Meta-standards, financial performance and senior executive compensation in China: An institutional perspective

We examine the relationships between number of business certifications and financial performance and senior executive compensation in Chinese manufacturing companies. The results show that the number of certifications obtained by a firm is significantly correlated with the compensation of the firm's senior management, but not with the firm's financial performance. We also find that ISO 9000, when adopted for the sake of meeting market institutional expectations, increases the operating cycle time of the certified firm. Our findings offer a clue to the cause of the popularity of meta-standards in China-executives adopt popular management techniques under an institutionalized environment to enhance their personal legitimacy, despite that the techniques may not necessarily improve firm performance.