The mediator role of learning capability and business innovativeness between total quality management and financial performance

Abstract

The concept of total quality management (TQM) has attracted many researchers from a variety of disciplines. In particular, the literature has addressed the impact of TQM on a firm’s operations and performance. However, disparate perspectives on the relationship between TQM and a firm’s financial performance have emerged. In this paper, we suggest an interconnected relationship among TQM, organisational learning capability (OLC), business innovativeness, and a firm’s financial performance and propose that OLC and business innovativeness mediate the relationship between TQM and a firm’s financial performance. By studying 193 firms in Turkey, we found that: (1) TQM affects OLC and a firm’s business innovativeness, (2) OLC influences a firm’s business innovativeness and (3) a firm’s business innovativeness affects its financial performance. Also, we found that OLC and business innovativeness in a firm mediate the relationship between TQM and the firm’s financial performance.

Keywords:

• total quality management
• organisational learning capability
• business innovativeness
• financial performance

Notes

1. We also tested the impact of manufacturing type on a firm’s financial performance, business innovativeness, and OLC. Results show that manufacturing type has no significant impact on financial performance (β = .11, p > .1), business innovativeness (β = −.08, p > .1), or OLC (β = .01, p > .1).