Standards certification and research and development in companies: What factors are affecting them?

What is it about?

This research paper investigates how international standards certification (like ISO 9001 or 14001) and Research and Development (R&D) work together to drive sustainable innovation and technological progress in European firms. Using data from over 14,000 enterprises, the study explores whether these two paths are separate choices or complementary tools for business growth. At its core, the study asks whether investing in R&D and obtaining international certifications are linked by the same underlying factors. R&D is often seen as the first step for a company to develop new technologies and "green" products. Standards certification acts as a "quality signal," helping companies build trust, enter new markets, and ensure their innovations meet international safety and environmental requirements. The research confirms a positive correlation between R&D and certification. Companies that spend money on R&D are significantly more likely to hold international certificates. This suggests that R&D generates the high-tech products that then require certification to be successfully sold on the market. The study identifies specific traits that increase a firm's likelihood of being both innovative and certified: - Size Matters: Larger companies and subsidiaries of large firms are much more active in both R&D and certification. - Global Reach: Firms that focus on exporting or use foreign licenses are more likely to pursue both paths to remain competitive internationally. - The "Sole Proprietor" Gap: Small, one-person businesses (sole proprietorships) are significantly less active in these areas, highlighting a potential need for targeted support. While R&D and certification often go hand-in-hand, the study found that sector matters. For instance, firms in manufacturing or utilities (electricity/gas) are very likely to seek certification but may be less likely to conduct their own R&D compared to other high-tech sectors. The paper highlights that these activities are not just about profit; they are essential for reaching United Nations Sustainable Development Goals (SDGs). For example, the ISO 14,000 family of standards is a key tool for climate action (SDG 13), and firms investing in environmental R&D find it much easier to obtain these green certifications

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Why is it important?

What is Unique About This Paper? - Micro-Level Focus on Europe: Unlike many previous studies that focused on Asian markets or a small number of selected countries, this paper uses extensive micro-data specifically from a wide range of European firms. - Massive Dataset: The analysis leverages the World Bank Enterprise Surveys (WBES), providing a robust sample of over 14,000 observations across 26 European countries, including 17 EU and 9 non-EU states. - Dual-Path Analysis: It treats R&D investment and international certification not just as separate activities, but as two interconnected paths toward the same goal: sustainable innovation. - Broad Standard Coverage: While most research focuses only on ISO 9001, this study looks at a variety of standards, including the ISO 14,000 (environmental), ISO 50,000 (energy), and HACCP (food safety) families. Main Contributions to the Field: - Validation of the "Signaling Effect": The paper contributes to the theory that international standards act as a crucial signal for high-tech firms. It proves that firms with intangible assets (like R&D) use certification to communicate quality and interoperability to global markets. - Sustainability Linkage: It explicitly connects business investments to the United Nations Sustainable Development Goals (SDGs), showing how ISO standards help firms contribute to goals like Climate Action (SDG 13) and Industry/Innovation (SDG 9). - Sectoral Insights: It reveals that the "clustering" of R&D and certification differs by industry. For example, manufacturing and utility firms are highly likely to certify but less likely to conduct internal R&D compared to other sectors. - Entrepreneurial Policy Evidence: The findings offer a "profile" of firms that struggle to innovate (such as sole proprietorships), providing a roadmap for policymakers to design better support systems for smaller enterprises.