Software quality and the Capability Maturity Model
Communications of the ACM
Quality awards and the market value of the firm: an empirical investigation
Management Science
Localization of Knowledge and the Mobility of Engineers in Regional Networks
Management Science
Are Sale Signs Less Effective When More Products Have Them?
Marketing Science
An Insider's View of CMM Level 5
IEEE Software
The Long-Run Stock Price Performance of Firms with Effective TQM Programs
Management Science
The World Is Flat [Updated and Expanded]: A Brief History of the Twenty-first Century
The World Is Flat [Updated and Expanded]: A Brief History of the Twenty-first Century
Why 'nearshore' means that distance matters
Communications of the ACM
Location Strategies and Knowledge Spillovers
Management Science
Certification in the Indian Offshore IT Services Industry
Manufacturing & Service Operations Management
Certification: Does the Emperor Have Any Clothes?
IT Professional
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We examine the heterogeneous returns to third-party quality signals in the context of the Indian software services industry. Prior theory has argued that quality certification is important in markets characterized by information asymmetry. However, there is limited understanding of the contingent factors that influence the efficacy of the quality signal. We focus on capability maturity model (CMM) certification, which is granted on the basis of a rigorous audit of software vendor's internal quality-oriented software construction practices, as a signal of unobservable quality. Drawing upon prior research in strategy and economics, we theorize that the impacts of CMM certification on a vendor's export performance are conditional on factors reflecting the vendor's strategy (diversification and location) and its competitive environment (the extent of CMM penetration in the vendor's competition). Analysis of panel data supports our predictions related to the contingent value of CMM certification, and shows that a software service provider gains more from certification in terms of its software exports when its service offerings are diversified, when it chooses to locate away from a cluster of other software service firms, and when the extent of CMM penetration in the competition is low. This study extends prior research in the information value of a quality signal on a firm's demand side that has, for the most part, focused solely on direct effects. We discuss the implications of our findings for the strategic trade-offs that managers of software service firms need to make.