Quality Certification and the Economics of Contract Software Development a Study of the Indian Software Industry

38 Pages Posted: 21 Feb 2000 Last revised: 12 Jun 2014

See all articles by Ashish Arora

Ashish Arora

Duke University - Fuqua School of Business; National Bureau of Economics Research; Duke Innovation & Entrepreneurship Initiative

Jai Asundi

Center for Study of Science, Technology and Policy

Date Written: July 1999

Abstract

A significant amount of software development is being outsourced to countries such as India. Many Indian software firms have applied for and received quality certifications like the ISO9001, and the number of quality certified software firms has steadily increased. Despite its growing popularity among Indian software developers, there is very little systematic evidence on the relationship of ISO certification to organizational performance. Using data on 95 Indian software firms and their US clients, we develop a stylized model of a firm that develops software for others to articulate the different ways in which ISO certification can affect firm profits. We conclude that ISO certification enhances firm growth. The results provide partial support for the proposition that ISO certification also enhances revenue for a given size, suggesting that firms are receiving a higher price per unit of output. In turn, this is consistent with the notion that ISO certification also enhances the quality of output. Our field studies confirm that although most firms see ISO certification as a marketing ploy, some of them do proceed to institute more systematic and better-defined processes for software development.

Suggested Citation

Arora, Ashish and Asundi, Jai, Quality Certification and the Economics of Contract Software Development a Study of the Indian Software Industry (July 1999). NBER Working Paper No. w7260. Available at SSRN: https://ssrn.com/abstract=202429

Ashish Arora (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

National Bureau of Economics Research

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Jai Asundi

Center for Study of Science, Technology and Policy ( email )

Mayura Street, Nagashetyhalli
RMV Extension Stage 2
Bangalore, 560094
India
+918066902542 (Phone)

HOME PAGE: http://www.cstep.in

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