1.

Introduction

Until the mid-seventies, SMEs had a minor role in economic development due to the
dominance of the mass production paradigm in the industry. After this period, this
paradigm was increasingly challenged, leading to large firms fragmentation,
unemployment growth and creation of new SMEs. When in the early 1980s
unemployment rose in many of the European economies, the interest in SMEs
development and self-employment (through micro businesses) intensified. Many
studies were undertaken during that period and a vision for SMEs based economic
growth was developed. Many nations, particularly developing countries, have
acknowledged the value of small and medium enterprises, which are seen as the engine
of growth for any economy (Okpara, 2009). However, recent global changes have forced
manufacturing organizations across the globe to reconsider their management
techniques and tools. To provide empirical evidence on quality management practices,
this study explores the various quality improvement tools which were applicable and
effective to the SMEs environments.
Understanding and using management models, standards, and assessment tools, in
conjunction with quality concepts and tools, can help ensure that businesses and other
organizations survive and flourish over the long term. The use of quality initiatives will
help businesses: (1) Document and improve processes; (2) Understand customer
requirements and ensure that their products and services meet those requirements;
and (3) Streamline relationships between internal customers and suppliers and
employees of the business and external customers and suppliers. However,

implementing a quality initiative stops short of managing a business from a strategic,

systems perspective that can be accomplished using various management models,
quality award criteria, and standards.
This paper proposes that organizations should use a model which integrates
quality concepts and strategic management concepts into a powerful systemic structure
called the 5Ps Model. The authors suggest that this model is especially effective for
small businesses since they are not as complex as larger organizations. In other words,
they can more easily develop and align their respective Purposes, Principles, Processes,
People, and Performance which are the elements of the 5Ps Model.

The entrepreneurial spirit is essential for the economic well being of a nation and the
free enterprise system itself. Entrepreneurs have the passion for ensuring that their
businesses survive because business success means personal success. As they create
businesses, they generally think of providing the best products and services at the best
prices so that they can acquire customers. So, without contemplating definitions of
quality, small business creators begin their journey with a passion for excellence. Yet
many of these entrepreneurs do not have the background, expertise, or desire to
manage their businesses strategically, and they often do not implement quality systems
and initiatives until they are required to do so by customers.

QUALITY INITIATIVES

Managers who wish to implement quality initiatives should study quality models,
concepts, and tools developed and popularized by W. Edwards Deming (1986, 1939),
Joseph Juran (1995, 1993, 1992, 1989, 1988), Philip Crosby (1994, 1984, 1979), Kaoru
Ishikawa (1985, 1982), Mildred Golden Pryor, J. Chris White, and Leslie A. Toombs
(1998), Pryor and Cullen (1993, May-June), and others. In order to understand quality
initiatives, one must first understand what quality is. Deming (1986, 1939) was one of
the first to talk about meeting or exceeding customers expectations and requirements
that are determined or modified through continuous communication between
customers, front-line associates, and management. Juran (1995) says that quality is
fitness for use. Crosby (1979) refers to quality as conformance to requirements, not
goodness. Neither Deming, Juran, nor Crosby specifically addresses processes,
relationships, or value in their definitions of quality. Of the three experts, only Deming
includes a focus on customers. This paper will use the following definition of quality
(Pryor, White, and Toombs, 1998, p. 2.3):
Quality refers to the extent to which processes, products, services, and relationships
are free from defects, constraints, and items which do not add value for the customer.
Using Pryors definition of quality, small businesses can implement a variety of quality
initiatives such as Six Sigma (Harry and Schroeder, 2000), Strategic quality
management (Pryor, White & Toombs, 1998), and Total quality management (Ishikawa,
1985; Feigenbaum, 1991; Harrington, 1995; Juran, 1995) as well as various
organizational development initiatives relating to teams, empowerment, and other

concepts that have the potential of improving all aspects of a business. However, in
order to ensure long-term survival and success, major change or improvement
initiatives should be implemented in conjunction with the use of various management
models such as the Strategic management Model, the 5Ps Model, and the Malcolm
Baldrige National quality Award Criteria. In other words, quality initiatives should be
integrated into the strategic management of an organization. The model which
integrates quality into the strategic management of an organization and requires the
alignment of its elements is the 5Ps Model also referred to as the 5Ps Strategic
Leadership Model.

