Taking an innovative approach to quality practices: exploring the importance of a company’s innovativeness on the success of TQM practices

Quality management practices such as total quality management (TQM) are continuously applied to improve firm performance. However, recent quality researchers have found contradictory performance evidence highlighting that the success of TQM might depend on various contextual factors. Specifically, researchers and practitioners have recognised similarities and considerable overlap between TQM and innovative practices, which suggests that innovativeness plays a contextual role. However, this putative relationship remains unexplored. The purpose of this study is to assess the importance of innovativeness to the success of TQM practices through applying contingency theory. Using data collected through a large-scale survey, we carry out an empirical study and produce robust results that strongly confirm such a contextual role of innovativeness. Specifically, we identify that the seven practices closely related to TQM, namely visionary leadership, internal and external cooperation, learning, process management, continuous improvement, employee fulfilment, and customer satisfaction, have a significantly stronger impact on operational performance in companies characterised by a high level of innovativeness.     

Contextual and mediation analysis between TQM critical factors and organisational results in the EFQM Excellence Model framework

Following a total quality management (TQM) approach and the EFQM Model framework, this contribution aims to study the influence of TQM social factors on organisational results, by considering the TQM technical factors as a mediating variable in this relationship. Moreover, the effect of size and type of business on the implementation of TQM and results is analysed, as well as determining which TQM practices have a more important effect on the operational results. The research questions and hypotheses proposed in this research model are tested on a sample of 116 Spanish firms. The results support the reliability, validity and the high-predictive power of the EFQM Excellence Model as a framework for the implementation of TQM. Moreover, our findings indicate that TQM social factors provide a cornerstone for the success of the quality system. Similarly, TQM technical factors partially mediate the relationship between TQM social factors and results. It was also found that TQM social factors and processes management are the main predictors of operational performance. Finally, significant differences were found in TQM implementation, and in the key results of companies, based on their size; however, these differences are not significant based on the sector activity.     

TQM and environmental uncertainty levels: profiles,fit, and firm performance

That a manufacturer should align its implementation of Total Quality Management (TQM) to the external environment it faces has been indirectly argued for long. Theoretical and empirical evidence for this argument has, unfortunately, been lacking. Our research remedies this knowledge gap. Borrowing structural contingency theory and the concept of fit, we hypothesised and report three findings. First, we found contrasting normative TQM profiles between a high vs. a low level of environmental uncertainty. Second, we identified significant detrimental impact on firm performance when a firm deviates its TQM implementation from the normative TQM profile prescribed for a specific level of environmental uncertainty. Third, we also discovered discernible differences in the deterioration in firm performance between a positive vs. a negative deviation from the normative TQM profile. These robust findings were derived from analysing secondary survey data from 330 Chinese manufacturing firms via profile deviation analysis, MANOVA, MANCOVA and OLS regression. Contrary to the literature, manufacturers operating in a volatile external environment should pursue and benefit from TQM implementation. Manufacturers should, however, not seek to implement TQM to the fullest extent nor implement TQM half-heartedly. Instead, manufacturers should benchmark best performers as to what the normative TQM profile is and pursue their own TQM implementation to minimise deviations from the normative TQM profile.     

The intervening effect of business innovation capability on the relationship between Total Quality Management and technological innovation

The growing diffusion and acceptance in the business world of Total Quality Management (TQM) has attracted greater interest on the part of academia. Although fundamental questions focus on how the different dimensions of TQM can bring about better business performance, a more recent recurring issue pertains to the relationship between TQM and technological innovation and whether technological innovation might provide a source of competitive advantage. Unfortunately, from both theoretical and empirical perspectives, the relationship between TQM and technological innovation appears contradictory and complex. This paper argues that the relationship might be better understood from the contingent perspective of strategic management and thus proposes a multidimensional intervening variable in the relationship, called Business Innovation Capability (BIC). An empirical study of 105 Spanish industrial firms reveals that the effect of some business practices suggested by TQM on technological innovation can be better understood when BIC dimensions are taken into account.     

