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The impact of ISO 9001 effectiveness on the performance of service

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Article  in  Journal of Service Theory and Practice · June 2013

DOI: 10.1108/09604521311303426

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The impact of
The impact of ISO 9001 ISO 9001
effectiveness on the performance effectiveness
of service companies
Evangelos L. Psomas 149
Department of Business Administration of Food and Agricultural Enterprises,
Received 7 May 2012
University of Western Greece, Agrinio, Greece Revised 17 October 2012
Angelos Pantouvakis Accepted 29 November 2012
Department of Maritime Studies, University of Piraeus, Piraeus, Greece, and
Dimitrios P. Kafetzopoulos
Department of Business Administration of Food and Agricultural Enterprises,
University of Western Greece, Agrinio, Greece

Abstract
Purpose – The purpose of this paper is to define and subjectively measure ISO 9001 effectiveness
as the achievement of the standard’s objectives and determine its impact on the performance
dimensions of service companies related to product/service quality, operational and financial
performance.
Design/methodology/approach – An empirical study was carried out using a sample of 100 ISO
9001:2008 certified service companies. Data were obtained from the quality managers of the companies
through a structured questionnaire. Exploratory factor analyses are applied to extract the latent
factors of the indicators of ISO 9001 objectives and performance dimensions. Multiple linear
regression analyses are also applied in order to determine the impact of ISO 9001 effectiveness on the
performance dimensions of service companies.
Findings – The findings of the present study confirm the dimensionality of the ISO 9001 effectiveness
(evaluated by the degree of achievement of the standard’s objectives, namely prevention of
nonconformities, continuous improvement and customer satisfaction focus) and reveal its significant
contribution to the performance of the service companies. The product/service quality and operational
performance of the service companies are directly and significantly influenced by ISO 9001
effectiveness. However, the financial performance is directly influenced only by operational
performance, while the impact of ISO 9001 effectiveness is indirect through its significant correlation
with operational performance.
Research limitations/implications – The sample of the responding ISO 9001 certified service
companies is limited to small and medium-sized enterprises (SMEs) from one country (Greece).
Moreover, the introduced instrument is of subjective nature as the data collected through quality
managers may be biased regarding ISO 9001 effectiveness and company performance. Furthermore,
the influence of ISO 9001 effectiveness on service company performance with regard to market share
and customer satisfaction has not been determined. The above limitations suggest future research
recommendations.
Practical implications – By defining ISO 9001 effectiveness based on its objectives, managers may
be aware of what to improve to increase the standard’s effectiveness and therefore directly improve
service company performance in terms of quality and operative results and indirectly in terms of
financial results.
Originality/value – Based on the core issues of ISO 9001 effectiveness this empirical study confirms
its multi-dimensional structure and determines the contribution of ISO 9001 effectiveness to specific
performance dimensions of service companies. Managing Service Quality
Vol. 23 No. 2, 2013
Keywords Greece, Small to medium-sized enterprises, ISO 9000 series, ISO 9001 effectiveness, pp. 149-164
Objectives, Company performance, Service companies r Emerald Group Publishing Limited
0960-4529
Paper type Research paper DOI 10.1108/09604521311303426
MSQ 1. Introduction
23,2 Service sectors are of great importance to the world economy (Lee et al., 2009; To et al.,
2011). Competing in the global economy and the current markets demands that the
service companies establish well-designed and implemented internal management
systems according to internationally accepted management standards such as ISO
9001 (Karapetrovic and Willborn, 1998). The ISO 9001:2008 standard is a generic
150 management system that is applicable to large and small; private and public;
industrial, commercial and service organizations (Walker and Johnson, 2009; To et al.,
2011). While manufacturing organizations were early adopters of ISO 9001, lately,
many service sector organizations have also pursued its adoption (Dick et al., 2002;
Singh et al., 2006; Calisir, 2007) at a much slower pace though than industrial
organizations (Heras et al., 2008). Current research postulates that this difference
between the manufacturing and the service sector in adopting quality management
practices and standards is decreasing, and that service organizations are now making
more progress towards quality management than manufacturing organizations
(Ronnback and Witell, 2008).
Despite the level of ISO 9001 penetration in services or manufacturing, it is
supported that just adopting and maintaining the ISO 9001 certificate is not enough
(To et al., 2011) and fulfilling and conforming to a quality standard’s minimal
requirements by itself is insufficient (Psomas et al., 2010). Opposing results have
been reported in the literature (for an analysis refer to Marin and Ruiz-Olalla, 2011 or
Lin and Jang, 2008) arguing in favour or against the importance of ISO 9001
certification to achieve quality, better financial results (Sampaio et al., 2011) or
company performance (Yeung et al., 2003; Psomas et al., 2010; Kim et al., 2011).
Ronnback and Witell (2008) state that concerning the overall question about the
financial benefits of quality management, the various research studies show
conflicting results. In practice, this may be attributed to the ineffective implementation
of the ISO 9001 standard (Zeng et al., 2007; Heras et al., 2008; Singh, 2008; Caro and
Garcia, 2009; Psomas et al., 2010). Moreover, it is worth noting that quality initiatives
focusing exclusively on service organizations is scarce (Ronnback and Witell, 2008)
and the lack of a road map that can be used by service managers to achieve their
quality-related goals is apparent (Calisir, 2007).
The main competitive edge nowadays shifts from simply applying the ISO 9001
standard to successfully implementing an effective quality management system (QMS)
after obtaining the certification (Lee et al., 2009; Wahid and Corner, 2009; Psomas et al.,
2013). Obviously, if service companies want to achieve business benefits and superior
results, the attainment of a quality certificate to ISO 9001 should not be the end,
but the starting point for deploying an effective QMS in the quest for quality
improvement (Dick et al., 2001).
Thus, and given the contradictory nature of the research findings regarding the
successful implementation and contribution of ISO 9001 to company and financial
performance, more fact-based and statistically oriented studies in the area of the ISO
9001 QMS are required, according to Lin and Jang (2008) and Sampaio et al. (2009,
2011). Additionally, Jang and Lin (2008) and Sampaio et al. (2009) suggest examining
how the depth of ISO 9001 implementation influences company performance in the
long run. Augustyn and Pheby (2000), Yaya et al. (2011) and To et al. (2011) specifically
highlight the need for further contextual research for the impact of ISO 9001 on
operational and business performance in several service sub-sectors (e.g. e-service
providers, public and tourism firms).
 Defining for the first time in the service sector ISO 9001 effectiveness as the The impact of
achievement of ISO 9001 objectives, the purpose of the present study is twofold: first ISO 9001
is to confirm, by providing empirical evidence from the service sector, the
multidimensional structure of ISO 9001 effectiveness. Second to that is to highlight effectiveness
the impact of ISO 9001 effectiveness on the service companies’ performance (defined as
product/service quality, operational and financial performance). By exploring ISO 9001
effectiveness patterns and performance outcomes in service organizations, this 151
study provides new and practically relevant insights into the literature. Data from
small and medium size companies from the service sector with the use of exploratory
factor analysis (EFA) and multiple linear regression identify and support the
introduced hypotheses.
The rest of the paper is structured as follows: in the first part, the literature is
reviewed in order to precisely define ISO 9001 effectiveness and specific company
performance dimensions. Then, the research hypotheses of the present study are
formulated. In the next part, the methodology of the research study is described which
is followed by the data analysis and the respective results. In the next part, the results
are discussed and the final conclusions and the managerial implications are presented.
Finally, the limitations of the study and future research proposals are presented.

