Esin Sadigoklu, Cemal Zehir

1. Investigating the effects of innovation and employee
performance on the relationship between total
quality management practices and firm
performance: An empirical study of Turkish firms
Esin Sadigoklu, Cemal Zehir
Quality Management
José Gámez Belmonte
Desirée Suárez Santana

2. Index
1. Introduction: TQM practices
2. TQM factors
3. Research model and hypothesis
4. Research methodology
5. Results of the analysis
6. Discussion and implications
7. Conclusions

3. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
1. Introduction: TQM practices
• Relationship between TQM practices and firm performance  mixed results
- Replication research: generalizations and knowledge
 cause-and-effect relationships
- Consistent research: result of methodologies
 strength and generality of research
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4. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
1. Introduction: TQM practices
• Improvements in quality AND innovativeness
 COMPETITIVENESS
• Incremental improvement and breakthrough innovation may
coexist in a company
• Effect of TQM practices:
- On various types of performance measures: differ, BUT
- On employee performance: no empirical evidence
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5. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
1. Introduction: TQM practices
• Effect of employee fulfillment:
- On firm performance: no empirical evidence
• Future studies:
Employee performance
- Direct and indirect effects of TQM practices on Innovation
Diverse performance measures
Quality and innovation
- Correlation between
Innovation and firm
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6. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
2. TQM factors
• Leadership
• Training
• Employee management
• Information and analysis
• Supplier management
• Process management
• Customer focus
• Continuous improvement
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7. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Hypothesis 1: TQM practices are positively related to
innovation performance.
• Leadership have to encourage employees to participate
in decision making innovative ideas improving
products.
• Empowerment, employee involvement, teamwork and
employee success of organizational innovations.
• Customer focus  search for new customer needs
new products.
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8. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Hypothesis 2: TQM practices are positively related to
employee performance
• Employee performance refers to employee satisfaction,
absenteeism, tardiness, commitment, motivation and
effort.
• Participative leadership consider employees as valuable
assets that can direct their goals to the organization´s
goals.
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9. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Hypothesis 3: TQM practices are positively related to firm
performance.
• Teamwork practices  increase employees´ knowledge
of their jobs improving firm performance in terms of
quality and costs.
• Effective suppliers-buyers improve the process.
• Continuously improving quality reduces:
 scrap rework costs
 Waste
 Non value added activities
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10. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Hypothesis 4: Employee performance is positively related to
innovation performance.
• Satisfied and motivated employees will contribute to
improving quality.
• Leaders should motivate them to produce new products by
focusing on customers needs and expectations.
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11. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Hypothesis 5: Innovation performance is positively related to
firm performance.
• Firms introduce new products  meet changing and rising
expectations  improve customers satisfaction and loyalty.
• Innovative firms have higher:
 Market share
 Growth rates
 Profits
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12. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Hypothesis 6: Employee performance is positively related to firm
performance.
• In TQM, employee
• Involvement in decision making Highly
valued
• Performance improvement
• When things go bad, the employees are given a necessary
training or transferred to other positions.
• Employees retention improve organizational effectiveness in
term of costs and keeping valuable historical knowledge and
skills. 10

13. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
3. Research model and proposed
hypothesis
Model of the relationship between TQM practices and
measures
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14. Theoretical Research model Research Results of the Discussion and
Introduction Conclusions
backgroung and hypotheses methodology analysis implications
4. Research methodology
• Cross-sectional survey methodology
• Unit of sample: plant level
• Turkish firms with ISO 9001:2000
• Subjective data were requested
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15. Theoretical Research model Research Results of the Discussion and
Introduction Conclusions
backgroung and hypotheses methodology analysis implications
4. Research methodology
• Bi-variate correlation of TQM factors with each other and
with measures of firm performance
• The TQM index equals the aggregate of the means of all
TQM factors:
• Model and hypotheses were tested via path analysis
• Goodness of fit of the model
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16. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• Different types of firms
• Respondents: Regular employees and managers at low,
medium and high levels
• Companies of all sizes
• Regional, national, international and global market
• Private and public sector
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17. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• Homogeneity of the data for sampling adequacy
- If KMO measure > 0,7 and
- result of Barlett’s test < 0,05 (probability associated to the statistic)
 Data are homogeneous and adequate for principal component analysis
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18. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• TQM factors and performance measures for EXPLORATORY FACTOR
ANALYSIS (EFA)
 explained 67,08% of the total variance
 eigenvalue greater than 1
TQM
factors
Performance
measures
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19. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• RELIABILITY OF THE MODEL: CRONBACH’S ALPHA
 Reliability of the TQM index=0,97
Alpha values of all TQM factors and performance measures:
higher than 0,7
 SATISFACTORY RELIABILITIES
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20. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• RELIABILITY OF THE MODEL
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21. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• VALIDITY OF THE MODEL
All TQM practices and performance measures are statistically
significant at a significance level equal to 0,001
Content validity
• Retained items: those with a factor loading value of at least 0,5
 ALL OF THEM
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22. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• VALIDITY OF THE MODEL
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23. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• VALIDITY OF THE MODEL
Convergent validity: Test of each item’s path coefficient
Each item’s coefficient= 2* its standard error
 High convergent validity
Discriminant validity
Correlation coefficients between TQM factors and performance measures < Reliability coefficients
 Discriminant validity
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24. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• VALIDITY OF THE MODEL
Criterion-related validity
Bi-variate correlation of the TQM index with
- Employee performance=0,65 (associated p-value<0,001)
- Innovation performance=0,39 (associated p-value<0,001) Strong criterion-
related validity
- Firm performance=0,66 (associated p-value<0,001)
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25. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• VALIDITY OF THE MODEL
- r values among TQM practices ≤ 0,8
 the obtained results are close to the true values
- VIF values of the TQM variables < 3
- Normality assumption is satisfied
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26. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
5. Results of the analysis
• TEST OF THE MODEL
- Goodness-of-fit statistics used in the range of recommended values
- No deleted items (all the coefficients were significant)
- Measurement and structural model fit the data
- All the paths in the model are supported
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27. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
6. Discussion and implications
• TQM practices are positively correlated with all
performance measures:
 Employee performance
Effectiveness
 Innovation performance
Efficiency
 Firm performance
• Firms that excel in one area are likely to excel in other
areas as well.
• Costumer focus, teamwork and information and analysis
practices help the firm determine customers needs.
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28. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
6. Discussion and implications
Managerial implications:
• Leaders can commit resources in order to implement TQM
practices to become more competitive in the market.
• Firms can combine:
Improving Performance
 Continuous improvement Competitiveness
 Breakthrough innovation
• Managers can measure the effects of TQM practices in
order to evaluate the effectiveness them.
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29. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
6. Discussion and implications
Research implication:
• Strategic planning is one of the key factors of TQM.
• Future studies can use multiple methods and informants
to eliminate method bias and improve the ability of the
findings to be generalized.
• The indirect relationship among TQM practices and
relationship between each TQM practice and various
performance measures can also be investigated.
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30. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
6. Discussion and implications
Research limitations:
• Respondents of the study might have been motivated to
give desired data that made their firms look better.
• Most of respondent were low level manager or
employees that may not have evaluated correctly the
current levels of firm performance.
• The study did not use objective measures of performance
because subjective measurement allowed us to compare
firms in different industries.
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31. Research model Research Results of the Discussion and
Introduction TQM factors Conclusions
and hypotheses methodology analysis implications
7. Conclusions
• Importance of continued efforts towards implementing TQM
practices in firms.
 Innovation
• Positive impact of TQM  Performance
 Employee performance
 Firm performance
• Continuous improvement and process management can be
combined with breakthrough innovation.
• Employee performance improves innovation and firm performance
• Firms should focus and satisfy employees needs to improve
performance, market share and competitiveness.
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32. Thank you for your attention