Total quality beyond North America

Abstract

PurposeThe purpose of this paper is to assess whether the implementation of a total quality management (TQM) approach positively affects the financial performance of European companies. This paper tests whether North American results showing the relative out‐performance of companies that have successfully implemented TQM approaches are replicated in Europe.Design/methodology/approachThis research uses the same methodology as the seminal work of Hendricks and Singhal. The winning of a Quality Award is used as a proxy for the sound implementation of TQM. Publicly available share price and accounting data is analysed over a ten year period. Changes in the performance of award winning companies relative to non‐award winning companies are tested using a matched‐pair comparison approach.FindingsThe results confirm that, despite evident and marked differences in company structures and institutional environments between North America and Europe, stronger performance is again achieved by the TQM‐oriented award winning companies.Originality/valueThere is little empirical research establishing the link between TQM and improved financial performance within Europe, with most existing studies presenting findings only based on perception data. The findings presented in this paper close some of the limitations of previous European studies and use rigorous research methods to estimate the financial and business impact of TQM on company performance in Europe. Furthermore, extending Hendricks and Singhal's seminal study to include Europe, has been an objective of those in the European TQM practitioner community ever since the early results were published.