Effect of International Standards Certification on Firm-Level Exports: An Application of the Control Function Approach

Growing number of firms in developing countries have earned certifications such as International Standards Organization (ISO) as it enhances reputation of their company or brand and attract buyers particularly in export market. This study evaluates the effect of international standards certification on firm's export performance in Europe and Central Asia by applying the control function approach with endogenous treatment effect to firm-level data. Certification is found to increase export share in firm's sales by 44.9% on average. The results suggest that ignoring the effect of self-selection of certification leads to a substantial bias in the estimated treatment effect.