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Quality
management
practices
Lassaad Lakhal
Faculte de Droit et des Sciences Economiques et Politiques de Sousse-Tunisia,
Sousse, Tunisia
Federico Pasin
Downloaded by Universiti Teknologi MARA At 11:25 16 September 2016 (PT)
625
Received September 2004
Revised April 2005
Mohamed Limam
ISG Tunis, Tunisia
Abstract
Purpose This paper aims to explore the relationship between quality management practices and
their impact on performance.
Design/methodology/approach First, critical quality management practices are identified and
classified in three main categories: management, infrastructure, and core practices. Then, a model
linking these practices and performance is proposed and empirically tested. The empirical data were
obtained from a survey of 133 Tunisian companies from the plastic transforming sector.
Findings The results reveal a positive relationship between quality management practices and
organizational performance. Moreover, the findings show a significant relationship between
management and infrastructure practices. In addition, the results illustrate a direct effect of
infrastructure practices on operational performance and of core practices on product quality.
Research limitations/implications The conceptual model proposed and tested in this study can
be used by researchers for developing quality management theory. In addition, this model may offer a
flow chart to practitioners for effective quality management implementation.
Originality/value The proposed model is the first one to distinguish the direct effects of
infrastructure practices on performance from the indirect effects of these practices through the core
practices. Besides, the use of path analysis method to study the direct and indirect relationships
between quality management practices and their effect on performance dimensions.
Keywords Quality management, Performance measurement (quality), Modelling
Paper type Research paper
1. Introduction
Quality gurus have put forth several approaches to improve company performance.
These approaches are embodied in a set of quality management practices, known as
total quality management (TQM). Several authors have attempted to clarify the
concept of TQM (Dean and Bowen, 1994; Dean and Evans, 1994; Hackman and
Wageman, 1995). TQM is generally described as a collective, interlinked system of
quality management practices that is associated with organizational performance
(GAO, 1991; Tornow and Wiley, 1991; Waldman, 1994; Madu et al., 1995).
In this respect, several studies have attempted to identify the key quality management
practices on which the success of a TQM process is based (Saraph et al., 1989; Flynn et al.,
1994; Ahire et al., 1996). However, these studies have not considered possible
interaction between practices. Recent studies, especially those of Cua et al. (2001),
Sousa and Voss (2002) and Kaynak (2003), underline the importance of causal relations
IJQRM
23,6
626
Practice
Related practices
Employee training
Employee participation
Supplier quality management
Customer focus
Continuous support
Quality system improvement
Information and analysis
illustrates the foundations of our generic practices, and has strongly inspired the
definition of items that will operationalize each practice. Table I also establishes links
between practices examined in our research and those described in other studies.
Appendix 1 displays the specific scales and the 43 items used in our study to measure
the quality management practices.
After selecting ten generic practices, we grouped them into three main categories
following the classification of Flynn et al. (1995a), Pannirselvam and Ferguson (2001)
and Sousa and Voss (2002), namely:
(1) management practice: issued from the top management;
(2) infrastructure practices: intended to support core practices; and
(3) core practices: based on tools and techniques specifically related to quality.
Quality
management
practices
627
Table I.
Links between practices
retained and literature
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628
This classification constitutes the basis of our model, and highlights the links between
quality management practices and firm performance. Table II presents the
classification of practices into each of the three categories.
2.2 Organizational performance
Following a literature review on strategic management, marketing and operations
management, we have chosen three performance related dimensions: financial
performance, operational performance and product quality. The choice of key
indicators of financial performance is based on the research of Kaplan and Norton
(1992). Moreover, the operational performance indicators are inspired from Grandzol
and Gershon (1998), while the product quality indicators are based on studies carried
out by Garvin (1987), Forker et al. (1996), Curkovic et al. (1999) and Kelada (1996).
Appendix 1 shows a detailed list of the retained indicators.
3. Conceptual model and hypotheses
3.1 Conceptual model
Figure 1 shows a model of relations between top management practice, infrastructure
and core practices, product quality, operational and financial performance.