2. Literature review and research hypotheses

2.1 ISO 9001 effectiveness
The International Organization for Standardization (ISO) serves not only to establish
performance standards but, also, to specify the processes by which the quality
management standards may be met, and by which the effectiveness and efficiency of
the QMS may be improved (Walker and Johnson, 2009). According to the ISO 9001
standard, “effectiveness” is defined as the extent to which the anticipated objectives are
achieved (ISO 9001:2000, 2000). van der Spiegel et al. (2007) suggest that evaluating the
degree to which the standard’s pre-established objectives are met should test ISO 9001
effectiveness. According to ISO (2008) and the ISO 9001 standard (ISO 9001:2008, 2008),
the aims of the standard are the following: prevention of nonconformities, continuous
improvement and customer satisfaction focus. These objectives are specifically
determined not only by the standard itself but also by many academics and experts
worldwide (van der Spiegel et al., 2004; Heras et al., 2006; Gotzamani et al., 2007).
Psomas et al. (2013) provide empirical evidence to support this consensus regarding the
underlying structure of ISO 9001 effectiveness. More specifically, using a sample of
small and medium-sized food manufacturing enterprises (SMEs), they confirm the
three ISO 9001 objectives identified in the literature (prevention of nonconformities,
continuous improvement and customer satisfaction focus) that define ISO 9001
effectiveness. The indicators for the assessment of these objectives are drawn from
the study of Psomas et al. (2013) (Table I).

