Impact Quality Management Practices On Performance and Competitive Advantage

Decision Scienc<es
Volume 26 Number 5
Sept./Oct. I995
Printed in the LISA.
The Impact of Quality Management

Practices on Performance and
Competitive Advantage
Barbara B. Flynn
College of Business, 300 Carver Hall, Iowa State University,Ames, IA 50011;
e-mail: bjlynn @ iastate.edu
Roger G . Schroeder
Operations anal Management Science Department, Curtis L. Carlson School of Management,
332 Management and Economics Building, University of Minnesota, 271 19th Avenue South,
Minneapolis, MN 55455; e-mail: [email protected]
Sadao Sakakilbara
Faculry of Business and Commerce,2-1545, Keio University,Mita, Minato-Ku, Tokyo 108 Japan
ABSTRACT
As decision makers become more involved in implementing Total Quality Management,
questions are raised about which management practices should be emphasized. In
this exploratory investigation of the relationship of specific quality management
practices to quality performance, a framework was constructed. It focuses on both
core quality management practices and on the infrastructue that creates an environment
supportive of their use. In addition, it incorporatestwo measures of quality performance
and their role in establishing and sustaining a competitive advantage.
Path analysis was used to test the proposed model, with multiple regression
analysis determining the path coefficients, which were decomposed into their various
effects. Weak linkages were eliminated. The trimmed model indicated that perceived
quality market outcomes were primarily related to statistical controllfeedback and
the product design process, while the internal measure of percent that passed final
inspection without requiring rework was strongly related to process flow management
and to statistical controllfeedback, to a lesser extent. Both measures of quality
performance were related to competitive advantage. Important infrastructure com-
ponents included top management support and workforce management. Supplier
relationships and work attitudes were also related to some of the core quality practices
and quality performance measures.
The results were interpreted in light of Hill’s concept of order winners and
order qualifiers and Garvin’s eight dimensions of quality. They indicate that different
core quality management practices lead to success in different dimensions of quality,
and that those dimensions function differently as order winners and order qualifiers.
Subject Areas: Empirical Survey and Production/Operations Management.
65 9
660 Impact of Quality Management Practices
INTRODUCTION
As decision makers realize the importance of high quality production in establishing
and maintaining a global competitive position, there has been a corresponding
interest in research on quality management. Much of the literature to date has been
descriptive; in particular, examining the practices used by Japanese companies (e.g.,
[21, [241,[351, [47], and 1661). The limited empirical literature focuses primarily on
describing commonly used quality management practices, in both the U.S. and in
Japan (see [6], [ll], and [12]). There have been only a few attempts to empirically
relate the use of certain quality management practices to quality performance and
to the overall performance of the organization. For example, Garvin [12] studied
quality practices and performance in the room air conditioner industry, and Roth,
DeMeyer, and Amano [56] compared the relationship of various quality practices to
quality performance in the U.S., Europe and Japan. Roth and Miller [57] found
quality programs to be a strong predictor of manufacturing strength. However, the
set of quality management practices included in these studies was quite limited.
Quality infrastructure practices were not considered. In addition, these studies were
conducted at the business unit (product-market) level, which may be problematic,
since implementation of quality management practices can vary widely between
plants within a common business unit.
In this exploratorystudy, we attempt to fill the gap by studyingquality management
at the plant level. We begin by suggesting a conceptual framework that synthesizes
findings from the literature and discussions with managers about quality manage-
ment practices and their expected relationship to quality performance. We take the
position that the plants with the best quality performance will use a coordinated and
integrated set of quality management practices, rather than focusing their efforts on
a few popular quality management practices.
FRAMEWORK FOR QUALITY MANAGEMENT

This paper takes the approach that quality management is an integrated, interfunc-
tional means of achieving and sustaining competitive advantage. In examining the
practices that comprise this approach, it groups management practices into core
quality management practices, which are expected to lead directly to improved quality
performance, and quality management infrastructure practices, which comprise the
environment that supports effective use of the core quality management practices.
Figure 1 illustrates the proposed framework for quality management and its
effect on performance. The five boxes at the left contain the quality management
infrastructure components. At the center are the core quality management practices,
indicated by rounded boxes. The product design process and statistical controllfeedback
are expected to have both a direct effect on quality performance and an indirect
effect, through their impact on process flow management, which is also expected to
be directly related to the measures of quality performance. The boxes at the right
represent performance outcomes. The core quality management practices are expected
to have an effect on both perceived quality market outcomes and the percent of
items that pass final inspection without requiring rework, which are believed to
make an important contribution to competitive advantage. Each of these components
is described below.
Flynn, Schroeder, and Sakakibara 66 1
Figure 1: Proposed model of the relationship between quality management practices

and performance.
Core Quality Management Practices

Process FZow Management. Effective process flow management is postulated to
have a direct impact on quality performance through reduction of process variance.
As process variance is reduced, the likelihood of defective parts is reduced accordingly.
Process flow management practices include heavy reliance on preventive maintenance
[lo] [ll], which emphasizes scheduled maintenance in order to avoid equipment
breakdowns. Hayes notes that the cleanliness and organization of the workplace is
also important, quoting a Japanese manager, “If you clean up the factory floor, you
tend to clean up the thought processes of the people on it, too” [24, p. 591.
Foolproofing of a process reduces process flow variance by designing the
process so that it is virtually impossible to perform it incorrectly [3] [18]. Also
known by the Japanese term Poka-Yoke [61], foolproofing involves design of fixtures,
use of electronic detection and signalling devices, product redesign and other practices
that encourage or force proper performance of an operation, particularly assembly.
Another means of reducing process flow variance involves scheduling produc-
tion to allow time for catching up at the end of the day. Knowing that there will be
ample time to (completethe day’s scheduled production encourages line workers to
stop the production line whenever a process flow problem is detected. Also known
by the Japanese term Jidoka, line-stop capability simplifies control of the process
by directing attention to the stopped equipment and the worker who caused the
stoppage [62]. This creates the “necessary pain” [23] to force attention to the
solution of the process flow problem, preventing future line stoppages.
When the shop floor is laid out so that machines are in close proximity, rather
than separated by in-process inventory, the visibility and subsequent solution of
process flow problems is enhanced [18]. In cellular layouts, there may also be
flexible workers and multiple machine tending, which facilitates group process
problem solving, often without slowing down production. The frequent and visible
presence of managers on the shop floor is also very helpful in solving process
problems as they occur, keeping the process flowing [%I.
Product Design Process. An effective product design process is believed to
have a direct impact on quality performance through its effect on product reliability,
product features and serviceability. High levels of reliability are achieved by con-
sidering the failure probabilities of each individual system and subsystem during
the product design process [lo]. All else being equal, the fewer the parts in a
product, the lower its failure rate will be. Product features and serviceability may
be enhanced by including customers on product design teams, incorporating the
customers’ perspective in the design process. Product features improve quality by
providing a product that better meets the needs of the customers, while serviceability
influences the customers’ ease of use [22].
The product design process is also believed to have an indirect effect on quality
performance through the impact of design for manufacturability on process flow
management. The development of parts designs that are simple to manufacture and
assemble leads to less process variance [21]. Key management practices include
constant interaction between design engineers, the manufacturing function, customers
and suppliers, extensive prototyping and trial production runs. The goal is to “get
the bugs out” of a new product before production, rather than rushing to market
with a questionable product [21].
In order to achieve the design of reliable and manufachuable products that meet
the needs of the customers, interdisciplinary design teams are used, in conjunction
with a formalized product design process. Rather than being limited to design
engineers, design teams involve diverse constituencies, including direct laborers,
manufacturing engineers, quality engineers, customers, suppliers and marketing rep-
resentatives. They follow a prescribed process that is designed to obtain input from
a number of perspectives at each stage, incorporate quality considerations into the
design of new products and do so in an efficient manner [21].
Statistical ControUFeedback.The use of statistical control/feedback is pro-
posed to have a direct effect on quality performance by detecting and feeding back
information about defective parts to the operators and engineers. Detection of quality
problems is achieved through the use of statistical process control (SPC), which
establishes the limits of normal variability of the production process. Knowledge of
the limits and the use of control charts empowers direct laborers by giving them
knowledge of when it is appropriate to stop the production process in order to
remedy a quality or process flow problem. This enables determination of the root
cause of quality problems, in order to prevent their recurrence.
Feedback of information about the process often takes the form of various
charts that portray SPC information, as well as other information, such as defect
and breakdown rates, schedule compliance, plant productivity, etc. Feedback may
Flynn, Schroeder, and Sakakibara 663
also be verbally provided to individuals by their supervisors. Schonberger states that

