Industrial Management & Data Systems

Revisiting quality management and performance

Tritos Laosirihongthong Pei-Lee Teh Dotun Adebanjo

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IMDS
113,7

Revisiting quality management

and performance
Tritos Laosirihongthong
Industrial Engineering Department, Faculty of Engineering,
Thammasat University, Pathumthani, Thailand

990
Received 2 February 2013
Revised 29 March 2013
Accepted 31 March 2013

Pei-Lee Teh
School of Business, Monash University, Selangor Darul Ehsan,
Malaysia, and

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Dotun Adebanjo
Business School, University of Greenwich, London, UK
Abstract
Purpose The purpose of this study is to examine the relationship between quality management
practices as well as their impact on organisational performance in the ASEAN regional context.
Design/methodology/approach A sample of 115 data collected from automotive
parts/components manufacturing companies in five ASEAN countries (Indonesia, Malaysia,
Philippines, Thailand, and Vietnam) was used to test the proposed research hypotheses. A two-step
modelling approach was employed to model the data by using structural equation modelling (SEM).
Findings Leadership of the organisations tend to focus on their external (customers and suppliers)
rather than internal (employees) partners. The result of this study also suggests that tier 1 suppliers of
the automotive industry in ASEAN considered quality information and supplier relationship instead
of people management, as the drivers of process management.
Research limitations/implications The study was limited to a single industry. The study did
not consider some aspects culture in its investigation.
Practical implications The results of this study clarify differences in how quality is managed in
an emerging region when compared to previous studies in developed countries.
Originality/value This study is the first attempt to explore quality management implementation
in a specific sector in the ASEAN region.
Keywords Quality management, Performance, ASEAN, Automotive industry
Paper type Research paper

Introduction
In an environment of intense global competition, total quality management (TQM) has
come to be recognised as a major business driver to improve quality performance and
provide customers with high quality products and services (Cai, 2009; Corbett et al.,
1998; Vecchi and Brennan, 2011). From a practical point of view, first, superior quality
in products or services has become an order-qualifier rather than an order-winner
(Curkovic et al., 2000; Forker et al., 1996). Although this concept has been adopted in
many industries across the globe, many problems persist. The automotive industry, for
Industrial Management & Data
Systems
Vol. 113 No. 7, 2013
pp. 990-1006
q Emerald Group Publishing Limited
0263-5577
DOI 10.1108/IMDS-02-2013-0058

This work was supported by the Higher Education Research Promotion and National Research
University Project of Thailand, Office of Higher Education Commission and Thammasat
University. The authors also would like to thank the ASEAN Secretariat in facilitating the data
collection.

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example, has been faced with vehicle recall problems. Perhaps, the most notable of this
was worldwide recall of more than 8 million cars for various quality problems by
Toyota between 2009 and 2010 (Taylor, 2012). The quality problems and the subsequent
recalls led to financial losses for Toyota and its dealers, lawsuits, and negative publicity.
There have also been worldwide recalls by other manufacturers such as BMW and
Honda (BBC News, 2011; Reuters, 2012a). The indication is that there are clearly still
significant quality problems with hard hitting impacts affecting the automobile industry.
Hence, it is important to revisit the study on management of quality especially in a
specific industry.
The context of this study is Southeast Asia, a region with a significant presence in the
automotive industry and equally significant growth plans. In Thailand, for example,
where global the top ten automotive manufacturers have established manufacturing
facilities, production volume is planned to rise from a forecasted 2 million units in 2012 to
a targeted volume of 3 million units by 2015 (Viboonchart, 2012). Similarly, in Indonesia,
Honda plans to spend US$337 million to boost production capacity to 180,000 per annum
by 2014 while Nissan would be investing US$400 to double production by 2014 (Bangkok
Post, 2012; Reuters, 2012b). With such significant operations and plans, it would be vital
for the Southeast Asia automotive sector to achieve and maintain a high level of quality
for the sector to be competitive and to avoid damaging problems associated poor quality
of parts and components leading to product recalls. Furthermore, there are plans to form
the ASEAN economic community in 2015 to facilitate free movement of people and
goods, and encourage more foreign direct investment in focal industries such as the
automotive and electronics industries. This study, therefore, provides useful insight into
quality management implementation in the automotive sector in this region.
From an academic perspective, although Sousa and Voss (2002) suggested that
many organisations have been successful in embedding TQM practices as part of their
day-to-day operations, a later multinational study by Adebanjo et al. (2010) found that
only 41 per cent of 453 companies surveyed had TQM programmes. The study
suggested that the automotive sectors in developed and developing countries are at
different stages of quality development. It has also been suggested that TQM studies in
Southeast Asia are not only under-researched but that TQM culture in the region can
be difficult (Zakuan et al., 2010). Hence, there is a need to better understand quality
management practices and levels of performance in developing economies and
particularly in sectors with important export profiles for products.
The purpose of this study is to examine the relationship between quality management
practices as well as their impact on organisational performance in the ASEAN regional
context. The impact of these practices on organisational performance was also
investigated. In the next section, the extant literature is reviewed leading to the
development of research hypotheses. Thereafter, the research methodology is described
and followed by the study findings, discussion and conclusions, and limitations.
Literature review and hypotheses development
TQM practices have been classified as hard and soft in orientation (Vecchi and
Brennan, 2011). Soft TQM refers to the social and/or people-based issues that relate to
the management of quality while hard TQM refers to the more technical and
methodological aspects of the management of quality (Rahman et al., 2005). This study
adopted the descriptions preferred by Sousa and Voss (2002), which referred to soft