Some other similar models have already been proposed in the quality
management literature. These models can be divided in two groups. In the first
group (Flynn et al., 1995a; Anderson et al., 1995; Pannirselvam and Ferguson, 2001;
Kaynak, 2003), infrastructure practices act indirectly on performance through core
practices. In the second group (Powell, 1995; Dow et al., 1999; Samson and
Terziovski, 1999), infrastructure practices can improve performance even without
core practices. Our model can be viewed as a combination of the two groups of
models. More importantly, our model is the first one to distinguish the direct effects
of infrastructure practices on performance from the indirect effects of these practices
through the core practices.
3.2 Hypotheses
The selected hypotheses stem directly from the model. More precisely, we have defined
a hypothesis for each link that appears in the model. These links symbolize a direct
relation between two elements of the model.
H1. Management practice is directly related to infrastructure practices.
The effect of management practice on the various components of infrastructure
practices were highlighted in the management literature. For instance, Adam et al. (1997)
show through their research that leadership has a significant impact on training.
Table II.
Classification of quality
management practices
Management practice
Infrastructure practices
Core practices
Quality
management
practices
629
Figure 1.
Relations between
management practice,
infrastructure practices,
core practices and
performance
IJQRM
23,6
630
This hypothesis is consistent with the empirical studies conducted by Forza (1995) and
Choi and Eboch (1998), which confirm the relationship between quality management
practices and product quality. This hypothesis is also consistent with Ahire et al. (1996),
who show that product quality has a statistically significant correlation with the
following core practices: statistical quality techniques use and internal quality
information.
Quality
management
practices
631
4. Research methodology
In this section we explain the methodology used to collect the data. We also draw the
statistical techniques used to test the research framework, the identification of critical
quality management practices and the construct validity of the measurement instrument.
4.1 Data collection
The data used in this study was obtained using a survey questionnaire filled by
Tunisian managers from the plastic transforming sector. This sector was chosen
because it reflects that of the Tunisian manufacturing sector, mainly by its wide
variability of quality management implementation levels. Also, it is a manageable
sector in terms of size of the study. First, a list of 133 Tunisian companies was defined
on the basis of the industrial and commercial guide of Tunisia, which includes all the
manufacturing industries. Then, these 133 companies were classified into three
categories (strong, medium and weak performance) based on ROI, ROA and growth of
sales indicators, and following the methodology proposed by Kotter (1992). The final
sample includes 92 companies with high and medium financial performance. Table III
presents the classification of studied companies into three categories.
To collect the data we have used a questionnaire. As Madu (1998) and Bavagnoli
and Perona (2000) assert, the questionnaire is a popular data collection method in
studies of quality management. The data collection instrument was pre-tested in ten
companies. The pre-tests included structured interviews with the general manager,
quality manager, process engineer, human resources manager, several supervisors and
workers. All of them were asked:
.
whether the questions were easy to understand;
.
whether there were any other questions that needed to be included; and
.
who was the right person to contact for the real study.
Feedback from the pilot study was used to clarify some questions. Based on the
feedback, some items in a few scales were dropped or added. In addition, to confirm
that the main aspects of quality management practices were covered, the draft
Performance
High
Medium
Low
Total
Number of companies
28
64
41
133
Table III.
Company classification
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4.2 Statistical techniques
The causal relations shown in Figure 1 will be tested by means of the path analysis
method. Path analysis is a multivariate analytical methodology for empirically
examining sets of relationships represented in the form of a linear causal model
(Duncan, 1966; Li, 1975). Mathematically, path analysis decomposes empirical
correlations or covariances among measured variables to estimate the path coefficients
in a path diagram (Neumann, 1978). Path analysis use simple bivariate correlations to
estimate causal relations in a structural equation system (Hair et al., 1998).
One advantage of path analysis over conventional regression analyses is the ability
to extend the single-multiple-regression-equation treatment to a network of equations
involving more than one equation (Li, 1975). In addition, this method can differentiate
direct and indirect effects (Duncan, 1966; Pannirselvam and Ferguson, 2001).
