Professional Documents
Culture Documents
3, 2012 259
Faisal Talib*
Mechanical Engineering Section,
University Polytechnic,
Faculty of Engineering and Technology,
Aligarh Muslim University,
Aligarh, Uttar Pradesh, India
E-mail: ftalib77@yahoo.co.in
*Corresponding author
Zillur Rahman
Department of Management Studies,
Indian Institute of Technology Roorkee,
Roorkee, Uttarakhand, India
E-mail: yusuffdm@iitr.ernet.in
M.N. Qureshi
Faculty of Engineering and Technology,
Department of Mechanical Engineering,
MS University of Baroda,
Vadodara, Gujarat, India
E-mail: mnqureshi@rediffmail.com
Abstract: Over the last two decades, service organisations have embraced total
quality management (TQM) as an effective management tool to improve their
service quality. They have begun to show a keen interest in TQM by working
on quality and related areas. TQM has become a major area of attention to
practitioners, managers and researchers due to its strong impact on business
performance, customer satisfaction and profitability. In the light of this, an
attempt has been made to study and understand the theory and concept of
TQM, its benefits as well as various facets of service components and its
classification. This study also explores the literature on the implementation of
TQM in selected service industries. The finding of this study provides a rich
contribution towards TQM theory, its role in service sector, as well as presents
the different components of services. This paper can help business managers
and quality practitioners in better understanding TQM, service systems concept
as well as TQM implementation in service sector. The scope for future study is
presented at the end.
Reference to this paper should be made as follows: Talib, F., Rahman, Z. and
Qureshi, M.N. (2012) ‘Total quality management in service sector: a literature
review’, Int. J. Business Innovation and Research, Vol. 6, No. 3, pp.259–301.
1 Introduction
In the present era of rapid changes in market and economic development characterised by
phenomenon such as globalisation, deregulation of markets, advancement in technology
and intense competition, total quality management (TQM) becomes utmost important not
only in manufacturing sector but also in service sector. It seeks to integrate all
organisational functions to focus on meeting and surpassing customers’ requirements and
organisational objectives. TQM empowers every member of the organisation and offers
the opportunity to participate, contribute and develop a sense of ownership. It is intended
to promote continuous, sustained and long-term improvement in quality and productivity,
and eliminate employees’ fear of change. According to Kumar et al. (2011), TQM is a
modern management philosophy and a journey, not a destination. They further asserted
that it is a systematic management approach to meet competitive and technological
challenges which has been accepted by both service and manufacturing organisations
globally. TQM highlights the need to improve the quality of goods and services to better
utilise the resources of organisation (Collins, 1996). Kureshi et al. (2010) argued that the
terms TQM and business improvement are used interchangeably in the quality
The scope of this study comes from the fact that role of quality has always been an
important issue in the products and services. With the environment becoming more
competitive and turbulent, service industries are increasingly concerned with obtaining a
sustainable competitive edge (Collins, 1996). This paper, therefore, has the main
intention of presenting an overview of TQM, its applicability and benefits together with
understanding the various facets of service components. Beside, this paper also presents
the complete classification of service industries in the Indian context. Towards the end,
this paper attempts to review literature on TQM in selected service industries and
discusses the conclusions of this study along with scope for future research.
2 An overview of TQM
The evolutionary philosophy of TQM which stands as a testimony today is due to the
pioneering contributions made by Juran, Crosby, Feigenbaum, etc. Juran’s (1991) quality
trilogy (planning, control and improvement), Crosby’s (1991) absolutes of quality
management (conformance to requirements, prevention, zero defects and cost of quality),
Feigenbaum’s (1990) 3 steps to quality (quality leadership, modern quality technology
and organisational commitment) and Deming’s (1986) 14 points and cycle (plan, do,
check and act, also called as PDCA cycle) constitute the most important aspects of the
TQM framework that quality gurus have recommended. The dominant emphasis of these
pioneers was on top management leadership for quality, supplier quality management,
process design and control, employee training and employee involvement in quality.
