TQM and Performance in small medium enterprises

The mediating effect of customer orientation and innovation

1. Literature Review

The relationship between total quality management and performance

The instrumental Role played by TQM in the assessment of production activities, in the standardization of processes and training, in competitive benchmarking, in measuring results and in increasing employee accountability has had the net effect of bringing down costs of defects and rework, reducing supervision and maintenance costs, managing inventory levels and stimulating innovation.

Proponents of TQM maintained that if organizations of any size implemented it efficiently, they may generate many benefits including high quality products, reduced costs, improved communications, team work, customer and employee satisfaction and improved financial performance. It was found that firms which had effectively implemented a TQM environment outperformed non-TQM firms on measures such as profitability, revenues, costs, capital expenditure, total assets and employee turnover.

Therefore, it is hypothesized that :

H1. The higher the total quality management (TQM) implementation, the greater the performance of the firm.

The relationship between TQM and consumer orientation

Improving quality by itself is not sufficient, what matters is enhancing the customer’s perception of quality. This is particularly important since many quality improvement efforts have been criticized for not taking customer feedback into account despite the call for an increase in the integration of consumer and TQM orientations.

Both market and quality management orientations share a number of common characteristics in as much as both seek to achieve better performance in meeting customer requirements, improving organizational performance capabilities and achieving a greater measure