Motivations behind ISO 9000, early implementation problems and perceived benefits in manufacturing SME: A Portuguese case study

Abstract This research paper focused on a set of concerns regarding opportunities to gain improvements in operational and business performance, in SME context, through the implementation and sustainability of a QMS based on ISO 9000 standards. In an effort to address such research questions, a detailed case study was undertaken on a Portuguese manufacturing SME. Besides other data gathering sources, several interviews were undertaken, in order to gain a general picture of the overall process, through the perception of key intervenient regarding issues like practices undertook over time, problems and difficulties faced, and perceptions about areas of improvement. This case shows how an SME fully committed in the implementation and sustainability of a QMS based on ISO 9000 standards managed to overcome serious handicaps in critical issues for near future. This paper highlights also that SME with a proactive behavior, seeking for quality continuous improvement may achieve both internal and external significant fruitful improvements. Keywords: ISO 9000; Motivations; Performance; Benefits; SME; Case study

1. Introduction

It is clear from previous researches documented throughout literature that, whatever the economic sector they operate in, their dimension, or their localization, more and more organizations are concerned with quality improvement issues, because they need to become more competitive, and, are compelled to use resources effectively. In fact, firms competitiveness rely increasingly on profitably meeting customers requirements and expectations, better than competitors. As a result, critical changes in firms competitive environment have been putting strong pressures on quality continuous improvement needs, accelerating breakthrough in quality management issues.

Recent integrated management approaches, such as TQM (Total Quality Management), are drawn heavily on the principle that quality improvement is a never-ending goal and

may be sustained through the development (and further continuous improvements) of processes able to provide uniform products and/or services that aim to satisfy or exceed key stakeholders expectations and to promote efforts and responsibilities of everyone in the organization. As stressed by Brah et al. (2002), TQM cant be seen as a quick fix way, highlighting that its true success involves a long-term paradigm shift, through significant organizational changes.

According to Sharma and Kodali (2008), TQM is universally accepted as one of the most understood change management programs and is one of the strategies for confronting the global competitive challenge facing both manufacturing and service industries. In fact, the number of successful organizations which embraced TQM philosophy and reported significant contributions suggest it undeniable importance as a key to achieve excellence. Furthermore, a number of research studies have been highlighting, throughout the last couple of decades, the benefits of such philosophy in organizations performance, all over the world. More recent researches still corroborate such evidences. For example, according to Arumugam et al. (2008) TQM practices were found to be partially correlated with quality performance of the Malaysian ISO 9001:2000 certified manufacturing organizations; the research conducted by Kumar et al. (2009), among total quality Canadian companies, confirmed positive impacts of TQM on the several dimensions of company performance, namely on employee relations, operating procedures, customer satisfaction, and financial results.

Several authors like Taylor (1995), Tummala and Tang (1996), or Escanciano et al. (2001) claimed that certification may be a significant first step towards a QMS based on

total quality management (TQM) principles, fostering employees consciousness about quality issues. However, some researchers still claim that some issues in ISO 9000 standards are opposite to important TQM principles such as paperwork and excessive controls throughout processes, when TQM philosophy enhances flexibility and prevention over inspection.

Nevertheless, regardless such discussions found throughout literature, since the creation of ISO 9000 quality standard in 1987, until nowadays, a huge number of organizations have implemented QMS based on such requirements. As a result, the development of standardized QMS based on ISO 9000 is certainly one of the most significant phenomena in recent quality management issues. According to the ISO Survey, by the end of December 2007, nearly one million organizations worldwide (175 countries/economies) were certified based on ISO 9001:2000 quality assurance standards, an increase of almost fifty percent over 2003 (International Organization for Standardization, 2007).

Simultaneously, as such phenomena was growing in importance, a number of researches have been published, focusing on issues like motivations for registration, cost benefit analyses, or its influence on overall performance, inter alia. In fact, a large debate took place in the literature, as to whether ISO 9000 standards provide or not improvements. The effects of ISO 9000 on organizations results have been widely analyzed throughout literature; however the lack of agreement regarding their connection remains quite unclear.

While some researches highlighted several benefits achieved from certification of QMS based on ISO 9000 standards, claiming that improvements in operational and business performance are significant, others provided less optimistic outcomes and found that improvements in indicators like profitability, productivity, and even quality are not significant. There is also another group of researchers stressing improvements in operational results outperform clearly business performance. Few researchers suggested that TQM ensure better results than ISO 9000 certification. Furthermore, some authors proved that ISO 9000 certification is often pursued by more effective and profitable organizations. Some investigations have also been undertaken in order to compare the joint effects of ISO 9000 and TQM, and some suggest that improvements are more significant if the implementation and development of QMS lays on a further step toward TQM.

Pursuing ISO 9000 certification wont lead, by itself, to significant improvements in operational and business performance, and several researchers proved that there are close relationships between reasons behind the decision to obtain the document, certifying that the QMS fulfill ISO 9000 requirements, and the nature and extension of improvements reached. Indeed, a number of researches published in literature suggested that organizations that strive for ISO 9000 certification willingly may probably report organizational performance improvements more significant than those that only pursue ISO 9000 certification under customer pressure. As a result, more studies focused on studying the relationships between internal versus external reasons behind the decision to pursue ISO 9000, and depth/breadth of ISO 9000 implementation may help to bring new

insights and explain disappointments manifested by many organizations, and even authentic failures, regarding results obtained from ISO 9000 certification process.

Furthermore, researchers concerned with organizational dimension highlight that there are significant operational differences between SME and large firms, enhancing that what applies to larger firms may not be suitable to smaller ones. Concerning research on quality management issues, few studies focused specifically on context of small firms and medium-sized ones. Such observation may be worrying, especially considering that, according to literature, SME are different in nature, and this can influence differently the way they act and perform. In fact, most of researches performed fall upon large companies or are based on samples regardless firms dimension, and therefore, the specific context of SME remain unclear regarding a set of concerns in quality management.