MANAGEMENT MODELS

Traditionally, small organizations have been less likely to utilize strategic management
models and strategic planning concepts than large organizations for many reasons: (1)
Small organizations are often family-owned; (2) Small business leaders are often more
focused on day-to-day operations as opposed to management models and strategic
management systems; (3) Small businesses have less money to spend on training; and
(4) Their competitors generally operate the way they do without using management
models and implementing improvement systems. Also, entrepreneurs who develop
small businesses usually have little desire to establish routine processes and
procedures. On the other hand, large organizations often have strategic planning
departments, more people who encountered management models and strategic
concepts when they completed their management or other college degrees, more money

to spend on training, and large competitors which are strategically-focused and

competitively-driven. This paper proposes various management models that small
business leaders can use to integrate quality initiatives into the strategic management
of their organizations. In so doing, they can increase the probability of their
organizations long-term survival.

Strategic Management Model

One such model is the Strategic management Model proposed by Pryor, White and
Toombs (1998) whereby small business owners or managers understand and utilize
elements of Strategic management to manage their business. The Strategic management
Model includes a SWOT analysis (i.e., analyzing a firms internal strengths and
weaknesses and its external threats and opportunities), as well as mission, vision,
values, goals and objectives, strategy formulation and deployment, measurement and
feedback, critical success factors, and competitive advantage

Several of the original Quality gurus suggested that strategic management or strategic
planning is essential for quality initiatives to be successful (Deming, 1986; Juran, 1988;
Crosby, 1994). Many authors suggest using a variety of business excellence models,
criteria, theories, tools, standards, strategies, environmental analyses, training, surveys,
and research to manage and improve small businesses (Hewitt, 1997; Jarvis, Curran,
Kitching, and Lightfoot, 2000, Collyer, 1996; Hamzah and Ho, 1994; Hansson and

Klefsjo, 2003; Wessel and Burcher, 2004; Gulbro and Shonesy, 2000; Cagliano, Spina,
Verganti, and Zotteri, 1998; Bilston and Sohal, 1995; McAdam and Fulton, 2002; Boon
and Ram, 1998; Nwankwo, 2000; Anderson and Sohal, 1999; Davig, Brown, Friel, and
Tabibzadeh, 2003; McNamee, and Greenan, and McFerran, 1999).
Other authors (and this paper) insist that quality initiatives must be integrated into the
strategic management of organizations (Chandler and McEvoy, 2000, Fall; Pryor,
Anderson, Toombs and Humphreys, 2007; Pryor, White, and Toombs, 1998; Pryor and ,
May-June, 1993; Butz, 1995; Garvin, 1988,). To further emphasize this point, Butz
(1995, May, p.106) states the following about Total quality management:
Many argue that TQM [continuous improvement] is already linked to the company
strategy because most strategic plans include quality goals, TQM is led by the senior
management team, and projects are chosen based on their importance in achieving
business success. While all of this is true, it doesnt go far enough. strategic planning and
TQM must become a single process. management of an organization and the extent to
which strategic planning and quality initiatives must be integrated to achieve the
required results.

5Ps Model

While the Strategic management Model is a model which small business leaders should
use for long-term survival and success, it does not include all of the elements of the 5Ps
Model, developed by Pryor, White, and Toombs (1998). The establishment of strategic

direction and the strategic management model is included in one of five elements
necessary for an organization to be successful. For pneumonic reasons, the authors call
this element Purpose. The other four elements are Principles, Processes, People, and
Performance. Strategy drives structure; structure drives behavior; and behavior drives
results. The arrow from Performance to Purpose represents the feedback mechanism
for guiding an organization toward its objectives. This feedback connection is essential
to successful Strategic quality management. The primary motivation of the 5Ps Model
(an essential ingredient in Strategic quality management) is to guide an organization
toward performance excellence, world-class status, and long-term survival. Metrics and
measurements are vital to track status and gage success in this endeavor.
Some elements of the 5Ps Model are similar to the Strategic management Model
previously mentioned. However, the individual five elements are not only important as
individual elements. Their alignment is also important. The individual elements of the
5Ps Model are discussed below:

