Investigating changes in TQM’s effects on corporate social performance and financial performance over time

Abstract

In this study, we develop a model of the relationships among total quality management (TQM), corporate social performance (CSP), and financial and market performance (FMP). We test the model with data collected from a sample of 156 Turkish firms in 2012 by using structural equation modeling (SEM). We also replicate the study in 2017 with data collected from 229 Turkish firms and compare the two samples by utilising multiple group SEM. The model fit is similar for the two samples. The empirical results support all the hypotheses and indicate that TQM has a positive effect on CSP; TQM also has both direct and indirect (through CSP) positive effects on FMP. These results have not changed for the full sample of Turkish firms over the 5-year period. Thus, our findings show that firms can improve CSP while remaining financially viable as a result of their TQM practices. We also test the moderating effects of firm size on the model relationships. We find that the overall model fit is different for firms of different sizes and that small and medium firms have experienced some changes over the 5-year period with regard to the model relationships.