a key aspect of feedback is its timeliness: “When discovery of a mishap is delayed,
the trail of evidence of causes grows cold and the number of combinations of causes
quickly becomes astronomical” [59, p. 51.
The use of statistical controYfeedback is also postulated to have an indirect
effect on quality performance through its effect on process flow management. The
use of Statisticid controVfeedback facilitates stopping to remedy problems before the
process drifts out of control, producing defectives [61].
Quality Management Infrastructure Practices

Customer ReMonship. Establishment and maintenance of an open relationship
with customers provides an input to the product design process by facilitating
clarification of the customers’ needs and desires. Key to nurturing strong customer
relationships is the establishment of communication links between the plant and
customers [65].Practices include frequent meetings with customers, visits to customer
plants, customer visits to the plant [58] and encouragement of customer feedback
on product and service quality.
The relationship with customers is hypothesized to have an indirect effect on
quality performance in three ways. First, by improving initial design quality, a strong
relationship wilh customers will improve quality performance by reducing the number
of engineering(changeorders after the design has reached production, thereby reducing
manufacturing process variability [%I. Second, the establishment of strong links
with customers is useful in the development of manufacturable designs, allowing
determination of which specifications and tolerances are critical from the customers’
perspective. Third, customer interaction is likely to lead to the design of new product
features, which better meet the customers’ needs and satisfy customers.
Supplier Relationship. Suppliers can contribute to quality performance in a
number of wails. Key to maximizing their contribution is the selection of a small
number of suppliers and establishing a long-term relationship with them. Selection
of suppliers based on quality considerations, rather than cost, encourages the provi-
sion of high quality parts; in contrast, suppliers selected through the competitive
bidding process have no incentive to improve quality once a contract has been
awarded [47]. Companies with a relationship with suppliers characterized by inter-
dependence and cooperation establish links for systematicallyexchanging information.
For example, supplier certification or qualification programs provide a means of
conveying manufacturers’ quality expectations to suppliers, as well as providing
assurance about the quality of incoming materials and parts [35]. Suppliers also
contribute to the product design process through inclusion in product design teams,
where they provide input about the capabilities of prospective materials and parts.
The supplier relationship is also expected to be directly related to process flow
management, since purchased materials and parts are a dominant source of process
variability [41].
Work Aftihrdes. Development of a work force with positive work attitudes,
including loyally to the organization, pride in work, a focus on common organizational
goals and the ability to work with employees from other departments, facilitates
teamwork and flexibility [29]. Effective communication between diverse parts of
the organization, rather than rivalry, competitiveness or lack of effective means of

communication, is vital. Knowledge of common organizational goals is essential in
ensuring that teams will progress in a direction that is not inconsistent with the
organization’s common goals [60]. Flexibility is particularly important in process
flow management, permitting workers to shift assignments to cover bottlenecks and
absences, smoothing out process variance [8] [31] [40]. It may also improve problem-
solving ability.
When employees are loyal to the organization and have pride in being part of
it, they will be more willing to take individual risks in order to better the organization.
Thus, employees with positive work attitudes have the knowledge and confidence
to attack problems, rather than defer to supervisors, and to be contributing team
members.
Workforce Munugement. Managing the work force to enhance work attitudes
requires a non-traditional approach to problem solving and compensation. This
approach emphasizes the importance of employees’ ideas and their continuous
growth and development [38] [44]. Interfunctional teams become the basis for
problem solving, while compensation approaches include incentives for group per-
formance, quality-based incentives and compensation based on breadth of skill [30]
[31l 1381 [391 1461.
In developing and encouraging team problem-solving approaches, it is important
that supervisors take on a new role, functioning as coaches, rather than giving
subordinates orders. A coaching supervisor is willing to let employees make their
own mistakes, in order to learn how to be empowered and manage their own work;
thus,supervisors function more as resources than as superiorsin this type of environment.
Top Management Support. Top management support is expected to be inte-
gral to encouraging the practices and behaviors that lead to quality performance
throughout the organization. It is expected to have an impact on all of the dimen-
sions of the framework. For example, top management can encourage the develop-
ment of strong customer relationships through the provision of resources for
customer plant visits by employees, inviting customers to visit the plant, requiring
the solicitation of detailed information about customer needs and specifications, and
requiring the inclusion of customer representatives on product design teams. Strong
relationships with suppliers can be nurtured by top management de-emphasizing price
considerations in evaluating supplier selection and retention, providing the purchas-
ing department with the tools needed to assess supplier quality levels, encourage-
ment of long-term contracts with suppliers and requiring suppliers to be certified
for quality [51]. Top management can encourage quality in the design process by
sheltering the design function from pressures to rush new products to market before
they have been thoroughly tested [21]. Quality in process flow management is
encouraged when top management eliminates the use of short-term, output-based
measures as the means of supervisor evaluation, and instead, provides rewards for
process flow improvements. Top management influences work attitudes through the
development and communication of a clear strategy that identifies the nature and
direction of the organization as including quality performance, thus, encouraging
goal congruence [63]. Statistical controyfeedback is encouraged by top manage-
ment’s insistence that key information about the process be recorded. More impor-
tantly, top management must act immediately on process feedback it receives, and
encourage all managers and supervisors to do the same. Top management supports
workforce management through its provision of resources to support training efforts,
encouraging a thorough selection process and the development of compensation
schemes which are related to quality goals.
Top management should accept its responsibility for quality and provide active
quality leadership through the types of actions listed above. It is important to have
strong, visible leadership for quality in a well-developed, focused strategy that has
quality as its central focus. A long-term orientation by top management is vital in
order to preveint frustration if changes in quality performance progress more slowly
than expected. In order to communicate this strategy to employees at all levels, it
is necessary to create a managerial climate that focuses on quality performance [32],
since employees behave as they perceive they are expected to by higher levels of
management [67].
Performance Outcomes
Quality performance is a difficult concept to define precisely. Indeed, Garvin [13] lists
eight critical dimensions of quality performance. Garvin’s list includes: performan-
primary operaling characteristicsof a product; features-characteristics that supple-
ment the basic functioning of the product; reliability-the probability of the product
malfunctioning or failing within a specified time period; conformance-the degree
to which the product’s design and operating characteristics meet established standards;
durabilityae amount of use the customer gets from the product before replacement
is preferable to continued repair; serviceability-the speed, courtesy, competence
and ease of relpair; aesthetics, which is based on individual preference for how the
product looks, feels, sounds, tastes or smells; and perceived quality, which is based
on image, brand name and advertising that makes inferences about quality. Maani
and Sluti describe a conceptual model that combines quality dimensions into two
constructs, staling that “the link between quality and business unit performance may
be explained via two distinct paths, arising from two different definitions of quality:
(1) manufacturing-based definition, or quality of conformance, and (2) product-
based definition, or quality of design [45, p. 931.” While it is difficult to precisely
measure the dimensions of the quality construct in an objective fashion, Figure 1
uses several proxies for quality performance.
Perceived QwUy Market Outcomes. Perceived quality market outcomes focuses
on management’s perception of the plant’s product quality and customer service,
relative to its competition. As such, it is a multidimensional construct, implicitly
including product characteristics such as conformance, reliability, performance and
durability, as vvell as serviceability and perceptions of customer satisfaction, which
could potentially include features and aesthetics.
Percent if Items That Pass Final Inspection Without Requiring Rework.
The percent of items that passes final inspection without requiring rework is an internal
measure of the plant’s ability to control its processes so that quality is designed and
built into its products, rather than defects inspected out. This primarily measures
Garvin’s conformance dimension. As conformance to specifications has an impact on
performance, durability and reliability, the percent of items that pass final inspection
without requiring rework is expected to be related to perceived quality market outcomes.
Competitive Advantage. A firm’s competitive advantage is the way in which