Purpose

The purpose of an organization, in the 5Ps Model, involves all the elements that
constitute the strategic intention of the organization. This includes the organizations
mission, vision, goals, and objectives, as well as strategies for achieving the vision,
mission, and goals. Small business leaders must establish the strategic direction and
goals of their organizations as well as the strategies and tactics for achieving them. Since

strategies drive structure (Chandler, 1962), Processes and Principles should be aligned
with Purpose.

Principles

These are the guiding philosophies, assumptions, or attitudes about how the
organization should operate and conduct business. They are the integrity base, ethics,
and core values to which employees are expected to make a commitment when they are
hired. These core values are the foundation for the way decisions are made and
employees behave. Leaders of small businesses, especially family-owned small
businesses, understand the principles upon which their organizations were founded
and upon which they currently operate. However, they may or may not understand how
to convey those principles to their employees or how to align principles with the other
elements of the 5Ps Model.

Processes
Processes are the organizational structures, systems, and procedures that are used to
make the products or perform the services that the organization provides, as well as the
infrastructure and rules that support these systems and procedures. Performance
appraisal methods, communication patterns, and production systems are examples of
processes. In small businesses, processes are generally defined by the people doing the
job and are often not well documented. It is difficult to manage and improve (or even
replicate) undocumented processes. Therefore, small business leaders should ensure

that all processes are documented by checklists, process maps, or process flowcharts.
Streamlined Processes that are well documented and Principles that are well
communicated can drive behavior that is necessary to achieve Performance excellence.

People
They are the employees (individuals and teams) who perform work that is consistent
with the Principles and Processes of an organization to achieve its Purpose. They are the
active components through which work results are accomplished. Purpose, Principles,
and Processes must be in place before People can be consistently effective. If small
business leaders understand and can align Purpose, Principles, Processes, and People,
they are more likely to achieve Performance excellence.

Performance
Performance encompasses all the metrics, measurements, and expected results that
indicate the status of the organization and are used as criteria for decision making.
Performance results are fed back into the strategic management process to provide a
means of feedback and control. It is essential that small business leaders understand
and establish measurement and feedback systems for their organizations long-term
survive and profitability. It is not enough just to understand and apply the elements of
the 5Ps Model separately. The 5Ps must be aligned with each other in order to achieve
maximum efficiency and effectiveness. For example, if organizational leaders want
People to work in teams, they must set up Processes to reward team success, not just

individual employee success. If one of the organizations core values (Principles) is

performance excellence, then Performance must be evaluated and improved. In other
words, metrics systems must be developed that measure the right thingssafety,
security, quality, on-time delivery, etc.;
baselines and targets must established; actual results must be compared to targets; and
the results must be fed back through the system so that Processes, products, services,
and relationships can be improved. Using the 5Ps Model, small business leaders would
incorporate the Strategic management Model and could incorporate the use of award
criteria and standards included in this paper to assess, manage, and improve their
organizations.

ISO and Other Standards

On the website for the International Organization for Standardization (2006) two ISO
standards were referred to as "generic management system standards" because they
can be applied to any organization, of any size, in any industry or sector of activity,
whether outputs are products or services. These organizations may be business
enterprises, healthcare organizations, government agencies, etc. The ISO website
further clarified the word generic as meaning that any organization regardless of its
scope of activity can establish a quality management or an environmental management
system and can use the relevant standards of

ISO 9000 and ISO 14000 as the basis for system requirements. management system was
defined on the ISO website (ISOa, n.d.) as follows:
"Management system refers to the organization's structure for managing its
processes - or activities - that transform inputs of resources into a product or
service which meet the organization's objectives, such as satisfying the
customer's quality requirements, complying with regulations, or meeting
environmental objectives.
With the above definition of management system, small business leaders can then use
ISO
9000 and ISO 14000 standards to help manage and improve their organizations.