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TQM as organisational infrastructure and hard TQM as core TQM practices. Sila and
Ebrahimpour (2003) found that the most commonly mentioned TQM factors included
leadership, customer focus, information and analysis, training, supplier management,
employee involvement, strategic planning, human resource management (HRM),
process management, teamwork, product and service design, benchmarking, process
control, benchmarking, continuous improvement, employee empowerment, and quality
assurance. According to Prajogo and McDermott (2005), TQM practices include
leadership, strategic planning, customer focus, information and analysis, people
management and process management. Similarly, Das et al. (2011) identified TQM
practices to include those organisational infrastructures such as top management
commitment, supplier quality management, and employee involvement.
With respect to organisational performance related to quality, Corbett et al. (1998)
used three variables actual quality performance, operating performance and financial
performance in their study of TQM practices in Asia and the South Pacific while Cai
(2009) used production performance and financial performance. The importance of
aligning TQM strategy with performance management was discussed in the study by
Soltani et al. (2005b).
By excluding the Six-Sigma dimension, which was considered as a breakthrough
improvement tool rather than organisational management infrastructure, the following
seven TQM practices proposed by Zu et al. (2008) were used in this study. They are
leadership, customer focus, supplier relationship, people management, information and
analysis, research development, and process management. An eighth practice
strategy and planning process was added to ensure that all aspects of TQM practice
as organisational infrastructure were considered. With respect to organisational
performance, the study adopted two constructs product quality and financial
performance based on studies by Cai (2009) and Zu et al. (2008). The modified model
used in this study is shown in Figure 1.

H5

Information and
Analysis

H12

H11
H10
Customer Focus
H1

Research
Development
H6

H2

Supplier
Relationship

H8
H7

Leadership
H3

People
Management

H13
Process
Management

H9

Strategy and
Planning Process
Top Management
Support

Traditional Quality
Management Infrastructure

Product Quality

H15
H16
Financial
Performance

H4

Figure 1.
Conceptual model

H14

Outcomes
Traditional Quality Management Core

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The relationship between TQM practices

The successful adoption of TQM within an organisation is related to senior management
ability and performance and TQM companies were more likely to have better leadership
when compared to non-TQM companies (Adebanjo and Kehoe, 1999). It has been
suggested that organisations with high leadership competencies are better at
implementing TQM and these organisations also produce products of a higher
quality (Das et al., 2011; Laohavichien et al., 2011). Conversely, poor commitment from
leaders may be partly responsible for TQM failures with key leadership failure reasons
identified to include lack of knowledge of TQM and risk avoidance (Soltani et al., 2005a;
Yadav and Goel, 2008). A survey of 800 managers in the UK conducting by
Wilkinson et al. (1994) found that senior executives were criticised for failure to show
personal commitment to TQM, scepticism, lack of enthusiasm, short-termism with
respect to TQM and failure to provide adequate resources. Leadership, therefore, is not
only important for quality development but lack of leadership can directly contribute to
problems with TQM. Waller and Ahire (1996) asserted that leaders are central in
deciding the direction and seriousness of TQM implementation and that commitment
from leaders must be a critical factor of TQM implementation. In a recent study,
conducted by Perez-Arostegui et al. (2012) concluded that leaders can facilitate staff
members to achieve an expected level of customer satisfaction.
Customer focus has been described as the focal point TQM and it is vital that
leaders encourage the understanding of customer needs, build relationships with
customers and fulfil their demands (Cai, 2009). The importance of the relationship
between leadership and supplier relationship was highlighted by Anand (1996) who
suggested that leaders need to be involved in developing their suppliers in addition to
defining a supplier quality policy. Wong (2002) suggested that establishing close
supplier relationships can enable an organisation improve customer satisfaction. That
study also recommended leaders to develop common goals with their suppliers.
Leaders are therefore important in organisation interaction and impact with external
partners and this study proposes the following hypotheses:
H1.

