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Navigating the myriad of corporate quality standards: a CSR and stakeholder perspective

Abstract

Quality standards (QS) (e.g., ISO 9001) play an important role in assuring the quality of goods and services for organizational stakeholders on a global scale. Recent work has highlighted the role of QS in communicating corporate social responsibility (CSR) practices to a firm’s stakeholders making both the QS adoption decision and the timing of adoption of immense strategic importance to top managers. However, the types of QS and their intended and unintended beneficiaries vary widely, making it difficult for managers to choose QS that are in accord with their CSR goals. Further, current economic (cost/benefit) and institutionally-based theoretical approaches do not provide managers with adequate guidance in making strategic adoption decisions. Rapid developments in QS practices have also made it difficult for researchers to incorporate them into CSR theory. Drawing upon a literature review of QSs and stakeholder theory, this study presents a QS framework and taxonomy that integrates QS adoption timing and beneficiaries. The framework also presents four configurations of QS adopters and their associated beneficiary stakeholder groups, enabling both researchers and practitioners to more completely understand the complex nature of stakeholder pressures on organizations.

Introduction

Corporate social responsibility (CSR) has received considerable attention in business literature (e.g., Fatima and Elbanna, 2023). Within the CSR literature, researchers have investigated the role that quality standards (QS) play in helping organizations achieve their strategic CSR goals and bolster awareness among their stakeholders (Kok et al., 2001; Reynolds & Yuthas, 2008; García et al., 2022). For managers of both manufacturing and service organizations alike, quality standards (also known as certified management standards (CMS) (Terlaak, 2007; Terlaak & King, 2007) or meta-standards (Heras-Saizarbitoria, 2018; Heras-Saizarbitoria & Boiral, 2013; Uzmeri, 1997) play a critical role in communicating CSR practices in virtually all mature industries, such as healthcare, education, financial services, and manufacturing (Castka & Corbett, 2015; Montiel et al., 2012; Uzmeri, 1997). QS have been developed to cover several CSR-related outcomes, including corporate social responsibility (ISO 26000) (Melnyk, et al., 2013), quality (ISO 9000), energy management (ISO 50001), environmental management systems (ISO 14001) (Link & Naveh, 2006; Vatyliotou et al., 2006), and risk management (Raz et al., 2005).

The QS portfolio available to managers is continually expanding and increasing in complexity as governmental agencies have also been turning to QS as an alternative to instituting new regulations offering expanded opportunities for firms to engage in CSR practices. For example, American agencies such as U.S. Customs and Border Protection and the Department of Defense have created the Customs-Trade Partnership Against Terrorism (C-TPAT) and the Cybersecurity Maturity Model Certifications (CMMC), respectively. The widespread adoption of such standards is evident, given the 11,400-member C-TPAT program and the growing development of the CMMC standard, whereby both agencies recognize that the introduction and use of QS offers an effective tool for achieving objectives with broad and significant social impact (Ritchie & Melnyk, 2012). Responsible Care is another—a QS in the chemical industry that was drafted by members in the aftermath of the 1984 Union Carbide Bhopal disaster. This QS has formed the bedrock of the more recent Responsible Care 14,001, offered by ANSI National Accreditation Board (ANAB), which combines the American Chemistry Council’s QS with ISO 14001 (DNV, 2023). Similar developments in other industries include standards such as the non-GMO Project that was created to assure the quality of food products. In each one of these instances, a voluntary QS has been proposed, which shifts the onus for compliance to the firms seeking the standard, rather ensuring compliance through monitoring and inspection by the agencies. Overall, for more than a decade, CSR publications have postured QS as a pathway for managers to communicate CSR practices to various stakeholder groups (e.g., ISO 9000) (International Organization for Standardization, 2022). Given the wide spectrum of QS available, it is often challenging for researchers and practitioners to accurately assess which stakeholder groups are likely to benefit from adoption of specific QS, including those that may be intended for CSR (Camilleri, 2019). Even within organizations, firm-specific benefits of QS adoption are difficult to codify (Al-Dhaafri, 2016; Lepisto, Saunila, & Ukko, 2022), and benefits of early vs late adoptions remain unclear (Kennedy & Fiss, 2009; Ritchie & Melnyk, 2012). As operations managers increasingly assess a wide array of QS as means to meet their CSR goals, they not only struggle to identify appropriate QS (Sethi et al., 2017), but they may also divest one standard in favor of more strategically appropriate one (Melnyk, Ritchie, Stark, & Heavey, 2023). There is still little guidance related to the replacement, diffusion, and growth of QS in the marketplace, particularly regarding its use as a CSR practice (Sethi et al., 2017).

We present managers with a new model of the QS marketplace with a specific emphasis on its linkages with key stakeholder groups. This model enables managers to extend beyond simple applications of QS divestiture (Fried et al., 2013) and adoption timing and understand the stakeholder dynamics in the QS adoption process and in determining its beneficiaries. We clarify the key stakeholder groups involved in the QS adoption process including their influence on when QS are adopted. We contribute to the CSR literature by developing a more comprehensive QS adoption taxonomy that includes adoption timing, with a focus on the QS beneficiary stakeholder groups.

