TQM practices and its performance effects – an integrated model

Abstract

Purpose Total quality management practices have been embraced by many quality-oriented firms around the world in order to improve performance in terms of quality, productivity, customer satisfaction and profitability. The purpose of this paper is to investigate the direct and indirect effects of TQM practices on various performance indicators specifically in the Indian manufacturing context. This paper focuses on developing an integrated model encompassing significant structural relations showing the linkage between TQM practices and multiple performance indicators – quality performance, customer satisfaction level, operating performance, employee performance, innovation performance, society results and financial performance. Apart from analyzing the direct relationship between constructs, the main purpose of this work is also to identify all the possible mediation effects of performance indicators on others using structural equation modeling (SEM). Design/methodology/approach An in-depth literature review was conducted to identify the key practices for the successful implementation of TQM in an organization as well as to explore TQM-performance effects. As a result, four TQM practices and seven performance indicators were identified. The data were collected from 260 Indian manufacturing organizations. After confirming the reliability and validity using exploratory and confirmatory factor analysis, the proposed hypotheses were tested using SEM. Findings Through testing the proposed hypothesized structural model, the direct and indirect effects of TQM practices have been examined. Moreover, this work developed an integrated model showing the interrelationships between TQM practices and performance indicators identified. The findings gave an insight that the effective implementation of TQM practices assists in reaping benefits in the every facet of an organization. By implementing these practices effectively, managers can expect to realize improvement in all these performance areas. Research limitations/implications This study is subject to certain limitations. Even if all variables were found to be reliable, valid and satisfactory non-response bias test results, the remote possibility of bias in the data might not be fully ruled out. There is a probability of occurrence of common method variance and common method bias, since the data for both dependent and independent variables were collected from the same respondents in the organization. Additionally data on performance indicators were based on the respondent’s assessment and awareness only. The mediating relationship between individual TQM practice and performance indicators can be investigated in future studies. Since society results are a necessity in future, the direct and indirect practices focusing toward this can be explored. In addition, there is a research scope to identify the moderating effect of contextual factors such as degree of TQM implementation, scope of operation and type of organization. Practical implications The findings of the research offer some potentially valuable insights into the relevance of TQM practices and its strong linkage on various performance indicators, through which the overall organization performance can be enhanced. By implementing these practices effectively, managers can expect to realize improvement in all these performance areas. Hence, the managers can adopt this approach to assess their organization’s level in the quality path and as a guideline in implementing TQM practices. They can also measure the impacts of TQM practices on multiple performance measures in order to evaluate their TQM initiatives. Especially the deployment of quality culture is a requisite to excel in the every facet of performance. The positive relationship between TQM practices and various performance indicators can motivate the managers to allocate resources in time, effort and capital for TQM implementation in pursuing quality, leading to customer retention and competitiveness. The findings of the study strongly suggest the need for the holistic implementation of TQM practices for the survival of the organization. Originality/value While there is a considerable volume of researches carried out to investigate the linkage between TQM and organization’s performance across the globe, still little is evidenced regarding the mediating effect of performance indicators on others, especially in the Indian manufacturing context. The present paper attempts to extend and add knowledge to this line of research and to bridge the gap and provide sufficient empirical evidence specifically in the Indian scenario. Thereby helps the organization to follow a guideline to improve the overall performance.