An analysis of the relationship between TQM implementation and organizational performance: Evidence from Turkish SMEs

Abstract

Purpose - The principal aim of this paper is to determine the critical factors of total quality management (TQM) and to measure their effect on organizational performance of SMEs operating in Turkish textile industry. Design/methodology/approach - Data for this study was collected using a self-administered questionnaire that was distributed to 500 SMEs in textile industry in the city of Istanbul in Turkey selected randomly from the database of Turkish Small Business Administration (KOSGEB). Of the 500 questionnaires posted, a total of 163 questionnaires were returned. Findings - Using exploratory and confirmatory factor analyses, seven empirically validated dimensions of TQM were identified. The structural equation modelling technique was employed to investigate the relationship between the implementation of TQM practices and organizational performance. Data analysis reveals that there is a strong positive relationship between TQM practices and non-financial performance of SMEs, while there is only weak influence of TQM practices on financial performance of SMEs. With only a mediating effect of non-financial performance that the TQM practices has a strong positive impact on financial performance of SMEs. Research limitations/implications - The sample is restricted to only a single region and a single industry, so it would be strongly recommended that data be gathered from various parts of Turkey including both various manufacturing and service industries. As the data in this study were collected from top managers of organizations on the basis of their subjective evaluations, objective performance indicators should also be employed in the analysis. Originality/value - Despite some attempts on the applicability of TQM practices and advanced manufacturing technologies as well as their impact on organizational performance of SMEs, there is a lack of systematic empirical evidence regarding the extent of TQM implementation and its effect on performance of SMEs in emerging market economies. This paper presents new data and empirical insights into the relationship between TQM implementation and organizational performance in SMEs operating in Turkey. © Emerald Group Publishing Limited. © 2008 Elsevier B.V., All rights reserved.