2.2 Company performance

A restrictive set of financial performance measures may adversely impact on an
organization’s long-term viability, so organizations should develop a broad range of
performance measures (O’Mara et al., 1998). Lee et al. (2009) investigate the overall
performance of ISO 9001 certified service organizations through elements such as
customer satisfaction from service quality, internal administration efficiency, cost of
poor quality and employee turnover rate. McAdam and Canning (2001) study the ISO
9001 benefits gained from small professional service firms related to the internal
MSQ Kaiser-Meyer-Olkin ¼ 0.921 Factors
23,2 Customer
Continuous satisfaction Prevention of
Measured variables improvement focus nonconformities

Factor loadings
152 Drawing an effective plan for continuous quality
improvement 0.824
Achieving measured-explicit quality goals 0.804
Company collection of information for processes
and service improvement 0.769
Continuous monitoring and improvement of
processes, procedures and products 0.761
Developing an organizational structure
supporting continuous improvement 0.685
Continuous improvement of employee work 0.684
Company activities increasing the level of
customer satisfaction 0.758
Company assurance of meeting customer
requirements with regard to products 0.753
Company focus on customer requirements 0.748
Personal contact between employees and
customers 0.732
Customer complaints, a major priority 0.623
Product conformance to specifications 0.804
Reduced nonconformity problems through
Table I. quality processing 0.742
Exploratory factor Efficient product, process and quality design 0.652
analysis of the indicators Eigenvalue 8.776 1.375 1.103
of ISO 9001 objectives Cumulative variance (%) 58.50 67.67 73.75

management system and communication, service quality and profit ratio. Singh and
Mansour-Nahra (2006) also study the operational efficiency and financial improvement
of public sector organizations as a result of ISO 9001 implementation. Singh et al. (2006)
examine whether the quality of customer service, the documentation process, the
number of mistakes and defects and the service company value are benefits derived
from implementing ISO 9001. Augustyn and Pheby (2000) assess the potential impact
of ISO 9001 implementation upon the performance of small tourism enterprises with
regard to customer complaints from service quality, re-working, efficiency, error rate,
productivity, cost of lost orders and sales. Tang and Kam (1999) conducting a survey
on consulting firms, explore the benefits from implementing ISO 9001 such as those
related to internal business operations, the company’s quality image and cost savings.
Prajogo and Brown (2006) study organizational practices and performance outcomes
(in terms of quality) of ISO 9001 certified nonmanufacturing companies.
Bearing the above-mentioned studies in mind, three performance-related
dimensions have been chosen for the purpose of the present study: product/service
quality, operational performance and financial performance. The indicators/variables
for the evaluation of product/service quality (Table III) are drawn from the studies of
Karapetrovic and Willborn (1998), McAdam and Canning (2001), Dick et al. (2002),
Prajogo and Brown (2006), Singh et al. (2006), Zaramdini (2007), Su et al. (2008),
Avella and Vazquez-Bustelo (2010) and Lam et al. (2012). The indicators/variables of
operational performance (Table III) are drawn from the studies of Karapetrovic and The impact of
Willborn (1998), Augustyn and Pheby (2000), McAdam and Canning (2001), Singh et al. ISO 9001
(2006), Zaramdini (2007), Lee et al. (2009) and Salaheldin (2009). Finally, the indicators/
variables of financial performance (Table III) are drawn from the studies of Augustyn effectiveness
and Pheby (2000), McAdam and Canning (2001), Zaramdini (2007), Ho et al. (2010),
Avella and Vazquez-Bustelo (2010) and Moneva and Ortas (2010).
153
2.3 Hypotheses formation
Based on the contradictions presented earlier at the introduction section regarding
the significance of ISO 9001 certification on performance and the above review of the
literature, the purpose of the present study in line with many scholars’ suggestions
for further research is to question and examine the impact of ISO 9001 effectiveness on
company performance.
The following research hypotheses are therefore formulated:

RH1. ISO 9001 effectiveness may well be described for the service companies
by its objectives (prevention of nonconformities, continuous improvement
and customer satisfaction focus) in a way similar to this of manufacturing
companies.

