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Quality management approaches and their impact on firms׳ financial performance – An Australian study

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  • O’Neill, Peter
  • Sohal, Amrik
  • Teng, Chih Wei

Abstract

The study of small manufacturing firms typically focuses on issues of entrepreneurship, business or operations strategy. Alternate issues remain scarce, and the implications for organisational performance are modest. In the Australian context, managers have often been criticised for their failure to recognise that quality and innovation are a key driving force to performance. This research utilises the work of several authors to develop quality orientations for small Australian manufacturing firms (SAMFs) to purposefully bridge the gaps in the business literature, and enable the evaluation of various performance outcomes. Specifically, this study investigates whether a firm׳s stated quality orientation is useful in differentiating firm performance. The research utilises longitudinal panel data gathered by the Australian Bureau of Statistics growth and performance survey over four years from financial year 1995 to 1998. We demonstrate that firm quality management orientation does provide a statistically significant financial performance advantage (and by inference survival advantage) over those SAMFs who do not engage in quality management. The research is a significant addition to the quality – financial performance literature, and provides a pathway forward for the use of two new financial (productivity) ratios as performance measures.

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  • O’Neill, Peter & Sohal, Amrik & Teng, Chih Wei, 2016. "Quality management approaches and their impact on firms׳ financial performance – An Australian study," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 381-393.
    • Handle: RePEc:eee:proeco:v:171:y:2016:i:p3:p:381-393
    DOI: 10.1016/j.ijpe.2015.07.015
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    References listed on IDEAS

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    4. Halilu Bello Rogo & Halilu Bello Rogo & Mohd Noor Mohd. Shariff & Muhammad Haroon Hafeez, 2017. "Moderating Effect of Access to Finance on the Relationship between Total Quality Management, Market Orientation and Small and Medium Enterprises Performance: A Proposed Framework," International Review of Management and Marketing, Econjournals, vol. 7(1), pages 119-127.
    5. Castillo-Apraiz, Julen & Matey de Antonio, Jesús, 2018. "Does quality pay in the pharmaceutical industry? The mediating role of training of personnel between quality management and performance," Revista de Dirección y Administración de Empresas, Universidad del País Vasco - Escuela Universitaria de Estudios Empresariales de San Sebastián.
    6. Cho, Young Sik & Linderman, Kevin, 2019. "Metacognition-based process improvement practices," International Journal of Production Economics, Elsevier, vol. 211(C), pages 132-144.
    7. Escrig-Tena, Ana B. & Segarra-Ciprés, Mercedes & García-Juan, Beatriz & Beltrán-Martín, Inmaculada, 2018. "The impact of hard and soft quality management and proactive behaviour in determining innovation performance," International Journal of Production Economics, Elsevier, vol. 200(C), pages 1-14.
    8. Lo, Chris K.Y. & Yeung, Andy C.L., 2018. "Quality management standards, institutionalization and organizational implications: A longitudinal analysis," International Journal of Production Economics, Elsevier, vol. 200(C), pages 231-239.
    9. Xuan Zhao & Benhong Peng & Chaoyu Zheng & Anxia Wan, 2022. "Business model innovation risk factors based on grounded theory: A multiple‐case analysis of cold chain logistics companies in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2108-2118, September.
    10. José Álvarez-García & María De la Cruz Del Río-Rama & María Del Mar Miras-Rodríguez, 2017. "How Do Quality Practices Affect the Results?: The Experience of Thalassotherapy Centres in Spain," Sustainability, MDPI, vol. 9(4), pages 1-19, April.

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