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Fco. Javier Llorns Montes Antonio Verd Jover Luis Miguel Molina Fernndez, (2003),"Factors affecting
the relationship between total quality management and organizational performance", International Journal
of Quality & Reliability Management, Vol. 20 Iss 2 pp. 189 - 209
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TQM and
organizational
performance
189
Received December 2001
Revised June 2002
Introduction
In the last few years, the core ideas of total quality management (TQM) have
been generally accepted by the business community throughout the world.
Within the framework of the quality revolution, company managers and
executives have been flooded with articles, books and seminars. TQM has been
described as a new model of thinking in business management (Chorn, 1991), a
comprehensive style to improve organizational performance and quality (Hunt,
1993), an alternative to the management by control (Price, 1989), and more
recently, as a change of paradigm (Broedling, 1990). Some authors consider
TQM as an approach historically unique to improve the organizational
effectiveness, with solid conceptual foundations which, at the same time,
provides us with a strategy to enhance business performance, taking into
consideration the way companies and their staff operate (Wruck and Jensen,
1994).
TQM has become a global phenomenon, as it affects Japanese companies as
much as US, European and Asia-Pacific ones (Chen, 1997; Corbett and Rastrick,
2000). It has been described even as an appropriate method to improve the
competitiveness of companies in developing countries (Mersha and Merrick,
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190
1997). Similarly, its principles and elements have been assumed by all sectors
in the economy, from the industry (Flynn et al., 1995), where it originated, to the
services (Silvestro, 1998), the public sector (Loomba and Spencer, 1997) and the
education (Elmuti et al., 1996).
Due to the importance of the material and human endeavours that the
organizations must carry out for the implementation of TQM, researchers have
been concerned with its relationship with the improvement of organizational
performance. Thus, an increasing number of studies exist trying to determine
the degree of influence of the different principles and elements of quality on
organizational performance. This relative importance is due to the existing
controversy about the real capability of TQM to impact performance.
Therefore, after a first stage where TQM was envisaged as the solution to the
Western companies problems of lost of competitiveness, the following stage
brought into light the reviling of TQM as another management fad, whose
effects upon organizational performance were evident only in the short term
(Zbaracki, 1998).
The present paper summarises the main contributions made in the field of
TQM to the study of its relationship with organizational performance. Thus, in
this paper, we propose a model that encompasses the factors affecting the
success of the implementation of a quality system, mainly based on industrial
psychology studies. With this purpose, the rest of the work has been organised
in the following way. First, TQM and organizational performance are defined
and the main works on TQM and organizational performance are briefly
revised. Next the proposed model is presented. The rest of the paper deals with
the propositions implicit in the model suggested. Finally, we present the main
conclusions that can be reached.
Definitions
TQM
According to Bemowski (1992), the expression TQM was firstly used in 1985
by the Naval Air Systems Command to describe the Japanese style of
management focused on quality improvements. Although a lot of controversy
exists on finding a definition able to include the efforts made by the different
researchers and professionals about TQM (Gehani, 1993), in this paper we
support the position stated by Snell and Dean (1992), Westphal et al. (1997),
Withers et al. (1997) or Yusof and Aspinwall (2000) and consider it as a
philosophy or an approach to business management.
Within the framework of the TQM, a distinction can be made between
content and elements or processes. The former has been known under the
names content (Reed et al., 2000), principles (Dean and Bowen, 1994), precepts
(Sitkin et al., 1994), values (Hellsten and Klefsjo, 2000) or basic attributes (Dean
and Evans, 1994). Although definitions do not coincide in full, all of them refer
to those fundamentals that make up TQM theoretical frame, without which the
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192
Kroll et al., 1999), this being one of the possible impacts of TQM upon
organizational performance.
TQM researchers, in their attempt to find an explanation for these uneven
results, have sought out the contextual factors that affect TQM effectiveness. In
this research line, they have focused either on environmental factors (Powell,
1995; Terziovski and Samson, 1999) or on the company characteristics
(Hendricks and Singhal, 2001b; Terziovski and Samson, 2000). However, these
papers did not analyse the organizational variables that really differ from one
company to another, and that explain the uneven results of the quality systems
(Douglas and Judge, 2001).
Many of the works that study the effects of TQM followed this sequence:
firstly, a TQM programme is implemented, then, the company productivity
and/or profitability improve, and hence it is concluded that this improvement is
a consequence of the programme implementation (Gilbert, 1992; Raffio, 1992).
But the improvement noticed could have actually originated as a result the
following:
.
Other events concurrent in time with the intervention. That is, the
relationship between the improvement processes and the organizational
results could have been obscured by some exogenous shocks
(environmental or market factors).
.
Very likely, the Hawthorne effect could have occurred, by virtue of which
the company staff works harder and better when they are aware of their
being under study.
.