A more comprehensive QS theory is essential for CSR practice in operations management for three reasons. First, since the advent of the millennium, we have witnessed a rise in government-authored QS that have a CSR emphasis. These standards have replaced previous reliance on legal mandates and appear to be “voluntary,” yet carry both tacit and real penalties for non-adoption, thereby serving as a gatekeeper to business interaction with government. For example, while the United States Customs and Border Protection’s C-TPAT security standard is voluntary, importers that are not certified incur significant delays at the border. Other border security directives have been introduced in Canada (e.g., Canada Border Services Agency’s Partner in Protection Program) and in Korea (e.g., Korean Customers Service’s Authorized Economic Operator Program). More recent Authorized Economic Operator (AEO) programs have been established in Taiwan, in Mexico, in Peru, and in Brazil. Similarly, non-compliance with other voluntary, United States-based standards, such as the Cybersecurity Maturity Model Certification (CMMC), restricts contractors from consideration for government bidding.

Second, QS play an important role in strategic CSR practices and organizational decision-making, particularly in terms of ensuring quality processes (Heras-Saizarbitoria & Boiral, 2013). The widespread impact of QS is exemplified in that millions of organizations have adopted ISO 9001 (International Organization for Standardization, 2022) alone. As such, QS provide critical advice to managers regarding the appropriate allocation of resources to compliance activities. Thus, it behooves managers to gain a deeper knowledge of QS to be better prepared to benefit from their adoption (Reddy, 1987). Finally, the strategic CSR reach of successful QS diffuses into supply chains, firm networks, as well as deep into organizational cultures and routines providing “order without law” (Terlaak, 2007). In some cases, these conditions serve as a means for achieving competitive advantage through customization (Anderson et al., 1999), particularly when QS become embedded in the DNA of the organization. However, for other organizations, the fitness of a particular standard (e.g., for strategic CSR practices) may be questioned (Thomas, 1999). The variety in QS implementation outcomes begs further inquiry.

To optimize the strategic benefits of QS adoption for CSR strategy implementation requires that researchers and quality managers correctly interpret the QS context in terms of the key stakeholders involved in the adoptions process, and the true beneficiaries of QS adoptions. This will enable operations managers to make more informed decisions regarding standard selection and adoption timing.

Quality standards – theoretical foundations

Quality standards—defined

A standard is a specification or requirement that is widely accepted. Our definition of QS is based on the definition offered by the International Organization for Standardization (ISO) (International Organization for Standardization, 2023). That is, a standard is: the way in which an organization manages the interrelated parts of its business in order to achieve its objectives…specifying repeatable steps that organizations consciously implement to achieve their goals and objectives, and to create an organizational culture that reflexively engages in a continuous cycle of self-evaluation, correction and improvement of operations and processes through heightened employee awareness and management. There are four key attributes alluded to in this definition: 1) specific goals or outcomes, e.g., quality; 2) specific practices tied to those goals; 3) some minimum acceptable level of performance on those goals or outcomes; and 4) an external third-party certification mechanism.

Standards come in two forms: product standards (e.g., USB, HDMI, Blu-ray) and management process standards (e.g., ISO 9001, ISO 14001, ISO 26000, C-TPAT). Product standards, enable connectivity (e.g., railroads) or compatibility (e.g., video games) via interface protocols that create a network of users (David & Greenstein, 1990). This study focuses on the second form – quality standards. Quality standards codify process behaviors and explain how work is to be performed (Terlaak, 2007; Ritchie et al., 2019; Melnyk, Ritchie, Stark, & Heavey, 2023). A process is typically undertaken by either humans or machines to create a good or service. Ideally, organizations creatively bundle combinations of resources and capabilities (Lopez-Mielgo, Montes-Peon, and Vazquez-Ordas, 2009) to achieve QS implementation that is more in line with strategies (Hussain, Barber, and Hussain, 2009).

QS in research—a review and assessment

The potential for QS to create a strong signal of quality has attracted the attention of researchers and practitioners alike. Much of this research has focused on the firm’s decision to adopt (e.g., whether they should adopt a QS) and timing (e.g., when they should adopt a QS) of adoption. The dominant theoretical frameworks employed in the literature to explain these decisions are: 1) the economics of innovation and 2) the neo-institutional theory frames. Both perspectives provide utility for decision-makers planning to implement QS for CSR purposes. Likewise, these frames also have shortcomings which we hope to remedy by introducing a more stakeholder-centric approach to QS adoption and timing decisions.

Economics of innovation

Historically, the primary motivator in the economics of innovation view is a simple cost/benefit analysis of QS adoption. Relatedly, this view assumes that firms will seek the least-cost method of adoption (Gold, 1990). Consideration of adoption also extends to the decision of whether to “customize” the standard (Westphal et al., 1997). For example, for most firms, the consensus in extant research has traditionally been that the total benefits of ISO 9001 certification exceed the costs (Buttle, 1997; Gotzamani, 2005; Leung et al., 1999; Wilson et al., 2003). As far as timing of adoptions is concerned, Westphal et al. (1997) proposed the idea that early adopters were economically driven, while late adopters were motivated by pressure from their customers. Because early adopters were economically driven, they were more likely to customize the standards to fit these practices with the firm’s environments, producing greater benefits. In contrast, late adopters were driven by coercive pressures coming from their customers and implemented the standards with little or no customization.

