The Relationship among Total Quality Management, Operational Performance and Competitive Advantage in the Jordanian Banking Sector

Abstract

The purpose of this study is to examine the relationship between total quality management (TQM), operational performance, and competitive advantage in the Jordanian banking sector, and also to determine whether operational performance mediates the relationship between TQM and competitive advantage. The data from 336 respondents were validated and tested using the partial least squares structural equation modeling. This study was conducted using a self-administered questionnaire distributed among managers of the Jordanian Banking Sector. The result revealed that TQM has a positive significant effect on competitive advantage at 0.001 level of significance (β=0.393, t= 7.113, p<0.001) .The results also showed that TQM had an important effect on operational performance at the significance level of 0.001 (β = 0.632, t = 14.846, p < 0.001).Also, the study discovered that operational performance plays a role as a mediator on the relationship between TQM and competitive advantage in the Jordanian banking sector at the 0.001 level; β = 0.257, t-value = 6.696, p-value = 0.000. The study is beneficial for the banking sector, financial institutions, and other organizations that seek to improve their competitive advantage among their competitors through proper employment of TQM dimensions namely: top-management, customer focus, continuous improvement, employee management, and process management, beside improving operational performance in different activities.