English

Abstract

Business environment and increasing demand for better quality by customers have caused many companies to realize that they should provide high quality products or services in order to successfully compete in the marketplace. Consumers are aware of rising standards in product or service quality and any decline in their satisfaction would be a serious cause of organizational failure. Numbers of study have provided sound evidence on successful implementation of TQM in a firm or organization that have reaped and gained a lot of benefits from the implementation. On the contrary, past literatures also showed different scenarios. The literature review has shown gaps in the study of quality management and organizational performance. Furthermore, the capacity for innovation is an important element affecting the quality management and organizational performance. However, there is still lack of study that describes innovation as one of the key factors in the implementation of SMEs' quality management. Therefore, there is a need to examine the implementation of innovation in quality management that can affect the performance of SMEs. Therefore, it is necessary to conduct the study with the inclusion of Business Innovation Capability (BIC) into the TQM application. This study presents a theoretical framework to examine the critical factors of quality management and organizational performance relationships among SMEs in Malaysia with the Business Innovation Capability (BIC) as the mediating variable. This study will examine the relationship of TQM on innovation from the perspective of the innovation process. This is in line with the Government's target to make the SMEs able to compete at the national, as well as the global level. Therefore, this study is relevant and important to be implemented in order to determine the quality management practices adopted by SMEs and their relationship to the performance of the organization. This is a proactive step implemented as the preparation for the empowerment of SMEs in order to seize the existing opportunities and facing an increasingly challenging market. However, SMEs in Malaysia seem to be facing problems to compete in an open economic trade and mostly dominated by large economic sectors. Accordingly, this study will examine the ability of innovation in the implementation of SMEs quality management. This is because the increase in quality management is required to facilitate the SMEs to strengthen their competitiveness through the application of quality standards and certification, dissemination of knowledge on quality management and benchmark comparisons with the firm that recorded an outstanding performance. Academicians and industry players have spent a lot of time to find and identify organizational factors, practices and materials that can support and improve the performance of quality management (1), (2). However, there is still lack of study that describes innovation as one of the key factors in the implementation of SMEs' quality management. Therefore, there is a need to examine the implementation of innovation in quality management that can affect the performance of SMEs. Ultimately, management's job is to hone the entire system so that it is capable of making the leap from continual improvement to continual innovation in whole new product categories that the customer has never even contemplated. (3) described that the competitive environment requires the organizations to focus on the more complex dimensions of performance, which are quality and innovation. This is because the uncertain environment could pose a threat to the quality management program conducted in an organization.