Challenges facing the economics of innovation framework

Recent studies have challenged the economics of innovation views as inadequate rationale for adoption timing and the extent of customization. There are numerous instances where early QS adoption occurred even though the costs exceeded the benefits (Ni et al., 2016). There are several instances in which both early and late adopters were motivated by economic factors (Benner & Veloso, 2008). Related work has also found that late movers (not the early movers) significantly benefited from voluntary, state-authored QS implementation (Ritchie & Melnyk, 2012). Affirming the multiplicity of findings on this topic, Kennedy and Fiss (2009) found that there are equivocal outcomes in the research related to the economic benefits of QS adoption timing (i.e., there exists both early and laggard beneficiaries). Overall, the economics of innovation approach, with its cost/benefit focus, offers only limited benefit in the QS adoption equation, particularly in terms of CSR.

Neo-institutional theory

The second primary motivation to adopt QS is grounded in Neo-Institutional Theory (NIT). This theory describes how an organization interacts with its environment (e.g., external forces, competitive environment, and supply chain partners) to affect processes, and ultimately performance (Meyer and Rowan, 1977; Zucker, 1977; Scott, 2014). According to NIT, behavior across diverse organizational units tends toward isomorphism (DiMaggio & Powell, 1983; Oliver, 1988) as organizational practices and structures reflect the beliefs and conventions embedded in social and political environments (Powell, 1995). At the heart of the NIT are three “forces,” 1) mimetic, 2) normative, and 3) coercive pressures. All three of these pressures play a role in QS adoption.

Normative pressures and QS

Quality standards have traditionally been framed in terms of the authorship of the standard (e.g., either publicly or privately authored), with an emphasis on social interaction (Ingram & Clay, 2000; Ingram & Silverman, 2002; Terlaak, 2007). In this case, the enforcement of the QS was classified depending upon whether it was centralized or decentralized. For example, Terlaak (2007, p. 970) positioned the most common QS, ISO 9001, as an example of a private-decentralized interactions. Importantly, in this framing, public entities (e.g., governments) were not associated with voluntary standards and the diffusion and adoption of private QS were cast as examples of a norm. As noted by Scott (2001, p. 55), “…norms specify how things should be done; they define legitimate means to pursue valued ends.” Importantly, norms lack the legal power of laws, yet they significantly influence how actions and activities are to be carried out in the marketplace.

Mimetic pressures and QS

Mimetic pressures are derived from, as the term implies, the mimicry of other firms in the industry. In this case, organizations may seek to deploy programs and process improvements that other firms in the industry have implemented.

Coercive pressures and QS

In contrast to the social enforcement of QS via norms (Terlaak, 2007) and mimetic forces, coercive QS are typically enforced by the power of the rule-of-law enacted by governments (Othman et al., 2011). Recently, however, government-authored regulations are being written as voluntary standards with a much more subtle coercive component. For example, after the 9/11 attacks, American decision-makers recognized two key societal needs: 1) border security had to quickly improve, and 2), due to limitations in resources, the active cooperation of industry was necessary. Following Ingram and Clay’s (2000) and Ingram and Silverman’s (2002) framework, the expected response of the United States government would be the creation of a law, with centralized enforcement methods (e.g., inspections of all incoming containers and trucks arriving at all border crossings). However, Customs and Border Protection (CBP) launched C-TPAT as a voluntary QS with more subtle coercive pressures. Similar to other private QS, C-TPAT shifted the onus of enforcement from the state and its agent (i.e., CBP) to the individual certified firms. However, adoption timing and benefits differed from other non-state authored QS, as this new standard did not provide economic benefits (Ni et al., 2016) for most adopters. Further, motivations for adoption were not in line with traditional early/late adopter frameworks. Taken in aggregate, the proliferation of state authored voluntary QS departs from the dominant logic that government standards are traditionally supported by the rule of law (Ingram & Silverman, 2002; Terlaak, 2007).

Challenges facing the NIT framework

Despite its contributions that extend beyond the cost–benefit calculations of the economics of innovation perspective, the NIT view also does not comprehensibly describe the current QS environment. Its greatest shortcoming is that it does not account for temporal factors (Lawrence et al., 2001). Current NIT frameworks cast QS as norms which, by definition, coalesce after the QS has already been widely recognized and accepted. This does not apply to the myriad of quality standards that enter the market as relatively unknown entities (a.k.a. guidelines) without a coalition of adopters (e.g., ISO 26000).

Creators of every voluntary QS ultimately desire to achieve a coalition of adopters in the presence of whom the QS is viewed by adopting firms as simply a cost of doing business (O’Neill et al., 1998; Ritchie & Melnyk, 2012). But the attainment of this “norm” status takes time (Shabana et al., 2017). It also typically involves a competitive process whereby other competing standards evolve and gain traction (Shapiro & Varian, 1999). Thus, the current use of the NIT perspective to explain QS adoption is only applicable to a small number of highly visible QS that have already been accepted as norms. Second, earlier NIT perspectives have not been updated to reflect recent developments in QS which suggest that early and late adopters appear to be similar (Ni et al., 2016). Third, the NIT focused on examining macro level forces inducing change in organizations. It does not impact firms homogeneously (Oliver, 1988) or completely address micro-level firm dynamics such as managerial agency, resource heterogeneity, and entrepreneurial behaviors (Alvesson and Spicer, 2019).

