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Understanding the Mechanism of Influence of TQM Practices on Financial Performance: the Mediating Effect of Innovation Performance

Author

Listed:
  • Kulenović Mirza

    (Ph.D. student at School of Economics and Business University of Sarajevo and is now at USAID/BiH Activity MEASURE II)

  • Veselinović Ljiljan

    (School of Economics and Business University of Sarajevo, 71000 Sarajevo, Bosnia and Herzegovina, +387 33 253 766)

  • Šunje Aziz

    (School of Economics and Business, University of Sarajevo)

  • Cero Ermin

    (Faculty of Economics and Social Science,| International Burch University)

Abstract

This study explores the mechanism of influence of total quality management (TQM) practices on a company’s financial performance (FP), considering innovation performance (IP) as a mediator variable. In addition, the proposed model seeks to determine whether the competition intensity (CI) moderates the relationship between TQM practices and FP. Based on the sample of 593 companies from various sectors in Bosnia and Herzegovina, structural equation modeling is used to analyze the relationships between the variables in the model. The results of this paper reveal the implicit and often omitted impact of IP on FP taking into account TQM practices, suggesting that the impact of TQM practices is manifested through full mediation of IP. The moderating effect of CI in the relationship between TQM practices and FP was not supported. The results indicate the role and the importance of IP in the mechanism of influence of TQM practices.

Suggested Citation

  • Kulenović Mirza & Veselinović Ljiljan & Šunje Aziz & Cero Ermin, 2022. "Understanding the Mechanism of Influence of TQM Practices on Financial Performance: the Mediating Effect of Innovation Performance," Zagreb International Review of Economics and Business, Sciendo, vol. 25(1), pages 149-176.
    • Handle: RePEc:vrs:zirebs:v:25:y:2022:i:1:p:149-176:n:1009
    DOI: 10.2478/zireb-2022-0010
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    More about this item

    Keywords

    total quality management; TQM; innovation performance; financial performance; full mediation effect;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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