A significant number of industries have adopted some form of TQM framework in
their business and have derived most benefits (Rahman and Sohal, 2002). For instant,
many firms have utilised the Malcolm Baldrige National Quality Award framework as a
base model for TQM to improve quality and economic performance in the organisation
(Jung and Wang, 2006; Lee et al., 2010; Prajogo and Hong, 2008; Teh et al., 2009) and
have got positive and significant results. Furthermore, there is a trend towards stronger
demand for improved measures of the performance of the industries and TQM has a role
to play in relation to this (Williams et al., 2004). A review of the extant literature on
TQM in services revealed that research work has been taken on (Table 1):
x barriers of TQM implementation
x critical dimensions of TQM
x development of TQM framework
x development of TQM models
x financial outcomes of service quality (SQ) initiatives
x identification and implementation of TQM practices
x impact of TQM in service industry
x relationship between TQM and customer satisfaction
x relationship between TQM and employee satisfaction
x relationship between TQM practices and business performance
x relationship between TQM practices and quality performance
TQM in service sector: a literature review 263
Area/issue References
Barriers of TQM implementation Soltani et al. (2005), Huq (2005), Mosadegh Rad
(2005), Bhat and Rajashekhar (2009), Talib et al. (in
press a), Ab-Rahman et al. (2011)
Critical dimensions of TQM Mahadevappa and Kotreshwar (2004), Saravanan and
Rao (2006), Tarí (2005), Sureshchandar et al. (2002),
Talib and Rahman (2010a), Talib et al. (in press a,
2011b)
Development of TQM framework Yusof and Aspinwall (2000), Malhotra and Grover
(1998), Hafeez et al. (2006), Talib et al. (2011c,d),
Azam et al. (in press a)
Development of TQM models Sureshchandar et al. (2001), Bayraktar et al. (2008),
Bou-Llusar et al. (2009), Kakkar and Narag (2007),
Talib and Rahman (2010a), Azam et al. (in press b),
Ooi et al. (2009)
Financial outcomes of SQ initiatives Rust and Zahorik (1993), Rust et al. (1994, 1999), Brah
et al. (2000)
Identification and implementation of Aghazadeh (2002), Khamalah and Lingaraj (2007),
TQM practices Gustafsson and Johnson (2003), Behara and Gundersen
(2001), Sureshchandar et al. (2002), Talib et al. (2011b)
Impact of TQM in service industry Khan (2003), Kumar et al. (2009), Talib and Rahman
(2010b)
Relationship between TQM and customer Mehra and Ranganathan (2008), Gonzalez et al. (2004),
satisfaction Sahney et al. (2004), Yang (2006), Tarí (2005), Bou-
Llusar et al. (2005), Sila and Ebrahimpour (2005), Sit
et al. (2009), Yoon et al. (2006)
Relationship between TQM and employee Yang (2006), Tarí (2005), Bou-Llusar et al. (2005), Sila
satisfaction and Ebrahimpour (2005), Ooi et al. (2007a,b, 2008),
Teh et al. (2009)
Relationship between TQM practices and Prajogo and Mc Dermott (2005), Brah et al. (2002),
business performance and culture Hasan and Kerr (2003), Bou and Beltran (2005), Hafeez
et al. (2006)
Relationship between TQM practices and Flynn et al. (1994, 1995), Arumugam et al. (2008),
quality performance Brah et al. (2002), Hasan and Kerr (2003), Prajogo
(2005), Prajogo and Brown (2004), Prajogo and Sohal
(2004), Ahire et al. (1996), Talib et al. (2011d)
TQM and knowledge sharing Rad (2006), Jacobs and Roodt (2007), Hong et al.