Overall, as explained in the proceeding sections, both the economics of innovation and NIT frameworks offer useful insights related to the adoption decision. However, there are many conditions in which these frameworks cannot be applied universally to understand QS adoption in practice and particularly QS that meet CSR goals. We propose a more current and comprehensive framing of the QS environment by shifting the examination to stakeholder influence on adoption. To accomplish this, we emphasize the importance of key stakeholder groups such as buyers, suppliers, community (local communities, interest groups, and advocacy groups), the certifying organizations, and the audit regime.

Using stakeholder theory, we present a configuration model that identifies four types of QS adopters. The model is the resultant of integrating two key characteristics of the nature of QS, 1) the primary beneficiaries and 2) the adoption timing.

Quality standards adoption – proposed framework

Consistent with stakeholder theory, we take a stakeholder management approach to QS adoption to explain the variety in QS adoption behavior displayed by firms. A stakeholder-oriented approach to QS adoption is supported by advances in stakeholder theory research which recognize the role of different stakeholders, with varying motives, influencing firm decisions (Aguilera et al., 2007). Stakeholders possess the ability to influence firm strategic decisions by placing demands on firms (Helmig et al., 2016). For example, stakeholder groups have been shown to place pressures on firms to foster industry homogeneity (Verbeke & Tung, 2013). Similarly, a decision to adopt QS and the timing of the decision are likely to be an important consideration for different stakeholder groups, especially when they perceive themselves as a primary beneficiary of adoption. Below, we explain the stakeholder groups involved in the QS adoption process, and their role in shaping the overall QS system.

Stakeholder groups

Development of our framework begins with describing the key stakeholders in the QS adoption context with attention to their roles (primary or secondary). Stakeholder research recognizes the differences in the goals and needs of different stakeholders (Freeman, 1984). When devising strategies that shape a firm’s dealing with its external environment, managers are expected to balance the competing interests of stakeholder groups (Freeman, 1999). Within this research, stakeholder classification schemes have been developed based on stakeholder power, legitimacy, and influence which help managers prioritize and manage stakeholders (Mitchell et al., 1997; Wheeler & Sillanpää, 1997, Wagner et al., 2012). Such classifications divide stakeholder groups along dimensions based on their postures towards specific firm strategic choices, e.g., adoption of environmental strategies (Hart, 1997; Buysse & Verbeke, 2003; Simpson & Sroufe, 2014). We take a similar approach in classifying stakeholders based on the type of pressure they place on firms in their QS adoption decisions and timing, with an expectation towards their intended beneficiary.

Stakeholder theory and QS

The most publicly visible facet of QS is the achievement of standard “certification” by the firm. However, QS implementation is a process involving a larger system of interrelated stakeholder groups. Freeman (1984) defined stakeholder groups as entities which can affect a firm’s performance or are affected, positively or negatively, by the achievement of a firm’s goals. As these groups can potentially impact a firm’s resource acquisition, firms manage the competing interests of stakeholder groups when making strategic decisions (Frooman, 1999). Further, stakeholder theory literature divides stakeholder groups into primary and secondary stakeholders where the former are in transactional relationship with the firm. For example, employees, buyers, suppliers, and different levels of government are primary stakeholders, whereas the community at large, media and activists etc., are secondary stakeholders (Clarkson, 1995).

Reviews of the literature confirm the important role of stakeholder theory in explaining issues relevant to voluntary standards (Tuczek, Caskta, & Wakolbinger, 2018; Todaro et al., 2020). Stakeholders are not only instrumental in shaping quality standards (Balzarova & Castka, 2012) but also there is potential for QS to create a strong signal of CSR and quality (Castka & Corbett, 2015). Research has also highlighted the role various stakeholders play in a firm’s decision to adopt QS. There is considerable stakeholder interest in QS that communicates a company’s commitment to issues that are important to stakeholders (Martins, Teixeira, and Batalhao, 2023). Given these stakeholder demands, companies respond by adopting QS to demonstrate their commitment to stakeholders. Indeed, Blind and Heß (2023) find that stakeholders perceive the pursuit and adoption of QS favorably and as evidence of the organization’s success in pursing sustainability- related goals.

Overall, previous QS research considers the firm as either the buyer or the supplier, that undertakes the QS adoption process to integrate a QS into the fabric of its culture and processes. We extend existing literature by proposing that this process is comprised of varying types of pressures from different stakeholder groups. In addition to the focal firm and society as important stakeholder groups, who are also the primary beneficiaries of QS adoption, we propose two additional stakeholder groups that are part of the QS adoption process: the certifying organizations and the QS audit regime. The first group is responsible for developing and actively promoting the quality standard. The second group validates the adoption of the standard and sets the tone for its implementation, a practice that often influences the degree of customization during QS implementation. Together, these four entities (e.g., firms as buyers/suppliers, society at large, certifying organizations, and the audit regime) interact, forming an important business ecosystem that influences the adoption, diffusion, and growth of the QS. To illustrate the interconnectedness of these stakeholders, for each group we provide a QS example.

