Beyond compliance: Examining the link between industrial standards and firm performance in Indonesia

This study investigates the impact of industrial standards on firm performance in Indonesia. Using survey data from 276 certified firms, we analyze how standards influence labor, quality, regulatory compliance, and cost efficiency, and how these factors affect market, financial, and productivity outcomes. Over 80 % of the firms implement more than two standards, including ISO, HACCP, Indonesian National Standards, Good Manufacturing Practices, and Halal Certification. The analysis employs a two-stage factor analysis approach, along with structural equation modelling. The findings indicate that industrial standards significantly improve cost efficiency, labor practices, quality, and compliance. Compliance and quality enhancements are associated with stronger market performance and productivity, while cost efficiency supports financial gains and productivity. Labor practices also contribute to improved market outcomes. The results underscore the positive influence of standards in enhancing firm performance and provide practical insights for managers aiming to boost productivity and competitiveness through standard implementation.