(2004), Cheah et al. (2009)
TQM and new product development Sun et al. (2009), Langerak and Hultink (2008), Dayan
and Benedetto (2009), Lukas and Menon (2004)
TQM practices and its impact on role Teh et al. (2008, 2009), Lu and Lee (2007), Brah and
stressors Lim (2006), Phusavat et al. (2007), Gilboa et al. (2008)
264 F. Talib, Z. Rahman and M.N. Qureshi
Author(s) Definition
Deming (1986) A management philosophy which develops all management principles and
practices from the belief that continual improvement of quality is the key to
success
Oakland (1989) An approach for improving the competitiveness, effectiveness and flexibility
of an organisation
Berry (1991) A total corporate focus on meeting and exceeding customers’ expectations
and significantly reducing costs resulting from poor quality by adopting a new
management system and corporate culture
Oakland (1993) A new way of managing to improve effectiveness, flexibility and
competitiveness of a business to meet customers’ requirements
Zairi et al. (1994) A positive attempt by the organisations concerned to improve structural,
infrastructural, attitudinal, behavioural and methodological ways of delivering
to the end customer, with emphasis on consistency, improvements in quality,
competitive enhancements, all with the aim of satisfying or delighting the end
customer
Roosevelt (1995) A strategic architecture requiring evaluation and refinement of continuous
improvement practices in all areas of business
Dahlgaard et al. A management process which any organisation can implement through long-
(1998) term planning, by using continuous quality management plans which lead the
organisation towards the fulfilment of its vision
Mohanty and Lakhe An approach for continuously improving the quality of goods and services
(2002) delivered through the participation of ‘all’ levels and functions of the
organisations
Palo and Padhi An integrated approach to bring continuous improvement in products and
(2005) services using proper tools, technology and training to meet customer’s
expectations on a continuous basis
Lee et al. (2010) A business management strategy seeking to improve the quality of
organisational management, competitiveness and providing value to
customers
TQM in service sector: a literature review 265
3 An overview of services
Various service systems have been emerged out since early 1980s. These service systems
are based on different criterion. Of these four are worthy – Chase (1978), Schmenner
(1986), Wemmerlov (1990) and Lovelock (1983). Chase (1978) segments by the extent
of customer contact in the delivery of the service. Schmenner (1986) classifies services
266 F. Talib, Z. Rahman and M.N. Qureshi
using two dimensions, with the degrees of interaction and customisation on one axis and
the degree of labour intensity on the other. Wemmerlov (1990) more recently presented a
service system scheme, where the variables of differentiation are the degree of
routinisation of the process, the ‘object’ of the service process and customer contact.
While Lovelock (1983) has proposed classification of services into four distinctive
categories based on what a service organisation is actually processing and how does it
perform that task. Beside these four service system schemes, Liu and Wang (2008)
classify the structures of the previous classifications of services based on the schemes
concepts, i.e. discrete item scheme, continuum scheme and matrix scheme. Lusch and
Vargo (2008) perceived services as supplements to physical goods and referred as good-
dominant logic, where tangible goods are the primary focus of economic exchange.
While Lovelock and Wirtz (2007) formulated non-ownership-based service paradigm
underlying in it the marketing exchanges, which do not result in a transfer of ownership
from seller to buyer are different from those that so. Another study by Gebaver et al.
(2008) suggested a comparable classification for business services, where services are
divided into three groups: customer services, product-related services and customer
support services. Katzan (2008) speaks about information services – a resource capable
of supporting a service event based on information. Other studies on service system
schemes and classification are by Gebaver et al. (2006), Edvardsson et al. (2005),
Schmenner (2004) and Mayer et al. (2003).
A service organisation may be servicing individual customer or alternatively it may
be servicing their possessions. Further, the servicing may be physical as in case of
purchasing washing machine, the customer also receives services such as installation,
maintenance and repair or visiting a restaurant. Alternatively, the servicing may be
intangible as in case of education, information, museums, banking or securities.
Summary of selected schemes for service classifications are listed in Table 4.