This research was carried out as a piece of a wider project focused on understanding how Portuguese manufacturing SME faced quality challenges and how their relationship with the key stakeholders foster or hinder their journey toward quality continuous improvement. Therefore, this specific research paper focused on a set of concerns regarding opportunities to gain improvements in operational and business performance, in SME context, through the implementation and sustainability of a QMS based on ISO 9000 standards Such concerns ended up in the researchs main focus and got materialized through the following purposes: (i) to examine empirically whether SME can indeed benefit from ISO 9000 certification process, and (ii) to analyze the effects of some critical factors which may influence improvements obtained and dictate the success or failure of the overall strategy.

More specifically, three questions were addressed to keep the researchs development focused on the main purpose: What are SME main prominent motivations to pursue ISO 9000 certification? What are the main difficulties and obstacles SME have to overcome in an early phase? What are the main benefits and improvements gained through such process in SME context?

This paper attempted to provide its contribution to fill a set of gaps identified in literature, and clarify some issues still controversial. In an effort to address such research questions, a detailed case study was undertaken on a Portuguese manufacturing SME.

For the purpose, among some other data sources, a set of several interviews was undertaken, in order to gain a general picture of the overall process, through the perception of key intervenient regarding issues like practices undertook over time, problems and difficulties faced, and perceptions about areas of improvement. This case shows how an SME fully committed in the implementation and sustainability of a QMS based on ISO 9000 standards managed to overcome serious handicaps in critical issues for near future.

The remainder of this research paper was structured as follows. The first section provides a short review of the relevant literature. Next, the methodology is carefully described, followed by the detailed results obtained from the case study, and some reflections about 6

how such results fit in actual literature. Finally, conclusions are drawn, with a special attention to managerial implications and suggestions for further researches.

2. Literature Review Does ISO 9000 certification provide real and significant benefits?

The development of standardized QMS based on ISO 9000 is undoubtedly one of the most significant phenomena in recent quality management issues, and although some authors argue that marketing effects of ISO 9000 might have been greater during the early years of its diffusion, when few companies had adopted it (Casadess and Karapetrovic, 2005), since the creation of ISO 9000 quality standard in 1987, a huge number of organizations have implemented QMS based on its requirements, and simultaneously, a number of researches have been undertaken and published, trying to analyze and understand the main reasons for such growth, and focusing on issues like motivations for registration, cost benefit analyses, or its influence on overall performance, among other fields.

Regardless the overwhelming popularity gained by ISO 9000 certification, substantial uncertainties remain, surrounding its role and value on firms route toward quality continuous improvement. While the essence and scope of the ISO 9000 standards are quite well explained, there are a number of issues still unaddressed. In fact, despite the growing body of research focused on the effects of ISO 9OOO on organizations performance, most of results seems to remain inconclusive and controversial (Boiral and

Roy 2007; Sroufe and Curkovic, 2007; Wilson, et al. 2003; Heras, et al. 2002; Aarts, 2001).

A large debate took place in the literature, as to whether ISO 9000 standards provide or not real and significant improvements. The effects of ISO 9000 on organizations results have been widely analyzed throughout literature; however the knowledge on such connection remains quite unclear, at least useful, both for theoretical and practical purposes, attending to the contradictory results observed throughout literature, and the corresponding lack of agreement between researchers.

A number of research studies have focused on the relationship between quality management practices and organizational performance (Powell, 1995;

Hendricks and Singhal, 1997; Terziovski and Samson, 1999; Kaynak, 2003; Liu, 2009). Regarding ISO 9000 certification specifically, while some researchers concluded that ISO 9000 registered companies are more profitable than non-ISO 9000 companies (Simmons and White, 1999), others stressed that ISO 9000 certified companies do not perform noticeably better than non-certified companies (Morris, 2006; Dunu and Ayokanmbi, 2008; Martnez-Costa, et al., 2009). Some researches highlighted several benefits achieved from certification of ISO 9000-based QMS, claiming that improvements in operational and business performance are significant. (Reimann and Hertz, 1996; Handfield, et al., 1998; Huarng, et al., 1999; McAdam and McKeown, 1999; Yahya and Goh, 2001; Heras, et al., 2002; Tar and Molina, 2002; Naser, et al., 2004; Briscoe, et al., 2005; Lin and Jang, 2008).

Other researchers (Rahman, 2001; Feng et al., 2008; Han et al., 2007; Jang and Lin, 2008; Martnez-Costa et al., 2008) observed less optimistic outcomes and found that the implementation of ISO 9000 practices influenced directly and positively operational performance but affected business performance indirectly, concluding that improvements in operational results outperformed clearly business performance indicators. Moreover, some authors even stressed that while implementation of QMS based on ISO 9000 standards led to better operational performance indicators, it didnt provide better business performance (Terziovski, et al., 2003; Naveh and Marcus, 2005). On the contrary, according to several other researchers, ISO 9000 certification doesnt lead to significant organizational improvements (Terziovsky et al., 1997; Terziovsky & Samson, 1999); Lima et al.,2000; Singel, et al., 2001 ; Martinez-Costa et al., 2009). Influences of QMS based on ISO 9000 standards on company performance have been also assessed through comparison with improvements reached from systems based on total quality management (TQM) principles (Rayner and Porter, 1991; Askey and Dale, 1994; Meegan and Taylor, 1997; Huarng, 1999; Prabhu et al., 2000; Sun, 2000; Escanciano et al., 2001; Hill et al., 2001; Rahman, 2001; Gotzamani and Tsiotras, 2002; Sun and Cheng, 2002; Martnez-Lorente & Martnez-Costa, 2004; Molina et al., 2004; Han et al., 2007; Martnez-Costa et al., 2008; Martnez-Costa et al., 2009). Whilst some results suggested that, once implemented, some of the ISO 9000 principles may be contradictory with TQM philosophy (Martnez-Lorente & Martnez-Costa, 2004), findings have generally supported the claim that ISO 9000 may be a good first step to TQM, since performance improvements are usually statistically significant in TQM-

related issues (Bradley, 1994, Kanji, 1998, Yusof and Aspinwall, 2000, Claver and Molina, 2002, Han et al., 2007).