Big data analytics business value and firm performance: linking with environmental context

Previous studies, grounded on the resource based view, have already explored the relationship between the business value that Big Data Analytics (BDA) can bring to firm performance. However, the role played by the environmental characteristics in which companies operate has not been investigated in the literature. We inform the theory, in that direction, via the integration of the contingency theory to the resource based view theory of the firm. This original and integrative model examines the moderating influence of environmental features on the relationship between BDA business value and firm performance. The combination of survey data and secondary financial data on a representative sample of medium and large companies makes possible the statistical validation of our research model. The results offer evidence that BDA business value leads to higher firm performance, namely financial performance, market performance and customer satisfaction. More original is the demonstration that this relationship is stronger in munificent environments, while the dynamism of the environment does not have any moderating effect on the performance of BDA solutions. It means that managers working for firms in markets with a growing demand are in the best position to profit from BDA.     

Entrepreneurial orientation and performance: mediating effects of technology and marketing action across industry types

We contribute to the debate on the relationship between entrepreneurial orientation (EO) and firm performance. We theorise, firstly, that the relationship between EO and performance is mediated by the firm’s technology and marketing action and secondly, that these mediating effects will differ by industry. We test the model on 489 Korean SMEs. Results indicate both technology and marketing action mediate the effect of EO on performance. As expected, technology action has a stronger mediating effect than marketing action in manufacturing industries, while marketing action has a stronger mediating effect in service industries. We discuss implications for managers and policy-makers.     

The fit between environmental management systems and organisational learning orientation

With the significant increase in the adoption of environmental management systems (EMSs), it is important to evaluate whether EMSs can improve the business value for organisations that adopt them. However, less is known about whether or not EMSs lead to improved firm performance with only few studies evaluating the broad link between an organisation’s environmental strategies and its business performance. Furthermore, previous studies are inconsistent in their findings about the relationship between environmental strategies and firm performance. We attribute this inconsistency to the misfit between environmental strategies and organisational learning orientation which results in operational inefficiency within the firm. This study tries to find out the proper fit pattern between EMSs and organisational learning orientation by investigating their joint effect on firm performance. Based on survey data from 214 Chinese manufacturing companies, we found that the interactions between EMSs and four dimensions of organisational learning orientation have positive impacts on firm performance. Thus, the proper organisational learning orientation for efficiency and effective EMSs is characterised by high levels of commitment to learning, shared vision, open-mindedness and knowledge sharing.     

TQM and brand-building by Chinese original brand manufacturers: impact on business performance

To gain competitive advantage, original brand manufacturers (OBMs) need to understand how operations and marketing cooperate to achieve performance. Doing so can guide OBMs to make appropriate actions to develop their operational and marketing capability, and foster collaboration between the two functions. Using data collected from 560 Chinese OBMs, the authors investigated the joint impact of total quality management (TQM) initiated by operations and brand-building undertaken by marketing on product quality, brand performance and customer satisfaction and loyalty. The results revealed that the two efforts interact and generate gains that individual efforts cannot realize. Not only their interaction generates additional value to product quality, the results also broadly substantiated the authors’ hypothesis that TQM and brand-building take different paths to affect customer satisfaction and loyalty. In total, although brand-building, as matter of inputs, may impose stronger influences on the performances, OBMs should not neglect TQM, as investing in both is critical to the firm’s long-term success.     

How Firm Performance Affects Internationalization

• Only a few studies have investigated whether a firm’s performance has an effect on its internationalization. These studies, focusing on actual firm performance, have suggested a resource-based argument and generally found non-significant results.
• In this paper, we argue that relative firm performance is critical in determining a firm’s internationalization because it influences a firm’s attitude toward risk-taking. We apply prospect theory to predict this relationship.
• Using time-series, cross-sectional analysis of 701 Japanese firms from 1993 to 1998, we uncovered an inverted-U shaped relationship between a firm’s relative performance and its degree of internationalization using its historical performance target. As compared to the industry target, relative performance showed a positive impact on a firm’s internationalization.

     

Transnationality and Financial Performance in the Era of the Global Factory

Drawing on the core notions of knowledge augmentation and rational choice in internalization theory, the paper develops a theoretical framework to examine the relationship between transnationality and financial performance in the era of the global factory, and tests hypotheses against recent experience of leading transnational enterprises. The paper rejects a direct relationship between transnationality and financial performance, and supports a mediation model in which knowledge-based assets mediate the relationship between transnationality and financial performance conditional on R&D intensity. In making decisions on the transnationality of a firm, managers should not focus on whether it helps the firm achieve direct financial benefits because these are quickly offset by the costs in a competitive environment. Instead, they should focus on whether it helps the firm enhance knowledge-based assets and, through it, financial gains that can be long-lasting, and whether it is supported by R&D to augment such assets.     

