The relationship between TQM and SMEs’ performance

Abstract

Purpose The purpose of this paper is to empirically test the association between total quality management (TQM) and small and medium enterprises’ (SMEs) performance. In particular, it examines whether organizational culture (OC) has a mediating effect on the TQM–SME performance relationship. Design/methodology/approach The conceptual model for this study was developed based on the literature review of TQM, OC and SME performance. As the research framework, a self-administered questionnaire was used to collect data from managers/owners of SMEs in the Riyadh, Mecca and Eastern regions of the Kingdom of Saudi Arabia. The instrument was evaluated for its validity and reliability. A structural equation model was designed to examine the relationships, using PLS 3.0. Findings Statistical outcomes add to the literature through displaying a positive direct effect of TQM and OC on SMEs’ performance, and a significant and positive indirect effect of TQM on SMEs’ performance through OC. Research limitations/implications The quantitative cross-sectional research design investigated a sample of manufacturing SMEs. Future research could use qualitative techniques or a case study approach for further information analysis. Practical implications The findings of this research provide insights into SMEs’ owners/managers in today’s dynamic manufacturing environment, focussing on TQM as a mechanism for improving their performance. The results can help SMEs by providing guidance on OC, because of its effect on the successful implementation of TQM, therefore improving the level of performance. Originality/value The research extends the literature of TQM with a comprehensive understanding of TQM from the perspective of SMEs in Saudi Arabia. It fills the gap in empirical studies that investigate the joint effect of TQM and OC on SMEs’ performance. This paper highlights the theoretical contribution and managerial implications as well as making recommendations for future research.