Whilst ISO 9000 certification has gained great acceptance worldwide, many companies felt to achieve the competitive benefits expected through the implementation of ISO 9000-based QMS (Lima et al., 2000). As stressed by Sun and Cheng (2002), pursuing ISO 9000 certification wont lead, by itself, to significant improvements in operational and business performance, and several researchers proved that there are close relationships between reasons behind the decision to obtain the document, certifying that the QMS fulfill ISO 9000 requirements, and the nature and extension of improvements reached. Indeed, a number of researches published in literature suggested that organizations that strive for ISO 9000 certification willingly may probably report organizational performance improvements more significant than those that only pursue ISO 9000 certification under customer pressure. In fact, several researches concluded that both nature and intensity of motivations behind a decision to pursue ISO 9000 certification plays a key role in the success of the implementation process or in the emergence of organizational problems (Boiral and Roy, 2007). The research onducted by Boiral and Amara (2009) explored alternative performance configurations resulting from the implementation of ISO 9000-based QMS in 872 certified organizations, highlighting that, frequently, internal and managerial motivation to pursue ISO 9000 certification affected positively the likelihood of a certified company to reach a better-performing effectiveness configuration. In fact, a number of researches stressed the importance of motivations to develop QMS under ISO 9000 standards, highlighting that companies pursuing ISO 9000 certification for external reasons, like promotional purposes or under

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customer pressure, experienced fewer benefits than those that are really convinced of ISO 9000s virtues to foster effective management practices and a general awareness toward quality continuous improvements (Jones et al., 1997, Huarng, 1999, Douglas et al., 1999, Singels et al., 2001, Withers and Ebrahimpour, 2001, Yahya and Goh, 2001, Terziovski et al., 2003, Jang and Lin, 2008, Boiral and Amara, 2009, Nair and Prajogo, 2009). For example, according to Martnez-Costa et al. (2008), ISO 9000 certification in a large sample of Spanish industrial companies did lead to improvements in performance; however, it appeared that internal motivations to implement ISO 9000 were associated with high performance, whereas external motivations were not. Examining the differences between firms that maintain certification and those that do not in terms of the benefits that firms felt they had obtained from certification, Lo and Chang (2007) stressed that firms' reasons for obtaining certification had an impact on the strength of the relationship between the maintenance of certification and the benefits gained. Based on a sample of 1500 ISO 9000 Australian certified organizations, Terziovski and Power (2007) concluded that organizations that seek ISO 9000 certification with a proactive behavior driven by a continuous improvement strategy are more likely to gain higher benefits.

As a result, more studies focused on studying the relationships between internal versus external reasons behind the decision to pursue ISO 9000, and depth/breadth of ISO 9000 implementation, may help to bring new insights and explain disappointments manifested by many organizations, and even authentic failures, regarding results obtained from ISO 9000 certification process.

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ISO 9000 certification experienced by SME

Anecdotal evidences suggest that ISO 9000 certification does lead to significant improvements in companies performance. However, very little emphasis has been directed toward research on the implementation of QMS based on ISO standards at manufacturing SME, since most of the studies focused on larger organizations.

Critical changes in firms competitive environment have been putting strong pressures on quality continuous improvement needs, and although SME are generally associated with lack of resources and competencies, these are forced to increasingly develop more formal quality management strategies striving for higher levels of productivity and competitiveness. As a result, according to Briscoe et al. (2005), smaller companies often struggle to achieve the world-class quality standards, customers are expecting. Faced to such panorama, more and more SME are turning to the adoption of standardized QMS in an attempt to overcome inherent resource problems and to improve quality external perceptions.

As a matter of fact, SME are frequently small suppliers of larger customers more powerful, and play generally a supporting role in their supply chain context. As a result, such minor role in the supply chain may influence their strategic decision toward quality improvement, for example being forced to pursue a specific QMS model irrespective of its potential benefits.

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Indeed, when compared to larger organizations, small and medium sized ones are generally characterized as resource constrained (Kipley and Lewis, 2009; Pett and Wolff, 2007) and the key rationale for separating SME from larger companies on researches focused on the implementation of QMS based on ISO 9000 standards is that SME are more likely to face significant resource scarcities, like financial resources, human resources, time, knowledge, among other factors (Kumar and Antony, 2008, Aldowaisan and Youssef, 2006) that may place smaller manufacturing companies at a quality disadvantage.

Thus, challenged with limited capacity and resources, and in order to compete on parity, small and medium sized firms need to develop superior skills to counterbalance disparities in economies of scale, resource restrictions, among other critical factors (Kipley and Lewis, 2009). For example, according to Pinho (2008), in order to achieve market advantage, SME need to leverage their resources and capabilities to provide superior value (innovative products and services) to customers in a competitive marketplace.

There is a widespread belief that such resources handicap hinders SME potentialities to bet on effective QMS, which generally involves huge resources consumption. For example, the general idea is that setting up quality standards and documenting a quality system requires substantial managerial time and efforts.