Relationship building,lean strategy and firm performance: an exploratory study in the automotive supplier industry

In contrast to previous literature, we propose that commitment to lean strategy should be preceded by building close relationships with key supply chain partners (suppliers and customers). Two aspects of lean strategy, lean manufacturing and lean design are studied in this paper. We hypothesize that relationship building positively affects both aspects of lean strategy, which in turn positively influences firm performance. To test these relationships, we use data from the top 150 auto suppliers to the ‘Big Three’ original equipment manufacturers (OEMs). The results show positive relationships between (1) relationship building and lean design, (2) relationship building and lean manufacturing, and (3) lean design and firm performance. This suggests that relationship building is more valuable for enhancing the ‘product’ aspects of lean strategy as opposed to the ‘process’ aspects of lean strategy. Process aspects of lean strategy appear to be largely a function of internal efforts.     

Total quality management: An empirical test for mediation effect

This study reviews empirical studies of total quality management (TQM) and has identified four different approaches of examining TQM practices-performance relationships. It reveals that a consensus on how TQM practices affect quality performance has yet to emerge. Based on their findings, some researchers conclude that 'supportive' practices can bring quality improvement, while some indicate that 'core' practices do. To add to the complexity, some support both. The current study seeks to examine the relationship between supportive and core TQM practices and their direct and indirect effects on quality performance. A mediation model was hypothesized and tested by hierarchical multiple regression based on a sample of 25 electronics companies in Hong Kong. In general, the survey study gives further support for the interdependent nature of TQM practices. The results showed that the effect of training and employee relations on quality performance might be largely transmitted by certain core quality management practices. In particular, it suggests that core TQM practices mediate the effect of supportive TQM practices on quality performance when the practices are taken as two integrated factors. Both researchers and practitioners are advised to consider the interdependencies of supportive and core factors when assessing the impact of any new technology or new management technique on an organization.     

Green procurement and green supplier development: antecedents and effects on supplier performance

This study adopts the opposing theoretical views of legitimacy – institutional and strategic – in evaluating firm performance and top management commitment as antecedents to green procurement and green supplier development. Additionally, the impact of green procurement and green supplier development on supplier performance is analysed. Using a sample of western European companies, we develop a structural equation model to test our hypotheses. We find that the buying firm’s market performance positively relates to the adoption of green procurement. While financial performance has no effect on green procurement, top management commitment is found to be an important driver of both green procurement and green supplier development. Moreover, the relationship between green procurement and supplier performance is fully mediated by green supplier development. The paper addresses a research gap concerning firm-level antecedents for green procurement and green supplier development showing that both practices may impact supplier performance. Furthermore, it is shown that legitimacy concerns drive basic green procurement, whereas top management is decisive for advanced practices, such as green supplier development.     

The coevolution of interconnected relationship strategies in supply networks

Supply network (SN) complexity is the main challenge for managers in predicting the consequences of their firm’s relationship strategy decisions. The number of relationships and their interconnectedness constitute SN complexity and moreover, a firm’s relationships inside an SN are coevolved. It is, therefore, important to investigate how a specific relationship strategy has connected and coevolved with other types of relationship strategies in the context of a specific business situation and the interaction policies of firms. What kind of attractors of interconnected relationships will emerge?

To address these issues, we model firms’ interactions inside an SN using cellular automata and complex adaptive system perspectives. Several micro-rules that mimic the drivers and mechanisms of all archetypes of relationship strategies (i.e. cooperation, defection, competition and co-opetition) were programmed inside agents. Experiments using the prisoner’s dilemma game reward schemes, representing business situation factors, have been built and the results show that the coevolution of interconnected relationship strategies coevolution causes the emergence of interesting attractors.     

Internationalization Speed and Firm Performance: A Study of the Market-Seeking Expansion of Retail MNEs

Existing research is divided on whether firms that rapidly expand their overseas operations perform better than firms that internationalize slowly. Drawing on Penrose’s theory of the growth of the firm, we argue that the positive effects of rapid internationalization give way to negative effects with increasing internationalization speed, leading to an inverted U-shaped association between internationalization speed and firm performance. We analyze the market-seeking expansion of 110 retailers over a 10-year period (2003–2012) and find support for a curvilinear relationship between internationalization speed and firm performance that is moderated by the geographic scope of firms’ internationalization path and firms’ international experience. Our study contributes to resolving conflicting views on the link between internationalization speed and firm performance.     

