Science, Specific Knowledge and Total Quality Management

Wruck, Karen H.; Jensen (Deceased), Michael C.

doi:10.2139/ssrn.47731

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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

See all articles by Karen H. Wruck

Karen H. Wruck

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

Michael C. Jensen (Deceased)

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

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: Suggested Citation

Wruck, Karen H. and Jensen (Deceased), 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