Does Total Quality Management Still Shine? Re-Examining the Total Quality Management Effect on Financial Performance
Total Quality Management, Volume 25, Issue 5-6, 2014
Posted: 29 Mar 2014
Date Written: March 28, 2014
This paper re-examines the effects of total quality management (TQM) on firms’ financial performance by reviewing the findings of the empirical literature. It assesses the appropriateness of different financial measures while evaluating the impact of TQM as reported by various studies. We propose a new conceptual model to empirically test the effect of TQM implementation on financial performance – one that is meaningful for shareholders. There is near consensus that the overriding objective of a firm should be to maximize shareholders’ wealth. We conclude by briefly reviewing the methodological limitations inherent in studies in this field and recommend avenues for further empirical research on TQM’s impact on financial performance.
Keywords: TQM; shareholder return; financial performance; proxy
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