The relationship between total quality management (TQM) and corporate strategy

The relationship between total quality management (TQM) and corporate strategy: the strategic impact of TQM

Denis Leonard1,2 and Rodney McAdam3∗

1University of Wisconsin, USA

2RMT Inc., Wisconsin, USA

3University of Ulster, UK

• This paper examines the relationship between Total Quality Management (TQM) and Corporate Strategy by investigating the strategic impact of TQM on organizations. There is a paucity of in-depth research examining this complex relationship.

• The research methodology is a grounded theory inductive approach involving nineteen case studies. In this approach the dialogue and storytelling within the research study enables key constraints and areas of interest in the TQM/Strategy discourse to emerge.

• The key findings indicate that: (1) in many cases the bureaucratic/functional approach to strategy is paralleled in the approach to TQM; (2) a number of organizations had difficulty in identifying the ‘driving’ influences of TQM in relation to corporate strategy; (3) TQM is found to be a useful catalyst for developing corporate strategy; (4) some organizations were found to restrict their TQM efforts to operational levels rather than adopting Strategic Total Quality Management.

Copyright  2001 John Wiley & Sons, Ltd.

The strategic influence of TQM

Many commentators refer to TQM as a key competitive factor (Madu et al., 1996). This shows that quality and its strategic impact are considered to be an important issue to managers. The possibility arises that TQM has not as yet been accepted as an obvious strategic tool even in the most basic form, leading-edge businesses apart. This is despite Juran stating in 1991 that:

Product quality is now widely recognised as a major force in the competitive marketplace and in international trade (Juran, 1991, p. 81).

*Correspondence to: Rodney McAdam, School of Management, University of Ulster, Newtownabbey, Belfast, Northern Ireland, BT37 OQB, UK.

E-mail: r.mcadam@ulst.ac.uk

This terminology is still being used as though TQM has just now reached that strategic level point in its history. Gundogan et al., who carried out a survey evaluating TQM as an integrated method of understanding management, are of the view that:

In many cases, a good quality management scheme can be a survival factor and can even be the key to prosperity. Manufacturers now concentrate on quality as a contemporary competitive advantage in the international market (Gundogan et al., 1996, p. 379).

But has TQM reached this point? Tillery and Rutledge (1991) in discussing the widespread adoption of TQM in the USA stated that:

Quality was allowed to become an incidental and secondary factor, if considered at all in the formulation of a competitive strategy(Tilleryand Rutledge, 1991, p. 711).

In the intervening years little may have changed in quality, or rather the ‘maturity’ and sophistication of its application by companies may not have progressed. In describing the attitude of US firms of the time Tillery and Rutledge in 1991 commented that:

The response of many of these same firms to their new environment has been to make quality an important part of their competitive strategy in an attempt to restore a quality image to US made products, as well as actually to improve product quality. (Tillery and Rutledge, 1991, p. 71).

Quality now as then, is still used by many because it is needed to allow organizations to perceptibly stay on level terms, at least in aesthetic terms, as competitors and not to be perceived as ‘behind the times’. This lack of true commitment at senior management/director level to use quality in a corporate strategic manner was highlighted by Gundogan et al. who concluded that

The message of quality as a strategic weapon for contemporary competitiveness seemed to be getting through to the manufacturing environment... (Gundogan et al., 1996, p. 384).

They go on to point out that (despite their assertion that quality is used as a competitive advantage):

There are some areas for concern. The results of quality data analysis, although they were adequately processed, did not appear to be influencing top management and quality policies (Gundogan et al., 1996, p. 384).

An insight into the thinking of the companies involved in this research to explain this paradox is when they agree that:

TQM based on continuous improvement is seen as a competitive advantage. (Gundogan et al., 1996, p. 379)

This interpretation of TQM as continuous improvement is very much of an operational nature. If this is how it is perceived, then it is seen as being separate from the strategic issue and only of operational if perhaps ‘tactical’ benefit. There is a need to conduct exploratory-grounded case based research to obtain deep rich data that will contribute to this debate.

Research methodology – inductive research and Grounded Theory in TQM

Management research is predominantly based on deductive theory testing and positivistic research methodologies (Alvesson and Willmott, 1996). These approaches incorporate a more scientific approach with the formulation of theories and the use of large data samples to observe their validity. However, these approaches by and large, fail to give deep insights and rich data into TQM in practice within organizations:

In many areas of the social sciences existing deductive, theory testing research methods do not adequately capture the complexity and dynamism of the context of organisational settings (Perry and Coote, 1994, p. 3).

Juran (1991) and Wilson and Durant (1995) emphasize this point be saying there is a paucity of systematic and rigorous evaluation in many TQM studies. Furthermore, Wilson and Durant state the need for more theory-grounded and contingencybased research rather than be restricted to deductive approaches.

Grounded theory

One of the most developed inductive researchmethodsisthatofGroundedTheory (Glaser and Strauss, 1967). In this methodology (see Figure 1.) the researcher starts with minimalist a priori constructs, inquires deeply into organizational behaviour and events and gradually tests and forms theoretical constructs.

The researcher is able to develop theory through comparative method...looking at the same event or process in different settings or situations (Easterby-Smith et al., 1993, p. 35.) Grounded Theory uses abstract concepts to describe and analyse a series of general phenomena but based on practical experience. It is this intrinsic link to practical experience that makes the method attractive totheoryformingwithinthepracticeof TQM. For this study current study nineteen organizations were selected for in-depth analysis. These organizations were selected based

Nineteen organizations were

selected for in-depth analysis

on their involvement in TQM as evidenced by their use of the Business Excellence model (EFQM, 2001) and participation in national quality awards. The research was gathered using semi-structured interviews, ethnography and organization information and archives (Leonard and McAdam, 2001).

All the interviews were taped, transcribed and coded using Grounded Theory principles (Strauss and Corbin, 1990). The results from the case studies were analysed, coded (Remenyi et al., 1999) and written up. The key categories that emerged as significantelements of the relationship between TQM and corporate strategy are discussed as follows.

Bureaucratic and functional perspectives

When discussing the relationship between TQM and corporate strategy the majority of the cases presented a very bureaucratic or functional view of TQM. This view has direct parallels to the bureaucratic approach found in the strategic decision making process: The following quotation is typical:

Over the last few years we also have taken the time to have a quality plan every year. It is what we call an annual improvement plan. We would try and integrate that with our normal business activity. Now

as I said we have just formed a five-year strategic plan for the first time and so we are thinking more than just on an annual basis and we are just in the process of putting together some operational plans for that...we have a steering committee.

Ethnography

Longitudinal Case Study

Researcher’s observation

Critical ReflectionMultiple source interviews

andSocial constructionist workshops

Change agent’sStudy of existing records

Critical Reflection and Reflexive Action

Figure 1. Generic Grounded Theory research methodology (modified from Strauss and Corbin, 1990; Leonard and McAdam, 2001).

However, what has been done here, the creation of steering groups and reporting

structure, is relatively easily carried out and in fact must be done to have any practical usageofTQMandimpactontheorganization to any extent. Also this action does not explain the level of importance of TQM or the breadth of its influence in the strategic decision-making process. The manager pointed out that by making TQM a part of the process as above:

Our whole business is functional around our customers. It is about getting out into the marketplace and finding out whatour customers need and giving our customers that. So therefore, it is corporate strategy and that is why it is not something separate.

This manager was stating that the customer needs to be asked what they want, ensuring this is given, through satisfaction and reputation securing and gaining a customer base. Thus, increasing market share resulting in an increase in sales, combined with operational improvement results

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