Working Paper
Certification and business risk

The purpose of this paper is to investigate the scope for international private standards to play a role in reducing business risk. Business risk is measured as variability in revenue, customer base, informal payments, and temporary firm closure.

The results show lower levels of business risk among certified firms, especially for firms in the middle deciles of the risk distribution. Certification also correlates negatively with risk-reduction for technologically advanced firms, as well as firms located in rural areas and northern provinces of Viet Nam.

The results suggest that firms could find protection from business downsides by investing in quality management tools.