The results from studies of the relationship between total quality management (TQM) practices and firm performance and from those on the effects of TQM practices on various types of performance measures are mixed. There is no extensive empirical evidence about the effect of TQM practices on employee performance and innovation performance, and few empirical studies have investigated the mediating effect (indirect relationship) of one type of performance measure on the relationship between TQM practices and another type of performance measure. The objective of this study was to investigate the relationships between TQM practices and multiple performance measures and to examine the mediating effects of employee performance and innovation performance on the relationship between TQM practices and firm performance. The study used a cross-sectional survey methodology—we sent questionnaires to 500 randomly selected ISO 9001:2000 certified firms in different industries in the Marmara region in Turkey in 2005 and 2006 and obtained 373 usable questionnaires. After confirming the validity and reliability of the latent variables with confirmatory and exploratory factor analyses, we tested the model and hypotheses using structural equation modeling. Results of the study support the proposed hypotheses that employee performance and innovation performance partially mediate the relationship between TQM practices and firm performance. The study also provides managerial and research implications, research limitations, and suggestions for future studies.
Total quality management (TQM) is a systematic quality improvement approach for firm-wide management for the purpose of improving performance in terms of quality, productivity, customer satisfaction, and profitability. Since TQM practices have been embraced by many firms around the world for decades, they have earned the attention of many researchers from diverse areas. While there are many success stories related to TQM practices, some TQM programs have failed, and some authors (e.g., Bohan, 1998, Masters, 1996, Whalen and Rahim, 1994, McCabe and Wilkinson, 1998 and Taylor and Wright, 2003) have found reasons for these failures.
Results from studying the relationship between TQM practices and firm performance have been mixed (e.g., Kaynak, 2003, Nair, 2006, York and Miree, 2004, Sadikoglu, 2004, Prajogo and Sohal, 2001 and Hung, 2007), so a need remains to re-examine this relationship. Replication research contributes empirical generalizations and knowledge development, and consistent research results among multiple studies using a variety of methodologies give support to the strength and generality of research results (cf. Kaynak, 2003). Replication research also contributes to validating cause-and-effect relationships, uniting the empirical results of a discipline, and increasing knowledge by reducing type I errors, by evaluating the robustness and generalization of empirical results, and by developing theory through satisfying the criterion of reproducibility (cf. Nair, 2006).
Results of the study illustrate the importance of continued efforts toward implementing TQM practices in firms by revealing the positive impacts of effective TQM practices on innovation performance, employee performance, and firm performance. Although conventional wisdom states that TQM practices are detrimental to breakthrough innovation, the study suggests that continuous improvement and process management can be combined with breakthrough innovation.
The study also shows that employee performance partially mediates the relationships between TQM practices and innovation performance, as well as that between TQM practices and firm performance, and that innovation performance partially mediates the relationship between TQM practices and firm performance. We also find that employee performance improves innovation performance and firm performance and that innovation performance improves firm performance and mediates the relationship between employee performance and firm performance. Results of the study indicate that employees are valuable and non-imitable sources in a firm in generating innovative ideas to introduce new products, services, or processes, increasing productivity, efficiency, and quality, in reducing costs, and in delighting customers. Thus, the study reveals that firms should focus and satisfy employees’ needs to improve performance, market share, and competitiveness. The study also finds that firms should improve innovativeness to become competitive in a changing marketplace. The study shows that firms should synergize employees’ performance and innovative potential to excel in their market.
