Process institutionalisation crowds out innovativeness? An empirical analysis on the relationships between ISO 9000 adoption and R&D expenditure

Abstract

Much research from an organisational perspective suggests that process certifications such as ISO 9000 constrain firms' explorative capability, crowding out research and development (R&D) activities. Yet, from an operations management (OM) perspective, process certifications like ISO 9000 should provide a well-established system, strengthening firms' capabilities for both exploration and exploitation. In this research, we examine the impact of ISO 9000 certifications on R&D expenditure of firms and investigate how such an impact is moderated by different operating environments. We find that firms actually increase their R&D expenditure after ISO 9000 certifications. Our results further indicate that ISO 9000-certified firms are more responsive to the changing operating environments for their R&D investments. ISO 9000 certifications reduce R&D expenses more swiftly under turbulence but expand more significantly with operational slack. Our research indicates that ISO 9000-certified firms seem to be more responsive to external environments in controlling their R&D expenditure.