Impact of Quality Standards on Technological Capabilities of Indian Firms

Quality standards have a great potential for enhancing trade, minimizing cost and technological improvements in the production process. An attempt was made to examine the effect of international quality standards on the technological capabilities of Indian firms. The panel data set covering the period 2001-2014 while selecting 125 firms. Econometrics model was developed to examine empirically the relationship between International Quality Standards (IQS) and technological capabilities. The empirical findings revealed that technological capabilities were positively influenced by size, R&D, age, exports, and power and fuel expenses of the certified firms. Therefore quality standards serve as a helping hand to Indian firms in increasing their technological capabilities. It further makes management system effective and helped in cost reduction. Thus, there is a need to adopt and follow international quality standards in order to improve technological capabilities and competitive position of firms in the market. An important policy implication that emerged from the analysis was that the small and medium firms if supported by the government in terms of providing subsidies to adopt quality standards would result in substantial technological capabilities building.