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Over the last decades a number of researches have been undertaken under the scope of relationships between quality management practices and organizational performance; however, most of these studies focused on larger companies. Probably due to a growing awareness and recognition of SME importance in most economies worldwide, more recently, several researches have focused specifically on smaller companies. Some of these have approached general issues of quality management (Bilston and Sohal,1995; Boon and Ram, 1998; Anderson and Sohal, 1999; McAdam, 2000; Davig, et al., 2003; Sousa et al., 2005; Kumar & Antony, 2008), while other have analyzed specific quality instruments, philosophies or models like TQM or ISO 9000 certification (Collyer, 1996; Van der Wiele, and Brown, 1997; Quazi and Padibjo, 1998; Chandler and McEvoy, 2000; Gotzamani and Tsiotras, 2001; Rahman, 2001; Boulter and Bendell, 2002; Briscoe et al., 2005; Aldowwaisan and Youssef, 2006, Poksinska, et al., 2006; Pinho, 2008).

While all these studies provided useful understandings of SME perceptions towards ISO 9000 and TQM philosophy, the relationship between quality initiatives and SME performance indicators has not been fully examined empirically. In fact, a number of researchers pointed out that benefits of ISO 9000 may far outweigh costs of achieving registration, and that an ISO 9000 certification process may be useful both for smaller organizations, and for organizations without previous experiences with QMS, helping these to improve the organization and scheduling of their operations, through processes documenting, clear tasks and responsibilities definition, both among employees, and departments, among other factors (Briscoe et al., 2005; Gotzamani, 2004; Gustafsson,
2001; Sun 2000, McAdam & McKeown, 1999, Quazi and Padibjo, 1998, Mo and Chan,

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1997). It is not clear, however, that the ISO quality assurance system has been able to

improve firms' performance.

Focusing on ISO 9000-accredited manufacturing companies in New Zealand, the research performed by Lee and Palmer (1999) found significant differences in quality programs implementation patterns between small companies (fewer than 100 employees) and larger ones. Sun and Cheng (2002) found similar results, concluding that there were some significant differences between Norwegian manufacturing SME and larger firms in implanting ISO 9000 certification and TQM. Moreover, Lee and Palmer (1999) concluded that, when compared to larger companies, smaller ones are more likely to implement ISO 9000 due to external rather than internal factors, corroborating results from Van der Wiele and Brown (1997) and Sun and Cheng (2002). Results from the research performed by Lee and Palmer (1999) suggested that, when compared to larger companies, smaller ones understanding of the relationship between ISO 9000 and total quality management is lower. Accordingly, smaller companies are more likely to only implement QMS based on ISO 9000 standards, and manifest little intention to undertake any further extension of their quality programs toward TQM (unless if required).

Briscoe et al. (2005) also explored whether small manufacturers could successfully implement and benefit from standardized programs such as ISO 9000, concluding that if management can internalize core ISO practices, foster a quality culture, reduce behaviors that inhibit ISO adoption, performing a readiness analysis that helps tailor the ISO program to company needs, and leveraging a dynamic environment to drive quality consciousness, smaller companies may achieve real benefits from a certification process.

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In their research, Poksinska e al. (2006) analyzed three case studies of small organizations where ISO 9001:2000 was implemented with minimum effort; as a result, despite the direct external benefits experienced from certificates, only minor changes were experienced, and internal benefits remained beneath initial expectations, concluding that, in general, the way ISO 9001:2000 is implemented may contribute to a number of lost improvement opportunities. On the contrary, Van der Wiele and Brown (1997) found that the main significant improvements gained by smaller manufacturers seeking ISO 9000 certification are related to internal improvements, such as improved product quality, and greater quality awareness.

As a final remark, it is worth pointing out that, considering the number of researches published throughout literature highlighting the pressure on SME to pursue ISO 9000based QMS and the substantial costs and time inherent to the implementation of the process (Raynor and Porter, 1991, Brown et al., 1998, Lee and Palmer, 1999, Simmons and White, 1999), smaller companies should carefully weigh costs and benefits expected before pondering such move. As claimed by Briscoe et al. (2005), among others, it is time to take a closer look to analyze if ISO 9000 can effectively help improve the competitiveness of smaller manufacturing companies.

3. Methodology

Case selection

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Case selection involves choosing an individual case or set of cases that meet the different purposes previously defined, and fit within researchs boundaries. As a result, to achieve a clear understanding of the issue under research, it was critical to choose the case for inclusion carefully. According to Eisenhardt (1989), in case studies based research, random selection is neither necessary nor even preferable, opinion corroborated by Yin (2009), who suggested that selecting cases is a matter of discretion, judgment, convenience. Furthermore, Stake (1995) also shared a similar position, highlighting that in a purposive sample, features like accessibility, typicality, or opportunity for learning are significant selection factors.

In accordance, the case presented here, in this research, was selected based on two factors considered essential to meet the different purposes of the study. Firstly,

representativeness was not crucial. Indeed, potential for learning was considered more important, and an essential factor to reach effectively the objective outlined, and to allow fruitful insights both for practical and theoretical contributions. As a result, the profile outlined focused on a well-succeed SME in its quality focus and process oriented strategies, developed under certification purposes through ISO 9000 standards, preferentially pursuing a total quality company status. Based on the respondents of a survey performed in a previous research, a set of four companies matched perfectly such profile. Secondly, feasibility and accessibility were also important factors to achieve a research with such purposes. Accordingly, the case selection was largely determined by informants willingness to participate in the study, to provide the required information, to

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release staff members from work for interview, among other resources. Moreover, the furniture industry, where the company belongs to, is an important sector in the Portuguese economy, as it is one of the most labor-intensive industries, with a high potential to contribute both to reduce unemployment, and to increase exports.

Data collection and analysis

A wide range of data collection methods may be used throughout the development of a case based research, where both qualitative and quantitative data may be gathered from several different sources. In order to increase results internal consistency, validity, and reliability, following advices from several researchers (Denzin, 1984; Stake, 1995; Meredith, 1998; Voss et al, 2002, Yin, 2009), a special attention was paid to triangulation. As a result, the convergence toward triangulation was based on multiple sources of information, sorting out data from semi-structured interview records, direct observations during visits to the organization, and secondary data, like company website information, quality manual, internal newsletter, and internal records about the progress of the implementation of the QMS, among others.

