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Science, Specific Knowledge and Total Quality Management

Harvard Business School Working Paper No 94-003

38 Pages Posted: 11 Jul 1994  

Karen H. Wruck

Ohio State University - Fisher College of Business, Department of Finance

Michael C. Jensen

SSRN; Harvard Business School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

Multiple version iconThere are 2 versions of this paper

Date Written: July 1994

Abstract

We analyze Total Quality Management (TQM) from an economic and organizational perspective. We find that TQM is a new organizing technology that is science-based, non-hierarchical, and non-market-oriented. It improves productivity by encouraging the use of science in decision-making and discouraging counter-productive defensive behavior. It also encourages effective creation and use of specific knowledge throughout the organization. Effective implementation of TQM generally requires major changes in all three components of the organizational rules of the game, namely systems for allocating decision rights, performance measurement systems, and reward and punishment systems.

Note: A revised and shortened version of this paper is published under the same title in the Journal of Applied Corporate Finance, Summer 1997, Vol. 10, No 2. You can download it at: "Science, Specific Knowledge, and Total Quality Management".

JEL Classification: D23, L15, L22, M10, M14, O31

Suggested Citation

Wruck, Karen H. and Jensen, Michael C., Science, Specific Knowledge and Total Quality Management (July 1994). Harvard Business School Working Paper No 94-003. Available at SSRN: https://ssrn.com/abstract=47731 or http://dx.doi.org/10.2139/ssrn.47731

Karen H. Wruck (Contact Author)

Ohio State University - Fisher College of Business, Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-4330 (Phone)
614-292-2418 (Fax)

HOME PAGE: http://https://fisher.osu.edu/people/wruck.1

Michael C. Jensen

SSRN ( email )

7858 Sanderling Road
Sarasota, FL 34242
United States
617-510-3363 (Phone)
305 675-3166 (Fax)

HOME PAGE: http://ssrn.com/author=9

Harvard Business School ( email )

Soldiers Field
Negotiations, Organizations & Markets
Boston, MA 02163
United States
617-510-3363 (Phone)
305-675-3166 (Fax)

HOME PAGE: http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=ovr&facId=6484

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Harvard University - Accounting & Control Unit ( email )

Soldiers Field
Boston, MA 02163
United States

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