Quality mental model convergence and business performance

Abstract

Firms can focus on increasing customer satisfaction and retention (revenue emphasis) and/or on decreasing costs (cost emphasis) when managing quality to achieve better business performance. Although previous research has shown the superiority of a revenue emphasis for maximizing the return on a company's quality efforts, research has not yet examined how a revenue emphasis is adopted in firms. This paper adopts a cognitive approach to strategy and examines managers' mental models—their belief systems—to understand that adoption process. Using a longitudinal, multi-level study, we surveyed managers at two points in time to collect information about their individual (“I believe…”) and their divisions' collective (“We believe…”) revenue and cost mental models for managing quality. Our research shows that the collective revenue emphasis converges toward the individual revenue emphasis over time, while the individual cost emphasis converges toward the collective cost emphasis. We show that this revenue emphasis convergence is related to improved business performance, but cost emphasis convergence is not.