The relationship between total quality management practices and operational performance

Abstract Total quality management (TQM) has been a widely applied process for improving competitiveness around the world, but with mixed success. A review of the literature revealed gaps in research in this area of quality/operations management, particularly in the area of empirical testing of the effectiveness of TQM implementation. The aim of this study was to examine the total quality management practices and operational performance of a large number of manufacturing companies in order to determine the relationships between these practices, individually and collectively, and firm performance. We used a large data base of 1200 Australian and New Zealand manufacturing organisations. The reliability and validity (construct, content, criterion) of the practice and performance measures were evaluated. Our study showed that the relationship between TQM practice and organisational performance is significant in a cross‐sectional sense, in that TQM practice intensity explains a significant proportion of variance in performance. Some but not all of the categories of TQM practice were particularly strong predictors of performance. The categories of leadership, management of people and customer focus were the strongest significant predictors of operational performance. This is consistent with literature findings that behavioural factors such as executive commitment, employee empowerment and an open culture can produce competitive advantage more strongly than TQM tools and techniques such as process improvement, benchmarking, and information and analysis.