Impact of ISO9001 Certification on the Beverage Company's Performance: A Case Study of Brewery Companies in Ethiopia

Gemechu Getahun Amente

doi:10.7176/iel/10-1-02

Abstract

This study tries to shade light on the effect of ISO9001 on Performance of Brewery companies in Ethiopia. It empirically analyzes the impact of ISO9001 on the performance of brewery company's proxied by profit of companies during the sample period of 2002-2015.The sample consists three brewery companies namely: BGI-Ethiopia, Metha-Abo and Dashen brewery companies. The methodology is based on the Fixed effect model estimator proposed for dynamic panel data, which is strong in the presence of endogenous covariates, allowing for individual companies fixed effects, heteroskedasticity and autocorrelation. Based on our findings, out of the four independent variables average revenue and dummy of ISO9001 are positive and significant effect on companies profit i.e an increase (decrease) in average revenue of companies results in a 5.517 percent increase (decrease) in the company's profit. The result indicates that ISO9001 certification does have a strong significant positive impact on brewery companies performance. As the result revealed a company's profit increases by 1.052% due to ISO9001 certification. The other two explanatory variables average cost and natural logarithm of total sale become statistically insignificant. In sum, the result of the study indicates that Having ISO9001 certification improves the profitability of the brewery companies. This finding seems to agree with the study done by Dejene Tulu (2011) on five brewery companies in Ethiopia and other scholars like Sharma(2005),Pinar(2001) and Singles et al.(2000). Keywords: ISO9001, Brewery companies, performance, ,fixed-effect model. DOI : 10.7176/IEL/10-1-02 Publication date: January 31 st 2020

Highlights

ISO certification stands for certain minimum quality standards that organizations should meet and is said to assure a consistent quality of products, services and processes
The output above reveals that ISO9001 certification and average revenue have a significant impact on profit of the companies while average cost and sales volume appeared to be insignificant
5.Conclusions In a production systems Performance can be measured in terms of Quality-based measure, Time-based measure, Cost- based measure or Flexibility based measures

Summary

Introduction

ISO certification stands for certain minimum quality standards that organizations should meet and is said to assure a consistent quality of products, services and processes. Singles et al (2000) described that organizations that are involved in quality management out of an internal inspiration, such as improving their organizational arrangement, improvement of their competitive situation, improvement of their running and trading results, etc., profited most in terms of performance outcomes He stated that ISO 9001 standards help to guarantee that organizations follow definite well documented procedures in making of their products or services, and nothing more. Wu and Liu (2010) identified that ISO certification has significantly affected the financial perspective of the company performance of profitability Their result showed that ISO certification had a significant impact on improving customer satisfaction. At the end the appropriate model ( fixed effect model) is used to identify the impact of ISO9001 on companies performance

Empirical findings and discussions

Findings

5.Conclusions