First of all, a preliminary open-ended interview was conducted with the senior manager, where he was introduced to a brief and clear summary about the theoretical framework and researchs objectives. Moreover, a detailed schedule of the different tasks to be undertaken helped to provide confidence about the low impact of the research on firms daily activities. The interview covered also the historical background of the company, the

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organizational structure, and the main reasons for undertaking actions toward quality improvement, in general, and QMS in particular.

The further interviewees had to be selected on the basis of those having as much information as possible on the development and certification of the QMS. Indeed, the senior manager was also inquired about whom, in his opinion, may be considered as key informants about all the processes, in this research. According to him, the key informants would be himself, the quality/production manager, and the shop floor supervisor. Finally, a formal secrecy compromise was agreed in order to guarantee confidentiality of some information more sensitive (strategic nature); therefore, the company selected, will be referred to, in this paper, as Alpha, in order to preserve confidentiality.

As summarized in table 1, other targeted interviews were also conducted with three other managers and the shop-floor supervisor (team leader). Among several subjects, the main ones focused on the following issues: (i) practices undertook over time, (ii) problems and difficulties faced, and (iii) perceptions about areas of improvement.

Table 1 Interviews performed with informants

Interviewees job titles Senior Manager Hierarchical level Senior Years at Alpha 19 Number of interviews two Time spent 35 min. 40 min. Focus of the interview(s) historical background of the company organizational structure main reasons for undertaking actions toward quality improvement practices undertook over time perceptions about areas of improvement practices undertook over time problems and difficulties faced perceptions about areas of improvement practices undertook over time

Quality and production Manager HR

Middle

19

three

Middle

10

one

60 min. 40 min. 30 min. 50 min.

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Manager Marketing Manager Shop floor Supervisor Middle 17 one 30 min.

Operational

19

one

40 min.

problems and difficulties faced perceptions about areas of improvement practices undertook over time problems and difficulties faced perceptions about areas of improvement practices undertook over time problems and difficulties faced perceptions about areas of improvement

As a result a total of eight targeted individual interviews were conducted over a period of two weeks, each one tape recorded and written down for further analysis, in order to assure that information collected wouldnt be biased later.

Regarding the final assessment about the influence of ISO 9000 certification upon companys improvements, a dephi logic was applied.

Finally, as suggested by Yin (2009), the key informants (the senior manager, and the quality/production director) were requested to review the draft report of this case study to increase researchs validity A further and last interview with both, resulted in a final insightful session of nearly 60 minutes, where the final report was set up.

4. Findings

About the company

First of all it is worth to remember that in order to assure informations confidentiality, the name of the company under study was changed and specific data (more sensitive) was kept blurry; as a result, throughout this paper, the company will be called alpha.

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Alpha is a family company founded in the early 1980s by three brothers, that started producing 100% massive wood household furniture for the Portuguese market with no more than 10 employees. Nowadays, almost 60 employees are working at Alpha. In nearly thirty five years later, located in a highly industrialized region in Northern Portugal, Alpha grew from a micro enterprise, producing exclusively for a regional market, to a medium-sized enterprise, exporting about 60% of its production to several European markets, like Spain, France, and UK, and planning to expand outside Europe. Considered as an SME according to all worldwide classifications, Alfa was identified in a previous research and was selected to participate in this research, because of its potential to bring additional insights to the debate on ISO 9000-based QMS in SME.

Alpha designs and produces a variety of products, from house like bedrooms, living rooms, dining rooms, among others, along three different styles: rustic, classic and contemporary. The evolution experienced along the last eight years, enabled Alpha to become a total quality company, with a strong reputation among its main customers, based on three basic principles: (i) on time delivery, (ii) high quality, and (iii) competitive prices. Moreover, Alphas brand is nowadays a reference and a synonym of high quality and design, both in Portuguese industry and throughout several European countries.

In order to reach such status, Alpha has undergone several deep changes in its structure in the past 30 years, and for sure, the most significant occurred since 1998, when Alpha decided to develop its QMS based on ISO 9000 standards for a further certification.

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Sources of motivation behind ISO 9000 implementation We reached a crossroad: (i) competition was more and more aggressive, (ii) our sales were dropping down for a while, and (iii) complaints from customers were growing steadily. The company was progressively loosing strength, and being surpassed by our main competitors. As a result it was urgent to understand the motives for such decline, and undertake measures to counterbalance such trend
(senior manager).

In fact it was perceived as extremely important to begin with a deep analysis focused on internal factors as skills, resources and assets, or lack of them, on one hand and on external factors over which the company had little or no control, such as social or economic factors. As a result, top management decided to apply a SWOT analysis, in order to obtain a useful framework, helping Alpha to identify and prioritize goals, as well as to define the best strategies. Accordingly, Alpha undertook a detailed evaluation of companys key actual or forthcoming internal resources and capabilities (Strengths and Weaknesses), and external factors (Opportunities and Threats) in relation to their ongoing performance in a specific environment, helping to focus on key issues.

For the purpose, informations compiling and recording took place during short workshop sessions (about half an hour). At this stage, the SWOT leader (senior manager) had a key role.

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It was important to foster an atmosphere conducive to the free flow of thought in order to allow participants to express what they felt to be appropriate, free from blame. () The analysis provided helpful information in matching our firms resources and capabilities to the competitive environment in which we operated
(senior manager).

The main results are summarized in table 2 (listed without any specific order).