4.3 Identification of critical quality management practices
The critical quality management practices are determined according to the following
two analyses: principal factor analysis, and confirmatory factor analysis (Goodhue,
1998; Grandzol and Gershon, 1998). Principal factor analysis is used in order to bring to
the foreground a factorial structure. Confirmatory factor analysis is applied in order to
confirm the factorial structure. Table IV displays the results of the principal component
analysis (factors 1 and 2) and the confirmatory factor analysis (factor loadings).
Principal factor analysis show that some items should be deleted from the analysis,
either because of very low factor loadings or because of multiple factor loadings too
high to ignore (Grandzol and Gershon, 1998). Besides, confirmatory factor analysis
confirms these results. In fact, items indicated as potentially problematic according to
the principal factor analysis surfaced again in the confirmatory factor analysis. More
precisely, items with factor loadings below the suggested cut-off of 0.6 (Hatcher, 1994)
were considered problematic. Given all these considerations, several items were deleted
from the analysis (Table IV) and three practices (supplier quality management,
continuous support, and statistical quality techniques use) were eliminated from the
analysis. Therefore, the final measurement instrument consists of seven quality
management practices and 24 items.
4.4 Construct validity of the measurement instrument
To empirically test the construct validity of the measurement instrument based on the
seven quality management practices that emerged from the previous analysis, we have
applied the three steps proposed by OLeary-Kelly and Vokurka (1998):
(1) unidimensionality analysis;
(2) reliability analysis; and
(3) validity analysis.
Itemsa
0.779
0.681
0.811
0.744
0.006
0.096
0.195
0.08
0.184
0.972
0.75
0.63
0.85
0.7
0.07
OFQ 1
OFQ 2
OFQ 3
OFQ 4
OFQ5
0.903
0.221
0.186
0.003
0.902
0.201
0.861
0.707
0.853
0.196
0.88
0.44
0.44
0.14
0.9
ET 1
ET 2
ET 3
ET 4
ET 5
0.711
0.742
0.736
0.343
0.654
0.7
0.82
0.64
0.38
0.61
EP 1
EP 2
EP 3
0.822
0.821
0.868
0.68
0.71
0.91
SQM 1
SQM 2
SQM 3
SQM 4
0.019
0.605
0.848
0.801
CF
CF
CF
CF
1
2
3
4
0.773
0.818
0.801
0.709
CS
CS
CS
CS
1
2
3
4
0.358
0.657
0.802
0.164
QSI 1
QSI 2
QSI 3
QSI 4
0.109
0.799
0.793
0.778
0.42
0.76
0.75
0.75
IAA 1
IAA 2
IAA 3
IAA 4
0.735
0.751
0.778
0.855
0.66
0.66
0.73
0.88
SQTU
SQTU
SQTU
SQTU
SQTU
1
2
3
4
5
0.099
0.378
0.244
0.745
0.853
0.893
0.659
0.779
0.608
Quality
management
practices
633
0.17
0.39
0.45
0.36
0.78
0.82
0.68
0.61
0.735
0.745
0.652
0.897
0.996
0.716
0.836
0.673
0.703
0.32
0.37
0.36
0.43
0.12
0.23
0.39
0.42
0.41
Table IV.
Selection criteria for
critical practices
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634
Unlike the studies carried on by Fynes and Voss (2002) and Kaynak (2003), the
unidimensionality analysis was performed on the basis of a principal component
analysis of each of the seven practices. The results of this analysis reveal that the
items, for each practice, allow the extraction of a single factor. The unidimensionality
of the measurement scale is therefore confirmed.
The reliability analysis was performed based on Joreskogs r of internal
consistency (Joreskog et al., 1999). The convergent validity analysis was verified
according to Fornell and Larcker (1981) approach. Table V illustrates the results of
these analyses.
The results confirm the reliability of the quality management practices retained.
Specifically, Joreskogs r are all higher than the threshold of (0,8), with the exception of
the r representing the employee training practice, which is nonetheless very close to
that level (0, 78). Moreover, Table V illustrates good convergent validity. All factor
loadings are greater than the threshold of (0, 6). Moreover, the r of convergent validity
exceeds the threshold of 50 percent for all measurement scales, except employee
training.
