Total quality management practices, competitive strategies and financial performance: the case of the Palestinian industrial SMEs

Abstract

The purpose of this paper is to examine the relationship between Total Quality Management (TQM) practices, competitive strategies -cost leadership and differentiation-and firm performance in the Palestinian economy. Within this study total quality management has been conceptualized as soft and hard practices, in congruence with the literature. An empirical analysis based upon an extensive validation process was applied to refine TQM, competitive strategies and financial performance scales. Data were collected through surveying 202 in Palestinian industrial small and medium enterprises (SMEs). Structural Equation Modeling was carried out to test the anticipated relationships. Results derived from this study show that TQM practices have indirect, positive and significant relationship with financial performance through competitive strategies. In addition, a direct, positive and significant relationship between competitive strategies and financial performance was observed. Results derived from this study might help managers to implement TQM practices in order to effectively allocate resources and improve financial performance.

Intellectual Capital, Entrepreneurial Strategy and New Ventures Performance: Mediating Role of Competitive Advantage

“…For instance, Palmer et al (2015) elucidated that firms analyze different markets based on their innovative strategy to gain CA because they believe that CA can significantly contribute firm's performance. Similarly, Herzallah et al (2014) and Ma (2000) resulted that CA has a significant positive association with firms' performance.…”

Testing the dimensionality of the quality management construct

“…While some scholars investigated only the internal reliability of the scale for each dimension and did not test its dimensionality (Sharma, 2006), others tested the construct's dimensionality using an EFA only (Calvo-Mora et al, 2013;Douglas & Judge, 2001;Lee & Lee, 2013;, or one type of CFA only (Barker & Emery, 2006;Delić et al, 2014;Herzallah et al, 2014;Kristal et al, 2010;Terziovski, 2006), or an EFA followed by one type of CFA (Ahire et al, 1996;Dow et al, 1999;Kaynak & Hartley, 2005;Kim et al, 2012). Although some studies found that QM is a multidimensional construct with a potentially unequal contribution of each dimension to achieving improved organisational performance, some researchers indicated that organisations must adopt an integrative approach to implementing QM because firms cannot capture full benefits when they implement only specific practices.…”

“…QM has frequently been assumed to be a multidimensional construct measured by such dimensions as customer focus (CF) (Lee & Lee, 2013;Samson & Terziovski, 1999), top management commitment (Lakhal, 2009;Sharma, 2006), leadership (Calvo-Mora, Picón, Ruiz, & Cauzo, 2013;Sila & Ebrahimpour;, employee training (Banerji et al, 2005, Kim et al, 2012Su et al, 2008), employee relations (Flynn et al, 1995;Herzallah et al, 2014), quality information and reporting (Kim et al, 2012;Terziovski, 2006;Zu, Douglas, & Fredendall, 2008), benchmarking (Dow, Samson, & Ford, 1999;Powell, 1995), process management (PM) (Fening et al, 2008;Kim et al, 2012;Kristal et al, 2010), supplier management (SM) (Ahire & O'Shaughnessy, 1998;Kim et al, 2012;Tari, Molina, & Castejon, 2007), product design (Kaynak, 2003;Kim et al, 2012;Merino-Díaz, 2003), statistical process control (Ahire, Golhar, & Waller, 1996;Lau, Zhao, & Xiao, 2004), quality planning (Feng, Prajogo, Tan, & Sohal, 2006;Prajogo & Brown, 2004), and continuous improvement (Delić et al, 2014;Rahman & Bullock, 2005).…”

“…Numerous studies have attempted to investigate the direct and indirect effects of quality management (QM) on various aspects of organizational performance, including product quality (Ahire & O'Shaughnessy, 1998;Banerji, Gundersen, & Behara, 2005), customer satisfaction (Choi & Eboch, 1998;Terziovski, 2006), employee well-being (Liu & Liu, 2012), innovation (Delić, Radlovački, Kamberović, Maksimović, & Pečujlija, 2014;Kim, Kumar, & Kumar, 2012;Prajogo & Sohal, 2003), mass customisation capability (Kristal, Huangm, & Schroeder, 2010), competitive advantage (Flynn, Schroeder, & Sakakibara, 1995;Powell, 1995), profitability (Barker & Emery, 2006;Kaynak 2003), return on assets (Sharma, 2006), productivity (Banerji et al, 2005, Terziovski, 2006, market share (Douglas & Judge, 2001;Fening, Pesakovic, & Amaria, 2008), sales growth (Kaynak, 2003;Su, Li, Zhang, Liu, & Dang, 2008), and management perceptions of firm performance (Herzallah, Gutiérrez-Gutiérrez, & Rosas, 2014;Samson & Terziovski, 1999). Most of these studies conceptualised QM as a latent multidimensional construct that comprises several distinct but related dimensions measured by a set of indicators that reflect each dimension.…”

The Integrated Relationship among Organizational Learning, TQM and Firm’s Business Performance: A Structural Equation Modeling Approach

“…Some studies have suggested that TQM-adopting firms enjoy a competitive advantage over non-TQM (Powell 1995, Brah et al, 2000. Furthermore, numerous empirical studies, which attempt to examine the impact of TQM, support the proposition that a continuous commitment to TQM implementation has a significant positive effect on superior firm performance, as evidenced in the case of service firms (Agus, 2004), small and medium enterprises (Ahmad et al, 2014;Wali & Boujelbene, 2010;Salaheldin, 2009) and European companies (Boulter et al, 2013). Based on the preceding discussion, we propose the following hypothesis:…”