TQM, strategy, and performance: a firm‐level analysis

Outline

• Abstract
• Keywords
• 1. Introduction
• 2. Literature Review and Conceptual Framework
• 3. Hypotheses Development
• 4. Methodology
• 5. Results
• 6. Conclusions

Conclusions

With the globalization trend influencing how organizations set plans and operate to achieve their objectives, this study suggests the importance of incorporating TQM programs into the strategy choice process in order to continuously improve operations, customer relations, and overall performance. The main finding of this study is that TQM is both a driving force to competitive strategy selection and an important dynamic resource that competitive strategies support, allocate, and enhance in order to achieve a sustainable competitive advantage. Accordingly, the two models complement each other, implying that the two roles played by TQM are important for driving organizational performance forward. When viewed in terms of soft and hard, it is found that soft TQM has a higher impact on competitive strategy choice as well as on achieving a better operational performance. This is because soft TQM comprise the major forces of change, innovativeness, and continuous improvement, namely, the tacit knowledge, experience, and problem solving abilities of people – both managers and employees. While interdependence among the TQM practices has been demonstrated in previous research, the role of soft TQM components, including leadership and employee relations, will be amongst the major forces driving organizations to the venues of success.

The significance of this study lies in the contingent approach it followed in the assessment of the role that TQM plays in the strategy choice process: is it a catalyst that shapes the strategy choice process, or is it a resource that needs to be used and supported by the organization’s strategy to achieve competitiveness? The answer given by this study is: TQM is an organizational culture that plays a significant role in shaping the strategic thinking and thus the strategy choice process of an organization (Leonard and McAdam, 2001). At the same time, a competitive strategy of a firm can make use of the practices and principles of TQM to use the capabilities and competences of the human resources, systems, and processes in order to enhance the organization’s performance (Prajogo and Sohal, 2006). In the former role, TQM should be viewed as an organization-wide philosophy that influences organizational operations, core processes, and strategy choice and implementation. However, in the latter role, TQM could be viewed as an important resource that a competitive strategy should support with other resources and capabilities for it to be successful and for the company to reap its benefits. The two roles complement each other to yield high operational performance, and in both, the emphasis is more on the soft TQM part than it is on the hard TQM part.

This study result can be useful to many groups, including TQM researchers, TQM project managers and designers, and organization’s managers. As for TQM researchers, integrating the two roles that TQM plays in an organization in a holistic form that takes into consideration all the possible relationships will be enriching to this research stream. As for TQM designers and practitioners, understanding the links between TQM and the various organization’s strategies and core processes could be mission critical for designing TQM projects that are well aligned to the culture of the organization as well as its strategic management processes. Finally, it is prudent for managers to understand the role that different TQM practices play in affecting the various competitive strategies and their selection processes. This is important if the organization deploying TQM aims at reaping the benefits of this powerful and strategic resource.

Despite the contribution and the significance of this study, it has several limitations. To start with, the respondents were selected using the convenience sampling technique. Although this was deemed necessary due to the nature of data collected, it has its drawbacks regarding the generalizability of the results. Also, the data were collected through self-report questionnaires, which constitute a major limitation to construct validity (Avolio et al., 1991). The questionnaires ask for information to be reported by executives about their companies. Moreover, the relationship between TQM, strategy, and performance can change and evolve over time, especially that the setting is a dynamic one involving a vast array of behavioral, organizational, and environmental factors that might all influence this relationship. However, the fact that the data we gathered from multinational organizations spread over several geographical locations may mitigate the impact of this limitation. Moreover, the study did not account for certain behavioral factors – related to employees’ and managers’ characteristics, attitudes, and experience levels – as well as organizational factors – such as structure, size, and business nature (Sila, 2007) – that play a moderating role in the relationships highlighted in this study. Finally, the use of perceptual data related to performance may have a bias effect on the study results. Nevertheless, Choi and Eboch (1998) argue that the use of perceptual performance measure, such as customer satisfaction, could also be useful.

In light of these limitations, future research is recommended to use mixed methods research in order to validate the results of this research, and apply a longitudinal study to better capture the relationships between TQM, strategy, and performance. Conducting a replication study with random sample selection can enhance the methodological rigor of the study and increase the possibility of having a better and a supported external validity. Also, another possible source of data could be the customers whose opinions, along with those of executives, can give a better insight of the TQM-strategy-performance relationship. Furthermore, taking into consideration certain factors that may have a moderating role in these relationships, such as the country culture, could enrich the research results. In addition, the interaction effect of both differentiation and cost leadership strategies should be considered as it may result in better competitive advantage and performance. Moreover, a combination of indicators related to organizational performance, as used by Rahman and Bullock (2005), may overcome the limitation of using one kind of performance measure. Finally, a replication of this study with the relationship between soft TQM and hard TQM taken into consideration will also be useful.

In conclusion, contemporary business challenges cannot be underestimated. It is through a proper strategy choice process that well incorporates TQM, and more specifically the soft elements of TQM, that organizations can attain and maintain continuous improvement as well as high performance levels. In fact, TQM is a major source of competitive advantage, whether it is viewed as a catalyst or a strategic resource; its impact on the organization’s core processes, competitive strategy choice, and overall performance cannot be underestimated. However, just like any important and major endeavor in organizations, its success critically depends on the tacitness of those involved – managers and employees – that would facilitate a better deployment of the TQM tools and techniques to attain a sustainable competitive advantage for the firm. It is through this capability that TQM – both soft and hard, can become a way of life in organizations and make a difference in their performance.