RH2. ISO 9001 effectiveness as described by its objectives predicts and defines
service company performance (related to product/service quality, operational
and financial performance) in a cause and effect relationship.

3. Methodology
3.1 Questionnaire
A research study was carried out on ISO 9001 certified Greek service companies
through which the above formulated research hypotheses are tested. Data were
collected through a structured questionnaire. The present study essentially adopts the
measurement instrument used by Psomas et al. (2013) to assess ISO 9001 effectiveness
in food manufacturing companies. This instrument is based on the ISO 9001 defined
objectives (prevention of nonconformities, continuous improvement and customer
satisfaction focus) and their respective indicators as they have been identified in the
literature. However, the questionnaire items were modified in accordance with the
characteristics of a service company. Items concerning the performance dimensions of
service companies related to product/service quality, operational and financial
performance are also included in the questionnaire. Academics and professionals in the
field of quality management reviewed the initial version of the questionnaire to
ascertain successful adaptation. Based on their recommendations, the wording of the
questions was improved in order to make it more comprehensive. Moreover, a pilot
study was carried out using a sample of five quality managers of service companies.
The pilot study confirmed the suitability of the questionnaire items for a service
company. The final version of the questionnaire consists of three parts. The first
part includes questions on the demographic profile of the companies. The second part
concerns ISO 9001 effectiveness and contains statements with regard to the indicators
of the ISO 9001 objectives. Finally, the last part of the questionnaire contains
statements regarding the performance dimensions related to product/service quality,
operational and financial performance. Respondents were asked to indicate the degree
MSQ of agreement or disagreement with these statements, using a seven-point Likert scale,
23,2 where 1 represented “strongly disagree” and 7 represented “strongly agree”.

3.2 Sample
A total of 600 quality managers belonging to Greek service companies, selected
randomly from a pool of 1,000 service organizations all certified with ISO 9001:2008
154 standard and listed at ICAP’s (a Greek business information firm) database, were
approached through e-mails at the beginning of 2012. Totally, 100 completed
questionnaires were received back – a response rate of 16.6 per cent. The early and late
responding companies were compared in terms of the number of their employees
(w2-test) and the questionnaire items (one-way ANOVA) and no statistically
significant differences were found. Furthermore, several nonresponding companies
stated, when contacted, that the major reason for not participating in the research
study was lack of time. So, it is apparent that nonresponse bias is not likely to be an
issue in the final sample.

3.3 Data analysis

EFA are applied to extract the latent factors of the indicators of ISO 9001 objectives
and performance dimensions. The impact of ISO 9001 effectiveness on the performance
dimensions is determined through multiple linear regression analyses. The statistical
package SPSS 19 is used for data processing.

4. Results
4.1 The company profiles
Having as a criterion the number of employees, the responding service companies
can be categorized as micro (o10 employees, 33 per cent), small (10-50 employees,
38 per cent), medium (50-250 employees, 22 per cent) and large sized (4250 employees,
7 per cent). Thus, the vast majority of the sample companies are SMEs. A rate of
63 per cent of the responding companies have held the ISO 9001 certificate for more
than three years, meaning that these companies had also been certified according to the
previous version of ISO 9001:2000. The sample of the responding companies includes
private service companies from a variety of sectors (e.g. wholesale/distribution, retail,
banking/finance, repair/maintenance, communications, construction, insurance, food
and beverage catering). As far as the profile of the quality manager of the companies is
concerned, 85 per cent are at least university graduates, while 80 per cent have more
than five years’ experience in the service sector.

