An Empirical Investigation on the Impact of Quality Management on Productivity and Profitability: Associations and Mediating Effect

ABSTRACT This paper tries to investigate on how quality management practices may affect productivity and profitability in the electronics and electrical industry. This study attempts to fill the research gap by examining relationships between quality management practices, productivity and profitability in the electronics and electrical industry using correlation, multiple regression analyses and SEM. In doing so, relationships between QM, productivity and profitability constructs were assessed and described. The results reveal that quality measurement, benchmarking in particular as well as employee focus, supplier relations and training appear to be of primary importance and exhibit significant impact toward productivity and profitability. In addition, the findings also suggest that productivity mediates the link between QM and profitability. Findings of the study provide a striking demonstration of the importance of quality management practices for the electronics and electrical industry in Malaysia in enhancing its productivity and profitability. Keywords: Quality Management, Productivity, Profitability, Electronics and Electrical Industry, Correlation, Multiple Regression and SEM

[1]  Joseph Moses Juran.  Juran on Quality by Design: The New Steps for Planning Quality into Goods and Services , 1992 .

[2]  L. Cronbach.  Coefficient alpha and the internal structure of tests , 1951 .

[3]  Nandor Farkas.  Employee Involvement in Quality Improvement: A Comparison of American and Japanese Manufacturing Firms Operating in the U.S , 1995 .

[4]  J. Hair.  Multivariate data analysis , 1972 .

[5]  Jayant V. Saraph,et al.  An Instrument for Measuring the Critical Factors of Quality Management , 1989 .

[6]  Edward E. Lawler,et al.  Total quality-oriented human resources management , 1992 .

[7]  Schaffer Rh,et al.  Successful change programs begin with results. , 1992 .

[8]  P. Bentler,et al.  Comparative fit indexes in structural models. , 1990, Psychological bulletin.

[9]  W. Deming.  Quality, productivity, and competitive position , 1982 .

[10]  R. Gonzalez.  Applied Multivariate Statistics for the Social Sciences , 2003 .

[11]  Emmanuel U Opara.  The empirical test of total quality management : an application of TQM at Chevron and its impact on productivity , 1996 .

[12]  Maling Ebrahimpour,et al.  Employee involvement in quality improvement: a comparison of American and Japanese manufacturing firms operating in the US , 1992 .

[13]  Hale Kaynak,et al.  The relationship between total quality management: practices and their effects on firm performance , 2003 .

[14]  J. Nunnally.  Psychometric Theory (2nd ed), New York: McGraw-Hill. , 1978 .

[15]  O. Bayazit,et al.  An analytical network process-based framework for successful total quality management (TQM): An assessment of Turkish manufacturing industry readiness , 2007 .

[16]  Gilbert A. Churchill.  A Paradigm for Developing Better Measures of Marketing Constructs , 1979 .

[17]  Jesús Perdomo-Ortiz,et al.  Total quality management as a forerunner of business innovation capability , 2006 .

[18]  J Bowe,et al.  Total quality management. , 1992, Contemporary longterm care.

[19]  D. A. Kenny,et al.  The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. , 1986, Journal of personality and social psychology.

[20]  R. Weiers.  Introduction to Business Statistics , 1991 .

[21]  Ken Black,et al.  Business Statistics: Contemporary Decision Making , 1994 .

[22]  Arawati Agus,et al.  A linear structural modelling of Total Quality Management practices in manufacturing companies in Malaysia , 2001 .

[23]  D. A. Kenny,et al.  Process Analysis , 1981 .

[24]  新楽 和夫.  J.C.Slater: Quantum Theory of Atomic Structure, Vol.1, Mc Graw-Hill Book Co., New York 1960, 502頁, 16×23cm, $11. , 1961 .

[25]  Sanjay L. Ahire,et al.  Development and Validation of TQM Implementation Constructs , 1996 .

[26]  Patrick Y. K. Chau,et al.  Reexamining a Model for Evaluating Information Center Success Using a Structural Equation Modeling Approach , 1997 .