Total quality management and organizational performance : a marketing perspective

Abstract

Although many researchers suggest that total quality management (TQM) is likely to improve a company's competitive position, particularly with regard to performance improvement, little evidence is available to support this hypothesis. The few studies conducted so far are descriptive rather than empirical in nature and tend to focus on the critical success factors (CSFs) for TQM implementation. Therefore, it is difficult to generalize about the extent to which the implementation of TQM along with related business strategies actually impact organizational performance. Further, there is a lack of literature establishing the link between TQM and marketing, though both the management approaches are considered complementary and assumed to have performance impact on organizations. To bridge these research gaps, this study looks into the assumed relationship between TQM and marketing, and their impact on organizational performance. Importantly, most TQM studies conducted thus far have dealt with organizations in the western world, and not many of them have addressed the local situation in Hong Kong. This study therefore may provide a useful reference about the combined effects of TQM and marketing on organizational performance in Hong Kong. Total quality orientation looks at the level of quality management being implemented, while market orientation examines the level of marketing being practiced. In this study, TQM is considered to be relatively at a higher level total quality orientation than one that is practicing inspection alone. Marketing practiced in corporate environment, i.e. integrated marketing, is considered to be at a higher level of market orientation than when it is practiced as an independent organizational function. Theory suggests that organizations must align their TQM and marketing implementation to improve performance. To investigate the impact of these two 'different' management approaches which when implemented together is expected to bring about a synergy increasing organizational performance, a combination of quantitative and qualitative research was conducted to obtain empirical results through mail survey and case studies. A model and several hypotheses concerning the relationships among total quality orientation, market orientation and organizational performance were proposed. Total quality orientation, market orientation and organizational performance were modeled as second order constructs consisting of several interrelated latent first order constructs that were operationalized by their immediate indicator variables. The model was evaluated, using data collected from 304 organizations having an operational quality management system. The quantitative phase of this study used structural equation modeling technique, i.e. LISREL. Analyses were performed in two-steps, first testing the piecewise measurement models of the three constructs, and then testing the structural model to estimate the hypothesized relationships among the constructs. The results of the model evaluation showed strong support for a positive correlation between total quality orientation and market orientation. The path analysis of the model showed that market orientation positively affects organizational performance, but the affect of total quality orientation on organizational performance is not significant. However, there was strong evidence of alignment between total quality orientation and market orientation (TQOR/MARKOR alignment) among the samples. Organizations with higher levels of TQOR/MARKOR alignment were found to perform better than those with lower levels of alignment. It was also found that the levels of total quality orientation and market orientation differ among different industry types in Hong Kong. Public utility and service industries were found to display higher levels of both total quality orientation and market orientation, followed by manufacturing industry and construction industry. The highly TQOR/MARKOR aligned organizations were also found to perform better than the other organizations. When TQM and marketing are operating synergistically, the performance impact of TQM is perhaps driven through market-oriented behaviors in organizations, although the total quality orientation/organizational performance relationship was not supported in the path analysis. An outward focus rather than an inward focus is implied for effective TQM implementation. The results of the qualitative phase of the study that involved in-depth studies of four organizations with different degree of TQOR/MARKOR alignment lent further support to the findings described earlier. Consistently, there was strong evidence that organizations with a higher level of TQOR/MARKOR alignment perform better than those with a lower level of TQOR/MARJCOR alignment. A high level of TQOR/MARKOR alignment was identified as a significant contributor to organizational performance. Based on results of the case studies, factors that distinguish high from low performers, including 1) top management involvement and commitment 2) organization of systems, and 3) continuous focus on process improvement, were identified. This study contributes to the knowledge on TQM/marketing management interface by providing empirical evidence on the performance impact of TQM and marketing, and how and why they interact in organizations to increase organizational performance. The study also uncovered the factors that might hinder the achievement of high level of TQOR/MARK.OR alignment in organizations. In terms of organizational performance, the study suggests that TQM and marketing and their synergy may be a competitive necessity. This study helps management to understand the roles that TQM and marketing should play in organizations and their impact on organizational performance. Academic and managerial implications are included and suggestions for further research are offered.