Table 2 Strengths, Weaknesses, Opportunities, and Threats STRENGTHS Experienced and multi-skilled workforce. Workforces motivation and dedication. Top management commitment. Team working spirit. Family atmosphere, WEAKNESSES Short-range planning and lack of an effective management control system. Low capacity for innovation, design and product differentiation. Ineffective quality management system. Difficulty in responding to the aggressiveness of external producer markets. Preponderance of control over prevention. THREATS Growing quality awareness. Competitors have superior access to channels of distribution. Increased environmental regulation. Competitors growing aggressiveness. Competition from countries (like China) with lower labor costs and less restrictive regulations (environment, hygiene, safety, etc).

OPPORTUNITIES Co-branding with foreign manufacturers End-users responsiveness to new ideas Growing importance of ISO certification Entrance in new market segments Exploitation of European and Brazilian markets

The SWOT analysis showed clearly that Alpha was experiencing significant internal shortcomings and handicaps, both regarding its management control system and its quality management system, and this was considered critical, considering the different threats identified. In fact, Alpha was benefiting from a special working environment, with a significant top management commitment and experienced and multi-skilled workforce,

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highly motivated. According to TQM advocates, such mix-environment would be very conductive to a total quality atmosphere benefiting any quality continuous improvement program. Top management realized that, regardless such advantage, actual systems would not allow any significant improvement, and if nothing was done, Alpha would continue experiencing repeated customer complaints, delayed deliveries, frequent warranty returns, low productivity levels, inter alias. Accordingly, it was decided that Alpha would begin to develop its QMS according to ISO 9000 standards, because such undertaking would probably benefit strongly Alphas performance.

The objectives defined were the following: (i) to improve consistency of products and services performance, (ii) to reduce cost, (iii) to Improve both productivity and efficiency, (iv) to reach higher customer satisfaction indicators, and (v) to gain a stronger market advantage and increase business. Thus, Alpha would pursue a formal quality system to help providing more consistent operations, and to provide credible signals of quality assurance. In fact, it may be summarized that reasons behind such decision were twofold: (i) to improve internal operational efficiency and reduce costs, and (ii) to gain competitive advantage and increased marketing and sales opportunities.

Problems and obstacles overcome at an early stage of the process

A number of companies have complained about some features inherent to ISO 9000 certification and reported significant obstacles both regarding planning and

implementation of ISO 9000-based QMS. Most of the barriers highlighted throughout

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literature deal with lack of resources (including time availability), lack of experience and expertise/knowledge, lack of commitment from top management, among other constraining issues.

Such difficulties are even more critical in smaller organizations, and Alpha was not an exception. As most of SME, Alpha had to deal with critical issues regarding its lack of resources including human resources, financial resources, time, and physical resources which strangled their capacity to properly implement the ISO 9000-based QMS.

It took about 2 years and a half, to develop the complete QMS, from the beginning of the development of the ISO 9000 system, until the end of the registration process. We heard that, generally, such processes are concluded in a shorter period of time; however, considering the lack of resources we were experiencing, we had to take our time to acquire the necessary skills and knowledge in quality management issues and ISO 9000-based QMS, and ensure a sustained QMS implementation (senior manager).

Besides such barriers, the systematization and triangulation all the data gathered through the different sources, highlighted the following two additional main problems, Alpha had to overcome, or at least to attenuate, in an early stage of the system development. (i) top managements lack of understanding of ISO requirements, and (ii) employees wrong perception of quality and initial resistance to change.

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Overcoming top managements lack of understanding of ISO requirements First of all, it is worth pointing out that none of the companys top management members had any previous experience with implementing a QMS. Moreover, none of these had a clear understanding of ISO requirements. However, in order to minimize costs (preparation, development, implementation, maintenance, improvement), the company choose a do-it-yourself solution. The apparent savings would come from eliminating the consultancy costs potentially involved during preparation, development, and

implementation.

Because of serious restrictions we were facing at the moment, it was decided to design and plan the process with our own recourses. () After a while we realized that such undertaking was a time-consuming process. Moreover, our lack of knowledge and previous experience lead us to unexpected and questionable initial results (Senior manager).

Even though we could overcome some difficulties at an ad hoc and short term basis, this would not serve our long term interest; this would be merely fighting symptoms instead of curing the decease (Quality/Production manager).

At the beginning, the senior manager was quite keen on improving quality; however such willingness did not correspond to an adequate communication of his own commitment to the different managers, who in turn did not express clearly their commitment to the shop floor supervisor and operators. As a result, Alpha didnt reach the expected full employee

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commitment. The insufficient employee support in turn cooled the early enthusiasm and full commitment of top management.

Within the company, it was obvious that we did not have adequate competencies to develop a QMS. As a result, we decided to apply for external help, appointing an external quality consultant. However resources availability did not allow hiring a full time consultant, so we decided to contract a consultant only for the initial planning/design of our system and for training of key staff (Senior manager).

The external consultant helped to evaluate gaps between the quality management system already in place and the requirements of ISO 9000 standards; he also helped in the identification of bottlenecks, and any kind of waste and non-value added activities throughout the supply chain. Once identified, gaps were subjected to a complete analysis in order to plan the different steps necessary to develop the QMS processes effectively. Among other key features, the plan included the different activities to be performed (planning and documentation, implementation, evaluation), decisions about how activities had to be performed, the scheduling of every step, the resources required, the identification of who would be direct or indirect affected, as well as a clear responsibilities definition. For each of these activities, a completion time was estimated in order to manage all the implementation process effectively.

Despite the additional significant costs supported in the short term, the consultants experience helped in the planning and implementation of the process,

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as we gained significant savings in the long term, avoiding successive repetitions, redundancies, and reworks of our system (production manager).

At an early stage, decisions have been made regarding responsibilities of the employees who would be directly involved in the development and documentation of the QMS. Additionally, a leader was appointed to oversee the implementations progress of the QMS throughout the different stages and provide resources whenever required. Notwithstanding consultant being in most cases the project leader in the implementation process, the production manager was designed as the leader of the project, chosen because of his general academic background on management, and of the natural knowhow he had about the global supply chain. As a result, he accumulated these tasks and responsibilities to his regular functions within the firm.