To examine the discriminant validity, the Chi-squares of the constrained and
unconstrained models were compared (Anderson and Gerbing, 1988). Significantly
lower Chi-squares for the unconstrained model would indicate that each correlation
between pairs is less than 1.0 (Bagozzi et al., 1991), and that the constructs are
empirically distinct, rendering support for the discriminant validity of the constructs.
In our case, the Chi-squares (x 2) of the unconstrained model (x 2 410.15; df 231)
was significantly lower than the Chi-squares of the constrained model (x 2 963.85;
df 252). Given the differential of 21 degrees of freedom (Ddf 252 2 231 21) and
a type 1 risk of 1 percent, the tabulated value of the Chi-squares is 39.932. As the
difference in Chi-squares (Dx 2 963.85 2 410.15 553.7) largely exceeds the
tabulated value, the discriminant validity is confirmed.
Latent variables
Table V.
Reliability and
convergent validity
analyses
Joreskogs r
r of convergent validity
0.81
0.90
0.78
0.81
0.83
0.82
0.80
0.53
0.81
0.49
0.60
0.56
0.54
0.57
5. Empirical findings
After testing construct validity, we then tested the causal relations between the latent
variables in order to confirm or refute the hypothesis presented earlier. Thus,
consistently with Swamidass and Newell (1987), Anderson et al. (1995) and Flynn et al.
(1995a), we tested our conceptual model by means of the path analysis approach. The
conceptual model can also be represented by equations (see Appendix 2).
The model does not deny the existence of variables such as organizational context,
industry, structure and technology, which may play an important role in the
explanation of organizational performance. Despite that, these variables are not
included in our model explicitly. Their effects will be considered by the nine error
terms specified in the model.
Before testing the hypothesis, we will validate for the absence of the
multicolinearity problem. To do so, we applied the methodology proposed by Flynn
et al. (1995a), which consists in studying the diagonal of the inverse of the correlation
matrix. This diagonal includes elements called variance inflation factors (VIF) equal to
1/(1-R 2), where R 2 measures the portion of variance of each variable explained by the
other variables. Neter et al. (1990) assert that the VIF values must not exceed the
recommended threshold of ten. Since, all the coefficients (VIF) are situated between
1.11 and 3.70, the multicolinearity is not a problem in this case.
To calculate the path coefficient, in order to indicate the explanatory power of each
antecedent variable on the dependent variable, we used LISREL software, with the
correlation matrix as the input, and we applied the methodology used by Anderson
et al. (1995). The results are presented in Table VI.
Of the 26 relations tested, 18 were found to be significantly different from zero with
an error risk below 1 percent, 2 are different from zero with a risk below 5 percent, and
6 relations were not statistically significant.
Table VI shows that top management commitment and support practice has a
statistically significant direct effect ( p-value , 0.01) on the following practices:
organization for quality employee training employee participation and customer
focus. This finding confirms the first hypothesis.
The practices organization for quality employee training and employee
participation have a statistically significant direct effect ( p-value , 0.01) on the
information and analysis practice. Moreover, the practices employee training
employee participation and customer focus have a statistically significant direct
effect ( p-value , 0.01) on the quality system improvement practice. Customer
focus practice does not have a significant effect on the information and analysis
practice. Organization for quality practice does not have a significant direct effect on
quality system improvement practice. To summarize, the infrastructure practices do
not all have a significant effect on the core practices; yet overall, their effect is
significant. This partly confirms the second hypothesis.
The results show that all infrastructure practices have a statistically significant
direct effect on operational performance. This confirms the third hypothesis. Note that
in addition to having a direct effect on operational performance, organization for
quality and employee training practices also have a significant indirect effect on
operational performance via core practices.
The results also illustrate that the practices: organization for quality and
customer focus have a statistically significant direct effect ( p-value , 0.05) on
Quality
management
practices
635
support
support
support
support
support
support
support
support
support
and
and
and
and
and
and
and
and
and
Dependent variable
Table VI.
