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

Abstract

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.

Keywords:

• TQM
• environmental uncertainty
• fit
• multivariate analysis
• profile deviation analysis

Acknowledgement

The work described in the paper was supported by a Major Program (Project No. 71090403/71090400) and a Major International (Regional) Joint Research Project (71420107024) of the Natural Science Foundation of China (NSFC). It is also supported by the Institute of Supply Chain Integration and Service Innovations at South China University of Technology.

Notes

1. The original data had been collected in 2001. Nonetheless, since we are interested in examining the performance impact of deviations from an ideal TQM profile and not in prescribing state-of-the-art practices, we believe that the age of the data is not problematic. In the worst case, the ideal TQM profiles that are derived are based on the environmental uncertainty in China in 2001; our analysis, as such, speaks to what happens when manufacturers deviate from these ideal TQM profiles. We expect the performance impact of deviating from the ideal TQM profiles to hold if we had more current data from Chinese manufacturers. The difference may simply be with respect to what constitutes the ideal TQM profiles.