Table 4 Summary of selected schemes for service classifications
Reference(s) Classification dimensions
Chase (1978) Extent of customer contact in the delivery of service
Lovelock (1983) Nature of service, relationships, judgement, demand pattern and delivery
method
Schmenner (1986) Degree of interaction/customisation and labour intensity
Wemmerlov (1990) Degree of routinisation of the process, the object of the service process
and customer contact
Mayer et al. (2003) A 2D model using personal of service assembly and process of delivery
Schmenner (2004) Degree of variation of customisation and interaction, relative throughput
time
Liu and Wang (2008) Discrete item scheme, continuum scheme and matrix scheme
Gebaver et al. (2008) Business services for growth of product, customer services, product-
related, services and customer support services
Lovelock and Wirtz Distinction between marketing through services or service marketing,
(2007) product-related services and service as a product
Lusch and Vargo (2008) Service-dominant logic, where tangible goods are the primary focus of
economic exchange
Godlevskaja et al. (2011) Services categorisation schemes are grouped under eight service
paradigms: goods vs. services or manufacturing vs. services paradigm,
contemporary service industries paradigm, non-ownership service
paradigm, goods-focused paradigm, services-for-growth paradigm,
service-focused paradigm, relationship paradigm and service in
automated environment
TQM in service sector: a literature review 267
Author(s) Definition
Cowell (1984) Activities, benefits or satisfactions, which are offered for sale or are
provided in connection with the sale of goods
Stanton (1986) Those separately identified, and essentially intangible, activities that
provide want of satisfaction and that are not necessarily tied to the
sale of a product or another service
Gummersson (1987) Something that can be bought and sold but which you cannot drop
on your foot
Quinn et al. (1987) It includes all economic activities whose output is not physical
product or construction, is generally consumed at the time it is
produced and provides added value in forms that are essentially
intangible
Kotler and Turner (1993) Any kind of performance that one party can offer to another that is
essentially intangible and does not results in the ownership of
anything
Zeithaml et al. (1996) Services are deeds, processes and performances
Lovelock and Wirtz (2004) An economic activity that creates value and provides benefits for
customers at specific times and places by bringing about a desired
change in, or on behalf of, recipient of the service
Edvardsson et al. (2005) A value co-creating processes with customers
Karwan and Markland (2006) A package made up of a set of tangible and intangible elements
Bygstad and Lanestedt (2009) Services are a non-material equivalent of a goods
268 F. Talib, Z. Rahman and M.N. Qureshi
3.2.1 Intangibility
It is one of the most important distinctive properties of service. Service has no physical
attributes and as a result impossible for a customer to taste, feel, hear or smell before they
buy it. The customer cannot assess the intangible aspect of service before the event and
hence, customers often must use the reputation of a service organisation and its
representatives to judge quality (Dotchin and Oakland, 1994). Zeithaml (1981) observed
that services often cannot be evaluated in advance of the user. The customer must rely on
experience of the service itself or ‘on trust’. However, service providers can take account
of customer psychology and make plans to cope with the difficulties of demonstrating
their offerings, while designing a new or revised service package.
3.2.2 Inconsistency
Inconsistency in most of the service literature is also referred to as variability or
heterogeneity. Heterogeneity of services occurs in consequence of explicit and implicit
service elements relying on customer preferences and perception. Differences exist in the
outputs of service provider producing the same service over a time within the same
organisation. The interaction between customer and provider may vary by customer
(Sasser et al., 1978). This inherent variability makes it difficult to set precise quantifiable
standards for all of the elements of service.
3.2.3 Inseparability
Inseparability is a characteristic of a service which indicates that it cannot be separated
from the creator–seller of the product and thus, it has the property of simultaneity.
Simultaneity occurs because the customer has to be present before any services can take
place. Whereas foods are produced first, then sold and consumed, most services are sold
first and then produced and consumed simultaneously (Zeithaml et al., 1996). Morris and
Johnston (1987) argued that the employee providing the service must first diagnose
individual customer expectations then customise the service on the basis of the diagnosis.