Structural model analysis
Independent Variable
Indirect effect
0.00
0.00
0.00
0.00
0.57 * *
0.59 * *
0.30 * *
0.40 * *
0.42 * *
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.22 *
0.15 *
0.26 * *
0.52 * *
0.43 * *
0.74 * *
0.31 * *
0.00
0.00
0.00
0.00
0.00
0.46 * *
0.36 * *
0.27 * *
2 0.06ns
2 0.007ns
0.41 * *
0.44 * *
0.31 * *
0.19 *
0.00
0.68 * *
636
Direct effect
0.52 * *
0.43 * *
0.74 * *
0.31 * *
0.57 * *
0.59 * *
0.30 * *
0.40 * *
0.42 * *
0.46 * *
0.36 * *
0.27 * *
2 0.06ns
2 0.007ns
0.41 * *
0.44 * *
0.31 * *
0.41 * *
0.15 *
0.94 * *
(continued)
Total effect
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23,6
Financial performance
Product quality
Operational performance
Financial performance
Product quality
Operational performance
Financial performance
Product quality
Operational performance
Financial performance
Product quality
Operational performance
Financial performance
Product quality
Operational performance
Employee training
Employee training
Employee training
Employee participation
Employee participation
Employee participation
Customer focus
Customer focus
Customer focus
Information and analysis
Information and analysis
Information and analysis
Quality system improvement
Quality system improvement
Quality system improvement
Dependent variable
Independent Variable
2 0.06ns
0.00
0.60 * *
2 0.12ns
0.00
0.82 * *
0.20 *
0.00
0.51 * *
0.50 * *
0.34 * *
0.57 * *
0.035ns
0.34 * *
2 0.13ns
Direct effect
0.19 *
0.26 * *
0.20 *
0.15 *
0.24 *
0.09ns
20.02ns
0.09ns
20.07ns
0.00
0.00
0.00
0.00
0.00
0.00
Indirect effect
0.13ns
0.26 * *
0.80 * *
2 0.03ns
0.24 *
0.91 * *
0.18 *
0.09ns
0.44 * *
0.50 * *
0.34 * *
0.57 * *
0.035ns
0.34 * *
2 0.13ns
Total effect
Quality
management
practices
637
Table VI.
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638
also reveal that the core practice information and analysis is the only one that has a
direct and significant effect on both operational and financial performance.
Besides, the results also support the interdependence between quality management
practices. This finding is in line with the studies of Flynn et al. (1995a), Anderson et al.
(1995), Pannirselvam and Ferguson (2001) and Kaynak (2003).
From a managers point of view, the empirically validated positive effects of quality
management practices on organizational performance is encouraging for those who
take the initiative to implement TQM. Besides, the measurement instrument developed
and validated empirically in this paper can be used by managers to evaluate their TQM
implementation and to target improvement areas.
6.2 Limitations of findings
Several limitations of this study should be discussed in this section. First, the data
collection method was based on managers perceptions. As reported by Dearborn and
Simon (1958), managers respond to questionnaires from their own local environment,
which may or may not reflect what is going on in the organization as a whole.
Consequently, it is rather dangerous to readily assume that an individual response is a
reliable and valid indicator of an organization-level construct (Venkatraman and
Grant, 1986). Nevertheless, the use of managers perceptions is frequently used in
quality management research (Madu, 1998). Second, based on the type of data used in
the analysis, our study was not able to capture the effects of other mutually supportive
process management techniques (e.g. business process reengineering and JIT) on firm
performance (Flynn et al., 1995b).
In addition to the limitations already mentioned, we acknowledge the fact that the
sample size is relatively small. The results of this study should not be generalized beyond
what is reasonable, given the nature of the sample. Future studies should consider
substantially larger samples including greater representation of industries and countries.
Given the cross-sectional nature of the data, we should exercise caution in drawing causal
inferences from the findings of this study. Despite this caveat, we observe an association
between management practice, infrastructure and core practices, and performance. More
detailed longitudinal studies may be appropriate for assessing causality.