it creates value for its customers. It does so by outperforming its competition on
various dimensions, which allows it to establish and sustain a defensible position in
its product market. Porter [53][54][55]describes two distinct competitive advantages:
low cost and differentiation, which may include quality, features, delivery, follow-up
service, ease of use and other non-cost means of differentiating a f m from its com-
petitors. Hayes and Wheelwright [25][68] suggest that there are five manufacturing-
based competitive advantages: low cost, high quality, dependability, flexibility and
innovativeness.
Traditionaleconomic analysis suggests that these competitive advantagesrepresent
tradeoffs. More recently, Porter [53][54][55] suggests that every organization must
make a choice about which competitive advantage to pursue in order to avoid being
“stuck in the middle.” However, there is both theoretical [27][34][48]and empirical
[19][20][69]support for the notion that simultaneous pursuit of several competitive
advantages can lead to a stronger position in the market than focusing on a single
competitive advantage. These researchers suggest that competing on several fronts
simultaneously creates a position that is difficult for competitors to attack.
There have been several recent attempts to conceptualize competitive advantage
and related constructs as a measure of multiple performance criteria. For example,
Nemetz [49] suggests including measures of quality, material control, delivery,
inventory, machine performance, flexibility, and cost, stating that measures included
should meet the following criteria: (1) they should reflect manufacturing processes,
(2) they should promote decisions congruent with long-term profitability, and
(3) they should help to control operations. Wood, Ritzman and Sharma [70]empirically
found four independent clusters for achieved performance. These were quality
(including performance, durability, reliability and features), delivery (including both
speed and dependability), price/cost and a second quality dimension that included
performance, consistency and quality as perceived by the customer.
Hypotheses
The relationships portrayed in Figure 1 give rise to a number of hypotheses. The
first four deal with interrelationships among the quality infrastructure variables.
They focus primarily on the foundation for quality management established by top
management support.
H1: Customer relationship is directly related to top management support.
H2: Supplier relationship is directly related to top management support.
H3: Workforce management is directly related to top management support.
H4: Work attitudes are directly related to top management support and work-
force management, as well as indirectly related to top management sup-
port through the mediating effect of workforce management.
The next three hypotheses focus on the determinants of the core quality management
practices. They emphasize the supportive role of the quality infrastructure practices.
H5: The product design process is directly related to customer relationship,

top management support, supplier relationship and work attitudes. It is
indirectly related to workforce management through the mediating effect
of work attitudes; and to top management support through the mediating
effect of supplier relationship, workforce management and work attitudes.
H6: Process flow management is directly related to top management support,
suplplier relationship, workforce management, work attitudes, product
design process and statistical controYfeedback. It is indirectly related to
top management support, customer relationship and supplier relationship
through the mediating effect of the product design process; and to top
management support, workforce management and work attitudes through
the mediating effect of statistical controYfeedback.
H7: Statistical control/feedback is directly related to top management support,
workforce management and work attitudes; and indirectly related to top
management support and workforce management through the mediating
effect of work attitudes.
The final set of hypotheses deals with the effects of the core quality management
and infrastructure practices on the measures of plant performance. In the interest of
parsimony, the mediators of the indirect effects are not listed.
H8: Perceived quality market outcomes are directly related to the product
design process, statistical control/feedback and process flow management;
and indirectly related to customer relationship, supplier relationship,
workforce management, work attitudes and top management support.
H9: The percent of items that pass final inspection without requiring rework
is directly related to product design process, statistical controYfeedback
and process flow management; and indirectly related to customer relation-
ship, supplier relationship, workforce management, work attitudes and
top management support.
H10: Cornpetitive advantage is directly related to perceived quality market
outcomes and the percent of items that pass final inspection without
requiring rework. It is indirectly related to product design process, statistical
controUfeedback, process flow management, customer relationship, sup-
plier relationship, workforce management, work attitudes and top man-
agement support.
METHOD
Sample
The sample wa6 comprised of data collected as part of a larger data collection effort,
which measured management practices and performance characteristics of world-
class manufacturers in the U.S.It was constructed so that plant-level analysis could
be conducted, because it is at the plant level that specific quality management
practices and performance occur. In order to assure a broad range of practices and
668 Impact of Quulity Management Practices
performance, a two-factor stratified sample design was used, with industry and plant
type as the two factors. Data were solicited from a stratified random sample of 75
manufacturing plants with greater than 100 employees in the machinery, electronics
and transportation components industries, defined at the 3digit SIC code level.
These industries were chosen because they are industries in transition, where a great
deal of variability in performance and practices was expected to be present. Three
plant types were chosen: Japanese-owned (operating in the U.S.), World-Class repu-
tation (U.S.-owned) and traditional (U.S.-owned). These plant types were included
because they were expected to provide information about a broad range of manage-
ment practices and perfomance.
The plants, all located in the U.S., represented different parent corporations. A
master list was developed for each substratum using Dun’s Industrial Guide: The
Metalworking Directory [5] as the source for traditional plants, a Japanese-language
source published by JETRO as the source for Japanese plants, and Schonberger’s
[58] honor roll, and communication with industry leaders as the source of U S . -
owned world-class plants. Within each master list, all plants were randomly selected.
Participation was solicited by telephone conversations with the plant managers.
A total of 706 questionnaires were received, representing 60 percent (45 plants) of
the 75 plants that were contacted. The 45 responding plants were not significantly
different from the original universe of 75 plants in terms of plant size or location.
Three plants were subsequently removed when it was discovered that they were
inappropriate to the sample design (for example, fewer than 100 employees, or from
the same parent corporation as another plant in the sample). Responses by plant type
and industry are summarized in Table 1. Table 2 summarizes selected characteristics
of the sample.
Variables
The measured variables conespond to the components of the framework. Top manage-
ment support is an exogenous variable, not influenced by the other measured vari-
ables in the model, while all other variables are endogenous variables. The percent
of items that passed final inspection without requiring rework was an objective
measure, while the remaining ten variables were each operationalized as the mean
value on a perceptual scale (complete scales are listed in the Appendix), measuring
a specific component of the framework, where a value of one indicated the best
performance and a value of five indicated the worst performance. The scales were
developed by us to correspond to the dimensions of quality management practice
that we believed would be important, based on the literature. The measure of com-
petitive advantage focused on five competitive advantages (not including quality, in
order to avoid tautological logic): low cost, fast delivery, volume flexibility, inventory
turnover and cycle time. A low score on this scale indicates that plant management
perceives that the plant has been relatively successful pursuing several of these
competitive advantages simultaneously.
Table 3 contains the mean, standard deviation and variance of each variable
and its zero-level correlation and covariance with all other variables. It indicates
that there were no serious problems with unusually high standard deviations, nor
unusual means. Table 3 does indicate the presence of multicollinearity, particularly
between work attitudes, process flow management and several other variables. Although
Flynn, Schroeder,and Sakakibara 669
Table 1: Overview of plants in sample.