Leadership is positively related to customer focus.

H2.

Leadership is positively related to supplier relationship.

The role of leaders is also critical from an internal perspective. According to Dwyer
(2002), TQM efforts fail due to poor management of people aspects through, for
example, lack of teamwork, poor motivation or low levels of employee involvement.
The role of leaders in the implementation of TQM includes gaining the trust of
employees, fostering internal communication and participating in problem solving
(Ooi et al., 2013). Consequently, the actions of leaders can engineer changes in attitudes
of employees and the support and resources provided by leaders will enable better
teamwork (Yeung et al., 2005). Leaders are also responsible for managing strategy and
the transformation of strategy to action (Das et al., 2011). According to Porter and
Parker (1993), only organisations with the appropriate management behaviours can
develop effective strategy. As a result, with respect to the influence of leadership on
internal activities, the following hypotheses are proposed:
H3.

Leadership is positively related to people management.

H4.

Leadership is positively related to strategy and planning process.

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and performance
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Cai (2009) noted that customer focus is important for TQM success. Organisations are
required to foster a culture to look for ways to serve customer needs and expectations
(Simon and Yaya, 2012). This implies a need for market intelligence and close
relationships, dialogue and feedback from customers (Ahire et al., 1996). It is important
to note that closing links with customers was also seen to be important to increase the
information sharing relating to quality (Forza and Filippini, 1998). Information and
analysis was described by Ooi et al. (2013) as a TQM practice that can underpin better
performance. Therefore, the study proposes:

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H 5.

Customer focus is positively related to information and analysis.

Suppliers are key players in TQM and can influence different aspects of quality
(Forza and Filippini, 1998). McGinnis and Vallopra (1999) provided a strong case for the
involvement of suppliers in the design and development of new products. According to
Prajogo et al. (2008), suppliers play an important role in innovation performance
including product development. Tan et al. (1998) argued that process management is
unlikely to succeed if suppliers do not provide materials that meet or exceed expectations.
It is important to note that supplier relationships/integration affect process effectiveness
and efficiency as well as organisational innovation (Perona and Saccani, 2004).
Consequently, the study proposes:
H 6.

Supplier relationship is positively related to research development.

H 7.

Supplier relationship is positively related to process management.

Godfrey et al. (1997) revealed that the implementation of TQM needs employees
participation in waste elimination by using various improvement tools. Employees are
major drivers of improvements through participation in activities such as process
improvement teams (Hendricks and Singhal, 2001; Evans and Lindsay, 2011). The
implication is that employees can positively or negatively impact process management. It
is important to note that a critical aspect of TQM implementation is the alignment of
human resources management strategies with process-based activities. Therefore, the
following hypotheses are proposed:
H 8.

People management is positively related to research development.

H 9.

People management is positively related to process management.

Hendricks and Singhal (2001) described the potential benefits of information and
knowledge transfer between operating units as increases in process and product
quality. The ability to collect, analyse, and utilise information can have profound
impacts on performance. An ability to analyse information was noted to be central to
the use of several process management tools, products and process design techniques
(Kehoe, 1996). This information includes process performance data, customer
requirements, employee satisfaction, and supplier performance index (Prajogo et al.,
2008; Zu et al., 2008). The ability of suppliers to provide the right materials and be
involved in product design is dependent on getting timely and accurate information
(McGinnis and Vallopra, 1999). Therefore, information gathering, analysis and sharing
can be considered as a TQM practice that can impact the success of other practices and
it is hypothesised that:

H10. Information and analysis is positively related to supplier relationship.

H11. Information and analysis is positively related to process management.
H12. Information and analysis is positively related to research development.
Several design-related techniques are focused on designing products and processes
that are efficient and reliable and minimise the risk of product and process variability
(Evans and Lindsay, 2011; Kehoe, 1996; Zu et al., 2008). The premise is that a good
research-based design will result in products that are more robust, easier to produce,
and that will enable more efficient identification and resolution of problems that arise.
Therefore, it is hypothesised that:

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H13. Research developmentis positively related to process management.