Since the quality manager would be responsible for the further success of the implementation, after the different tasks performed by the external consultant, he participated in several in-depth training courses on a number of issues like quality concepts and tools, ISO 9001 overview, ISO 9000 requirements, internal audits, team oriented problem solving, document writing, and records control.

Employees wrong perception of quality and initial resistance to change At the beginning of the process, employees, in general, were not supportive on the quality effort. In fact, employees in general did not have a real perception about problems Alpha was really facing. Most of them thought that Alphas products had already a high quality

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standard, and accordingly believed that additional efforts were useless. Moreover, because of top managements inability to express their full commitment, Alpha experienced a significant resistance, mainly from older operators who were afraid of changes and willing to keep their status quo.

At the beginning, I felt that most of the shop floor operators feared that they may be burdened with increased work, and therefore I believe they tried to slow down every new initiative driven at quality improvement. () the message of what was being attempted was not fully grasped by all employees; as o result, we began to experienced a slight dissatisfaction and some resistance to change, because employees in the plant had difficulty in understanding what was going on (Shop
floor Supervisor).

Such unexpected contrariety was readily resolved, or at least attenuated, when top management realize that they did not have the adequate competencies to lead the project, by their own, decided to apply for external help.

At the beginning we were not comfortable with the idea of hiring a stranger to develop our system, because we fear that his lack of understanding of our business or processes would result in a documented system with little or no merit. Fortunately, we were misled. His commitment was extremely significant, and his endeavor to understand fully our reality was unexpected () he spent hours and hours interviewing almost everyone, reading internal documents, and socializing with different employees (senior manager).

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Extensive quality awareness meetings were steadily organized and applied. Promptly, every employee was clarified about the importance of quality improvement for Alpha, the real problems the company was facing, why to undertake such significant changes, how the main changes would occur and how it would affect them, the benefits for Alpha and for them, and especially the role of everyone in the project. Furthermore, Alpha managed to involve the employees at a very early phase of the implementation process, encouraging employees at all levels to come up with new ideas, rewarding good suggestions, which motivated employees to participate more actively.

It was important to inform everybody about the system and to allow people to be involved in the design of the routines () the request for suggestions to improve quality was well received from everyone, and generally employees felt confident to express their ideas (production manager).

Introducing ISO 9000 training to all employees, explaining the structure of documentation, how to develop Quality Manuals, the requirements for certification, QMS planning, how to identify and implement improvement processes was something Alpha couldnt afford. The lack of resources (money and time) didnt allow general training initiatives directed at everyone in the company. As a result, a number of key employees were selected to participate in such action.

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We realized that if we wanted to effectively implement the QMS, we would need to drive concerted training efforts across all hierarchical levels throughout the organization (senior manager).

Once duly prepared, the staff subjected to special training and development on ISO 9000based QMS, began in their turn to teach and train other colleagues ((on-the-job training programs).

Benefits of setting up a quality management system

Despite the several barriers and difficulties Alpha had to overcome toward the end of the project, we managed to achieve our goal: a sustained implementation of our ISO 9000-based QMS. () considering the significant further evolution experienced by Alpha, we are sure that the benefits gained through the process outperformed clearly all the costs supported, both direct and indirect (senior
manager).

Implementing a QMS brought a number of internal benefits, improving Alphas overall efficiency of operations, and opened up several opportunities vis--vis the external environment (production manager)..

As already said, regarding the final assessment about the influence of ISO 9000

certification upon companys improvements, a dephi logic was applied. Each interviewee
was asked to assess the influence of ISO 9000 certification upon companys results along a

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number of indicators according to the following levels: (i) reduced, (ii) moderate, and (iii) significant. After collecting all the data, a summary was written down and the report was submitted to each of the interviewees. Knowing the contents of the report, these were asked to repeat the assessment process. After collecting the new responses, consensus was reached on almost all the indicators; only two of them were slightly different: (i) manufacturing lead times, and (ii) reduced costs of internal failures. Thus, as they respected to operational issues, it was decided that the shop floors opinion would more reliable. Final results are summarized in table 3.

Table 3 Assessment of improvements reached through the development of the ISO 9000-based QMS Reduced Moderate Significant External Benefits Export Sales Market Share Customer satisfaction (measured through customer complaints) Customer service Relationship with Customers Relationship with Suppliers Internal Benefits Better control of business reduced cost of internal failures (rework, rejections, ...) reduced cost of external failures (customer returns, replacements, ...) Productivity Quality of work life Employees satisfaction Decision making Reduction of defective products Profitability Quality of products Manufacturing lead times Departmental/cross functional comunication Departmental/cross functional cooperation Documentation procedures Customer focus Quality Awareness

First of all, it is worth pointing out that there is a general agreement throughout the different hierarchy levels, that one of the most important improvements reached is the general quality

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awareness gained across all the hierarchy. Analyzing no results from table 3, it is clear that both internal and internal improvements are evident, corroborating results of other researches that highlighted several benefits achieved from ISO 9000-based QMS, claiming that improvements in operational and business performance are significant. (Reimann and Hertz, 1996; McAdam and McKeown, 1999; Heras, et al., 2002; Naser, et al., 2004; Briscoe, et al., 2005; Lin and Jang, 2008).

However it is also clear that internal improvements outperform external ones, supporting other studies (Rahman, 2001; Feng et al., 2008; Han et al., 2008; Jang and Lin, 2008; Martnez-Costa et al., 2008) which results suggest that the implementation of ISO 9000 practices influenced directly and positively operational performance but these outperform business performance.

