Int. Journal of Business Science and Applied Management / Business-and-Management.com
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1 INTRODUCTION
Since the 1980s, when the total quality management (TQM) concept was firstly defined (Deming,
1986, Crosby, 1979, Juran, 1986), practitioners and researchers alike have broadly defended the
positive effects of TQM practices on firms’ overall effectiveness and performance. However, although
TQM has been clearly conceptualized around basic principles such as consumer focus, continuous
improvement and human resource management, there has been a lack of consensus regarding its
primary constructs, which prevents comparison across studies and generalizations from the empirical
evidence. The 90s mark the starting point of empirical research on critical factors in TQM, although
different studies have yielded different sets of TQM factors (Saraph et al., 1989; Flynn et al., 1994;
Powell, 1995; Ahire et al., 1996; Black and Porter, 1996; Zhang et al., 2000; Antony et al., 2002). As a
result, there is no single measurement instrument to evaluate TQM implementation.
Furthermore, evidence concerning the impact of TQM on business performance is also based on a
wide range of indicators that differ across studies and are in some cases contradictory, especially
regarding financial performance, which is measured in terms of ROA –return on assets- or ROI –return
on investment. Some research has found a positive effect of TQM on the latter (Easton and Jarrell,
1998; Hendricks and Singhal, 2001a,b); whereas other research reports a negative incidence of TQM
on these measures (Chapman et al., 1997). In some cases, TQM’s repercussion on these financial
outcomes is even deemed inexistent (Adam, 1994; Powell, 1995; York and Miree, 2004). The different
methodological and conceptual approaches used by researchers may have led to conflicting results but,
in response to this controversial evidence, a new body of research is examining a contingent approach
to the TQM-performance relationship. This approach assumes that the effects of TQM on business
results are mediated by both non-controllable environmental factors, such as market competitiveness,
uncertainty or complexity (Fuentes, 2003; Chong and Rundus, 2004), and by internal factors, such as
how long TQM has been implemented, or the firms’ size, diversification or capital intensity (Terziovski
and Samson, 1999; Hendricks and Singhal, 2001a; Brah et al., 2002; Lloréns et al., 2003; Taylor and
Wright, 2003).
Obtaining sound evidence of TQM’s impact on performance in different contexts should be as
much a priority as addressing the potential moderators of this link. TQM is one of the most complex
activities that any company can involve itself in; it requires implementing a new way of managing
business and a new working culture which not only affect the whole organizational process and all
employees but also demand the allocation of significant organizational resources. Firms therefore need
to be fully convinced of the trade-offs provided by TQM, particularly if time elapses before the desired
results are felt, or if substantial organization stress has to be overcome in the short term to adopt the
necessary organizational change (Brah et al., 2002). However, most research undertaken so far relates
to companies operating in developed countries, mainly USA, UK and Australia (Sila and
Ebramhimpour, 2002), although some researchers have focused on developing economies such as India
(Motwani et al., 1997, Rao et al., 1997), Saudi Arabia (Curry and Kadasah, 2002) and Palestine
(Baidoun, 2004).
To reinforce the benefits of TQM it is also advisable to facilitate comparison across studies by
avoiding differing conceptualizations and TQM-related measures. Accordingly, it has recently become
a common practice to link research to the criteria of well-known Quality Award models (Woon, 2000;
Rahman, 2001; Prajogo and Sohal, 2004). Quality Awards provide a useful assessment framework
against which organisations can evaluate their quality management practices and their end business
results, and constitute a common benchmark or standard criteria for firms operating under their area of
influence. We advocate the use of these models as a TQM benchmark in their respective geographical
area of influence (i.e. countries), as they offer firms several advantages, including the immediate
chance to assess their closest competitors’ TQM practices and the outcomes that may be expected.
Consequently, the aim of this study is to develop an instrument to measure TQM implementation based
on Quality Award applicable to the Spanish firms under study, i.e., the European Foundation for
Quality Management (EFQM) Excellence Model, as well as to provide empirical evidence on the
relationship between management practices and measures of business performance in the model.
The body of literature that analyzes the relationship between quality management and
organizational performance resorting to quantitative data analysis, and adopting a comprehensive
analysis of the EFQM quality practices and outcomes, is limited. The list becomes even shorter if we
seek this analysis based on causal relationships and referred to business organizations (Bou-Llusar et
al., 2005; Eskildsen and Dahlgaard, 2000). Given that this model represents the European standard to
be achieved by firms involved in the TQM adventure, this study seeks to fill a gap in the literature by
employing structural equations modelling (SEM) to test the criteria relationships. Our end purpose is to
substantiate TQM’s contribution to the attainment of competitive advantage, that is, the