Quality Practices for a Competitive Advantage in Smaller Firms

This exploratory study examines the quality practices used in smaller entrepreneurial firms. The current literature defines flexibility as one of the primary competitive priorities for smaller firms. This study develops an exploratory proposition that relates the characteristics of quality systems used by small firms, and their value, to the competitive priority of flexibility. A survey of 184 small firms in the US. was conducted using the classification scheme for quality systems consistent with the Malcolm Baldridge National Quality Award (MBNQA) performance criteria. Overall, the results support the proposition that small firms tend to employ quality practices that enable change and that position the firm to pursue flexibility as a competitive priority. The paper concludes with a discussion of the insights generated by the findings and directions for future research. Small businesses are mighty minnows, reflecting the competitive spirit that a market economy needs for efficiency; they provide an outlet for entrepreneurial talents, a wider range of consumer goods and services, a check to monopoly inefficiency a source of innovation, and a seedbed for new industries; they allow an economy to be more adaptable to structural change through continuous initiatives embodying new technologies, skills, processes, or products (Ibielski 1997, p. 1). Small business productivity has been the driving engine of the U.S. economy for the past two decades. With the beginning of the new millennium, the degree of productivity demonstrated by smaller firms will be vital to a continued economic surge. Stressing quality can produce the desired productivity results (Deming 1986). The general definition of productivity is the ratio of outputs to inputs. In this context, pursuit of higher quality levels leads to fewer inputs via less rework and fewer failures, and more outputs via improved competitive position and increased demand (Gitlow, Oppenheim, and Oppenheim 1995). Perhaps most importantly, a fundamental principle of the Total Quality Management (TQM) philosophy is an intense focus on customer satisfaction (Noon and Radford 1995; Hodgetts 1998). Focus on the customer enables the firm to recognize changing market conditions and effect appropriate change. Hence, the relationships between productivity and quality go beyond operational efficiency and incorporate the uncertain and dynamic nature of the competitive environment in which the smaller firm participates. In this context, it is important to analyze the role of quality practices that enable smaller firms to pursue competitive priorities, such as flexibility. Following the lead of larger firms, smaller firms are moving into quality programs at a "phenomenal rate' (Meyer 1998). In examining the objective measures of quality in U.S. firms, Andreichuk (1992) stated, "It's a common misconception that big firms with extensive human and financial resources can do a better job of educating and motivating their workers to make quality improvements. The truth is that smaller companies can be even more successful at soliciting employee support and involvement because there are fewer management layers to permeate and fewer people to convince of the benefits" (p.29). As a way to improve the overall competitiveness of U.S. industries, Congress created the Malcolm Baldridge National Quality Award (MBNQA) in 1987. Each year there can be two MBNQAs given to applicants in each of three categories: manufacturing, service, and small business. However, although total quality has now become an expectation in contemporary business, the debate continues as to the real effectiveness of TQM programs. Shin, Kalinowski, and EI-Enwin (1998) argued that TQM programs fail due to an inefficient system for executing the quality principles. In studies that have examined TQM (Ernst & Young 1993; Black and Porter 1996; Shin, Kalinowski, and EI-Enwin 1998), it becomes apparent that there is agreement on the guiding principles of total quality. …