5. Discussion

The growing involvement of SME in seeking ISO 9000 certification is generally attributed to several strong motivating forces. Many SME decided to seek ISO 9000 registration because of external pressure, because their customers are increasingly expecting their suppliers to pay more and more attention to quality issues, and feel ISO 9000 standards may ensure such willing. Other SME pursued ISO 9000 certification because of market-related factors, trying to increase their chances of gaining new contracts. Quality improvement, looking for efficiency, or processes consistency are also frequent strong driving forces for undergoing in such journey. In fact, motivations behind

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seeking ISO 9000 certification has been significantly analyzed since its creation in 1987, and many researchers have stressed that most organizations have been developing their QMS according to international standards, like ISO 9000, for external reasons, either to be used as a marketing tool for promotional purposes, or due to strong external pressures from key customers (Rayner and Porter, 1991; Van der Wiele & Brown, 1997; Brown et al., 1998; Sun and Cheng, 2002). Notwithstanding, several researches stressing the importance of motivations for certifying QMS, highlighted that companies pursuing ISO 9000 certification for external reasons, experienced fewer benefits than those driven by internal and managerial motivation.

In fact, a number of researches suggested close relationships between reasons behind the decision to develop QMS based on ISO 9000 requirements, and the nature/extension of improvements reached. The case study presented here supported results of researches conducted by Boiral and Amara (2009), Martnez-Costa et al. (2008), or Terziovski and Power (2007), among others, which suggested that organizations that seek ISO 9000 certification with a proactive behavior, driven by a continuous improvement strategy are more likely to gain significant benefits. Convinced of ISO 9000s virtues to foster effective management practices and a general awareness toward quality continuous improvements, Alpha moved forward with the development of its QMS based on ISO 9000 standards, with a clear purpose in mind: quality continuous improvement. Such proactive behavior provided both internal and external significant fruitful improvements, corroborating a general agreement that companies that seek ISO 9000 certification driven by internal reasons gain usually better benefits than those motivated by external pressure.

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In fact, this case study showed that ISO 9000 standards may result in the implementation of effective quality management practices, supporting authors like Quazi and Padibjo (1998) who believe that ISO 9000 registration may provide an important stepping stone toward an overall wide integrated system based on TQM principles.

Such observation may be explained through the resource-based view of the firm (Wernerfelt, 1984, Barney, 1991, Grant, 1991, Hart, 1995), suggesting that firm internal resources and capabilities are the basis for creating sustained competitive advantage. From a resource-based perspective, companies resources and competences include all assets, skills, capabilities, organizational characteristics and processes, know-how, information, aptitudes, information and knowledge which may provide both efficiency and effectiveness improvement (Barney, 1991). As stressed by Barney (1991), gaining sustained competitive advantages from short-run favorable position requires unique resources, heterogeneous in nature, described as valuable, rare, inimitable, and nonsubstitutable; such resources may help in exploiting specific opportunities. In fact, according to Grant (1991), heterogeneity of assets explains differences in firms performance, and RBV is precisely focused on the factors responsible for these differences.

A number of management researchers have been exploring such theory in order to explain innumerous phenomena, Advocates of the resource based view explain that firms may reach sustainable competitive advantage when holding unique different resources, not easily bought, transferred, copied, imitated that will add value while being rare, and create a competitive barrier.

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If a company pursues ISO 9000 certification merely because of being pressured by customers requirements, its global performance, after the adoption, wont be significantly better or worse than it was before the adoption. The most significant gain obtained may be avoiding losing contracts or even customers. In fact, when motivations for pursuing ISO 9000-based QMS are essentially driven by external pressures, just to fulfill external requirements, the process development may be kept at a superficial level, providing only superficial benefits, and resources easily copied by competitors.

On the contrary, organizations that seek ISO 9000 certification with a proactive behavior, driven by a continuous improvement strategy are more likely to develop such critical resources. Firms pursuing more that a certificate, convinced of ISO 9000s virtues to foster effective management practices and a general awareness toward quality continuous improvements, would may gain a potential source of sustainable competitive advantage. In fact, TQM literature highlight that sustained competitive advantage may be reached through tacit and inimitable resources, gained through effective QMS based on TQM principles (Powel,1995), such as effective leadership, management commitment, quality awareness, employee empowerment, team working culture. Changes pursued in such firms may provide

6. Conclusion

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Contrary to many SME that view ISO certification as a necessary evil, conceiving such undertaking as the final goal of the process, this research analyzed a Portuguese SME that defined quality as its clear priority, inculcating a significant continuous improvement attitude, striving to develop a strong quality culture.

This case study reinforces the idea that ISO 9000 certification can promote a strong quality culture, and emphasizes a number of issues critical to the implementation of a quality management system in a mid-sized firm. The paper highlights the importance of generating a global quality awareness for a successful QMS implementation. Moreover, the importance of top management commitment and involvement in such project is also stressed. In fact, it is worth pointing out that these two critical issues are core issues for a successful implementation of QMS, and are closely interrelated.

Furthermore, literature suggests that external consultants dont have generally a full understanding of companies overall system and specificities. The case study performed here reports the key influence of an external consultant, at an early phase of the implementation process, especially when top management had neither any previous experience with implementing a QMS, nor a clear understanding of ISO requirements.

Finally, considering the significant costs (direct and indirect) involved in the development of ISO 9000-based QMS, smaller organizations should be aware that pursuing ISO 9000 certification just for compliance does not constitute per se a competitive advantage, and should reflect clearly about costs they would support, and

37

which benefits they are expecting, before going on with such undertaking. Moreover, a number of researches suggested close relationships between reasons behind the decision to develop QMS based on ISO 9000 requirements, and the nature/extension of improvements reached. This paper highlights that SME with a proactive behavior, seeking for quality continuous improvement may achieve both internal and external significant fruitful improvements. However, several researches showed that firms seeking ISO 9000 certification driven by external reasons may achieve only superficial benefits, losing the opportunity to gain real sustained competitive advantages.

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