Industry
Transportation
Machinery Components Electronics
Stratification by plant
U.S.traditional 5 3 4
U.S.world-class reputation 4 4 9
Japanese owned 4 5 4
Stratification by respondent
U.S.traditional 82 48 65
U.S.world-class reputation 69 67 135
Japanese owned 88 90 62
some multicollinearity between independent variables is not unusual, relatively high

levels of multicollinearity between independent variables can lead to difficulties in
drawing inferences on the basis of the regression estimates (due to higher standard
errors of the estimated correlation coefficients) [2] [50].However, Asher [l] indicates
that even at r=0.8 the obtained results will be close to the true values, while they
will be more disparate at higher levels of correlation. The correlation between
workforce management and work attitudes (r=0.8108) was the only one that exceeded
0.80. Two tests were used to further assess the impact of the observed multicol-
linearity. Firsl, Lewis-Beck [42] suggests that zero-order correlations fail to consider
how each independent variable is related to all other independent variables simul-
taneously. He:suggests that a stronger indicator of multicollinearity is a high R2
value combined with statistically insignificant coefficients when each independent
variable is regressed on all others. None of the independent variables was found to
have high multicollinearity using this criterion; although several models had rela-
tively high R:' values, each had at least several statistically significant coefficients.
Second, the Variance Inflation Factor (VIF), which measures the inflation in parameter
estimates due to collinearities among the independent variables [50], was calculated
for each model. This was done during the path analysis, and VIF values are listed
in Table 6. All1 model variables were well within the VIF limit of 10, indicating that
their multicollinearity did not have an undue influence on the least squares estimates.
Thus, all variables in the model were retained for further analysis.
Because there were six plants that declined to provide information about the
objective measure of the percent of items that passed final inspection without requiring
rework, analysis of variance was used to test whether there was a systematic differ-
ence between the respondents and nonrespondents to that item, in terms of the other
variables. Table 4 indicates that there were no statistically significant differences
between respondents and nonrespondents, in terms of the percent of items that
passed final inspection without requiring rework; thus, all 42 observations were
retained for further analysis. The variables were standardized after descriptive statistics
were calculated, but prior to further statistical analysis.
Table 2: Characteristics of sample plants. 9
0
Nationality Sample
U.S. Owned Industry Sample
Entire U.S. Owned World-Class Japanese Transportation
Characteristic Sample General Reputation Owned Machinery Components Electronics
Sales value of production 139,758 127,220 213,657 78,397 92,106 63,663 225,433
($000)
Manufacturing costs
Direct labor (%) 9 10 7 10 9 8 10
Materials (%) 65 61 61 74 68 66 63
Overhead (%) 25 28 32 15 24 26 27
Net investment in plant and 21,896 22,398 20,035 23,494 20,058 26,330 20,550
equipment ($OOO)
Year plant originally built 1964 1939 1964 1986 1952 1965 1972
Equipment age:
Less than 2 years old (%) 24 12 16 52 14 29 26 is
tr
3-5 years old (96) 20 8 25 35 18 18 24 -f:..
6-10 years old (8) 22 28 25 10 15 22 26 %
11-20 old (a) 20 29 21 3 28 20 15 (0
> 20 years old (%) 14 23 13 0 25 11 9 fj,
Number of hourly personnel 419 318 604 278 542 387 357 s
Number of salaried personnel 214 217 289 117 317 108 209 ;s
Production processes: 29
One of a kind (%) 5 15 3 1 12 1 4 3
Small batch (%) 33 44 36 17 36 18 41 $
Large batch (a) 16 37 7 8 19 23 7 *cr
Repetitivdsemi-continuous(%) 32 10 40 39 17 52 28 :
Continuous (%) 18 3 11 39 16 9 24 a.
0
f
Table 3: Correlations, covariances and descriptive statistic^."^
Standard
Variable Mean Deviation 1 2 3 4 5 6 7 8 9 10 11
1. Top management 2.48 0.44 0.19 0.09 0.07 0.10 0.10 0.15 0.09 0.12 0.14 -1.04 0.10
SUPPO*
2. Customer relationship 2.17 0.51 038 0.26 0.06 0.06 0.05 0.08 0.07 0.06 0.06 -0.63 0.08
3. Supplier relationship 2.74 0.57 030 0.20 0.33 0.09 0.06 0.17 0.06 0.07 0.14 -1.43 0.06
4. Workforce management 2.76 0.38 0.60 0.29 0.41 0.15 0.11 0.13 0.11 0.13 0.08 -0.52 0.07
5. Work attitudes 2.39 0.36 0.67 0.29 0.29 0.81 0.13 0.11 0.10 0.12 0.09 0.12 -0.05
6. Product design process 2.74 0.56 0.62 0.27 0.52 0.61 0.53 0.32 0.10 0.11 -0.96 -0.97 -0.84
7. Process flow management 2.65 0.38 0.52 0.35 0.29 0.73 0.77 0.45 0.14 0.13 0.07 0.11 0.06
8. Statistical controYfeedback 2.68 0.44 0.61 0.27 0.28 0.76 0.76 0.46 0.76 0.19 0.09 -0.25 0.10
9. Perceived quality market 1.91 0.53 0.59 0.23 0.45 0.39 0.45 0.40 0.25 0.39 0.28 -1.09 0.13
outcomes
10. Percent which passed 91.39 9.18 -0.25 -0.13 -0.26 -0.15 -0.31 -0.19 -0.24 -0.07 -0.24 0.84 -1.22
final inspection without
requiring rework
11. Comuetitive advantage 2.20 0.43 0.51 0.36 0.25 0.41 0.44 0.46 038 0.52 0.59 -0.34 0.18
Torrelations are in boldface type and fill the lower half of the matrix; the variancdcovariance matrix occupies the diagonal and upper half of the
matrix.
bCorrelations greater than 0.30 are significant at the 0.05 level; those greater than 0.37 are significant at the 0.01 level and those greater than 0.55
are significant at the 0.001 level.
Table 5 contains a summary of the analysis of the reliability and validity of the
scales [9].Reliability was operationalized as internal consistency and was measured
by Cronbach’s alpha [4].Using item intercorrelation matrices as a guide, items that
did not strongly contribute to alpha, and whose content was not critical, were
eliminated. Table 5 shows that the final alpha values for all scales exceeded the
minimum acceptable alpha value of 0.60 [33] [43] [52],and that most did so by a
substantial margin, indicating that the scales were internally consistent.
Construct validity measures the extent to which the items in a scale all measure
the same construct [14].Within-scale factor analysis was used to test whether the
items in a scale all loaded on a common factor. Table 5 shows that the eigenvalues
for each of the scales exceeded the minimum eigenvalue of 1.00 [41],and the Appendix
shows the factor loadings by item. Factor loadings of at least 4.40 are considered
acceptable [ 181;thus, all of the items contributed to their respective scales.
Instrument Development
Because the quality management scales were used to gather data as part of a larger
study, they were assembled into seven questionnaires, along with other measures,
each targeted at a different respondent. This approach was used in order to ensure
the accuracy of the responses; questions and scales were targeted at the respondents
expected to be most knowledgeable about their content. Thus, many of the scales
were targeted at several managers only, or workers only. For example, while the
process flow management scale was administered to a process engineer and three
supervisors, the statistical control/feedback scale was administered to ten direct
laborers and three supervisors. Altogether, eleven managers and ten workers in each
plant received questionnaires. The instrument also collected objective data, including
the measure of the percent of items that passed final inspection without requiring
rework. All scale responses were eventually averaged into a single plant response
per scale. For example, the responses of the ten workers were summarized by the
average worker response on the work attitudes scale, or the sum of quality managers
and plant accountant’s response was summarized by their average response on the
statistical controYfeedback scale.
The instrument was pretested at twelve plants, located throughout the United
States. Each pretest included a site visit, structured interviews with managers and
workers, and administration of the pilot instrument. Revisions were made to the
items, based on comments of the pilot respondents.
Analysis
Path analysis was used to analyze the model, with regression analysis determining
the significance of the relationships between the independent and dependent vari-
ables [36][64]. Because of the exploratory nature of this study, several different
models were constructed and tested. A simpler initial model, previously tested using
discriminant analysis, was refined and modified into the initial path model, shown
in Figure 1. It was based on the findings of the initial study and inferences from the
literature. This model was subsequently reduced for decomposition. All variables
were standardized to conform to a standard normal distribution, following the re-
quirements of path analysis [15][26].
Table 4: Analysis of difference between percent without rework-Respondents versus nonrespondents.
Nonrespondents Respondents
Variable n Mean n Mean 2 D.F. Probability
Top management support 6 2.62 36 2.46 0.95 7.4 0.37
Customer relationship 6 2.27 36 2.16 0.73 11.5 0.48
Supplier relationship 6 2.63 36 2.76 -0.79 13.5 0.44
Workforce management 6 2.77 36 2.76 0.03 5.9 0.98
Work attitudes 6 2.50 36 2.37 0.61 5.9 0.57
Product design process 6 2.57 36 2.76 -0.75 6.7 0.48
Process flow management 6 2.73 36 2.64 0.49 6.3 0.64
Statistical controYfeedback 6 2.91 36 2.64 1.05 5.7 0.34
Perceived quality market outcomes 5 2.21 36 1.87 1.04 4.6 0.35
Competitive advantage 5 2.48 36 2.16 1.19 4.5 0.29
Table 5: Summary of measurement analysis.
Number of Respondents
Scale Title Plants Individuals Cronbach's ~1 Eigenvalue
Top management support 42 128 0.88 4.63
Customer relationship 42 128 0.66 2.08
Supplier relationship 42 84 0.74 2.26
Workforce management 42 84 0.94 8.33
Work attitudes 42 420 0.97 10.16
Product design process 42 128 0.89 5.33
Process flow management 42 84 0.89 6.05
Statistical controllfeedback 42 84 0.76 4.59
External quality performance 42 42 0.75 2.60
Competitive advantage 42 42 0.74 2.82
Prior to conducting h e path analysis, the standard assumptions that underlie multiple
regression analysis [171 were verified, using three preliminary multiple regression
models, with internal quality, external quality and competitive advantage as the
dependent variables. The assumptions of constant variance, no influential outliers
and normality were verified using the following plots: residuals by predicted values,
rankits plot of residuals, studentized residuals by case number, Cook's distances by case
number and Leverage values (hat matrix diagonal) by case number [50].The
Shapiro-Wilk statistic provided a further test for normality, Neither the plots nor the
ShapimW& statistic indicated any potentially s i m c a n t e s h m the assumptions.
Path coefficients between each set of independent and dependent variables
were represented by standardized regression coefficients [16]. In order to simplify
the model prior to decomposition, all paths whose coefficients were not statistically
significant at the 0.15 level or less were eliminated. The relatively high threshold
level was chosen in the interest of being conservative in estimating direct and
indirect effects; linkages that had even a slight effect remained in the model for
decomposition. The correlations between all pairs of variables were then decomposed
into the sum of their direct, indirect and spurious effects [l].
A direct effect between two variables is indicated by an arrow joining them in
the path model, while an indirect effect is indicated by a pair or series of forward-
pointing arrows; for example, top management support is hypothesized to have an
indirect effect on the product design process through the mediating effect of customer
relationship. A spurious effect exists between two variables because of a third
variable or combination of variables that directly or indirectly affects both variables
of interest. For example, customer relationship and supplier relationship may be
spuriously related because of top management support, which is an antecedent to
both. Such an effect, although mathematically part of the decomposition, does not
represent a substantiallymeaningful effect. n u s , the sum of the direct and indirect effects
represents the total substantively meaningful effect of one variable on another [l].
Flynn, Schroedcr, and Sakakibara 675
The sum of all simple (direct) and compound (indirect and spurious) paths
provides an indication of the adequacy with which the model was specified. If the
model was specified correctly, the empirical correlation between any two variables
should be numerically equivalent to the sum of the simple and compound paths
linking the two variables, except for measurement error. There are no hard and fast
rules for deterrnining the magnitude of acceptable measuremente m r before concluding
that the model, specification was incomplete or inadequate; arbitrary decision rules,
such as “differences greater than 0.10 suggest the need for model revision” [l, p. 241
are often applied.
RESULTS AND DISCUSSION