The time factor can also obscure the relationship between TQM and the
results achieved (Whetton and Cameron, 1994), as some conclusions can
be reached in the short term, without waiting for an analysis of the
consequences in the long run.
.
The case may also have happened where the company managers had
selected organizational units for pilot testing as part of an introductory
stage of the TQM programme.
When the managers and the change agents start planning the programme
implementation, the workforce, workflow and internal organization are
examined in detail. Then, any cause of inefficiency detected at the moment of
the implementation will be corrected. If, as a result, the organizational unit
productivity increases, the quality programme will be deemed responsible for
this improvement. Although this can actually be the case, there is also the
possibility that the improvement occurred only as a result of the paraphernalia
inherent to the programme, and not as a result of the integral programme itself.
This approach makes it difficult to find an explanation for the reasons
underlying the improvements (Hackman and Wageman, 1995; Powell, 1995).
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193
Figure 1.
Relationship between
TQM and performance
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factors is established directly and through the TQM effect on the existing
relationship between personal factors and system factors. That is, that TQM
has an impact on the way organization members apply their knowledge in the
organization, and therefore it affects organizational performance.
Below, the model propositions are dealt with more deeply.
194
TQM contents, business orientation and environmental uncertainty
A research line of growing interest is the one that has tried to set out how TQM
contents should be adapted to the objectives of the organization. Thus, Sitkin
et al. (1994) consider that from the TQM common precepts arise some principles
contingent to the main objective to be reached through TQM implementation.
This leads them to distinguish between a learning-focused approach, if the
intention is to provide the organization with the necessary tools to solve new
problems, and a control-focused approach, if the idea is to prevent losses as a
consequence of out-of-control production processes.
On the other hand, Manz and Stewart (1996) consider that there are two
TQM forms related to the definition of quality. Thus, if quality is defined as
conformance or as desirable features, then TQM will adopt some philosophical
fundamentals about a very different work reality in organizations. Thus, in the
former case, TQM tends to adopt a mechanicist, closed-system perspective,
whereas if we take the second definition of quality, it approaches more to the
idea of opened system. At any event, authors such as Waldman (1994) does not
accept the first TQM form as such, as they consider that one of the TQM basic
principles, without which it cannot be considered as such, is the definition of
quality as satisfaction of customer needs.
The importance of taking into consideration the business orientation is an
idea already accepted in the TQM literature (Reed et al., 1996). The idea that
business can either be process-driven, or customer- or market-focused, strongly
appears in the existing literature on business management.
Although the customer focus was traditionally considered as a marketing
concept, the most recent researches and thinking suggest that it is much more
than that. For a company to be customer-driven means that it is able to capably
and positively impact on its value chain. Narver and Slater (1990) were the first
at studying the relationship between market orientation and business
profitability. Their findings showed that the customer focus is positively
related to business profitability.
The process orientation has never been defined nor measured in full. This
concept links to the classical theory of business management (e.g. scientific
management) and there underlies much of our current management theory and
organizational models dealing with the companies internal control and the
management of their activities. Thus, for instance, Spencer (1994) studied seven
factors (objectives, quality definition, environment role/nature, managerial role,
employees role, structure rationality and change-oriented philosophy) that
widely explain the management practice and found that TQM thinking and the
theory included in the machine-like, organic and cultural organizational models
substantially overlap. Also, Spencer pointed that business management
academics also suggested that managers would better increase their focus on
efficiency improvement and process control.
The business orientation relates to the TQM strategy contents. In the case of
the customer focus, these contents can be further specified throughout a market
advantage and/or product design efficiency. Alternatively, the process focus
can be specified thanks to the products reliability and/or process efficiency.
Reed et al. (1996) consider that customer-focused companies should make
available the favourable conditions permitting them to successfully achieve an
income increase by means of a market advantage and a costs reduction,
through an improvement in the products design reliability. On the other hand,
companies oriented to the processes should be capable to achieve an
improvement in their income by enhancing their products reliability, and
reduce costs by increasing the levels of efficiency in the processes.
So if we study the real intention of organizations in promoting TQM, we find
the classical distinction between exploitation of the organization capabilities
and exploration of new capabilities (Argyris and Schon, 1978). That is to say,
as a large part of the organizational structures allowing innovation are in
conflict with efficiency in current products manufacture, the firm has to chose
between an organization completely closed in the exploitation of existing
capabilities and the exploration of new competitive capabilities. On this regard,
two basic TQM orientations can be considered, relating exploration or
exploitation of the existing capabilities in the organization. Similarly, these are
only two edges in the continuum of possibilities that can arise, but, as stated by
Conner and Prahalad (1996), edges are useful for economic studies, as they
permit to clarify basic concepts of theories. Therefore, this is what Doty et al.
(1993) called a contingent hybrid types structure within configurational theory.
