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'Baldrige Index' Consistently Outperforms the S&P 500

For the past seven years, the Commerce Department's National Institute of Standards and Technology has compared winners of the Malcolm Baldrige National Quality Award to the Standard & Poor's 500. The Baldrige group consistently has outperformed the S&P 500. In the most recent study issued April 6, 2001, the Baldrige group beat the S&P 500 by 4.4 to 1.

The Baldrige Index is a fictitious stock fund made up of publicly-traded U.S. companies that received the Malcolm Baldrige National Quality Award between 1990 and 1999. In the 2000 study, NIST "invested" a hypothetical $1,000 in each of the whole company winners--ADAC Laboratories (1996 winner), Eastman Chemical Company (1993 winner), Federal Express Corp. (1990 winner), and Solectron Corp. (a winner in 1991 and 1997). Another hypothetical $1,000 was invested in the S&P 500 for the same time period.

The investments were tracked from the first business day of the month following the announcement of award recipients through Dec. 1, 2000. Adjustments were made for stock splits.

NIST has conducted the Baldrige Index study since 1995. That year it outperformed the S&P 500 by 6.5 to 1, and has beat it each year since.

NIST also tracked a similar hypothetical investment in a group made up of the whole company winners and the parent companies of 18 subsidiary winners. This group outperformed the S&P 500 by about 4.2 to 1, achieving a 685 percent return on investment, compared to a 163 percent return for the S&P 500.

While receiving a Baldrige Award or any other award is not a guarantee of success, organizations that win a Baldrige Award show continuous and major improvements. Other studies also have found that organizations receiving quality awards show long-lasting improvements. For example, Professors Vinod Singhal of the Georgia Institute of Technology and Kevin Hendricks of the University of Western Ontario studied 600 publicly-traded firms that have won quality awards, including the Baldrige. The five-year study showed that award recipients experienced a 44 percent higher stock price return, a 48 percent higher growth in operating income, and a 37 percent higher growth in sales than the control group, consisting of firms similar in size and operating in the same industries. Award winners also experienced significant improvement in employment, asset growth and return on sales.

Named after a former Secretary of Commerce, the Malcolm Baldrige National Quality Award and the Baldrige National Quality Program are helping to improve the competitiveness and performance of U.S. businesses and education and health care organizations by promoting performance excellence, recognizing achievements of high-performing U.S. organizations and publicizing their successful strategies. The award is not given for specific products or services. Since 1988, 41 companies have received the Baldrige award. Baldrige awards are given in manufacturing, service, small business, education and health care.

As a non-regulatory agency of the U.S. Department of Commerce's Technology Administration, NIST strengthens the U.S. economy and improves the quality of life by working with industry to develop and apply technology, measurements and standards through four partnerships: the Baldrige National Quality Program, the Measurement and Standards Laboratories, the Advanced Technology Program, and the Manufacturing Extension Partnership

NOTE: For a copy of the Baldrige Index stock study, see the World Wide Web or fax a request to (301) 926-1630.

Released April 6, 2001, Updated January 23, 2023