Relationship between TQM and Performance

The relationship between TQM and performance has been investigated by numerous scholars, (Joiner TA (2007), Sun H. (2000), Hendricks et al. (2001), Terziovski and Danny (1999), Prajogo et Sohal (2003), Mielgo et al. (2009), Ho et al. (2001), Eboch (1998)). In fact, different performance types such as financial, innovative, operational and quality performance have been used to study the relationship between TQM and Performance. Quality performance generally indicates a strong and positive relationship with TQM, Prajogo and Sohal (2003). Moreover, companies implementing TQM gain a competitive advantage, Mielgo et al. (2009). Since the 1980s, managers incorporated quality to the strategic planning process in order to gain a competitive advantage, Zehir et al. (2012).

Some of the key indicators for quality performance are: product/service quality, productivity, cost of scrap and rework, delivery lead-time of purchased materials, delivery lead-time of finished products to customers, Zehir et al. (2012).

Studies treating the relationship between TQM and Performance in different contexts:

Joiner TA (2007) finds a strong positive relationship between the implementation of TQM practices and organizational performance. This study also found that co‐worker and organization support moderated the relationship between TQM implementation and organization performance.

Also, Sun H. (2000) studied the relationship between TQM and business performance improvement. The research is based on a survey conducted in Norway. Specifically, the study finds that TQM principles such as quality leadership, human resource development, quality information, contribute to the improvement of customer satisfaction and business performance.

Hendricks et al. (2001) conducted a survey on the relationship between changes in operating income and firm characteristics: size, the timing of TQM implementation, the maturity of the TQM program, the degree of capital intensity. They find that small firms do better than large firms; in addition, firms that won independent awards achieve better performance.

Additionally, Terziovski and Danny (1999) find a relationship between TQM practice and organizational performance in manufacturing companies in Australia and New Zealand. There are significant differences in the relationship between TQM and organizational performance across industry sectors and different size companies, particularly on the effect of defect rates, warranty costs and innovation of new products.

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