Top management team diversity,ambidextrous innovation and the mediating effect of top team decision-making processes

Until now, the amount of evidences for and discussions of how a top management team (TMT)’s composition influences ambidextrous innovation are very limited. This article develops and tests a model that connects task-related TMT diversity and TMT decision-making processes to explain the heterogeneity in a firm’s strategic focus on ambidextrous innovation. The paper is based on a questionnaire survey/analysis with sample of 179 TMTs from high-tech firms in China. The conclusion exhibits that TMT task-related diversity has a strong effect on a firm’s strategic focus on ambidextrous innovation through strategic decision-making activities. The findings suggest that the TMT debate and decision comprehensiveness can mediate the relationship between TMT task-related diversity and a firm’s strategic focus on ambidextrous innovation. Overall, these results suggest that involvement in debate and comprehensiveness of strategic decision activities may bring out the potential of a TMT’s diversity in enabling them to focus on ambidextrous innovation strategy.     

The effects of internal technological diversity and external uncertainty on technological alliance portfolio diversity

This research proposes internal and external determinants that influence the diversity of a firm’s alliance portfolio. Focusing on technological aspects of the firm as well as investigating internal and external factors, we suggest that the internal technological diversity of the focal firm, as well as the technological uncertainty of the industry, affects the technological diversity of the alliance portfolio. The hypotheses are tested on a sample of U.S.-listed semiconductor firms’ global R&D alliances from 1990 to 2010. We find that the internal technological diversity of a firm has a negative influence on its technological alliance portfolio diversity. However, technological alliance portfolio diversity seems unaffected by the uncertainty of the firm’s environment. This study contributes to prior literature which has extensively studied the effects of alliance portfolio diversity on firm performance but has paid little attention to its determinants.     

The synergistic effect of environmental sustainability and corporate reputation on market value added (MVA) in manufacturing firms

This study is an attempt to explore the predictive effect, in terms of operational capability, of a large manufacturing firm’s environmental greening efforts carried out in the interest of sustainability, and of the firm’s reputation for social responsibility. Through both a traditional and a new, innovative approach, this study investigates the potential synergistic effect of environmental sustainability and the improvement of corporate reputation on a firm’s market performance in terms of shareholders’ equity value (market value added, or MVA) when taken together with the firm’s other key differential business factors. The findings of this study provide notable implications that establish the integrative paradigm for the influence of environmental greening sustainability on firm performance through the use of an innovative methodological approach regardless of a priori theoretical assumptions. Through this, the impact of environmental sustainability and corporate reputation, as well as their synergistic effect, on firm performance push forward a new foundation in business practice. The major findings and new methodological approach (Back-Propagation Neural Networks; BPNN) in this study will open a broad new spectrum of opportunities for further research on these topical issues.     

Economic crisis and firm exit: do intangibles matter?

ABSTRACT

The financial crisis has caused many business closures, especially in the periphery of the European Monetary Union. In this paper, we use original firm-level Italian data to explore the role of intangibles in limiting firm exit during the crisis. While intangibles strengthen firms’ resilience, i.e. the ability to cope with unexpected shocks, they also entail sunk costs, which expose firms to greater financial risk. In the longer term, when access to external finance is critical for survival, we expect intangibles to play a positive role only if combined with a solid financial structure. Our results support these hypotheses: intangibles directly reduce the probability of firm exit during the initial phase of the crisis (before 2010). At later stages, the beneficial effect of intangible assets is conditional on the firm exhibiting a solid pre-crisis financial status. Managerial and policy implications are discussed.     

Dissertation Review

ABSTRACT

Total Quality Management (TQM) has been used successfully for many years in Japan in its manufacturing industries. In the United States TQM has found increasing application in manufacturing during recent years - especially the last decade. TQM advocates believe the approach can produce comparable results in the service industries. This paper discusses applicability to the consulting engineering field and describes the experience of the firm of Gee & Jenson, a Florida-based consulting engineering firm.