Relationship of total quality management with corporate sustainability in the MSME sector: does innovation capability play a mediating role?

Abstract

PurposeThis study attempts to find the structural relationship between Total Quality Management (TQM) and Corporate Sustainability (CS) by analyzing the role of Innovation Capability (IC).Design/methodology/approachThe authors conducted the study in the context of manufacturing industries in the Indian Micro Small and Medium Enterprises (MSME) sector. In the process, The authors attempt to throw light on the significance of TQM and IC in bringing out sustainable practices in organizations. The authors used Structural Equation Modeling with AMOS to study the relationship between TQM and CS.FindingsThe authors measured TQM through product control management, process control, vendor quality management and customer relationship improvement. We did find a direct relationship between TQM and CS, along with its three dimensions: environmental sustainability, economic sustainability and social sustainability. TQM was found to be antecedent to IC. IC, measured through product innovation, process innovation and managerial innovation, did not mediate the relation between TQM and CS. However, the link between TQM and social and environmental sustainability partially mediates through IC at the dimension level.Practical implicationsTQM can provide a holistic means of nurturing participation and satisfaction of stakeholders for achieving corporate sustainability and in the process, can create an innovative culture for stimulating a circular social economy.Originality/valueThis study fills the gap in the literature by providing a structural model that explains the relationship between TQM and corporate sustainability and highlights the role of innovation capability in achieving it.