The relative efficiency of quality management practices

Abstract

The aim of this study is to compare the relative efficiency of quality management practices among American, Japanese, and Taiwanese firms located in Taiwan. Data envelope analysis (DEA) technique is used to measure the relative efficiency of these firms. Quality management practices and organizational performances are treated as input and output factors respectively. The firms are grouped in four based on their efficiency levels. These groups are referred to as robustly efficient, marginal efficient, marginal inefficient, and distinctly inefficient units in DEA. The results of the analysis showed that there is a significant difference between the levels of efficiency among the three typologies of firms – American‐, Japanese‐, and Taiwanese‐owned firms. The study found that the efficiency of quality management practices for Japanese‐owned firms is the highest, even though almost all of their employees are Taiwanese; also, American‐owned firms’ efficiency is higher than that of Taiwanese‐owned firms. It was also observed that the ethnocentric quality management practices of foreign firms in Taiwan might have contributed to the inefficiency of Taiwanese firms. The study shows that Taiwanese and US firms can benchmark the efficient practices of Japanese firms in order to be the best‐in‐class.