Table 6 lists the results of the tests of path coefficient significance. Using the
criterion of p<:O.15as the basis for model reduction, the results suggested that the
paths from top management support to process flow management and statistical
controUfeedback; customer relationship and work attitudes to the product design
process; supplier relationship, workforce management, and product design process
to process flow management; and from product design process and statistical control/
feedback to percent of items that passed final inspection without requiring rework
should be deleted. The revised model, with all estimates of path coefficients, is
presented in Figure 2. Decomposition of the path coefficients into their effects is
presented in Table 7.
Relationship Between Infrastructure and Core Quality Practices

The determinants of the product design process were found to be top management
support and supplier relationship. Top management support was more strongly related
to the product design process, both directly and indirectly through the mediating
effect of supplier relationship. Top management support encourages the development
and use of interfunctionaldesign teams to develop products that are manufacturable
and meet the needs of the customers. Suppliers are a key component in these teams,
providing infclrmation about potential components, as well as receiving information
from them about how to better meet their needs.
The link between work attitudes and the product design process was eliminated
in the reduced model. This appears counterintuitive, since teamwork is believed to
be very important in the product design process. However, we found that the product
design function is typically located at the corporate level, rather than at the plant.
Thus, our measure of work attitudes (plant level) was not administered to many of
those (corporate level) most likely to be key players in design teams. While plant
respondents clould describe the product design process, they were not a direct part
of it. Future research needs to include an assessment of the work attitudes of all
design team members.
A second link with the product design process that was eliminated was the link
with customer relationship. The scale that measured customer relationship was rela-
tively weak from a measurement perspective, and it contained only three items.
Thus, we believe that the lack of significance of customer relationship was probably
due to measurement problems, rather than to a lack of importance of the construct.
This relationship should continue to be investigated in future research.
Table 6: Summary of path analysis. 9
of
Dependent Variable F Probability R2 VIF Independent Variable B t Probability

Customer relationship 6.92 0.0121 0.15 1.00 Top management support 0.38 2.63 0.0121
Supplier relationship 3.92 0.0548 0.09 1.00 Top management support 0.30 1.98 0.0548
Workforce management 22.94 o.oO01 0.36 1.00 Top management support 0.60 4.79 o.oO01
Work attitudes 47.90 o.oO01 0.7 1 1.57 Top management support 0.29 2.68 0.0108
1.57 Workforce management 0.64 5.89 o.oO01
Product design process 9.75 o.Ooo1 0.5 1 1.99 Top management support 0.41 2.57 0.01 42
1.18 Customer relationship 0.00 0.00 0.9997
1.13 Supplier relationship 0.35 2.89 0.0065
1.86 Workforce management 0.14 0.90 0.3739
Process flow 12.31 o.oO01 0.68 2.32 Top management support -0.09 -0.68 0.4983
management 1.41 Customer relationship 0.02 0.15 0.8806 3
4.09 Workforce management 0.15 0.76 0.45 19 .Q
3.79 Work attitudes 0.43 2.29 0.0282 8
2.23 Product design process 0.02 0.16 0.8725 9
tQ
2.87 Statistical controll 0.37 2.25 0.0307 F,
feedback 8
%
$
Table 6: (continued).
Dependent Variable F Probability R2 VIF Independent Variable B t Probability
Statistical control 23.19 o.oO01 0.65 1.86 Top management support 0.14 1.05 0.3009
and feedback 2.97 Workforce management 0.42 2.51 0.0165
3.46 Work attitudes 0.32 1.81 0.0787
Perceived quality 2.90 0.0378 0.27 1.41 Product design process 0.30 1.76 0.0890
market outcomes 2.50 Process flow -0.38 -1.64 0.1120
management
2.59 Statistical control/ 0.45 1.77 0.0863
feedback
1.12 Percent not requiring -0.23 -1.50 0.1435
rework
Percent of items which 1.33 0.2813 0.1 1 1.37 Product design process -0.17 -0.85 0.4004
passed final inspection 2.3 1 Process flow -0.42 - 1.63 0.1 121
without requiring rework management
2.47 Statistical control/ 0.36 1.25 0.2196
feedback
Competitive advantage 7.79 0.0017 0.32 1.06 Perceived quality 0.46 -3.17 0.0033
market outcomes
1.06 Percent not requiring -0.21 -1.53 0.1351
rework
m
4
4
Figure 2: Revised model of the relationship between quality management practices