ISO 9000

The International Organization for Standardization indicates that the ISO 9000 family of
standards addresses quality management" which refers to what an organization does to
fulfill: (1) the customer's quality requirements, and (2) applicable regulatory
requirements, while aiming to (3) enhance customer satisfaction, and (4) achieve
continual improvement of its performance in pursuit of these objectives (ISOb, n.d.).

In 2006, the International Organization for Standardization website stipulated that ISO
9001:2000 is used if you are seeking to establish a management system that provides
confidence in the conformance of your product to established or specified
requirements and ISO 9004:2000 is used to extend the benefits obtained from ISO
9001:2000 to all parties that are interested in or affected by your business operations.
Interested parties include your employees, owners, suppliers and society in general.
There are similarities between the previously-discussed Categories of the MBNQA
Criteria and the eight principles included in ISO 9000: Principle 1 (Customer Focus);
Principle 2 (Leadership); Principle 3 (Involvement of People); Principle 4 (Process
Approach); Principle 5 (System Approach to management); Principle 6 (Continual
Improvement); Principle 7 (Factual Approach to Decision Making); and Principle 8M
(Mutually Beneficial Supplier Relationships). These principles are very important to
small businesses just as they are to medium and large size businesses.

ISO 14000

The ISO 14000 family of standards is primarily concerned with environmental

management. The website for the International Organization for Standardization (2006)
indicates that this means two things: (1) Minimize harmful effects on the environment
caused by its activities; and (2) Achieve continual improvement of an organizations
environmental performance

Like ISO 9000, ISO 14000 is a generic standard and is applicable to all organizations
regardless of size, product or service, and type of organization or industry. ISO 9000
and ISO 14000 are respectively quality and Environmental standards that can be used
for assessment and compliance. Together they comprise a significant part of a
sophisticated management model which can help ensure an organizations long-term
commitment to performance excellence and survivability. Today, many organizations
require their suppliers to be ISO 9000 and/or ISO 14000 certified.

Small Business Standards

The Small Business Standard, developed by the management consultants with the
Chartered quality Institute (CQI), is another business standard/model which could be
useful to small businesses. On its website, CQI (2007) states: The Small Business
Standard has been designed for use in ventures such as micro businesses, small and
medium size businesses. Where the term management is used in relation to a micro
business it may simply mean the proprietor.
The Small Business Standard is divided into nine sections: (1) management
responsibility; (2) Business reviews; (3) Customer care; (4) Staff and employees; (5)
Work environment and processes; (6) Suppliers; (7) Documentation; (8) Preventing
and correcting product or service problems; and (9) Records. While the standard is
simplistic when compared with the Strategic management Model, the 5Ps Model, or the
MBNQA Criteria, it has many of the key ingredients of an organizational management

system. It would be a good starting point for leaders of small businesses who wish to
systematically manage and improve their organizations (CQI, 2007).
On the website of the British Standards Institute, the following information is provided
about the application of standards in small businesses: Small . . . businesses can achieve
real benefits from standards. Here (in the Small Business Guide to Making Standards
Work) you will find the information and resources small . . . enterprises need to make
the best possible use of, and contribution to, the standardization process. Used to best
advantage, standards can: (1) eliminate inefficiencies in resource allocation; (2)
improve speed to market and reduce risk; and (3) enable effective competition with
larger organisations (British Standards Institute, n.d.).
Management Practices has concentrated on large firms. Little efforts have been done on
the Quality Management Practices in SMEs, particularly in developing countries like
India. Earlier researches indicate that the majority of SMEs understand the importance
of both Quality Management Practices and planning activities for their survival and
growth. However, it is unsystematic, non-formal and short-term oriented. Both firm size
and planning behavior are found to have statistically significant relationships with
Quality Management Practices. As firm size increases from small to medium, and as
SMEs move from operational to strategic planning, they attach greater degree of
importance to QMP practices. However, the planning behavior of SMEs is more strongly
related to QMP than firm size. India values small and medium enterprises (SMEs) for
several reasons, such as their potential to create employment and to generate foreign
currencies through export, and their potential to grow into Larger Enterprises (LEs).