H14. Research development is positively related to product quality.
Organisational performance
A number of studies suggested that there is a link between product quality and process
quality (Curkovic et al., 2000; Saad and Siha, 2000). Efficient and effective processes
can enhance product quality by maintaining process stability and reducing process
variation. Forker et al. (1996) indicated that product quality (conformance to
specifications) is significantly related to a growth in return on investment (ROI) and
growth in sales. Furthermore, a study conducted by Dick et al. (2008) noted that an
increase in product quality can be associated with elimination of waste, cost reduction,
and improved financial performance. Hence, it is hypothesised that:
H15. Process management is positively related to product quality.
H16. Product quality is positively related to financial performance.
Research methodology
Survey instrument development and data collection
In this study, the survey instrument was adapted from past literature. Scale
measurements and sources are listed in Table I. During the pre-test analysis, the original
scales were re-validated and modified by two academics and four practitioners from the
ASEAN automotive industry. Some of the original questions were removed because they
were not relevant in this research focus due to cultural differences and the level of
manufacturing maturity. In addition, the original measure was designed for multiple
industries survey in developed nations, whereas this study targeted specifically the
ASEAN automotive industry, which is a leading sector in this region. After pre-testing
the survey instrument with 15 experts (including four TS-16949 assessors, five quality
management representatives of automotive manufacturing companies, and six
academics with specialism in the field), data was collected from automotive original
equipment manufacturer (OEM) suppliers in five ASEAN countries including Indonesia,
Malaysia, Philippines, Vietnam, and Thailand. The automotive industry in this region is
heterogeneous in terms of subsectors and product and/or process complexity. However,
recent studies have shown that the ASEAN automotive industry and its associated
component manufacturing sector are relatively advanced in their implementation of
operations strategy including TQM (Laosirihongthong and Dangayach, 2005;

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Table I.
Measurement items
and sources

Leadership (adapted from 1. Senior executives share similar beliefs about the future direction of this
Rahman et al. (2005))
organisation
2. Senior managers actively encourage change and implement a culture of
improvement, learning, and innovation in moving towards excellence
3. Employees have the opportunity to share in and are encouraged to help
the organisation implement change
4. There is a high degree of unity of purpose throughout our company, and
we have eliminated barriers between individuals and/or departments
Customer focus (adapted 1. We actively and regularly seek customer inputs to identify their needs
and expectations
from Sila and
Ebrahimpour (2005))
2. Customer needs and expectations are effectively disseminated and
understood throughout the workforce
3. We always maintain a close relationship with our customers and
provide them an easy channel for communicating with us
4. We have an effective process for resolving customers complaints
5. We systematically and regularly measure external customer satisfaction
1. We strive to establish long-term relationships with suppliers
Supplier relationship
(adapted from Forza and 2. We use a supplier rating system to select our suppliers and monitor their
Filippini (1998) and
performance
Sousa and Voss (2002))
3. Suppliers are actively involved in our new product, component, module
and system development process
People management
1. We have an organisation-wide training and development process,
(adapted from Sousa and
including career path planning, for all our employees
Voss (2002))
2. Our company has maintained both top-down and bottom-up
communication processes
3. Employee satisfaction is formally and regularly measured
4. Employee flexibility, multi-skilling and training are actively used to
support performance improvement
5. We always maintain a work environment that contributes to the health,
safety and well-being of all employees
1. We have a mission statement which has been communicated throughout
Strategy and planning
the company and is supported by our employees
process (adapted from
Sousa and Voss (2002)
2. We have a comprehensive and structured planning process which
and Prajogo and Sohal
regularly sets and reviews short and long-term goals
(2006))
3. When we develop our plans, policies and objectives we always
incorporate customer requirements, supplier capabilities, and needs of
other stakeholders, including the community
4. We have a written statement of strategy covering all business operations
which is clearly articulated and agreed by our senior manager
Information and analysis 1. Our company has an effective performance measurement system that
incorporates a number of measures and indicators to track overall
(adapted from Yeung et al.
organisational performance
(2005) and Prajogo and
Sohal (2006))
2. Up-to-date data and information of companys performance is always
readily available for those who need it
3. Senior management regularly have a meeting to review companys
performance and use it as a basis for decision-making
4. We are engaged in an active competitive benchmarking program to
measure our performance against the best practice in the industry
Research development
1. We have excellent communication processes between R&D and other
(adapted from Prajogo
departments
and Sohal (2006))
2. Our R&D pursues truly innovative and leading-edge research
(continued)

