Entry barriers and industry rivalry

Abstract

PurposeThis study aims to investigate the impact of quality management practices on performance and the extent to which industry rivalry and entry barriers moderate the relationship between the implementation of quality management practices and quality management performance.Design/methodology/approachA survey questionnaire was administered for this research using Powell's quality management framework. The respondents were required to indicate their degree of implementation of quality management practices and to rate their TQM performance in relation to overall performance, the firm's competitive position and the nature of the impact of quality management on the organisation. Structural equation modelling was used to test the hypotheses.FindingsThe results show that firms with high levels of executive commitment to quality management and those that pay close attention to customer needs tend to improve their competitive position, view quality as being positive for the organisation, and improve overall performance. The results suggest that the degree of quality management implementation is positively associated with entry barriers, which would mean reduced level of threat from new entrants; whereas the industry rivalry issues were not significantly associated with either quality management or organisational performance. The findings also show that existing firms' ability to create entry barriers facilitates increased opportunities to improve their organisational performance.Research limitations/implicationsThe sample was relatively small, subjective measures of organisational performance were used which may be biased due to respondents' interpretation of their own firm's performances, and there is a possibility that many firms with low levels of QM implementation may not have participated in the study, leading to self‐selection bias. These factors may limit the generalisability of the research findings to other settings. Therefore further research is required to ascertain whether the same practices are evident across organisations of different sizes and industry groups within a broader sampling frame.Practical implicationsThe findings suggest that quality management implementation by firms within an environment where higher levels of entry barriers exist results in higher organisational performance due to the firms' relative protection against new competitors.Originality/valueThis is one of the very few papers to investigate the role of Porter's industry analysis framework in relation to quality management implementation and firm performance.