and performance.
Statistical ControVfeedback was a function of workforce management, work

attitudes and top management support. The effect of top management support was
indirect, mediated by work attitudes and the combination of workforce management
and work attitudes. The strongest total effect was the effect of workforce management
on information management. Likewise, process flow management was also a function
of top management support, workforce management and work attitudes, as well as
statistical control/feedback. Work attitudes and workforce management had the
greatest total effects on process flow management.
Top manageaent support was directly related to work attitudes, providing an
environment that encourages their development. Top management support was also
directly related to workforce management, providing encouragement and rewards
for use of practices that lead to the development of positive work attitudes. Positive
work attitudes are important in the development of effective work team, which
work to detect and solve process problems, leading to reductions in process variance.
Likewise, positive work attitudes are important in development of a work force that
willingly and conscientiously collects the data necessary for the provision of timely
and effective feedback about the manufacturing process.
Indicators of Quality Performance

The top indicators of perceived quality market outcomes were statistical control/
feedback, product design process, process flow management, top management support
and the percent of items that passed final inspection without requiring rework. The
effect of top management support was indirect through the mediating effects of the
infrastructure ,and core quality practices. The relative importance of statistical control/
feedback and product design process is not surprising. Information about process
quality plays an important role in the production of products that meet the customers’
expectations of high quality, which translates into market outcomes.
The effect of process flow managementis in the direction contrary to expectations.
The negative sign of the coefficient indicates that the use of poorer process flow
management practices leads to better perceived quality market outcomes. This is
counterintuitive and cannot be explained by the literature. It may, however, be
related to the relatively high degree of multicollinearity exhibited by process flow
management with a number of other variables.
Table 6 also indicates that the percent of items that passed final inspection
without requiring rework played a significant role in determining perceived quality
market outcoimes. This is not surprising, indicating the importance of conformance
quality to market outcomes. The negative sign of this coefficient is in the expected
direction, indicating that plants producing a higher percent of products passed final
inspection without requiring rework achieved better perceived quality market out-
comes (scores closer to one on a one-to-five scale).
It is interesting to note, however, that the percent of items that passed final
inspection without requiring rework was not the only determinant of perceived
quality market outcomes, nor was it the key determinant. This demonstrates that
quality is a multidimensional construct in the market, including other dimensions,
such as reliability, durability, customer service, features and aesthetics, as well as
conformance to specifications.Process flow management was the primary determi-
nant of the percent of items that passed final inspection without requiring rework,
and its effect was in the expected direction. Its focus is on designing and maintaining
a process flow that is predictable and in control, resulting in the production of items
with minimal variability. The indirect effects in Table 7 show that process flow
management is supported by several important elements. The presence of strong
statistical control/feedback provides operators with process information, which allows
them to determine when intervention is necessary, as well as providing them with
immediate feedback about their own performance. Effective workforce management
is important in selecting and developing members of production teams, which are
key in solving process flow problems as they arise and creating process improvements.
Process flow management, statistical controllfeedback and workforce management
were all supported by a strong foundation of top management support, which provides
direction, examples and rewards for quality behaviors.
The link between the product design process and process flow management
was not significantly different from zero. The lack of significance of this link is
surprising, p,articularly in terms of the importance of design for manufacturability
approaches in the literature. However, recall that the process flow management scale
measures the use of practices that improve process control (variance minimization);
it is not a measure of the degree of process control present. It is expected that product
design process would be significantly related to a measure of process control;
however, this remains to be tested.
Table 7: Decomposition of path coefficients.
Dependent Independent Direct Indirect Total Spurious Sum of Implied
Variable Variable Effect Effect Effect Effect Paths Correlation Difference
Product design Top management support 0.41 0.11 0.52 0.00 0.52 0.62 0.10
process Supplier relationship 0.35 0.00 0.35 0.12 0.47 0.52 0.15
Statistical control/ Top management support 0.00 0.47 0.47 0.00 0.47 0.61 0.14
feedback Workforce management 0.42 0.20 0.62 0.06 0.68 0.76 0.08
Work attitudes 0.32 0.00 0.32 0.34 0.66 0.76 0.10
Process flow Top management support 0.00 0.46 0.46 0.00 0.46 0.52 0.06
management Workforce management 0.00 0.51 0.5 1 0.10 0.61 0.73 0.12
Work attitudes 0.43 0.12 0.55 0.13 0.68 0.77 0.09
Statistical control/ 0.37 0.00 0.37 0.28 0.65 0.76 0.1 1
feedback
Perceived quality Top management support 0.00 0.28 0.28 0.00 0.28 0.59 0.3 1 3
market outcomes Supplier relationship 0.00 0.1 1 0.1 1 0.06 0.17 0.45 0.28 +u
Workforce management 0.00 0.13 0.13 0.09 0.22 0.39 0.17 4
Work attitudes 0.00 -0.01 -0.01 0.22 0.21 0.45 0.24 %
0
Product design process 0.30 0.00 0.30 0.06 0.36 0.40 0.04 6
Statistical control/ 0.45 -0.10 0.35 0.07 0.42 0.39 0.03 3
feedback
Process flow management -0.38 0.10 -0.28 0.21 -0.07 0.25
Percent not requiring -0.23 0.00 -0.23 -0.09 -0.32 -0.24
rework
Table 7: (continued). 3
a
.
h
Dependent Independent Direct Indirect Total Spurious Sum of Implied 3-
Variable Variable Effect Effect Effect Effect Paths Correlation Difference il
Percent of items Top management support 0.00 -0.19 -0.19 0.0 -0.19 -0.25 0.06 P
3
shipped without Workforce management 0.00 -0.21 -0.21 -0.04 -0.25 -0.15 0.10
requiring rework Work attitudes 0.00 -0.05 -0.05 -0.05 -0.10 -0.31 0.21 %
Statistical control/ 0.00 -0.16 -0.16 -0.12 -0.28 -0.07 0.21 ::
feedback 6
Process flow management -0.42 0.00 0.00 0.00 -0.42 -0.24 0.18 $
a
Competitive Top management support 0.00 0.19 0.19 0.00 0.19 0.5 1 0.32
advantage Supplier relationship 0.00 0.00 0.00 0.01 0.01 0.25 0.24
Workforce management 0.00 0.13 0.13 0.05 0.18 0.41 0.23
Work attitudes 0.00 0.01 0.01 0.12 0.13 0.44 0.31
Product design process 0.00 0.13 0.14 0.06 0.20 0.46 0.26
Statistical control/ 0.00 0.19 0.19 0.07 0.26 0.52 0.26
feedback
procesS flow management 0.00 0.13 0.13 0.10 0.23 0.38 0.15
Percent not requiring -0.21 -0.1 1 -0.32 -0.04 -0.36 -0.34 0.02
rework
Perceived quality 0.46 0.00 0.46 0.02 0.48 0.59 0.11
market outcomes
In addition, the difference between the sum of paths and implied correlation
for some of the variables contributing to the measures of quality performance is
relatively high. This indicates that, while these models m statistically significant
and have relatively good R2 values, there may be additional relevant dimensions of
quality management that were not tested, or that the scope of these dimensions was
incompletely measured.
Indicators of Competitive Advantage