The Firm (Buyers and Suppliers)

Firms, acting as either buyers or suppliers of goods or services adopt QS to address problems related to information asymmetries (Montiel et al., 2012). The buyer/supplier pairing of firms can be considered the primary dyad. The suppliers traditionally initiate QS adoption, particularly in cases where industry standards are established as standard operating procedures (Westphal et al., 1997). In time, the buying organizations become interested in the QS since they become aware of the improved products or services offered by certain suppliers and the associated QS. Consequently, buyers will “encourage” other non-certified suppliers to pursue the QS (Westphal et al., 1997). For example, in the case of the Customs-Trade Partnership Against Terrorism (C-TPAT), the buyer may pressure the supplier toward certification to speed their goods through customs.

The certifying organizations

Certifying organizations are charged with establishing, disseminating, and protecting the integrity of the QS. A certifying organization can take many forms. It can be an external organization such as the International Organization for Standardization (www.iso.org), professional societies (e.g., the Supply Chain Council and the Association for Supply Chain Management (ASCM)), private consulting organizations (e.g., McDonough Braungart Design Chemistry (Mcdonough & Braungart, 2002) and the Cradle-to-Cradle certification for product design, or governmental agencies, and C-TPAT). Certifying organizations are an external secondary stakeholder and can only place normative pressures on the firm to adopt a QS. They leave the challenges of adoption and diffusion up to the firms involved. It is however, in the best interests of the certifying organizations to ensure that their standards achieve widespread acceptance and be perceived as legitimate. As such, certifying organizations take an active role in the promotion of their standard and its adoption. For example, Ni et al. (2016) found that early adopters of C-TPAT were primarily large market leaders, a resultant of CBP’s distinct efforts to promote the standard and encourage market leaders to drive adoption (Giachetti & Lampel, 2010). In this case, the certifying organization (the federal government) sought adopters of the C-TPAT standard to advance the branding of the certification in the marketplace.

The audit regime

One of the most important tasks of the certifying organization is to set up the audit regime. The audit regime consists of the process by which the standard is certified. Its foundation is the team of auditors (inspectors and surveyors) who are responsible for assessing the processes of the QS adopting organizations. As external secondary stakeholders, auditors not only affirm QS implementation, but also play a key role in communicating amendments and new standard developments from the home office to the field. Audit regimes monitor the adoption process, as well as recommend or deny re-certification. As such, the nature of the audit regime sometimes determines the acceptable level of QS customization permitted.

Overall, we propose that the collective activities (whether subtle or coercive) of buyers/suppliers, the certifying organizations, and the audit regime, result in significant differences in adoption timing decisions and adoption benefits to the firms and society at large. Amidst these interactions, firms decide which beneficiary group is most salient (Mitchell et al., 1997), as well as the cost/benefit and timing of adoption. Inclusion of these key stakeholder groups into the QS adoption discussion helps explain the paradoxes that arise when viewing QS adoption decisions through only economic or NIT lenses. The relationships between these stakeholder groups, the pressures to adopt QS, and the adoption decision are presented in Fig. 1. It is noteworthy that while stakeholders are often interdependent entities, the relationships presented in Fig. 1 are illustrative of the primary influences on the adoption decision.

Fig. 1
figure 1

Stakeholder pressures on quality standard adoption decisions. A variety of institutional pressures influence the decision making associated with the adoption of a quality standard. Five key stakeholders are identified, including the buying firms, the supplying firms, certifying organizations, the audit regime, and the community at large

The QS adoption configurations

QSs have traditionally been classified from the perspective of the organization; whether QS adoption follows a standard that is government mandated or voluntary (Ingram & Silverman, 2002). For example, government-authored QS have been described as “laws” and privately authored standards (e.g., the family of ISO standards) have been classified as “voluntary.” While this classification is a convenient dichotomy, it does not provide the adopter guidance on adoption beneficiaries. Further confounding the practical usefulness of this dichotomy is that government entities routinely collaborate with the private sector in the development of voluntary standards. For example, the Office of Management and Budget published a revision of OMB Circular A-119 stating that agencies and departments “…shall participate with them in developing voluntary consensus standards when such participation is in the public interest and is compatible with agency and departmental missions, authorities, priorities, and budget resources…” (U.S. Government Office of Management and Budget, 2023). Similarly, this Circular states that “many voluntary consensus standards are appropriate or adaptable for Government purposes.” This emphasis on voluntary standards over laws reflects a widespread political reluctance to enact or enforce new regulations. The requirements for governmental speed and responsiveness, a greater focus on government efficiency, and reduced level of governmental funding and support are increasingly key motivators in adopting QS as a preferred method over laws to achieve broad-based social goals (Roberts, 2013). These trends related to government involvement in QS have significant implications for CSR-related QS, particularly for organizations that are trying to navigate the QSs landscape to serve their constituencies more effectively.

The QS adoption framework

The beneficiary

We propose that a more effective metric in classifying QSs broadly, and CSR-related QSs specifically, is to build a model that focuses on the beneficiary of QS adoption. Using this stakeholder-oriented approach, we classify a “private standard” as one in which private stakeholders (e.g., the firms, such as the buyers and suppliers) capture most of the adoption benefits. For example, Buttle (1997) found that firms successfully implementing ISO 9001 not only gained significant marketing benefits but also reported greater positive impacts in terms of process improvement and ultimately, profitability. The fact that the firm realized most of the QS benefits, would classify this standard as “private.”

