The impact of international standards certification on the performance of firms in less developed countries

Abstract

This paper examines the effects of international standards certification (ISC) on both productivity and sales performance for firms from a wide set of countries exhibiting different degrees of institutional development. Against a large dataset of manufacturing firms operating in 59 countries we find that ISC raises productivity and sales performance of firms through efficiency gains and quality signaling, with the effects being larger in countries where market supporting institutions are weak. The largest gain in performance comes from direct productivity improvements helping firms to climb the technological ladder and closing the productivity gap with firms based in developed countries.