The effect of Six Sigma projects on innovation and firm performance

Abstract The paper develops a theoretical base for the effect of Six Sigma projects on innovation and firm performance. It has been proposed that Six Sigma projects enhance technological innovation of the firms; however, they are beneficial for firms in stable environments. Since Six Sigma programs are focused on variance reduction and efficiency, these initiatives are not very effective in dynamic environments, where the rate of technological change is dramatic. With their emphasis on variance-reduction and efficiency Six Sigma programs can be effective in enhancing incremental innovation. In addition, due to the focus of Six Sigma projects on existing customers, they may impede innovation for new customers. Accordingly, implementing Six Sigma projects in fast pace environments with high level of innovation and change may be a challenge, and may not result in the expected outcome. Building upon theories form process management and quality management the paper proposes several propositions to address the effect of Six Sigma projects on innovation and firm performance.

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