4.2 EFA of the indicators of ISO 9001 objectives

In order to confirm whether the factorial structure of the indicators of ISO 9001
objectives revealed in the manufacturing sector (through the study of Psomas et al.,
2013) is also valid in the service sector, an EFA (varimax rotation method) is
performed. The result is the establishment of three latent factors. These factors are
explained based on the measured variable loadings and can be labelled in accordance
with the three ISO 9001 objectives identified in the literature and determined in
the manufacturing sector (Psomas et al., 2013), namely continuous improvement,
customer satisfaction focus and prevention of nonconformities (Table I).
Table I shows that all the factor loadings are 40.62. Thus, the squared factor
loadings indicate that a satisfactory proportion of measured variance is explained
by the respective latent factor. Factor loadings 470.50 are generally considered
necessary for practical significance (Hair et al., 2005). Moreover, loadings of 70.55 are The impact of
considered statistically significant for sample sizes of around 100 (Hair et al., 2005). ISO 9001
Hence, it is apparent that the factor loadings of the measured variables of the present
study are practically and statistically significant. effectiveness
The reliability of the latent factors is confirmed, according to Hair et al. (2005),
through Cronbach’s a coefficients (Table II). All these coefficients indicate acceptable to
good reliability, given that the lowest acceptable limit of Cronbach’s a coefficient ranges 155
between 0.6 and 0.7 (Hair et al., 2005). Cronbach’s a is the most commonly used
measure of scale reliability, as revealed by Ladhari (2008) reviewing a large number of
service-quality measurement models. Most scales used in the reviewed studies exhibit
good reliability that is, Cronbach’s a 40.60 (Ladhari, 2008).
The construct validity of the latent factors is confirmed, according to Hair et al.
(2005), by evaluating the convergent validity (factor loadings of respective measured
items 40.62, average variance extracted 40.5), the discriminant validity (average
variance extracted 4Corr2) (Table II), the face-content validity (the questionnaire
was developed based on an extensive literature review, a pilot study and review by
academics) and the nomological validity (significant correlations between the latent
factors). It is worth noting that in the studies reviewed by Ladhari (2008) concerning
the development of service-quality measurement instruments; the convergent,
discriminant and nomological validity are also tested using the same methodology
and thresholds as in the present study. However, only a few of these studies test
and support all three types of validity (convergent, discriminant and nomological)
(Ladhari, 2008).

4.3 EFA of the indicators of performance dimensions

The indicators of the performance dimensions of service companies identified in
the literature are used as the measured variables of an EFA (varimax rotation method).
The result is the establishment of three latent factors. These latent factors are
explained using the measured variable loadings and can be labelled as follows:
financial performance, operational performance and product/service quality (Table III).
Table III shows that all the factor loadings are 40.60. Thus, the squared factor
loadings indicate that a satisfactory proportion of measured variance is explained by
the respective latent factor. Having in mind the size of the research sample of the
present study and the suggestions of Hair et al. (2005), it is apparent that the factor
loadings are practically and statistically significant.
The reliability of the latent factors is confirmed, according to Hair et al. (2005),
through Cronbach’s a coefficients (Table IV). All these coefficients indicate acceptable
to good reliability. The construct validity of the latent factors is confirmed, according to
Hair et al. (2005), by evaluating the convergent validity (factor loadings of respective

Latent factors Cronbach’s a Average variance extracted (AVE)* (Corr2)**

Continuous improvement 0.936 0.572 0.469

Customer satisfaction focus 0.884 0.525 0.449
Prevention of nonconformities 0.893 0.541 0.469 Table II.
ISO 9001 objectives –
Notes: *AVE ¼ Sl2i /n (number of items i ¼ 1 y n; li, factor loading); **Corr2, the highest squared model reliability
correlation between the factor of interest and the remaining factors and validity
MSQ Kaiser-Meyer-Olkin ¼ 0.825 Factors
23,2 Financial Operational Product/service
Measured variables performance performance quality

Factor loadings
Net profit 0.860
156 Company financial results 0.857
Profitability 0.855
Cash flow from operations 0.771
Sales growth 0.603
Company efficiency 0.881
Company productivity 0.858
Process effectiveness 0.849
Table III. Product/service quality 0.863
Exploratory factor Consistent and reliable products/services 0.856
analysis of the indicators Product/service conformance to specifications 0.824
of performance Eigenvalue 4.935 2.096 1.288
dimensions Cumulative variance (%) 44.86 63.91 75.63

Latent factors Cronbach’s a Average variance extracted (AVE)* (Corr2)**

Financial performance 0.874 0.632 0.223

Table IV. Operational performance 0.912 0.745 0.223
Performance dimensions – Product/service quality 0.833 0.719 0.192
model reliability Notes: *AVE ¼ Sl2i /n (number of items i ¼ 1 y n; li, factor loading); **Corr2, the highest squared
and validity correlation between the factor of interest and the remaining factors

measured items 40.60, average variance extracted 40.5), the discriminant validity
(average variance extracted 4Corr2) (Table IV), the face-content validity (the
questionnaire was developed based on an extensive literature review, a pilot study and
review by academics) and the nomological validity (significant correlations between
the latent factors).

