Does Quality Certification or Product Diversification Improve the Performance of Small and Medium Enterprises?

This study utilizes a Cobb–Douglas production function and an instrumental variables regression approach to analyze the impact of quality certification and product diversification on asset productivity at the firm level. Analyzing a panel dataset of approximately 2500 firms from 2011, 2013, and 2015...

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Bibliographic Details
Published in:Sustainability 2024-03, Vol.16 (5), p.2023
Main Authors: Le, Duc-Niem, Nguyen, Van-Hoa
Format: Article
Language:English
Subjects:
Certification
Competitive advantage
Datasets
Diversification
Diversification in industry
Economic growth
Globalization
ISO standards
Product lines
Productivity
Quality management
Small & medium sized enterprises-SME
Small and medium sized companies
Variables
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Summary:This study utilizes a Cobb–Douglas production function and an instrumental variables regression approach to analyze the impact of quality certification and product diversification on asset productivity at the firm level. Analyzing a panel dataset of approximately 2500 firms from 2011, 2013, and 2015 showed that regional norms significantly influence adoption behaviors, which vary across industries and business types. The study reveals that firms employing computers and those with a larger scale are more inclined to adopt these strategies. The results showed that quality certification enhances asset productivity by approximately 26%, highlighting its positive role. In contrast, firms with diversified products exhibit about 18% lower asset productivity than mono-product firms, suggesting a trade-off inherent in diversification. The study concludes with policy recommendations emphasizing the promotion of quality certification while carefully considering the complexities and potential inefficiencies arising from product diversification strategies.
ISSN:2071-1050
2071-1050
DOI:10.3390/su16052023