As the result of a perception that smaller firms do not have the resources
necessary to implement TQM effectively, the focus of the literature has been on large
organizations. For this study, a survey instrument was developed and a survey
conducted to investigate the level of practice of TQM elements and to find the most
critical factors perceived by the small and medium sized manufacturing enterprises
(SMEs). Attempts at finding significant differences in quality practices were made and
the result established the existence of significant differences between perceived and
practice response on Total Quality Management implementation among small and
medium manufacturing enterprise groups. Index Terms Total Quality Management,
Business Excellence, Small and Medium Sized Enterprises, Perception, business
excellence

In view of the global level competition companies have emphasized that quality should
be integrated into all aspects of products, processes, and services within their
management system. Hence Total Quality Management (TQM) has become increasingly
popular as one of the managerial tool in ensuring continuous improvement so as to
improve customer satisfaction and retention, as well as, to ensure its product or service
quality. A study has been undertaken to know the extent of the use of TQM practices of
SMEs

in

Surat.

II. LITERATURE REVIEW

The objective of this study was to investigate the impact on the implementation of
quality management practices on the performance and growth of SMEs in Surat.
Researches have been conducted to determine the relationship between quality
management practices and performance mostly in the developed world. In the
developing world, the study of quality management practices and organizational
performance is scanty. Small firms lack the resources to implement quality
management. Be that as it may, Total Quality Management is seen as a tool to improve
organizational performance in both large and small organizations and in any part of the
world. The review of the literature identified (Anderson & Sohal, 1999; Evans, 1996;
Samson & Terziovski, 1998; Prajogo & Brown, 2004) who conducted such studies in
developed countries. Most of the studies have been based on large firms and in
developed countries. Studies have been conducted to determine the importance of
management practices on organizational performance (Adam, 1994; Anderson & Sohal,
1999; 1994; Powell, 1995). The concept of quality has been a concern for most
businesses. Vokurka (2001) in his article declared, global competitiveness is a reality
and quality is key to winning in the marketplace. By itself, quality may not guarantee
success but it is difficult to compete without it. And like most other competitive factors,
the standards of quality are constantly rising (p 363).

In some studies, quality

management is referred to as Total Quality Management. In this study, Quality

Management (QM) is used to refer to all kinds of quality management principles and
philosophies. What therefore is Quality and why implement quality management
practices? Quality has been defined by Karapetrovic and Willborn (1997) as the ability
of a product to satisfy stated or implied requirements (p. 287). Daft (1997) defines

Total Quality Management (TQM) as a concept that focuses on managing the total
organization to deliver quality to customers and identifies employee involvement, focus
on the customer, benchmarking and continuous improvement as the four significant
elements of the concept. The Department of Trade and Industry (DTI), UK has declared,
Best Practice Management provides a platform for the sharing of knowledge, processes
and ideas, otherwise known as benchmarking (DTI, 2004). This is in line with Crosbys
quality management philosophy. According to Wessel and Burcher (2004), quality
management in general deals with permanently redirecting a companys macro and
micro operations towards the needs of internal and external customers (p. 264). Dow,
Samson, and Ford (1999) concluded the relationship between quality practices and
superior quality outcomes is a fundamental and defining element of the whole concept
of quality management (p 2.). Various studies (Kuratko, Goodale, & Hornsby, 2001;
Tata, Sameer, & Jaideep, 2000; Ahire & Golhar, 1996) have used the domains or
elements of the Baldrige Quality Awards as the elements or variables of quality
management. Other emerging countries such as Malaysia and Singapore have adopted
them in their quality framework (Sohail & Hoong, 2003) making it a world recognized
modern or quality management practices that could be practiced anywhere in the world
by organizations both large and small and especially with countries that are yet to find
their feet in this era of globalization and global competition. The following quality
management models namely, Malcolm Baldrige National Quality Awards (MBNQA),
European Foundation for Quality Management (EFQM), Australian Quality Award
(AQA), and the British Quality Foundation (BQF) all identified leadership, planning,
people (HR), customer focus and processes as the main variables for quality
management or best practice management. The objectives of all four models are to
improve organizational performance.