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3. Our R&D strategy is mainly characterized by high risk projects with

chance of high return
4. R&D plays a major part in our business strategy
Process management
1. The concept of the internal customer (i.e. the next process down the
(adapted from Yeung et al.
line) is well understood in our company
(2005))
2. We designed the ISO9001 or ISO/TS16949 QMS around its business
processes
3. We have clear, standardized and documented process instructions which
are well understood by our employees
4. We make an extensive use of statistical techniques (e.g. SPC) to improve
the processes and to reduce variation
Product quality (adapted Relative to the major competitors in our industry
from Prajogo and Sohal 1. The performance of our products is [. . .]
(2006))
2. The conformance to specifications of our products is [. . .]
3. The reliability of our products is [. . .]
4. The durability of our products is [. . .]
Financial performance
1. Our sales growth is [. . .]
(adapted from Prajogo
2. Our market growth is [. . .]
and Sohal (2006))
3. Our market share is [. . .]
4. Our profitability is [. . .]

Prajogo et al., 2007). As part of an initiative known as the proposed ASEAN policy
blueprint for SME development 2004-2014 to improve the competitiveness of automotive
manufacturers and assemblers in the region, the ASEAN secretariat invited senior
operations managers in the automotive industry to attend a series of one-day executive
workshops in the five countries. A five-point Likert scale survey questionnaire was
administered to participants at the workshops (1 strongly disagree and 5 strongly
agree for TQM construct while 1 worse than competitor in industry and 5 better
than competitor in industry). This scale was chosen because literature on the subject
suggests that five and seven points are the optimum and most commonly used range
(Malhotra and Peterson, 2006). Also, the study by Dawes (2008) found that the five- and
seven-point scales produced the same mean score as each other, once they were rescaled.
A total of 165 usable surveys were completed and returned. After cleaning the collected
data, 115 samples were usable indicating a net response rate of 70 per cent. The sample
size of 115 is adequate to be analysed in this study. First, this study employed the
maximum likelihood estimation (MLE). MLE is the most appropriate estimation
technique in this study because it is scale free (Kline, 2005), and it has desirable
asymptotic properties such as minimum variance (Schumacker and Lomax, 2004). As
indicating in Hair et al. (2010, p. 661), MLE generates valid and stable results with sample
sizes as small as 50. In a related vein, other simulation studies such as Gerbing and
Anderson (1985) have validated the appropriateness of MLE used with small samples
within structural equation modelling (SEM) analysis. Given that this study used MLE,
the SEM results analysed using 115 samples are reliable. Second, in a publication of
educational and psychological measurement, Kunce et al. (1975) posited that sample size
shall be at least ten times the number of variables in multivariate research. Given that
our research model contains ten measured variables, the sample size of 115 is acceptable.
Furthermore, it has been noted that if the sample size is too large, researchers are prone
to commit Type II error (Sekaran and Bougie, 2010).

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Table I.

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The study employed a widely used technique to investigate for non-response bias in
the survey data (Lambert and Harrington, 1990). Independent samples t-tests
did not yield any statistically significant difference between the early and late
groups of returned surveys, suggesting that non-response bias was not an issue in this
study.
The breakdown of ASEAN countries involved in this study is as follows: Vietnam
(28.7 per cent), Thailand (27.8 per cent), Philippines (22.6 per cent), Malaysia
(14.8 per cent), and Indonesia (6.1 per cent). The respondents were quality management
managers and executives from automotive OEM organisations that had received quality
systems certification such as ISO 9000/TS 16949 and ISO 14001.

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Content and constructs validity

Table II shows the reliability and validity analysis. The coefficients of Cronbachs a
were higher than 0.70, meeting the desirable value recommended by Nunnally
and Bernstein (1994). In addition, the analysis calculated composite reliability and
according to Bagozzi and Yi (1988), a composite reliability of 0.60 or above is
deemed acceptable in assessing the reliability of scales. For this study, all scales were
reliable as the Cronbachs a values were in a range of 0.795-0.931, and composite
reliability values were between 0.876 and 0.951. Convergent validity is established
when a measure of a variable produces AVE of 0.50 or higher (Fornell and Larcker,
1981). As showed in Table II, the average variance extracted (AVE) coefficients of all
constructs were in a range of 0.638-0.831, providing strong evidence of convergent
validity. Discriminant validity is assumed when the average variance shared between
a scale and its measures are greater than the variance shared between the constructs
and other constructs in the model (Fornell and Larcker, 1981). The values of square
roots of AVE were higher than the off-diagonal measures of the construct pairs,
indicating that discriminant validity was verified (Table III).
To address the problem of common method variance (CMV), Harmons single factor
test was performed. This analysis was proposed by Podsakoff et al. (2003) and it has
been used in recent studies (Prajogo et al., 2008). The results showed that the largest
factor accounted for 45.40 per cent of the total variance, suggesting that no single or
general factor emerged as a dominant factor. As a result, the problem of CMV was not
significant in this study.

