Quality management, innovation capability and firm performance

Abstract

PurposeMany organizations are facing competitive challenges due to the rapid pace of technological changes. Both quality management (QM) and innovation are the competitive factors that are intensely embedded into organizational products, services and processes. In order to achieve higher firm performance, manufacturing firms are needed to adopt QM practices as well as develop innovation capability. Therefore, the purpose of this paper is to examine the relationship among QM, innovation capability (IC) and firm performance under both mediation and moderation models using structural equation modeling.Design/methodology/approachThe approach of this study is quantitative. The data used to test the hypotheses were gathered from Indian small- and medium-sized enterprises (SMEs) interviewing senior managers with a structured questionnaire. These hypothesized relationships are tested with data collected from 134 Indian manufacturing firms by using SPSS and AMOS statistical software.FindingsOverall, the findings clearly show that QM through the firm’s IC is indirectly associated with a firm’s business performance. It supported the notion that QM practices encourage the definition of innovation strategies of products and processes within a manufacturing setup, which positively affected different aspects of firm performance. More importantly, this study supports the findings of past studies that questioned the role of QM practices in improving a firm’s IC.Research limitations/implicationsSome limitations of this study include: although a cross-sectional survey has been applied, the research does not permit us to account for the lag between implementation and performance. It also brings the opinion of a limited number of senior managers of Indian manufacturing SMEs, and hence both the sample size could be increased and the nationality of the respondent/responding firms could be expanded for future research.Practical implicationsIn light of the obtained results, several recommendations were introduced to assist decision makers in manufacturing companies. The paper contains suggestions for improving manufacturing firm’s performance through developing IC and adopting QM practices.Originality/valueThis paper extends theoretical contribution in production and operations management literature, highlighting how QM practices and firm’s IC have to interact in determining an organization’s success and sustaining its global competitiveness.