The top contributors to competitive advantage were perceived quality market outcomes
and the percent of items that passed final inspection without requiring rework.
Percent without rework had less than half the direct effect on competitive advantage
that perceived quality market outcomes had; a third of its total effect was the indirect
effect of percent without rework on competitive advantage, which was mediated by
its effect on perceived quality market outcomes. This may be that, in the case of
many plants, the market is unaware of internal quality performance, because defects
are sorted out before they ever reach the market. However, poor internal quality,
when not coupled with sorting out defects at final inspection, could have a devas-
tating effect on market performance. These results also suggest that conformance,
while perhaps more critical in competitive performance a decade ago, may be
evolving to “order qualifier” [28] status, where high conformance to standards is a
prerequisite for even being in the market. The “order winner,” which leads to
competitive position by delighting the customers, is related to dimensions of quality
other than conformance. Order qualifiers are no less important than order winners;
if a plant neglected to meet its internal quality standards, the impact on its competi-
tive performance could be very serious. However, conformance quality performance
only gains entrance into the market, while other dimensions of quality performance
win orders and enhance competitive position.
Other fairly strong indicators of competitive advantage were top management
support, statistical control/feedback, process flow management, product design
process and workforce management. All had an indirect effect through their impact
on the measures of quality performance. This illustrates the contribution of both the
core and infrastructure quality management practices to competitive advantage.
In addition, the R2 value indicates that the combination of percent without
rework and perceived quality market outcomes explained slightly over a third of the
variance in competitive advantage. This indicates that competitive advantage is a
multidimensional construct and that quality performance is only one of several
contributors.
CONCLUSIONS
This exploratory study makes several important contributions to the literature. First,
we developed and tested a framework that describes core and infrastructure quality
management practices and their relationship to several dimensions of quality and
plant performance. Through analysis of path coefficients and elimination of weak
paths, we have refined the original model to a trimmed model that should be a useful
departure point for future researchers interested in pursuing the relationship between
quality management practices and performance. The initial framework proposed that
customers, suppliers, top management and work force cooperate to form an infra-
structure that is supportive of the use of the core quality management practices. Core
practices include practices related to the product design process, process flow man-
agement and statistical controYfeedback. While the product design process is im-
portant in determining market perceptions of quality, process flow management and
statistical controVfeedbackcontribute to the physical quality of the product.
We have: also provided evidence that competitive advantage is a multifaceted
construct. Although perceived quality market outcomes and the percent of items that
passed final inspection without requiring rework both contributed significantly to
its variance, roughly two-thirds of the variability of competitive advantage remains
to be explained. This indicates that there are other factors that contribute to competitive
advantage and suggests that focusing solely on quality improvement may not be a
sufficient meians for a plant to attain and sustain competitive position. For example,
the use of JrT to achieve fast throughput and automation for cost reduction could
be two additional factors important in explaining competitive advantage [7] [19].
The results suggest that different dimensions of quality performance function
in different strategic ways. We believe that internal, conformance-related quality is
an order qualifier, required for a plant’s product to even be considered as a part of
the market. VVhile conformance-related quality has been known as an order winner
in the past, there is much anecdotal evidence to suggest that it is evolving into an
order qualifier, as manufacturers have been forced to make substantial improvements
to their confclrmance-related quality in order to remain in business [37]. Our results
suggest that the order winner is quality characteristics that are related to features
and aesthetics. As customers consider a number of alternative products, all of which
meet confonance standards, it is the design features and aesthetics that win them
over, creating or sustaining a competitive advantage for the firm. There is a signifi-
cant opportunity for future research in expanding the measurement of Garvin’s eight
dimensions of quality performance and assessing their relationship with various
quality management practices.
Not suqprisingly, top management support was found to be critical to both
infrastructure and core quality management practices. This demonstrates the idea
that quality management is a philosophy that pervades the entire organization, rather
than the responsibility of a few isolated individuals or departments. Without strong
top management support, the core and infrastructure practices would be ineffective.
It is important to view this study in the context of its limitations. Although the
respondents varied by scale, the study relies heavily on the use of perceptual data.
The measure of perceived quality market outcomes, in particular, is relatively weak,
because it asks managers for their perception of market perceptions of the organi-
zation and thie quality of its products and services. Measurement of quality in the
eyes of the customers would be valuable in future studies. While the data collected
for this project included a large amount of objective data, including financial meas-
ures, its potential use was severely compromised by a large number of missing
values and biased data due to the large number of green field sites among the
Japanese plants. Future studies should strive to include more objective data, particularly
financial me,asures of performance. Although the sample was randomly selected
within each substratum, it was not designed to be generalizable to all U.S. industry.
The sample is limited to three industries and contains roughly two-thirds world-class
plants. Thus, there may be some restriction of range.
Most of the previous research about quality management practices has been
descriptive, while this study links quality management practices with quality per-
formance at the plant level. We have established not only the link between quality
management practices and quality performance, but have also described the link
between quality performance and competitive advantage. Future research should
continue to investigate and refine the linkages between various types of core and
infrastructure quality management practices, dimensions of quality performance and
competitive advantage. [Received: June 16, 1992. Accepted: September 6, 1995.1
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APPENDIX
Scale Listing (Factor Loadings in Pamntheses)
Top Management Support

1. All major department heads within our plant accept their responsibility for
quality (0.75).
2. Plant management provides personal leadership for quality products and
quality improvement (0.72).
3. Our top management strongly encourages employee involvement in the
production process (0.80).
4. We hwe a regular system of monitoring plant performance against formal
criteria (0.75).
5. We h;ave a well-developed manufacturing strategy in our plant (0.75).
6. Our plant is well-focused (0.81).
7. We have products andor processes that sometimes place conflicting de-

mands on plant personnel (reverse coded) (0.56).
8. Management outside of the plant is primarily concerned with short-range
financial performance (reverse coded) (0.63).
9. Short-term losses affect our decision making, but are less important than
pursuing long-term goals (0.64).
Customer Relationship
1. We frequently are in close contact with our customers (0.83).
2. Our customers seldom visit our plant (reverse coded) (0.79).
3. Our customers give us feedback on quality and delivery performance
(0.88).
Supplier Relationship
1. We strive to establish long-term relationships with suppliers (0.77).
2. Our suppliers axe actively involved in our new product development process
(0.64).
3. Quality is our number one criterion in selecting suppliers (0.60).
4. We rely on a small number of high quality suppliers (0.70).
5. Our suppliers are certified, or qualified, for quality (0.67).
Workforce Management
1. Our plant is organized into permanent production teams (0.73).
2. Our plant forms teams to solve problems (0.73).
3. In the past three years, many problems have been solved through small
group sessions (0.73).
4. Workers are rewarded for quality improvement (0.89).
5. Supervisors are rewarded for quality improvement (0.72).
6. If I improve quality, management will reward me (0.74).
7. We pay a group incentive for quality improvement ideas (0.57).
8. Our plant has an annual bonus system based on plant productivity (reverse
coded) (0.57).
9. Nonfinancial incentives, such as jackets, coffee cups, etc., are used to
reward quality improvement (0.66).
10. Direct labor undergoes training to perform multiple tasks in the production
process (0.75).
11. Plant employees are rewarded for learning new skills (0.78).
12. Our plant has a low skill level, compared with our industry (reverse coded)
(0.60).
13. Direct labor technical competence is high in this plant (0.64).
14. Supervisors encourage the persons who work for them to work as a team
(0.74).
15. Supervisors encourage the people who work for them to exchange opinions
and ideas (0.77).
16. Supervisors frequently hold group meetings where the people who work
for them can really discuss things together (0.74).
Flynn, Schroetier, and Sakakibara 689
Work Attitudes
1. I talk up this organization to my friends as a great organization to work
for (0.88).
2. I find that my values and the organization’s values are very similar (0.89).
3. I am proud to tell others that I am part of this organization (0.92).
4. This organization really inspires the best in me in the way of job performance
(0.90).
5. I am extremely glad that I chose this organization to work for over others
I was considering at the time I joined (0.91).
6. This plant doesn’t have a very definite idea about how things should be
done (reverse coded) (0.84).
7. This plant produces a very special kind of employee (0.82).
8. This plant has a clear view about how to achieve goals (0.93).
9. Sayings are often told within the plant that embody organizational wisdoms
(0.73).
10. Generally speaking, everyone in the plant works well together (0.82).
11. Departments in the plant communicate frequently with each other (0.87).
12. Departments within the plant seem to be in constant conflict (0.88).
13. Management works together well on all important decisions (0.67).
Product Design Process