However it must be stressed that the

management gurus notably Deming, Juran, Crosby all had some quality management
factors, which showed some similarities. All the models mentioned above were modeled
around the identified factors of the quality pioneers. This study adopted the MBNQA
variables as tools of quality management practices. These are; Leadership, Strategic
Planning, Customer and Market Focus, Measurement, analysis and knowledge
management, Workforce Focus, Process management and, Results. The dependent
variable is performance. The performance indicators for this study will include
profitability, sales growth, customer satisfaction, employee morale, and market share.
Some of these performance measures have been used in previous studies (Yusuf & Saffu,
2005; Lerner & Almor, 2002; Saffu & Manu, 2004).
TQM has the potential to not only increase competitiveness and organizational
effectiveness but also improve product quality and organizational performance (Ahire,
1996). Powell (1995) suggests that there are significant relationships between TQM,
competitive advantage and business excellence. A study by Simmons and White (1999)
concluded that ISO 9000 registered companies are more competitive and profitable
than non-ISO 9000 companies. The overall results point to the significant and positive
impact of TQM on competitive advantage and customer satisfaction,which, in turn,
significantly improves the performance of these companies. Hence, quality has been
seen as a fundamental capability for enterprises to develop. Quality advocates have
identified several critical principles for successful TQM practices like: top management
role,customer focus, supplier relationship, benchmarking, quality-oriented training,
employee focus, zero-defects, process improvement and quality measurement (Saraph
et al, 1989). Although, TQM is a well-established field of study for business excellence
the success rate of TQM implementation is not very high. The major reason for TQM

failure is owing to the tendency to look at TQM as tool and not as a system. The critical
factors of TQM are almost invariant across countries. The critical success factors of TQM
identified for this study are Leadership & Top Management Commitment(LTMC), Vision
and Plan Statement(VPS), Supplier Quality Management (SQM), System Process Quality
Improvement (SPQI), Total employee involvement (TEI), Education and Training(ET),
Performance Appraisal and Recognition (PAR), Customer Focus Satisfaction and(CFS),
Evaluation(En), Work Environment and Culture (WEC), Continuous Improvement (CI),
and Communication(Co), with a perspective on how to use critical factors as the
foundation for driving transformational orientation in order to create a sustainable
performance of business excellence.
Adoption of TQM practices yields visible and concrete benefits to SMEs. The studies
conducted by the researchers about the TQM practices and its affect on SMEs is as
follows. TQM is a strategic weapon that both large and small firms need in order to
survive and grow further arguing that SMEs are long recognized as the engines of
economic growth both in the developed and developing worlds. [1]

ISO 9000

registration provides a stepping stone towards TQM practices, also it was reported that
despite of benefits there were numerous barriers faced by firms. Journey towards TQM
requires not just the full commitment of company management but also quality culture
created externally by the government which is crucial to the progress beyond ISO 9000
TQM is an approach to doing business that attempts to maximize the competitiveness of
an organization through the continual improvement of the quality of its products,
services, people, processes, and environments. [3] The sector is so important for its
job and wealth generation potential creating a great need to implement TQM so that
SMEs can compete with large corporations in the open market. It was reported that a

few selected SMEs are often suppliers of goods and services to larger organizations and
TQM is the key to survival. It was also stated that TQM implementation in SMEs is
rewarding in the long term. [4] Effectiveness was measured on the basis of managers
satisfaction with the achievement of specific objectives and their estimation of the
change in several performance variables. Quality management takes time, which
necessitates data collection at several points in time, in order to identify causes as well
as their effects. [5] Despite substantial literature on TQM practices there is still much
debate concerning the standards impact on firm performance, competitiveness and
operations management. Demographical factors: The demographical factors have been
recognized as an important parameter by diverse publications found in literature and
the reviews is as follows: The creative brilliance of the lead entrepreneur, together with
the quality, maturity, diversity and depth of the entrepreneurial team, is the key
determinant in the survival of the SMEs and the likelihood of high performance and
growth. [6], [7] Age of the firm may affect firms survival and growth and firm may
decline. The liability of newness that makes the new SMEs faces greater risk to survival
than older firms. This is because the new firms do not have the experience, access, links,
experience, reputation or legitimacy of the older firms, leading to limited access to
external resources. [8] The average ISO 9000-registered firms in the electronics
industry were larger and more profitable than the average non-ISO 9000 firms,
although firm size did not affect the profitability. [9] It was found that the UK firms that
adopted ISO 9000 tended to be large, multi-product and manufacturing based. On the
other hand, the firms that did not adopt ISO 9000 tended to be smaller businesses that
dealt with domestic customers and served the local market. The study concluded that a
high majority of ISO 9000 users felt that the advantages of using ISO 9000 outweighed
the disadvantages.

