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Quality Management and the Bottom Line

Mark Marich

There are lots of interesting theories and methodologies about effective business management practices, but, in many cases, there’s not a lot of on-the-ground evidence that these so-called “best practices” make a firm more profitable.  New research from Harvard Business School takes a hard look at the use of one such methodology:  the ISO 9001 Standard for Quality Management.  ISO 9001 prescribes a method for improving management and production processes, and it is very popular, having been adopted by more than 900,000 organizations worldwide.  The researchers compared nearly 1,000 California-based firms who had adopted ISO 9001 to a matched control group of firms who did not deploy the system.  The ISO 9001 adopters had much lower organizational death rates, and outperformed the control group on nearly every measure of company performance, such as sales growth, employment, and average annual earnings.  The findings suggest that ISO certification is not just a management “fad,” but a powerful tool to improve company performance.

The 2008 Harvard Business School Working Paper (#09-018), “Quality Management and Job Quality:  How the ISO 9001 Standard for Quality Management Affects Employees and Employers,” was written by Daniel I. Levine and Michael W. Toffel. 

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