adopters subsequently differed in two particular types of injury rates: serious sudden-onset injuries (as typically occur following industrial accidents) and, separately, serious cumulative injuries (which could result from more repetitive work). This sub-analysis is motivated by the concern that ISO adoption may lead to more repetitive work and, thus, more cumulative injuries. WCIRB data only categorizes "serious" injuries, which are those associated with at least $2,000 in costs.

These conditional fixed effects negative binomial models include controls for employment, payroll, sales, average occupational riskiness, calendar years, and dummies to denote the number of years until or since the match year. The results (not shown to conserve space) indicate no change in sudden-onset injury rates (b = -0.064; SE = 0.087) between adopters and their matched controls.

However, the regression predicting the number of serious cumulative injuries yields an incident rate ratio of 0.61 (b = -0.495; SE = 0.314) for has adopted ISO 9001, which is economically meaningful decline among adopters, but not statistically significant. Further research is warranted to explore the circumstances under which ISO 9001 adoption may help reduce serious cumulative injuries.

The workers' compensation data show a small shift to safer occupations at firms that become ISO 9001 certified. That is, the average worker in a post-certification firm works in an occupation for which workers' compensation costs are almost 5% lower than at the comparison firm (b = -0.047, SE = 0.009, p < 0.01).

6. CONCLUSIONS AND FURTHER RESEARCH

ISO adopters had far lower organizational death rates than matched firms within their industries. Hence, we obtained the same results as Levine and Toffel, even though we've changed the computational formulas. Sales and employment grew substantially more rapidly post certification at ISO 9001 adopting firms than at matched firms.

Total payroll and (to a lesser extent) annual earnings per employee grew substantially more rapidly post certification at ISO 9001 adopting firms than at matched firms. ISO 9001 adopters already had slightly lower than average injury costs at the time of adoption, and we found no evidence that this gap widened or narrowed after adoption. Adopters were more likely to report no injuries for workers' compensation at all in the years following adoption.

When comparing pairs of adopters and matched comparison firms that each had a positive number of injuries, we found no differences in their number of injuries.

This paper also plans to further examine the determinants of business start-up, long and short-term success, and failure of small businesses. Entrepreneurs and small firm success and failure have been the subject of extensive research. It is important to understand the external, internal, and motivational factors responsible for business start-up, the barriers faced during the initial and continuous stages of trading and the advice and assistance available to entrepreneurs.

Determining the educational aspects after ISO 9001 implementation (for reducing the formalization of work activities and offering permanent skill improvement) represents our on-going research plan.

7. REFERENCES:

Abrahamson, E. (1996). Management fashions. Academy of Management Review, no. 21(1): pp. 254-285

Docking, D. & Dowen, R. J. (1999). Market interpretation of ISO 9000 registration. Journal of Financial Research, no. 22(2): pp. 147-160

Dyck, A. & Zingales, L. (2004). Private Benefits of Control: An International Comparison. Journal of Finance, Vol. 59 No.2, pp. 537-600

Easton, G. S. & Jarrell, S. L. (1998). The effects of Total Quality Management on corporate performance: An empirical investigation. Journal of Business, no. 71(2): pp. 253-307

Levine, D. & Toffel, M. (2008). Quality Management and Job Quality: How the ISO 9001 Standard for Quality Management Systems Affects Employees and Employers. Working Paper SERIES, University of California, Berkeley

*** (2009) International Monetary Fund http://www.imf.org, Accessed on: 2009-05-01