Similarly, in our framework, a “public” standard exemplifies QSs whereby society captures most of the benefits of adoption. For example, the initial impetus for public QSs is a societal need (e.g., cleaner waterways with the Clean Marina Certification or the American Chemistry Council’s (2022 Responsible Care certification). These QSs are typically introduced to address a need that is important to the general populous, and one that private industry would not otherwise have addressed. Similarly, C-TPAT (the customs trade partnership against terrorism) improves national security by shifting the burden for developing, implementing, and managing supply chain security to private firms directly engaged in cross-border activities.

It is noteworthy that, while both public and private standards might have a multiplicity of beneficiaries, our framework focuses on the primary beneficiaries and the differing degrees of adoption benefits. For example, with ISO 9001, a private standard, the primary dyad of adopting firms benefits the most. However, society also benefits, through the design and delivery of higher quality goods and services at lower prices, albeit to a lesser degree than the adopting firms. With C-TPAT, a public standard, the members of the primary dyad benefit through the reduction of lead-time, however, a greater benefit accrues to society in the form of reduced terrorism risk. The key is that in our proposed framework, classifying a QS as either “public” or “private” is determined by the stakeholder group that potentially captures most of the QS adoption benefits rather than who authors it.

Adoption timing

The second dimension of this framework is the temporal nature of adoption. The literature on this topic typically differentiates QS adoption along a timing continuum ranging from early to late adoption. For most QSs, “early” adoption means that a firm adopted the standard in its development or growth phase. In many cases, early adoption is typically within a couple years of the QS inception of the QS. During this phase, the QS diffusion and integration into the marketplace is relatively low. By contrast, late adopters adopt after a QS has been circulating in the marketplace for many years, likely during the maturity phase of a QS life cycle. For example, some QS have endured for decades (e.g., ISO 9001). These QS also carry a high level of diffusion and integration into a given industry. Overall, due to the nuanced nature of voluntary QS and the breadth of organizational types that adopt such standards, the nature of the diffusion curves vary by QS and time horizon.

We now develop a framework that identifies a taxonomy of four QS adopter types based upon the beneficiary stakeholder group and adoption timing dimensions. In Fig. 2 we classify the configurations of QS adopter types as Benefits Maximizers, Recruited Adopters, Cost Minimizers, and Compelled Adopters. Each of these types is explained in the following sections.

Fig. 2
figure 2

The Quality Standard Adopter Framework. This framework depicts likely configurations of QS adopter types relative to the types of benefits they receive upon adoption and timing of adoption. Four general types of QS adopters are identified, including Benefits Maximizers, Cost Minimizers, Recruited Adopters, and Compelled Adopters. Each of these adopter types represents unique motivations for QS adoption and their timing of adoption

Benefits maximizers

This group represents true believers in economic benefits for the QS dyad and adopts the standard early. Quality standards research claims that these adopters are economically driven and are focused on maximizing benefits (Terlaak & King, 2007; Westphal et al., 1997) that will accrue to the parties of the primary dyad. Primary stakeholder groups such as the firm’s top management, and shareholders of the firms involved in the primary dyad fall in this category. Stakeholder research confirms that firms that place a greater importance on meeting their primary stakeholder groups’ needs, take a leadership role in adopting strategies that benefit these groups (Freeman, Pierce, and Dodd, 2000). Given their proximity to critical firm decisions and their power, legitimacy, and salience (Mitchell et al., 1997; Neville et al., 2011) these stakeholders are likely to spearhead adoption decisions when it’s clear that benefits of adoption accrue to them. For example, recent research suggests that CEO compensation is positively associated with CSR performance, (Karim et al., 2018) and further, that CEOs purposely invest in CSR initiatives to impact their compensation (Hsu, 2023). The adoption of the ISO family of standards may serve as a basic example of this cause-and-effect relationship whereby process improvement implementations may accrue to the firm through economic benefits such as real cost savings or improvements in reputational capital.

Recruited adopters

In this cell, we are focused on early adopters who are dealing with a QS that offers little in the way of first-mover advantage or economic benefits (Melnyk et al., 2013; Ritchie & Melnyk, 2012). These “Recruited Adopters” are essential because for this category of standards to achieve their desired outcome – that of meeting some desired public good – they must achieve industry status quickly to become “taken for granted” (Melnyk et al., 2013, p. 298). Yet, this leaves the problem of how to get enough firms to adopt such a new standard when the private benefits are relatively low or nonexistent, and the rule of law cannot be invoked to spur on adoption.

When business operates in a community, they derive their legitimacy by their positive interactions with their surroundings. Community and society at large are an important stakeholder which grants businesses a so called “social license to operate” (Demuijnck et al., 2016). Stakeholder theory explains that different stakeholder groups, such as employees, investors, and society at large, pressure firms to conform to institutional norms. When regulatory compliance is an integral part of firm operations it assures stakeholder groups of the long-term viability of the firm (Hart, 1997). In such scenarios, local communities and societies at large can place mimetic pressures on firms to adopt standards with public benefits.

