Use of Partial Least Squares (PLS) in TQM Research: TQM Practices and Business Performance in SMEs

Abstract

Advances in structural equation modeling (SEM) techniques have made it possible for management researchers to simultaneously examine theory and measures. When using sophisticated SEM techniques such as covariance-based structural equation modeling (CBSEM) and partial least squares (PLS), researchers must be aware of their underlying assumptions and limitations. SEM models such as PLS can help total quality management (TQM) researchers achieve new insights. Researchers in the area of TQM need to apply this technique properly in order to better understand the complex relationships proposed in their models. This paper attempts to apply PLS in the area of TQM research. Consequently, special emphasis is placed on identifying the relationships between the most prominent TQM constructs and business performance based on a sample of SMEs operating in the Turkish textile industry. The analysis of PLS results indicate that a good deal of support is found for the proposed model where a satisfactory percentage of the variance in the dependent constructs is explained by the independent constructs.