Scales

Table II.
Reliability and
validity analyses

Leadership (LD)
Customer focus (CF)
Supplier relationship (SR)
People management (PM)
Strategy and planning process (SP)
Information and analysis (IA)
Research development (RD)
Process management (RM)
Product quality (PQ)
Financial performance (FP)

No. of
items

Cronbachs
a

Composite
reliability

Average variance
extracted

4
5
3
5
4
4
4
4
4
4

0.868
0.868
0.795
0.899
0.874
0.815
0.891
0.808
0.914
0.931

0.910
0.906
0.880
0.927
0.914
0.878
0.926
0.876
0.940
0.951

0.717
0.658
0.710
0.718
0.726
0.644
0.757
0.638
0.796
0.831

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LD
CF
SR
PM
SP
IA
RD
RM
PQ
FP

LD

CF

SR

PM

SP

IA

0.847
0.701
0.749
0.710
0.754
0.719
0.513
0.651
0.444
0.458

0.811
0.715
0.717
0.774
0.740
0.581
0.664
0.474
0.329

0.843
0.709
0.734
0.743
0.565
0.653
0.521
0.488

0.847
0.766
0.756
0.558
0.658
0.480
0.395

0.852
0.795
0.501
0.706
0.500
0.368

0.802
0.523
0.751
0.482
0.389

RD

RM

PQ

FP

Quality
management
and performance
999

0.870
0.572
0.439
0.380

0.799
0.419
0.296

0.892
0.439

0.912

Notes: All correlations are significant at: 0.01 level (two-tailed); the italic values in the diagonal row
are square roots of the AVE

Table III.
Correlation analyses

Research findings: the structural equation modelling

The re-visited model was tested using SEM. This method can be assessed statistically
and simultaneously (Hair et al., 2010). A two-step modelling approach suggested by
Anderson and Gerbing (1988) was used to model the data. The model fit statistics yield
a good fit to data: NC 0.878, GFI 0.827, AGFI 0.774, RMSEA 0.000,
NFI 0.870, CFI 1.000, and TLI 1.027. These values were within the threshold
limits suggested in the SEM literature (Hair et al., 2010; Shimizutani et al., 2008).
Although AGFI was slightly below 0.80, the TLI was greater than 0.95, indicating
strong evidence of a good-fitting model (Figure 2).

Information and
Analysis

H12: 0.116

H5: 0.214
H10: 0.209

H11: 0.578**

Customer Focus

H1:
0.872***

H6: 0.475**
H2: 1.077***

H8: 0.634*
Supplier
Relationship
H7: 0.321**

Leadership
H3: 8.708

Research
Development
H13: 0.100*

Process
Management

H14: 0.091

Product Quality

H15: 0.515***

H9: 0.156

H16: 0.348**

People
Management

Financial
Performance

H4: 0.636*
Strategy and
Planning Process
Top Management
Support

Traditional Quality
Management Infrastructure

Outcomes

Traditional Quality Management Core

Note: Numbers are path coefficients and their significance levels are denoted as:
*p < 0.10, **p < 0.05, ***p < 0.01 and ****p < 0.001