However, Reed and his colleagues suggest that these relationships will
depend upon the uncertainty degree perceived. Thus, for instance, when the
business is half driven to customers and to processes, but the environment
produces a degree of uncertainty be it high or low the improvement of the
results after a TQM programme implementation will not be clear. In highly
uncertain environments, the increase in the income produced by a market
advantage and a reduction in costs due to an improvement in the productdesign efficiency, will be either limited or curbed by the increase in costs linked
to the improvement in the process efficiency and the reliability of the products.
In opposition, with low levels of uncertainty, the reduction in costs produced by
an improvement in the process efficiency, and the increase in the income
arising out of higher levels of reliability of the products, will both be reduced
because of the costs incurred at trying to set forth a market advantage or an
improvement in the product design.
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The studies of Brown and Mitchell (1993), Schneider et al. (1980) and Schneider
et al. (1992) support this theory.
In the light of the above discussion, it can be stated that:
TQM and
organizational
performance
P2. The TQM elements implementation affects the interaction between the
characteristics of the individual and the system demands/constraints.
P3. The interaction between the characteristics of the individual and the
system demands/constraints impact on the behavioural processes.
P4. TQM elements implementation will impact positively on performance
because of higher individuals satisfaction, motivation and
commitment.
Learning
Through the incorporation of new ideas about learning, training and process
innovation, the quality movement has been able to demonstrate the potential
capability of the organizations to cope with the uncertain and changeable
circumstances of todays environments (Sitkin et al., 1994). Hackman and
Wageman (1995) put forward three levels of learning:
(1) learning among employees by means of cross-functional teams and
problem solving;
(2) learning about the way to enhance performance and work processes; and
(3) learning about the management of collective objectives and interests.
The quality movement proponents stated that the staff within a company
wants to learn and develop itself. However, this trend can weaken, since
learning may not be a shared, common value in the company, or a lack of the
necessary tools and skills may exist. TQM practices generate ideal
environments for learning, minimising the organizational culture fears and
providing employees with a series of tools enabling them to develop.
Furthermore, with different levels of continuity, TQM informs employees about
the performance level of their work processes, thus encouraging them to deploy
scientifical methods aimed at analysing and improving the said processes.
According to Barrow (1993), TQM and the organizational learning are
intrinsically bounded; the later being the main reason to carry out the
endeavours involved by the former. Thus, the relationship between them can
be studied on a twofold basis:
(1) the TQM itself constitutes a learning process; and
(2) TQM affects the way in which organizations learn.
On the one hand, the very TQM constitutes an organizational learning process,
that involves the introduction of changes in the way organizations act. Thus,
these changes in behaviour are nothing but the result of the new ways of
making the organization tasks have sense, once the knowledge acquired during
201
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202
the TQM processes is put into practice. In this regard, TQM has been
considered both as a double-loop learning process (Grant et al., 1994), and as a
single-loop learning process (Hackman and Wageman, 1995). In fact, according
to the former consideration, the changes brought about by TQM result from a
learning process incompatible with the traditional management practices, in
such a way that a change in the premises upon which these practices have been
built is necessary for the success of the TQM practices. On the contrary, those
standing for the TQM as a single-loop learning consider that in TQM, the
rhetoric predominates (Zbaracki, 1998), so that the main change in
organizations relates to the way in which managing processes are named,
whereas the basic premises remain the same.
On the other hand, the TQM affects the staffs knowledge-acquisition
processes, as it is considered that their power comes from their competence to
develop new starting points to solve existing problems in the organizations
(Mukherjee et al., 1998). Thus, one of the basic principles of TQM is the
continuous improvement, which consists in an explicit attempt to learn out of
ones own experience (Miner and Mezias, 1996). This way, organizations focus
on the study of the errors made and the seeking out of solutions. Therefore,
they put into practice one of the knowledge acquisition ways that most
decisively contributes to boost business performance in the short term, for
there is evidence that people learn more from their mistakes than from their
right decisions (Li and Rajagopalan, 1997).
Continuous improvement aspirations must be supported by the system
through the removal of barriers, and also favouring a learning-driven
environment, which includes substantial investments in training and the
spreading of the statistics and cross-personal techniques designed to promote
learning, both at the individual and at the team levels. In any case, the
individuals higher or lower level of learning will not only be subjected to the
support of the system. Rather, it will depend upon the personal characteristics
of that given individual (capability and skill). Generally speaking:
P5. The interaction between the employees personal characteristics and the
system requirements/restraints will influence the level of learning.
P6. TQM elements implementation will affect performance due to the
improvement in the individuals learning processes.
Cultural change acceptance
The existing literature on TQM almost unanimously emphasises the necessity
to change the organization culture, in order to adapt it to the requirements of
the new reality that TQM practices entail (e.g. Adebanjo and Kehoe, 1999;
Ahmed et al., 1999; Kanji and Yui, 1997; Manley, 1998; Vermeulen, 1997),
whereas Ciampa (1991) suggests that there exists a clear risk at believing that
an organizational culture can be permanently altered by one single person or, at
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