In addition, we argue that under these circumstances, the QS authors push hard for rapid adoption in the marketplace. For example, Customs and Border Protection, in the case of C-TPAT, turns to negotiations and persuasion to recruit adopters to build the validity of the C-TPAT QS. In these cases, the QS often reflects the preference of the early adopters and both the needs of the QS author, as well as the public. Early adoption in this case means that firms must deal with the ambiguities of implementing the new standard, since there is no prior road maps to success. Thus, adoption in this case requires that there are strong relationships between the firm and the authoring entity (the government), and/or the government agency actively recruits the early-stage adopters. In return for early adoption, firms are offered an opportunity to actively engage in the design and codification process of best practices. Therefore, the firms also serve as quasi-developers of these QS and their practices often become, or at least highly influence, the QS that is developed.

Cost minimizers

The third group is focused on minimizing adoption costs and deserves greater explanation. If we view QS as a form of administrative innovation (Teece, 1980), then we can apply the diffusion of innovation perspective initially proposed by Rogers (1983) and Moore’s (2002) “crossing the chasm” framework, whereby adoption is a process that is both economically and socially driven. Essentially, not all stakeholder groups involved respond to innovation in the same manner. These authors identified five adoption categories: innovators, early adopters, early majority, late majority, and laggards, all of which were influenced by economic considerations. However, the economic drivers of adoption timing varies. We argue that early adopters are driven more by the potential for first-mover reputation benefits (Lieberman & Montgomery, 1988). Late adopters, by contrast, are driven more by the need to minimize losses and reduce costs (e.g., loss aversion, (Tversky & Kahneman, 1991)).

Delaying the adoption decision reduces costs in several ways. First, the viability of the QS is demonstrated in practice by the outcomes of the early adopters. Specifically, over time, implementation costs fall due to developments such as the increasing presence of consultants (Viadiu et al., 2002), professional societies, and conferences, where adoption optimization strategies are shared. The emergence of “best practices” also help the later adopters streamline QS implementations (Ni et al., 2016). Overall, since late adopters are focused on minimizing their costs, they do not customize the QS and so receive reduced overall strategic benefits. Again, while this group is economically motivated, the primary consideration is reduction of implementation costs (Ritchie & Melnyk, 2012). For example, many firms opt for ISO 9000 family QSs after observing peer adoptions over time.

Compelled adopters

This fourth group represents late-stage (or Rogers and Moore’s laggards) QS adopters where the primary beneficiary is public. Importantly, when the QS is publicin nature, ‘standard’ status is often achieved instantaneously by pre-selected industry leaders (the Recruited Adopters). As such, the late-stage adopters consist of other organizations that are essentially compelled to adopt the standard, regardless of economic benefit or loss. The key to this problem can be found in the research findings of Giachetti and Lampel (2010), who observed that the adoption decision of many firms, when faced by very new and uncertain developments, tend to follow the actions of the market leaders. Behavioral attributes examined in this study suggest that if market leaders adopt the new QS, then two outcomes are achieved. First, they lend legitimacy to the new QS. Second, other firms are encouraged to follow due to latent bandwagon effects (Abrahamson & Rosenkopf, 1990; Abrahamson & Rosenkopf, 1991; Abrahamson & Rosenkopf, 1993) or mimetic isomorphism (Shabana et al., 2017). However, since public beneficiary QS incorporate best practices faster, adopting firms, despite being late movers, benefit from the adoption experiences of early QS adopters. For example, the early adopters often create templates for adoption, which significantly reduce implementation costs and aid late adopters in developing optimal QS protocols (Melnyk, Ritchie, & Calentone, 2013; Ni et al., 2016). These benefits are in addition to the best practices that are tacitly in the standard. While primary stakeholders do not directly benefit and their pressures are lower, the community at large continues to place demands on the firm forcing firms to balance competing pressures (Mitchell, Lee, and Agle, 2017). In these cases, the dominant driving force for adoption is the motivation to do the right thing for the public (Melnyk et al., 2003; Ritchie & Melnyk, 2012). These firms are primarily driven by pressure to comply. This group is different than the cost minimizers, in that the public good is the key driver, versus the minimization of costs. An example of typical organizations in this group are firms that adopted the C-TPAT certification after many years. Eventually, these firms succumb to the marketplace pressures to adopt the certification.

Conclusions

Contributions of a new framework for research

The complex nature of the CSR-related QSs is due to the continually evolving CSR and resulting QS landscape, creating paradoxes that current QS adoption frameworks cannot adequately explain. The ongoing emergence of new QS, increased government implementation of QS, and variations in audit regimes present managers with a complex array of choices regarding QS adoption timing and longevity of implementation. To address the paradoxes in the literature, we presented a framework that focused attention on the beneficiary stakeholder groups and the QS adoption timing to create four configurations of QS adopters.

This study offers the following broad insights. First, we have shown that the QS’s beneficiary framework is a suitable alternative for QS classification to focusing on the QS authorship. By shifting the focus to the beneficiary, we more effectively illustrate QS adoption in practice and account for the fact that multiple stakeholders are impacted by QS adoption. For example, with the growth of voluntary QS that have been authored by governmental agencies, the true benefits (and costs) of QSs have become increasingly obscured due to the variation in stakeholders who are impacted by the QS. We have also witnessed private firms enacting new standards that are focused on the well-being of the public at large, something that earlier frameworks could not explain.