Figure 2.
Results of research model

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Table IV.
SEM results

As shown in Table IV, the findings indicate that leadership is positively related to
customer focus (b 0.872, p , 0.001) and supplier relationship (b 1.077, p , 0.001)
and so H1 and H2 were supported. However, leadership is not positively related to people
management (b 8.708, p , 0.10) or strategy and planning process (b 20.636,
p , 0.10) and is in fact, negatively related to strategy and planning process. The
implication is that leaders are more engaged with external issues (customers and suppliers)
and focus less on internal issues (people management, and strategy and planning process).
For H5, the result does not indicate a relationship between these two. H6 and H7
predicted that supplier relationship would be positively related to two internal
constructs research development and process management (b 0.475, p , 0.05 for
H6 and b 0.321, p , 0.01 for H7). H8 and H9 predicted that people management would
positively relate to research development and process management. Table IV shows the
relationship between people management and research development is significant at the
0.10 level (b 0.634, p , 0.10) and so H8 is supported while H9 is not supported.
The findings show that there is indeed a positive relationship between information and
analysis and process management (b 0.578, p , 0.05) and this confirms H11. However,
there was no positive relationship indicated between information and analysis and the other
two constructs, supplier relationship (b 0.209, p 0.317) and research development
(b 20.116, p 0.781) and therefore H10 and H12 are not supported by the data.
H13 and H14 predicted that research development would be positively related to
process management and product quality but the data only found relatively weak
(significant at 0.10 level) positive relationship between research development and
process management (b 0.100, p , 0.10) and so H13 is supported. However, a positive
relationship could not be established between research development and product quality
and H14 is not supported. H15 predicted a positive relationship between process
management and product quality while H16 predicted a positive relationship between
product quality and financial performance. In line with these predictions, the data
confirmed both relationships and supported H15 and H16.
Hypotheses

causal path

Estimates

SE

Critical ratios

p-value

H1
H2
H3
H4
H5
H6
H7
H8
H9
H10
H11
H12
H13
H14
H15
H16

LD ! CF
LD ! SR
LD ! PM
LD ! SP
CF ! IA
SR ! RD
SR ! RM
PM ! RD
PM ! RM
IA ! SR
IA ! RM
IA ! RD
RD ! RM
RD ! PQ
RM ! PQ
PQ ! FP

0.872
1.077
8.708
2 0.636
2 0.214
0.475
0.321
0.634
2 0.156
0.209
0.578
2 0.116
0.100
0.091
0.515
0.348

0.134
0.252
8.896
0.367
0.207
0.236
0.135
0.328
0.206
0.209
0.273
0.417
0.056
0.076
0.132
0.113

6.512
4.271
0.979
21.732
21.035
2.013
2.380
1.931
20.756
1.000
2.119
20.278
1.788
1.193
3.891
3.094

0.000 * * * *
0.000 * * * *
0.328
0.083 *
0.301
0.044 * *
0.017 * * *
0.054 *
0.450
0.317
0.034 * *
0.781
0.074 *
0.233
0.000 * * * *
0.002 * * *

Note: Significant at: *p , 0.10, * *p , 0.05, * * *p , 0.01 and * * * *p , 0.001

Remarks
Supported
Supported
Not supported
Supported
Not supported
Supported
Supported
Supported
Not supported
Not supported
Supported
Not supported
Supported
Not supported
Supported
Supported

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Discussion and managerial implications

Discussion
Several issues could be discussed in the context of ASEAN automotive industry. First,
the result shows that leadership of the organisations are focused primarily on their
external supply chain partners (customers and suppliers) and not on internal issues
(employees, and strategy and planning process). This finding is different from previous
study in USA (Zu et al., 2008), which found a strong positive relationship between top
management support and workforce management. The authors suggest that this lack
of focus on employee involvement is partly responsible for the relatively low levels
indicated for people management. The result also argues that leadership actions, in
some instances, conflicts with the strategy and planning process. The authors,
therefore, suggest that the expected role of leadership in the ASEAN automotive sector
in line with accepted quality management norms has only been partly established.
Second, the result showed that there was no direct positive relationship between
people management and process management. Furthermore, the concepts of the
internal customer as well as employee involvement in process improvement techniques
are relatively low. Therefore, it is suggested that people management and involvement
in process management in ASEAN automotive supply chain is lagging. Process
management is positively related to supplier relationship and information and
analysis. There is also a weaker positive relationship between research development
and people management. These findings are in conjunction with the earlier discussion
on leadership showing that senior management prefers to drive process improvement
by focusing on supplier performance rather than employee involvement. The
exploitation of information in process management is also important in driving the
strong positive relationship between process management and product quality.
Third, the role and importance of timely and accurate quality information has been well
established in TQM literature (Forza and Filippini, 1998; Sila and Ebrahimpour, 2005).
Quality information plays an important role in supplier relationship, product design, and
process management. The study by Zu et al. (2008) found positive relationships between
quality information and customer relationship and supplier relationship but this study
found no such relationship (H5 and H6). This study also did not find a positive relationship
between information and analysis and research development (H12) but found a positive
relationship between information and analysis and process management (H11). Therefore,
it is suggested that automotive manufacturers in ASEAN view the quality information
primarily as a driver of process management but not customer focus or people
management. Presumably, the strong focus on these two issues by the organisations
leader means that the potential role of structured information and analysis in managing
these two sets of relationships is superseded.
The study also found a positive relationship between product quality and financial
performance. This concurs with the findings of previous studies (Dick et al., 2008;
Forker et al., 1996). However, the financial performance outcomes lag the product
quality outcomes and suggest that although relative high levels of quality are being
achieved, this achievement comes at a cost of process management.
Managerial implications
The automotive industry is considered to be a flagship industry in the ASEAN region.
It is a major employer of labour and a key export sector. The authors believe that the

