Adopting a total quality strategy for competitive advantage : a resource-based evaluation

To study the relationship between the implementation of Total Quality Management (TQM) and superior organizational performance, a model was developed using the resource-based perspective (RBP). This theoretical perspective proposes that an organization's capabilities may be a source of competitive advantage if they are valuable in terms of providing the ability to take advantage of opportunities or mitigate threats that exist in the external environment, are. sufficiently scarce within the industry, and are supported by appropriate internal, complementary variables.

To test the hypotheses developed from this model, a survey was sent to the CEO and the Director of Quality of five hundred and twelve general medical hospitals in nineteen metropolitan areas across the United States. Secondary data pertaining to the one hundred and ninety- three responding hospitals (38% completion rate) were combined with the primary data from the questionnaire.

Results obtained using regression techniques indicated that the extent of implementation of seven TQM common practices within these organizations was positively related to organizational performance. Performance was measured with three distinct variables, perceived financial performance, archival return on assets, and an independent audit score related to quality of service. In addition to the robust findings that TQM is related to superior organizational performance, moderated regression was used to determine that this relationship is conditional on two internal variables representing perceived levels of both the formality and the openness of the organization's structure. As hypothesized, this relationship was also supported by the data.

Finally, the study's non-findings also provided interesting results. Support for a moderating effect with respect to two external variables reflecting the growth in the local market or the level of competition was not found. While these results are not consistent with the RBP, they are consistent with the teachings of the founders and advocates of TQM, who argue for the universality of its effectiveness. In addition, the level of TQM rareness within the local market areas did not moderate the TQM/Performance relationship. In sum, we found strong support for the internal capabilities argument by the RBP, but no support for the external contingencies argument.