Economic analysis of TQM adoption in the construction sector

Abstract

Researchers have dedicated considerable efforts to examining and explaining the capacity of total quality management (TQM) to generate wealth, from the conceptual framework of the resource-based view. From this approach, TQM is basically an inimitable resource that generates competitive advantages. This analytical perspective can help justify and explain the behaviour of the firms that have adopted TQM, but not that of the firms that do not intend to adopt this management approach in the future. In the current work, we aim to make progress in this direction. We offer arguments, from an economic and organisational perspective, that help explain how TQM's capacity to generate wealth is not uniform in all firms but is contingent on variables such as the firm's size and subsector. The results of the empirical analysis, involving a sample of Spanish construction firms, provide support for two hypotheses postulating relations between the firm's optimum level of TQM adoption and its size and subsector.

Keywords:

• total quality management
• construction sector
• transaction cost theory
• determinants of level of TQM adoption

Acknowledgement

We gratefully acknowledge funding from MICINN-FEDER through research project ECO2009-09623, from the IDECONSA Chair, and from DGA-FSE through the CREVALOR research group.

Notes

The specialist consultancy that helped design the questionnaire was Qualitas Management.

The non-profit organisation Fundación Laboral de la Construcción en Aragón provided the data on the location, size and contact details of all the firms in the original population.

In May 2003 the European Commission adopted a new definition of micro, small and medium-sized enterprises. The aim was to promote entrepreneurship, investment and growth, facilitate access to venture capital, reduce administrative costs, and strengthen legal certainty. This definition came into force on 1 January 2005, and establishes the following categories based on the number of workers: large enterprise ≥250 workers; medium-sized enterprise <250 workers; small enterprise <50 workers; micro-enterprise <10 workers.