This study aims to explore how the interaction between formal institutional mechanisms, namely, ISO 9001 (Quality Management System) and ISO 14001 (Environmental Management System), and informal institutional environments, captured through the Corruption Perception Index (CPI), shapes the financial and market performance of publicly listed companies. Anchored in Institutional Theory, the research seeks to understand how firms navigate pressures for legitimacy and performance in evolving institutional contexts.
The authors use panel data and the Generalized Method of Moments (GMM) system estimator to analyze firms listed on Euronext Lisbon from 2011 to 2022, a period marked by economic adjustment, regulatory change and institutional uncertainty in Portugal.
Results show that higher CPI scores, reflecting lower perceived corruption, are positively associated with Tobin’s Q and Return on Equity (ROE), suggesting that institutional trust and perceived integrity enhance firm value. ISO 14001 certification consistently improves all performance metrics (ROA, ROE, Tobin’s Q), reinforcing the strategic value of environmental legitimacy. In contrast, ISO 9001 exhibits a more nuanced effect: while positively associated with market-based performance (Tobin’s Q), it shows a negative relationship with accounting-based indicators (ROA and ROE), possibly reflecting short-term implementation costs. These findings illustrate how different institutional signals interact and affect corporate outcomes, particularly in semiperipheral economies.
To the best of the authors’ knowledge, this is the first study to examine how the interplay between formal and informal institutional signals shapes firm performance in a civil-law, bank-oriented country such as Portugal. Rather than treating context as a backdrop, the authors emphasize its role as a boundary condition that informs the effects of certification and governance. By framing ISO adoption and corruption perception as institutional signals, the study advances theoretical debates on organizational legitimacy, signaling and institutional adaptation in transitional contexts.
