The relationship between total quality management practices and operational performance

This study explores the hypotheses that implementing effective total quality management TQM programs improves the operating performance of firms. The winning of quality awards is used as a proxy for the effective implementation of TQM programs. Changes in various performance measures for a test sample of quality-award winners are compared against a sample of control firms. Our statistical tests provide strong evidence that firms that have won quality awards outperform the control firms on operating income-based measures. Over a 10-year period, from 6 years before to 3 years after the year of winning the first quality award, the mean median change in the operating income for the test sample is 107% 48% higher than that of the control sample. There is reasonably strong evidence that firms that have won quality awards do better on sales growth than the control firms. Over the 10-year period, the mean median change in sales for the test sample is 64% 24% higher than that of the control sample. We also find weak evidence that firms in our test sample are more successful in controlling costs when compared with the firms in the control sample. In addition, the results indicate that firms in our test sample increased their capital expenditures more than the control sample over the time period prior to winning quality awards. Compared with the control sample, the test sample shows higher growth in both employment and total assets.

https://www.jstor.org/stable/pdfplus/2634637.pdf

Does Implementing an Effective TQM Program Actually Improve Operating Performance? Empirical Evidence from Firms That Have Won Quality Awards

This paper documents the long-run stock price performance of firms with effective Total Quality Management (TQM) programs. The winning of quality awards is used as a proxy for effective TQM implementation. We compare stock price performance of award winners against various matched control groups for a five-year implementation period and a five-year postimplementation period. During the implementation period there is no difference in the stock price performance, but during the postimplementation period award winners significantly outperform firms in the various control groups. Depending on the control group used, the mean outperformance ranges from 38% to 46%. Our results clearly indicate that effective implementation of TQM principles and philosophies leads to significant wealth creation. Furthermore, our results should alleviate many of the concerns regarding the value of quality award systems. Overall, these systems are valuable in terms of recognizing TQM firms and promoting awareness of TQM.

The Long-Run Stock Price Performance of Firms with Effective TQM Programs

Given the prevailing emphasis on agency performance, customer focus, stakeholder’s interests and other methods of assessment under new public administration and prevailing managerialism in many public sectors around the world, administrative practitioners have taken to benchmarking as an instrument for assessing organizational performance and for facilitating management transfer and learning from other benchmarked organizations. The introduction of benchmarking into the public sector is still in its early stages. Technical problems, scepticism about usefulness and the appropriateness of transferring putative private sector competencies into public administration and the resistance in accepting organizational change as a necessary consequence of benchmarking exercises in the public sector, prevent the widespread acceptance and use of benchmarking in public sectors, arguably “punch‐drunk” with systemic change. Nevertheless, there are some encouraging examples of benchmarking within the public sector. This paper critically analyzes these examples in order to establish the vulnerability points of such measurement instruments which, possibly, need more research in order to establish the specific learning dimensions to benchmarking and to illustrate the importance of such benchmarking and learning within the highly risky, information technology (IT)‐driven experiences of systems development and failure.

Benchmarking and performance measurement in public sectors

Since its introduction in 1987, the Malcolm Baldrige National Quality Award (MBNQA) has come to have a major influence in the assessment of quality efforts and systems. Many public and private institutions, for example, use the measures derived from this award programme to carry out self-assessments. Many programmes at the local, state and international levels are based on the MBNQA. Implicit in this evidence is the assumption that the MBNQA adequately captures the major dimensions of Total Quality Management. This study empirically assesses this assumption. Specifically, it assesses the extent of fit between the factors of the MBNQA and their measures. It also evaluates the extent to which these factors really do capture this important higher-level construct known as TQM. The results reported in this study are based on a field survey consisting of responses gathered from 526 plant managers within the US automotive industry. The assessment is carried out using confirmatory factory analysis and structural ...

Crawford-Mason C

Papers

Does the Baldrige Award really work