Quality and Productivity: Contradictory and Complementary

Summary: Is superiority in quality compatible with superiority in productivity, or do the two conflict? One stream of research argues that they are compatible, another argues that there are inherent trade-offs, while still another finds little or no relationship. This study seeks to reconcile the apparent contradictions. Building on Juran's (1989) recognition that perceived quality is a function of two distinct dimensions of quality, a model that estimates and compares the relationship for different industry sectors is developed. From this analysis, it is hypothesized that a positive relationship is more likely for goods manufacturers, while a negative relationship is more likely for services. General support for the hypotheses is found using data from the Swedish Customer Satisfaction Barometer.