7. Conclusion and future directions
The primary objective of this paper is to study the relationship between quality
management practices and their impact on performance. This research attempts to
contribute to the development of a quality management theory.
To carry out this research, we started by identifying a set of practices and items of
quality management presented in the literature. Then, we used this set to formulate our
conceptual model that links management practice, infrastructure and core practices,
product quality, operational and financial performance. Seven hypotheses regarding
the relations between the elements of the model were specified. An empirical study
then enabled us to select, among all the practices and items proposed in the literature,
24 items that made up the following seven practices: top management commitment and
support, organization for quality, employee training, employee participation, customer
focus, information and analysis, and quality system improvement.
The hypotheses regarding the relationships in the model were then empirically
tested on a sample of 92 companies in the plastics transformation industry using the
path analysis method. The results highlight the crucial role played by top management
Quality
management
practices
639
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640
commitment and support and clarify the relative importance and the interplay between
infrastructure, core practices and organizational performance.
The majority of the research related to TQM theory can be classified into the
mapping and relationship stage of the scientific inquiry process as defined by
Handfield and Melnyk (1998). Further research must advance beyond this stage
towards the last two stages of the scientific inquiry process: theory validation and
theory extension/refinement. In this respect, future research that focus on applying
the proposed model in new industrial and national contexts would be helpful. Besides,
there is also a need to refine and clarify the relative importance and the interplay
between core and infrastructure practices in determining performance.
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Appendix 1. TQM practices
For the seven TQM practices, respondents indicated the extent to which the items represented
practices in their organizations (1 very low to 5 very high). Items in italic type were
eliminated from the analysis:
(1) Top management commitment and support:
General management is actively involved in quality improvement.
Management provides the necessary resources to carry out activities efficiently.
General management encourages employees to consider customers needs and
expectations.
Management quality objectives are disseminated to all employees.
Top management pursues long-term objectives.
(2) Organization for quality:
The organization has a process management method.
Interdepartmental groups are common.
Processes are continuously improved.
The organization uses quality circles.
There is a little bureaucracy (formal hierarchy, procedures and detailed rules) in the
organization.
(3) Employee training:
The company provides continuous training for its managerial personnel.
The company provides continuous training for its non-managerial personnel.
Training needs are always evaluated.
Quality
management
practices
645
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23,6
Organizational performance
The scale represents the organizations relative performance (1 much worse than the
competitors to 5 much better than the competitors).
Financial performance Operational performance Product quality
Return on investments
Wastelevel
Reliability
Return on assets
Productivity
Durability
Sales growth
Cycle time
Tenacity
646
Regularity
Appendix 2
OFQ p21 TMCS e1
ET p31 TMCS e2
EP p41 TMCS e3
CF p51 TMCS e4
IA p62 OFQ p63 ET p64 EP p65 CF e5
QSI p72 OFQ p73 ET p74 EP p75 CF e6
FP p82 OFQ p83 ET p84 EP p85 CF p86 IA p87 QSI e7
PQ p96 IA p97 QSI e8
OP p102 OFQ p103 ET p104 EP p105 CF p106 IA p107 QSI e9
with, TMCS: Top management commitment and support, OFQ: Organization for quality, ET:
Employee training, EP: Employee participation, CF: Customer focus, IA: Information and
analysis, QSI: Quality system improvement, FP: Financial performance, PQ: Product quality, OP:
Operational performance, pij Path coefficient, ei Errors outside the model
Several points of the model are worth noting:
All paths are included in the figure. There is no return path. Our model is thus recursive.
The only exogenous variable is top management commitment and support.
The conceptual model is made up of nine endogenous variables. Each endogenous
variable is explained by one or more variables plus an error term. One endogenous
variable can influence another endogenous variable.
The first variable is not explained by any other variable in the model.
In the path analysis approach e refers to lost causes or causes outside the model.
Linear relations between the variables are additive.
Each variable is taken to be in standard form; that is, if Vi is the ith variable as measured,
svi : The same convention holds for the residuals.
then X i V i 2 V=
Corresponding author
Lassaad Lakhal can be contacted at: lassaad_lakhal@yahoo.com
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