4.4 The impact of ISO 9001 effectiveness on service company performance

The impact of ISO 9001 effectiveness on the performance of the service companies is
determined through multiple linear regression analyses (Figure 1). The regression
analyses are applied based on the summated scales of the independent and dependent
variables (Fotopoulos et al., 2009; Psomas and Fotopoulos, 2010). Moreover, based on
the summated scales of ISO 9001 objectives, a new summated scale is formulated
called “ISO 9001 effectiveness”. The first regression analysis examines the impact of
the independent variable “ISO 9001 effectiveness” on the dependent variable
“operational performance”. The second regression analysis examines the impact of
“ISO 9001 effectiveness” and “operational performance” (independent variables) on the
dependent variable “product/service quality”. Finally, the third regression analysis
examines the impact of “ISO 9001 effectiveness” as well as “operational performance”
and “product/service quality” (independent variables) on the dependent variable
 The impact of
Product/service
quality ISO 9001
R 2 adjusted = 49.8% effectiveness
0.675*

nss 157
nss
Operational
ISO 9001 0.551*
performance
Effectiveness R 2 adjusted = 29.7%

nss
0.411*

Financial
performance
R 2 adjusted = 21% Figure 1.
The relationships between
ISO 9001 effectiveness and
Notes: *Statistically significant regression weight in p = 0.00; nss, not statistically company performance
significant

“financial performance”. Using the studentized residuals, the assumptions required for
each regression analysis and more specifically the linearity, homoscedasticity, independence
and normality were tested. Based on the recommendations of Hair et al. (2005), specific
tests were carried out for each assumption to check for violations. According to the
results, these assumptions are not violated. Furthermore, the multicollinearity among
the independent variables of each regression analysis is checked and not confirmed.
According to the results, the first regression is statistically significant ( p-value ¼
0.00 and adjusted R2 ¼ 0.297). Estimating the regression model, the results show that
“operational performance” is directly affected by “ISO 9001 effectiveness” ( p ¼ 0.00,
b standardized coefficient ¼ 0.551). The results also show that the second regression is
statistically significant ( p-value ¼ 0.00 and adjusted R2 ¼ 0.498). Estimating the
regression model, the results show that “product/service quality” is directly affected
only by “ISO 9001 effectiveness” ( p ¼ 0.00, b standardized coefficient ¼ 0.675). By
contrast, “operational performance” does not directly affect “product/service quality”,
but indirectly through its significant correlation with “ISO 9001 effectiveness”. Finally,
the results show that the third regression is statistically significant ( p-value ¼ 0.00 and
adjusted R2 ¼ 0.21). Estimating the regression model, the results show that the
dependent variable “financial performance” is directly affected only by “operational
performance” ( p ¼ 0.00, b standardized coefficient ¼ 0.411). By contrast, “ISO 9001
effectiveness” and “product/service quality” do not directly affect “financial performance”,
but do so indirectly through their significant correlation with “operational performance”.

