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Why and How TQM Leads to Performance Improvements

Summary: [This abstract is based on the authors' 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.

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  • Topics: Total Quality Management
  • Keywords: Total Quality Management (TQM), Stakeholders, Economic value, Business performance, Economics, Hypothesis testing, Structural equation modeling
  • Author: García-Bernal, Javier; Ramírez-Alesón, Marisa
  • Journal: Quality Management Journal