The effects of TQM Critical Success Factors on Organizational Performance An empirical study on small and medium sized Danish manufacturing companies

The purpose of this thesis is to identify the critical success factors of Total Quality Management and to evaluate their impact on the organizational performance of small and medium-sized Danish companies, operating within the manufacturing industry. Despite numerous studies investigating the relations between Total Quality management practices and organizational performance, sparse research has been conducted on Danish SMEs, rendering this a vastly unexplored field. The data underlying this study was collected using a self-administered questionnaire, distributed to 330 small and medium sized Danish companies, operating within the manufacturing industry and certified with the ISO 9001 standard. Of the 330 questionnaires posted, a total of 115 questionnaires were returned. The data was employed to test the proposed theoretical model, established with the objective of assessing the impact of six empirically identified TQM critical success factors on the organizational performance of Danish SMEs. The non-parametric multivariate estimation technique, Partial Least Squares Structural Equation Modeling (PLS-SEM), is found particularly applicable, as it enables the indirect measurement of latent variables through a number of indicators and as it rests on no distributional assumptions. Applying PLS-SEM, two empirically validated relations between the TQM critical success factors and organizational performance were identified. The empirical analysis confirmed a strong and positive relationship between the TQM construct, Customer focus, and organizational performance. The same is in evidence with the construct, Top management commitment, and organizational performance. The findings thus suggest that having a distinct customer focus, encompassing the current and future preferences of customers, the active use of feedback in the product development process and customer satisfaction as a focal point, is positively related to organizational performance. In continuation hereof, a visible and concentrated effort by management, with the objective of improving quality and setting up a corporate culture encompassing the quality missions and vision of the organization, is found to be positively associated with organizational performance. An extensive analysis of the reliability and validity of the model was conducted, revealing no concerns regarding the quality of the model put forward. The empirical results of the thesis help identify areas in which Danish SMEs, operating within the manufacturing industry, ought to pay special attention. Despite some insignificant results, the findings though suggest the notion that the identified TQM critical success factors should be implemented holistically, in order to exploit the full potential of TQM. The thesis is subject to the common limitations of survey research. The study applies perceptual data provided by managers, quality managers and production managers. When the possibility of extracting complete and comparable objective data for the organizations under observation is present, it is thus recommendable for further research to complement the analysis with objective data.