5. Discussion
Large and small and medium size enterprises and ISO 9001 certification have been
extensively surveyed and examined in the quality literature (McAdam and Canning,
MSQ 2001; McAdam and Fulton, 2002; Singh et al., 2006; Zaramdini, 2007; Lee et al., 2009;
23,2 Wahid and Corner, 2009; To et al., 2011), requiring as a prerequisite to any further
consideration ample and thorough experience in applying the standard. The sufficient
experience of the responding Greek service companies in implementing the ISO 9001
standard is evident (Psomas et al., 2010) as they have long ago applied and
implemented the ISO 9001 QMS. Although the length of ISO 9001 certification has no
158 impact on either quality management practices or quality performance (Prajogo and
Brown, 2006; Lee et al., 2009), the present study focuses on service SMEs that have long
experience (at least three years) in implementing ISO 9001, in order to examine the
introduced hypothesis that ISO 9001 effectiveness improve the performance outcomes.
Many authors and experts worldwide support the view that the effectiveness of
a system such as ISO 9001 should be evaluated based on the performance of the
company in a reverse causality relationship than this that is here introduced:
performance defines ISO 9001 effectiveness. However, neither confirmation to the
system requirements, nor the depth and the extent of ISO 9001 implementation, nor the
achievement of a company’s objectives should be taken into consideration when
evaluating ISO 9001 effectiveness. A measurement tool applicable to service companies
and reflecting the ISO 9001 objectives (continuous improvement, customer satisfaction
focus and prevention of nonconformities) should be used, and is here introduced
and confirmed, in order to evaluate ISO 9001 effectiveness. The present study findings
also confirm the existence of the significant dimensions of service company
performance identified in the literature relating to product/service quality, operative
and financial results.
Having determined, conceptually and empirically, the dimensions of ISO 9001
objectives that depict ISO 9001 effectiveness, the impact of ISO 9001 effectiveness on
the performance dimensions of the service companies is investigated. According to the
findings, ISO 9001 effectiveness has a significant direct impact on product/service
quality and operational performance. On the other hand, surprisingly, considering both
ISO 9001 effectiveness and operational performance as possible direct contributors to
product/service quality, the results do not confirm any direct impact of operational
performance on product/service quality. This indicates that the strength of the direct
impact of ISO 9001 effectiveness on product/service quality is significant to such a
level that it limits the respective direct impact of operational performance on product/
service quality. However, this is not the case as far as the contribution of operational
performance to financial performance is concerned. More specifically, improving
operational performance results directly in increased financial performance.
By contrast, the impact of ISO 9001 effectiveness and product/service quality on
financial performance seems to be indirect.
The findings of this work are in line and confirm the similar study of Psomas et al.
(2013) in the manufacturing sector. It argues in favour of three latent factors depicting
the ISO 9001 objectives (continuous improvement, customer satisfaction focus and
prevention of nonconformities) based on which ISO 9001 effectiveness is described.
Trigueros Pina and Sansalvador Selles (2008) demonstrate, similar to the present study,
the connection of ISO 9001 effectiveness with the objectives of the standard, without,
however, mentioning the ISO 9001 objectives revealed in the present study. Augustyn
and Pheby (2000) also relate ISO 9001 effectiveness to the objectives of the standard
and demonstrate, similarly to the present study, that ISO 9001 has a positive impact
on a company’s performance. As far as the meaningful performance dimensions
for a company operating in the service sector are concerned, Zaramdini (2007) and
Singh et al. (2006) determine, similar to the present study, dimensions related to The impact of
product/service quality, operational and financial performance. Improved internal ISO 9001
operations and service quality as a result of ISO 9001 implementation, as revealed
through the present study, are also evident from the study of McAdam and Canning effectiveness
(2001), Singh and Mansour-Nahra (2006), Lee et al. (2009) and Wahid and
Corner (2009). The indirect relationship between ISO 9001 effectiveness and
financial performance revealed in the present study is in line with the findings of 159
the study of Su et al. (2008). Ronnback and Witell (2008), studying the economic value
of quality management, demonstrate, similar to the present study, that the
improvements of profitability are not a direct result of winning an excellence award
but of the improvement of quality principles/practices within the company. Similarly,
Parast and Fini (2010), studying the effect of operational performance (productivity)
and quality on profitability in the airline industry, find a positive link between
productivity and profitability, while the link between conformance quality and
profitability is not supported.

6. Conclusions
The implementation of the ISO 9001 standard has been an important research subject
for many years now, focusing on all the versions of the standard and examining for
example, its success, effects and benefits. However, it will continue to be an important
research subject since there are many unexplored topics regarding the optimization
and contribution of the QMS. This is evident from the literature gap and the future
research proposals that have been identified in the literature. The present study
contributes to the existing body of literature by investigating the effects of ISO 9001
effectiveness on service company performance. However, the major point that
differentiates the present study from similar studies concerns the fact that ISO 9001
effectiveness is introduced here and assessed by definition through the degree of
achievement of the ISO 9001 objectives, namely continuous improvement, customer
satisfaction focus and prevention of nonconformities. Other studies consider this ISO
9001 effectiveness as a by-product that is directly linked to the company performance
and not vice versa. It is also worth noting that, while ISO 9001 effectiveness has been
widely mentioned in the literature as a significant parameter of quality management
and company performance, no studies, to the best of authors’ knowledge, use these ISO
9001 objectives and their indicators in order to assess ISO 9001 effectiveness in service
companies. The fact that the business environment, in which the service companies
participating in the present study operate, is suffering from an unprecedented
economic downturn and financial crisis, enhances the contribution of the present study
to the literature. According to the study findings, by achieving the ISO 9001 objectives
(in other words by increasing ISO 9001 effectiveness), product/service quality and
operational performance are directly improved, while financial performance is
indirectly improved through operational performance.

