Accounting for Quality: Return on Investments in Quality Assurance Programs.
Academy of Accounting and Financial Studies Journal 2005, Jan, 9, 1
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Publisher Description
ABSTRACT Much has been written in the management literature about the strategic necessity of quality. Although companies have surged forward with quality initiatives, there is little documentation of the value of such programs. ISO 9000 is one of the most widely recognized international quality initiatives, and in fact, its use is so widespread that competitors in certain industries are compelled to adopt. The Baldridge Award is a competition based on adherence to quality standards that was established by Congress and is administered by the US Department of Commerce. It was developed in an attempt to encourage US companies to become more competitive based on a strategy of quality. Since its initial development, over a half million companies have become ISO registered and certified. Most companies register and become certified in hopes of reducing costs from customer complaints, improving customer service, reducing work in process, and increasing their ability to compete. In addition, hundreds of US companies compete annually for the Baldridge Award. The argument arises as to what extent companies are seeing results consistent with the financial rewards expected from adoption these quality initiatives. The purpose of this research is to determine if companies that invest quality initiatives see returns in the form of above average revenues or return on investment.