On The Impacts Of The Certification With ISO 9000 On The Financial Performance Of Producer Service Firms In China

With the economic development and the professional division, the externalization of internal services in manufacturing lead to the formation of producer services. The global trend of Service Economy has promoted its rapid development worldwide. Generally, the development of producer services represents the level of development of the service industry in a country, and it is capable to lead the manufacturing industry to higher level. The producer services are described with high permeability, high technology and knowledge-intensive as their characteristics. For their leading role to industries up and down, producer services have become an important booster for economic structure optimization and industrial upgradation, which make it great significance to accelerate the development of producer services.Producer Services in China suffer the lack of active interactions from manufacturing industries and the operating inefficiency of the firms, which means the mismatch of resources for invalid signaling caused by information asymmetries in micro-level exchanges of producer service firms and manufacturers. Theatrically, the certification with ISO 9000 that can reduce the information asymmetry and enhance management efficiency of firms can be introduced to the producer services to release the problem. Investigating the effects of ISO 9000 certification can help examining the operating mechanism of certification in China and shedding a new insight to the distortion of operating decisions in producer services of China.In this paper, from the characteristics of producer services in China and operating mechanism of the ISO 9000 certification, this paper investigates the costs and benefits of certification by introducing their interactive relationship into the analytical framework. Then we conduct an empirical test with 76686 producer service firms in 35 major cities of China in 2008. The results show that there is a positive correlation between ISO 9000 certification and revenue of the firms and sharp declines in operating efficiency and profitability is observed associated with the certifications. Moreover, regional marketization, industrial competition and technical complexity of the service is found to have regulating effects on the performances of certified companies to produce regulation. Finally, based on the conclusions, we forward a series of suggestions to promote the development of producer services in China.