Market Response to ISO 9000 Certification of Software Engineering Processes

A very large proportion of software projects are deemed to be failures. In most business sectors, this situation would be dealt with by improving quality assurance processes, frequently including certification of the business processes to standards such as ISO 9000. However, in the field of software engineering, there is controversy over whether or not certification of software engineering processes is a cost-effective response to quality issues. The value of certification in software engineering is examined in the present research by applying event-study methodology to examine the market response to announcements of certification of software engineering processes. The findings support the hypothesis that certification of software engineering processes leads to increased profits for companies that are primarily focused on developing products. Subsequent exploratory analysis suggests that the knowledge of the certification may leak out to the marketplace before the official announcement.