International Quality Certification: Signaling to Whom? Impact on Firm Performance in Latin America and the Caribbean

This study presents empirical evidence for the determinants of internationally-recognized quality certifications (ISO) adoption and its effects on firm performance in Latin America and the Caribbean. The results indicate... [ view full abstract ]

This study presents empirical evidence for the determinants of internationally-recognized quality certifications (ISO) adoption and its effects on firm performance in Latin America and the Caribbean. The results indicate that exporting, foreign, older, more productive firms and those of larger size in terms of employees have the highest levels of ISO adoption. Furthermore, obtaining certification has a positive effect on both the probability of exporting and the amount exported and can help ease financial restrictions for firms. Conversely, no effect was found either on local sales or on various measurements of firm productivity. These findings support the hypothesis that, through quality signaling, certifications can mainly help to address the problem of information asymmetry between firms, foreign customers, and credit institutions.