The impact of soft TQM on financial performance

Abstract

PurposeThe purpose of this paper is to explore the effect of soft total quality management (TQM) on organizational performance in the Jordanian pharmaceutical manufacturing sector using the balanced scorecard (BSC) perspective. It also examines the indirect effect of soft TQM on financial performance through BSC non-financial perspectives.Design/methodology/approachThe study is based on survey data collected from 197 employees in managerial and non-managerial positions working in Jordanian pharmaceutical manufacturing companies. Validity and reliability analyses were performed, and the study hypotheses were tested using structural equation modeling.FindingsThe results indicated that soft TQM positively affected all BSC perspectives. Customer perspective positively affected financial performance while innovation and learning perspective and internal business process perspective did not. In addition, only customer perspective significantly mediated the relationship between soft TQM and financial performance.Originality/valueThis is one of the first papers to examine the effect of soft TQM on organizational performance in terms of BSC perspective in the pharmaceutical sector. In addition, this paper is the first to examine the mediating effects of the BSC non-financial perspectives on the relationship between soft TQM and financial performance.