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senior executives in ASEAN automotive manufacturers are fully aware of the

importance of product quality and satisfying customers. It would appear that, based on
the studys findings, they have, so far been able to deliver products of relatively high
quality. However, as recent high profile quality problems in the automotive sector
have shown, the management of quality is not ever fully achieved. Furthermore,
the significant planned increases in production by ASEAN OEMs will place very
significant demands on their supply chain. It is reasonable, therefore, to recommend to
senior executives in these supply chain organisations to improve their focus on internal
issues and in particular, people management. Encouraging their employees to take
more ownership of process management and involvement in the use of statistical tools
would reduce process variation and waste, and further improve product quality and,
ultimately, financial performance.
The authors would recommend a review and redirection of the way in which
information and analysis is deployed. In particular, the use of information relating to
customers and suppliers requires attention. If OEM production volume increase as
planned, then the need for accurate information throughout the supply chain becomes
more crucial to reduce the risk of quality problems or disruptions to production.
Ultimately, this will be beneficial to all organisations in the supply chain. With the
proposed formation of the ASEAN Economic community in 2015, investment in the
ASEAN region and in the automotive industry, in particular, is expected to increase as
the region plans to increase its competitiveness on the world stage. If the automotive
supply chain manufacturers in this region are to remain successful and indeed expand
their business, the need and ability to deliver high quality products within the context
of increasing volume and an efficient cost base would be paramount and all aspects of
established TQM practice would need to be fully deployed and integrated.
Conclusions and limitations
The findings of this study contributes to clarifying differences in how quality is managed
in this industry when compared to established quality management literature and quality
management practices in western countries. Key practices such as senior executive focus
on people management were found to be lacking. This, in turn, may have partly accounted
for the inability of employees to be fully involved in process management. These two
issues leadership and people management are important soft issues at the core of
quality management and are meaningful development mandates and they should be fully
developed and deployed. The study also found that the use of information is not fully
exploited by the automotive supply chain manufacturers in the ASEAN region. In an age
where supply chain information between suppliers and customers is seen as important to
business success, this study shows that quality-related information in the ASEAN
automotive supply chain requires better development and exploitation. The study also
found that, irrespective of these shortcomings, products of relatively high quality are
being produced by the manufacturers and the challenge is to build on this base to become
world-class manufacturers.
However, the study is based on a single industry in the ASEAN region. Future
studies could examine the implementation of quality management in other major
industries and, in particular, the cultural issues identified in this study. If these cultural
issues are present in other industries, it will indicate a need to re-examine regional
cultures and impact on delivery of quality in an increasingly competitive world.

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About the authors
Tritos Laosirihongthong is an Associate Professor at Thammasat University, Thailand. His
research interests are in supply chain management and manufacturing operations management.
He works actively with a range of organisations in Thailand, Vietnam, and Australia. During
2007-2008, he was appointed by ASEAN Secretariat as the ASEAN Automotive Technical
Specialist for the AusAID ASEAN SME Automotive project. Dr Laosirihongthong has published
his research in several journals. He was the Program Chair of IEEE ICMIT 2008, IEEE ICQR
2011, APDSI 2012, respectively. Tritos Laosirihongthong is the corresponding author and can be
contacted at: ltritos@engr.tu.ac.th
Pei-Lee Teh is currently a Senior Lecturer at the School of Business, Monash University,
Malaysia. Her teaching and research interests cover total quality management, technology
management, management information systems, knowledge management, innovation and
learning. She has authored or co-authored several papers published in refereed journals such as
Journal of Business Economics and Management, Asia Pacific Journal of Management, Total
Quality Management & Business Excellence, Industrial Management & Data Systems, and
Journal of Computer Information Systems.
Dotun Adebanjo is a Professor in Supply Chain Management at Business School, The
University of Greenwich, London, UK. He previously spent several years at Leatherhead Food
International as a researcher, consultant and trainer to the food industry. His research interests
are in supply chain management, quality management and the application of new and emerging
technology to the delivery of efficient inter-organisational relationships. He has written a book on
customer satisfaction and has published his research in several journals and also presented his
research at leading international conferences.

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