Why and How TQM Leads to Performance Improvements

Abstract

Evidence shows that total quality management (TQM) improves organizational performance, but researchers disagree on why and how such improvements occur and on who really benefits (shareholders, employees, customers, society). This study tests hypotheses relating to TQM adoption and the path from wealth creation to wealth appropriation, making a distinction between shareholders' profit maximization and stakeholders' wealth maximization as drivers of the adoption. The authors estimate a model of the direct and indirect consequences of TQM adoption on organizational performance, and then test for a normative versus instrumental motivation driving the TQM adoption decision. They test their hypotheses using a sample of 208 Spanish firms analyzed with structural equation modeling. The results indicate that TQM improves operational performance and all stakeholders share the benefits of this improvement. The authors explain the path from TQM adoption to firm performance, clarify the goals firms may be pursuing when adopting organizational innovations such as TQM, and identify who the beneficiaries are and why and how they benefit from TQM adoption.

• adoption
• shareholders
• stakeholders
• total quality management
• wealth creation
• welfare

Additional information

Notes on contributors

Javier García-Bernal

Javier García-Bernal is assistant professor at the Management and Organization Department (Departamento de Dirección y Organización de Empresas) of the University of Zaragoza (Spain). He received his doctorate in economics, management, and organizations from the University of Zaragoza. He has published articles in Total Quality Management & Business Excellence, Business Research Quarterly, Applied Economics Letters, and Women in Management Review, among others. His research interests include total quality management and excellence models, organizational design, and industrial organization, especially in the context of the wealth creation analysis under different perspectives. He can be reached by email at [email protected].

Marisa Ramírez-Alesón

Marisa Ramírez-Alesón is full professor at the Management and Organization Department (Departamento de Dirección y Organización de Empresas) of the University of Zaragoza (Spain). She received her doctorate in business and administration from the University of Zaragoza. She spent a two-year period as visiting professor at Temple University (Philadelphia) in the Department of General and Strategic Management. She has published articles in Management International Review, Spanish Economic Review, Environmental and Resource Economics, Ecological Economics, Total Quality Management & Business Excellence, and Journal of Economic Behavior & Organization, among others. Her research interests include strategic management, especially in the context of the growth strategies, and wealth creation analysis under different perspectives. She can be reached by email at [email protected].