This study also provides deeper insights related to the early/late adoption benefits paradox for public QS, specifically the fact that both late and early adopters had been shown to benefit. In contrast with private QS, public standards incorporate best practices sooner and thereby offer more advantages to late adopters, who typically focus on both cost minimization and benefit from simply mimicking practices established by the early adopters. Regarding QS implementation, this study has emphasized the important role that key stakeholder groups play, such as the audit regimes. An audit regime that consists primarily of industry practitioners may foster greater learning in the implementation process, since they are able to directly witness implementation efforts elsewhere, while an audit regime that is more tightly coupled with the certifying organization may lead to fewer learning and customization opportunities.

Our paper extends previous work on the role of stakeholder pressure in shaping firms’ QS adoption decisions. Previous research on stakeholder theory and voluntary standards acknowledges the pressures placed by the institutional environment and stakeholder groups on firms to adopt certain QS. During this process, the saliency of the stakeholder to the organization is considered as an important determinant of a positive outcome. We discuss the interplay between these pressures. We extend existing research by integrating institutional logics with the degree of saliency of stakeholders to explain the adoption of QS. Our proposed framework focuses also on stakeholder actions from the perspective of beneficiary stakeholder groups. By adding these dimensions our paper provides a more comprehensive framework which explores the distinct institutional pressures placed by beneficiary stakeholder groups and the pivotal role these stakeholders play in QS adoption timing.

Contributions for practice

For business leaders operating in the CSR space, our framework is very useful. After all, the ISO standard on CSR, ISO 26000, cannot be certified, “Any offer to certify, or claims to be certified, to ISO 26000 would be a misrepresentation of the intent and purpose and a misuse of this International Standard” (ISO, 2010, p.1). Yet these processes remain the most useful way to attempt to meet not only the input and outcome goals for CSR, but also assess its impact as well (Howard-Grenville, 2021). Our framework suggests managers should carefully consider, not only the costs and benefits of the OS, but also whether they will be able to participate in its validation elsewhere, influence the creation of the standards, and/or customize the standards for their organization..

Overall, since managers are at the center of the QS adoption decision within firms, stakeholder groups place tremendous pressures on firms to adopt CSR-related QS. Managers attempt to respond to these pressures to gain and maintain legitimacy and a ‘license to operate’ within society (Banal and Song, 2017). In some countries (e.g., Canada) this may translate into a managerial emphasis on a broader group of stakeholders, while in others (e.g., United States) this may manifest in terms of the fiduciary duty to a more narrow group of stakeholders, such as the investors’ interests. In both instances, decision-making may not be in accord with the interests of all stakeholders. These competing pressures result in managers making decisions solely from a binary choice view of adoption vs non-adoption. Our proposed framework incorporates the dimensions of early and late adoption and the private and public beneficiary stakeholder groups. Given the different stakeholder preferences towards QS adoption timing explained by our proposed model, managers have a stronger sense of the relative importance and urgency of adopting a particular QS.

Future research and limitations

We hope that the framework presented herein promotes additional research related to clarifying the QS environment to optimize CSR benefits for organizations. Although it was beyond the scope of the current study, it would be interesting to explore the extent to which firms derive performance benefits (both near-term and long-term) from being significantly involved in the pre-launch phase of CSR-related QS. To-date, literature has discussed tacit benefits associated with foreknowledge of the QS, however, the true economic benefits associated with CSR-related QS have not been well researched. Another potentially fruitful stream of research related to QS and CSR is to consider relationships between levels of QS integration and adoption timing. Specifically, the nuanced nature of “differing levels of compliance” is complex, as there are a wide range of compliance levels (e.g., signal adoption without true implementation, full adoption with the intent of long-term “check-box” quasi-implementation, full adoption with high cultural integration). However, even within the various levels of compliance there is all manner of implementations ranging from full cultural integration to ‘check-box’ implementation (Melnyk, Ritchie, Stark, & Heavey, 2023; Ritchie et al., 2019). The sheer number of combinations of associated levels of compliance preclude inclusion in this study’s framework. However, opportunities for future research include attempting to quantify the adoption decision and whether there are diminishing marginal returns for later adaptors versus their lower costs due to learning best practices from others. Finally, since CSR and QS systems continue to co-evolve over time, case studies are especially appropriate to identify and test these theoretical models (Yin, 1994; Gibbert, Ruigrok, and Wicki, (2008).

Availability of data and materials

Not applicable.

Abbreviations

QS:

Quality Standards

CSR:

Corporate Social Responsibility

C-TPAT:

Customs Trade Partnership Against Terrorism

CMMC:

Cybersecurity Maturity Model Certification

ISO:

International Standards Organization

AEO:

Authorized Economic Operator

NIT:

Neo-Institutional Theory

CBP:

Customs and Border Protection

CEO:

Chief Executive Officer

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Acknowledgements

We are grateful for the comments from anonymous reviewers.

Funding

JMU College of Business Summer Research Grant Program.

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WR developed overall research concept, conceptual arguments, and refining study flow. SG refined ideas and lit review of competing standards in the marketplace. SM worked with refining overall conceptual modeling of framework. AS worked with developing and refining CSR and stakeholder concept integration.

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Correspondence to William J. Ritchie.

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Ritchie, W.J., Gallagher, S., Melnyk, S.A. et al. Navigating the myriad of corporate quality standards: a CSR and stakeholder perspective. Int J Corporate Soc Responsibility 9, 2 (2024). https://doi.org/10.1186/s40991-023-00087-3

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