1. We make an effort, in the design process, to list only the specifications
that are really needed (0.73).
2. The: emphasis in part design is on minimizing the part count (0.66).
3. We are not concerned about the number of parts in an end item (reverse
coded) (0.69).
4. Our new product introduction control process is very formalized, with
frequent reporting and monitoring (0.72).
5. Direct labor employees are involved to a great extent (on teams or con-
sulted) before introducing new products or making product changes
(0.57).
6. Manufacturing engineers are invo!ved to a great extent before the intro-
duction of new products (0.88).
7. There is little involvement of manufacturing and quality people in the
early design of products before they reach the plant (reverse coded) (0.68).
8. We work in teams, with members from a variety of areas (marketing,
manufacturing, etc.) to introduce new products (0.75).
9. We design for producibility (0.65).
10. New product designs are thoroughly reviewed before the product is pro-
duced and sold (0.67).
11. Customer requirements are thoroughly analyzed in the new product design
process (0.61).
Process Flow Management

1. Pro’cessesin our plant are designed to be “foolproof’ (0.57).
2. We dedicate a portion of every day solely to maintenance (0.61).
3. We have a separate shift, or part of a shift, reserved each day for mainte-
nance activities (0.50).
4. Our plant emphasizes putting all tools and fixtures in their place (0.79).
5. We take pride in keeping our plant neat and clean (0.79).
6. Our plant is kept clean at all times (0.84).
7. I often have trouble finding the tools I need (reverse coded) (0.61).
8. Our plant is disorganized and dirty (reverse coded) (0.81).
9. Our schedule is designed to allow time for catching up, due to production
stoppages for quality problems (0.53).
10. We usually meet the production schedule every day (0.73).
11. Production is stopped immediately for quality problems (0.59).
12. We have laid out the shop floor so that process and machines are in close
proximity to each other (0.65).
13. Direct labor is authorized to stop production for quality problems (0.5 1).
14. We hardly ever see managers on the shop floor (reverse coded) (0.49).
Statistical Control/F’eedback
1. Charts showing defect rates are posted on the shop floor (0.78).
2. Charts showing schedule compliance are posted on the shop floor (0.82).
3. Charts plotting the frequency of machine breakdowns are posted on the
shop floor (0.66).
4. I am never told whether I am doing a good job (0.86).
5. Information on quality performance is readily available to employees
(0.89).
6. Information on productivity is readily available to employees (0.86).
7. My manager never comments about the quality of my work (0.79).
Perceived Quality Market Outcomes

1. The quality of our plant’s product and service is superior to the competi-
tion on a global basis (0.81).
2. Our plant’s customer relations are superior to the competition on a global
basis (0.80).
3. Our customers have been well-satisfied with the quality of our products
over the past three years (0.81).
4. In general, our plant’s level of quality performance over the past three
years has been low, relative to industry norms (reverse coded) (0.80).
Competitive Advantage
Opinion about how your plant compares to its competition in your industry on a
global basis.
1. Unit cost of manufacturing (0.67)
2. Fast delivery (0.70)
3. Flexibility to change volume (0.68)
4. Inventory turnover (0.82)
5. Cycle time (from receipt of raw materials to shipment) (0.88)
Barbara B. Mynn is an associate professor of operations management at Iowa

State University. She holds an A.B. in psychology from Ripon College, an
M.B.A. from Marquette University and a D.B.A. in operations management
from Indiana University. Her previous publications have appeared in Decision
Sciences, Joumal of Operations Management, Internationul Journal of Production
Research, and other journals. Her current research interests include quality, JIT
and operatioris strategy. Professor Flynn’s research has been funded by the
National Science Foundation, the Center for Innovation Management Studies,
the Japan-U.S. Friendship Commission and the U.S. Department of Education.
She has held lleadership positions in the Decision Sciences Institute, the Academy
of Management and The Institute of Management Science.
Roger G. Schroeder is a professor of operations management and codirector

of the Quality Leadership Center at the Curtis L. Carlson School of Management
at the University of Minnesota. He received a B.S. and M.S.I.E. degree in
industrial engiineering from the University of Minnesota and his Ph.D. in operations/
research from.Northwestern University. He is on the faculty of the Minnesota
Executive Program and has consulted with many public and private organizations.
Professor Schroeder is the author of the textbook Operations Management,
published by McGraw-Hill. His research has been funded by the Ford Foundation,
the Exxon Education Foundation, the American Production and Inventory Con-
trol Society, the Japan-U.S. Friendship Commission and the National Science
Foundation. His current research interests include strategy in operations man-
agement, quality improvement and management of technology.
Sadao Sakakibara is a visiting assistant professor of operations management

at Keio and Gakushuin Universities, Tokyo, Japan. He holds a B.S. in mechanical
engineering from Aichi Institute of Technology, Japan, an M.S. in operations
research, an MA. in statistics, a professional degree in industrial engineering
and a doctorate in management systems, all from Columbia University. His
research interests are comparative evaluation of manufacturing practices between
Japanese and US. firms in topics related to JIT, quality management, manufac-
turing strategy and technology. Professor Sakakibara has previously published
articles in Jou,rnalof Operations Management, Production and Operations Man-
agement, Business Horizons, and other journals. His research has been funded
by the Japan4J.S. Friendship Commission and the National Science Foundation.

Impact Quality Management Practices On Performance and Competitive Advantage

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Decision Scienc<es

The Impact of Quality Management

FRAMEWORK FOR QUALITY MANAGEMENT

Figure 1: Proposed model of the relationship between quality management practices

Core Quality Management Practices

also be verbally provided to individuals by their supervisors. Schonberger states that

Quality Management Infrastructure Practices

the organization, rather than rivalry, competitiveness or lack of effective means of

Competitive Advantage. A firm’s competitive advantage is the way in which

H5: The product design process is directly related to customer relationship,

Table 1: Overview of plants in sample.

some multicollinearity between independent variables is not unusual, relatively high

Table 5: Summary of measurement analysis.

RESULTS AND DISCUSSION

Relationship Between Infrastructure and Core Quality Practices

Dependent Variable F Probability R2 VIF Independent Variable B t Probability

Figure 2: Revised model of the relationship between quality management practices

Statistical ControVfeedback was a function of workforce management, work

Indicators of Quality Performance

Indicators of Competitive Advantage

Top Management Support

7. We have products andor processes that sometimes place conflicting de-

Product Design Process

Process Flow Management

Perceived Quality Market Outcomes

Barbara B. Mynn is an associate professor of operations management at Iowa

Roger G. Schroeder is a professor of operations management and codirector

Sadao Sakakibara is a visiting assistant professor of operations management

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