TQM in service sector: a literature review 269
The employee must also assess the quality of his or her performance, as it takes place,
against their assessment of the customers’ expectations, while remain ready to detect and
respond to any adverse customer reactions which may occur.
3.2.4 Inventory
Another distinguishing characteristic of service is that they are produced and consumed at
the same time that causes elimination of inventory. This characteristic is also called as
perishability. Service cannot be saved, stored, resold or returned. A seat on a train or in a
theatre or telephone line capacity or a tax consultant’s time not used cannot be reclaimed
and used or resold at all later time. Perishability is in contrast to manufacturing goods that
can be stored in inventory or resold another day or even return if the consumer is
unhappy. Perishability makes these actions an unlikely possibility for most services.
Thus, perishability also requires that service production and service delivery often must
exist simultaneously (Dotchin and Oakland, 1994).
16.95%
Agriculture sector
Industrial sector
Service sector
57.28% 25.77%
Figure 3 Total contribution of service industries to India’s GDP (in %), 2008
Banking , 7.48
Real estate and
business, 7.53
Healthcare, 2.09**
Storage , 0.06
Transport , 6.36
Communication , 6.05
Education, 3.78*
Hospitality , 10.24
The scope of this section is to study and explore an in-depth literature review on the
issues related to TQM focusing on the impact of TQM implementation and its
applicability in different service industries.
After reviewing the voluminous literature, it was classified into four categories
depending on the importance, nature of literature available and future requirement for
further improvement. The classification categories so chosen are:
x TQM in healthcare
x TQM in banking
x TQM in hospitality (including hotels and tourism)
x TQM in ICT (including telecommunication services, ITeS and computer software
services).
TQM in service sector: a literature review 273
The reasons for choosing the above mentioned four industries are as follows:
x These industries represent the backbone of the Indian economy They share about
56% (more than half) of the service sector’s GDP at factor cost in the country (i3,
CMIE, 2010). Thus, they play an effective role in the growth and development of
Indian economy as well as in the Indian service sector. Figure 4 depicts the GDP
contribution of these industries in the service sector.
x As per the annual report to the people of employment published by Ministry of
Labour and Employment (MoL&E), Government of India (GOI), July 2010, the
service sector especially ICT, hospitality, healthcare and financial (including banking
services) are highly labour-intensive industries and provides substantial employment
(MoL&E, GOI, 2010). Hence, they have shown their major presence in the Indian
service sector.
x According to the CMIE, the net annual income generated by these industries is
steadily increasing from last five years except during the global economic slowdown
period of 2008–2009, which shows some decline in the net annual income. But in the
coming years, it is predicted that net income of these industries will again rise. This
shows that these industries play a major role in the progress and development of
country.
x In addition, these service industries are large enough to capture and represent almost
all the critical features of customer-perceived quality and the key dimensions of
excellence that management may encounter (Al-Marri et al., 2007; van Dun et al.,
2011; Yusuf et al., 2007).
x Finally, these industries reflect the Indian service sector mainly by its wide
variability of Quality Management (QM)/TQM implementation levels.
Figure 4 Total GDP contribution of four service industries in Indian service sector (in %), 2008
like banks (Al-Marri et al., 2007). Banking in India is fairly mature in terms of supply,
product range and reach – even though reach in rural India still remains a challenge for
the private sector and foreign banks.
Ministry of Finance, GOI has divided Indian banks into three types – public sector
banks, private sector banks and foreign banks (Ministry of Finance, Government of India,
2009). Currently, India has 27 public sector banks (i.e. with the GOI holding a stake), 22
private banks (these do not have government stake, they may be publicly listed and
traded on stock exchanges) and 30 foreign banks (Ministry of Finance, Government of
India, 2009). Beside this, around 100 scheduled commercial banks are also actively
participating and making business in the Indian banking sector. The overall growth of
GDP in banking and financial services as per Central Statistical Organisation (CSO,
2010) and i3, CMIE (2010) is estimated to be 7.09% in 2008, representing an increase
from the level of growth of 6.7% during 2007, indicating a performance and
infrastructure growth of this sector. According to the survey, Indian banks have combined
network of over 55,000 branches and 20,000 ATMs. This predicts that the Indian banks
are in a position to deal with total quality service (TQS) and are at par with other largest
international banks.