7. Managerial implications
The findings of the present study carry a managerial message. Service companies
should focus their efforts on fully achieving the objectives of the ISO 9001 standard.
Through continuously improving processes, product/service quality and the internal
business environment; strongly focusing on satisfying customers; and maximizing the
prevention and minimizing the detection of nonconformities, a service company
increases ISO 9001 effectiveness. As a consequence, tangible benefits are derived for a
MSQ service company, including product/service quality and improvement of operational
23,2 performance. This leads to increasing the financial indices of a service company. Thus,
this can help a service company withstand the current downturn and survive in an
unstable and financially unhealthy business environment. The fact that the current
economic downturn and financial crisis prevail not only in Greece but in many
other European countries too, strengthens this point of view and managerial message.
160 Moreover, the noncertified service companies can be motivated to implement
the ISO 9001 standard, and through increasing the standard’s effectiveness
improve their performance and be more competitive compared to the already ISO
9001 certified service companies.

8. Limitations and future research recommendations

The present study suffers from some limitations. The sample of the responding
ISO 9001 certified service companies is small and it mostly includes SMEs, since the
large-sized companies are not adequately covered in the sample. Moreover, due to
the small sample size, the relationships between ISO 9001 effectiveness and the
performance dimensions of service companies are determined through multiple linear
regression analyses that are applied separately. Consequently, the structural equation
modelling (SEM) technique, that allows the concurrent determination of the
relationships among several factors, cannot be applied due to sample size
restrictions. Thus, future research studies should be conducted based on a larger
sample of service companies with a balanced distribution of all company sizes, to
which the SEM technique can be applied. In doing so, the statistically significant
differences among small-, medium- and large-sized companies can also be detected
(regarding ISO 9001 effectiveness and company performance).
Bearing in mind the unstable business environment in which the responding service
companies operate and furthermore, the fact that the data collected represents
the subjective opinions of the company representatives, bias may be an issue in the
present study with regard to the assessment of ISO 9001 effectiveness and company
performance. Thus, future research studies can be based on objective business
evidence coming from the documents of the ISO 9001 QMS and the company financial
indexes. As far as the service company dimensions are concerned, it is apparent that
dimensions such as market performance and customer satisfaction have been excluded
from the purpose of the present study. So, it is suggested that future studies
incorporate such performance dimensions, on which the impact of ISO 9001
effectiveness can be determined.

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About the authors

Evangelos L. Psomas is a Research Assistant in the Department of Business Administration of
Food and Agricultural Enterprises in the University of Western Greece. He received a PhD in
Total Quality Management at the University of Ioannina, Greece, in 2008. He has dealt with
issues of management and marketing and has worked as a teaching assistant in the University of
Ioannina and Technological Educational Institute of Epirus. His research interests include: total
quality management, quality assurance, food safety management, human resource management,
supply chain management, agribusiness and food marketing. Evangelos L. Psomas is the
corresponding author and can be contacted at: [email protected]
Angelos Pantouvakis studied Civil Engineering at the National Technical University of
Athens and obtained his M.Eng in 1985. He continued his studies at the Nottingham
Business School, UK, obtaining an MBA in 1987 and then a PhD from the Judge Business
School, University of Cambridge in 1997. He has spent more than 20 years in the professional
arena in the services sector industry. He is at present Assistant Professor in the University
of Piraeus, Department of Maritime Studies. He has published in the field of services marketing
MSQ and shipping in many outlets such as Managing Service Quality, Total Quality Management and
Business Excellence, Journal of Targeting, Measurement and Analysis for Marketing,
23,2 Maritime Policy and Management, International Journal for Shipping and Transport Logistics
etc. He was awarded the Best Commended Paper award from Emerald (Managing Service
Quality) in 2010.
Dimitrios P. Kafetzopoulos is a Research Assistant in the Department of Business
164 Administration of Food and Agricultural Enterprises in the University of Western Greece.
His research interests include quality management, quality assurance and food safety
management.

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