Many studies have proved that the performance of banks is significantly and
positively linked with the SQ (Bellou and Andronikidi, 2008; Krishnaveni and Divya,
2006; Ladhari et al., 2011; Longbottom and Hilton, 2011) and to achieve quality in
service, the TQM is highly essential (Al-Marri et al., 2007; Kassem, 1998). The TQM is
discussed and implemented in various dimensions by different researchers. Some of these
studies on TQM in banking industry are presented in Table 8.
Table 8 Research studies on TQM in banking industry as reported in the literature (continued)
Table 8 Research studies on TQM in banking industry as reported in the literature (continued)
Table 8 Research studies on TQM in banking industry as reported in the literature (continued)
In recent years, ICT, ITeS and software have become a critical component in various
service industries such as the telecommunication, banking, education, etc. The quality of
communication, IT and software component is of paramount concern to everyone,
including users and developers. Both practitioners and academicians agree that ICT, ITeS
and software quality improvement techniques lead to a reduction in costs. The need for
TQM in ICT, ITeS and software industry becomes highly relevant (Sparrow et al., 2006;
Wali et al., 2000). The consensus is that there is a greater need to foresee and respond to
the customer needs and to assure quality in communication, IT and software development
industry.
The summarised reported literature on TQM in ICT, ITeS and software industry is
presented in Table 10.
5 Conclusions
This research paper has presented a vast array of literature on TQM and its applicability
in the service sector. This effort is more systematic in explaining various facets of service
components and its classification. Beside this, this paper also contributes to the theory,
definition and benefits of TQM as well as extant literature review of TQM in different
service industries. Based on the review of relevant literature and the findings from the
current literature survey, this study demonstrates that TQM has positive impact on
service organisation performance and has been adopted as a useful approach in a number
of foreign as well as Indian major service industries, such as healthcare, banking,
education, hospitality and ICT, ITeS and software industry. This paper presents some
selected studies on TQM implementation in different service industries. Further, the
outcome of this research suggests that TQM is applicable to the service sector and is
responsible for growth and development of country’s economy. Its implementation is
associated with better business performance and more rigorously it is being implemented,
the better the business performance.
However, the success or failure of TQM in service systems largely depends on the
initiatives and enthusiasm of members constituting the service organisation. The TQM
literature suggested that organisations that want to implement TQM effectively must have
patience, because TQM is a long-term process and requires major changes in cultural
aspects as well as employee mindset in an organisation. Therefore, to make TQM
movement a success, a new initiative has to be generated across the globe and following
initiatives need to be taken:
x identify the key areas of service
x identify the key practices for successful implementation of TQM
x commitment by the top management in implementing TQM for continuous
improvement
x a vision for the change
x customer focus and orientation should always be there
x management structure issue
x human resource focus
x environmental focus
x innovation focus
With such initiatives, TQM can be successfully applied to service industries to achieve
better results. This paper can help managers in better understanding the TQM, service
system concept as well as TQM implementation in service sector. This study also helps in
better understanding the sectoral classification as well as service sector classification in
Indian context as proposed by different organisations and bodies.
290 F. Talib, Z. Rahman and M.N. Qureshi
Acknowledgements
The authors would like to gratefully acknowledge the anonymous referees and the Editor-
In-Chief Prof Angappa ‘Guna’ Gunasekaran for their helpful and invaluable comments
which helped in improving the presentation of this paper considerably.
TQM in service sector: a literature review 291
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