Appreciating the importance of TQM, past studies have verified the issue of ISO 9000
certification in relations to the implementation of TQM. According to Sohail and Teo
(2003), some researchers like Bradley (1994) have pointed out the opinion that the ISO
9000 certification is the first step towards the implementation of TQM while some
researchers still prefer to maintain focusing on TQM only. They indicated that even
though some authors praise the ISO 9000 concept, others view it as a ritualized form of
quality management that should not be used in isolation from TQM principles.
Briscoe, Fawcett, and Todd (2005) indicated that internalizing the core ISO practices is
important in improving performance and ISO 9000 practices must become part of the
routine in the organization. It is also proposed by Fenghueih, Ching, and Cleve (1999)
that for the maximum benefits of ISO 9000 certification, the efforts undertaken in
implementing the standards should be part of a TQM process.
Meanwhile, a study by Sun (2000) found that ISO 9000 standards are partially related to
the implementation of TQM and the improvement of business performance and
therefore it is recommended by the study that ISO 9000 should be incorporated with
the philosophy and methods of TQM. In addition, Martinez-Lorente and Martinez Costa
(2004) mentioned that despite the beliefs about ISO 9000 as a good first step in the way
of implementing TQM, some of the ISO 9000 principles are contradictory once
implemented with TQM philosophy. Samuel K Ho (1994) has pointed out 8
characteristics, which are needed in order to implement ISO 9000 successfully. One of
them is TQM is needed in the ISO 9000 system in order to produce quality products and
services. This is because even with the ISO 9000 certification in hand, it would not
guarantee that the products are of high quality.

According to Javier, Antonio, and Mignel (2003), a distinction can be made between the
TQM content, elements, processes or practices. It is so-called elements (Waldman,
1994) practices and principles (Dean & Bowen, 1994), values and techniques (Hellsten
& Klefsjo, 2000), processes and contents (Reed, Lemak, & Mero, 2000), interventions
(Hackman & Wageman, 1995), principles and precepts (Sitkin, Sutcliffe, & Schroeder,
1994), etc.
The ISO 9000 series sets out the methods that can be implemented in an organization to
ensure customers requirements are fully met (Oakland, 1989). Yahya and Goh (2001)
mentioned that ISO 9000 is a management control procedure. It involves a business
documenting the processes of design, production, and distribution to ensure that the
quality of products and services meets the needs of customers (Quazi, Hong, & Meng,
2002; Pun, Chin, & Lau, 1999).
Present study tries to examine impact of ISO certification on TQM practices compared to
those of non ISO certified in small and medium enterprises (SMEs).

Some research has found a positive effect of TQM (Easton and Jarrell, 1998; Hendricks
and Singhal, 2001a,b); whereas other research reports a negative incidence of TQM on
all of the measures (Chapman et al. 1997). Other research has found a neutral result
(Adam, 1994; Powell, 1995; York and Miree, 2004). Hence, that indicates the
inconsistent results of those studies, However, that could lead to a methodological
problem and conceptual approaches used by researchers which may have led to
conflicting results but, in response. Moreno Luzon (1993) examined the effectiveness of
TQM in a survey of 44 small manufacturing companies in Valencia, Spain. Effectiveness
was measured on the basis of managers satisfaction with the achievement of specific
objectives and their estimation of the change in several performance variables over a
one year period believed to be a consequence of the quality program. Overall, the

managers indicated a high level of achievement of their TQM objectives, and some
managers perceived that their TQM programs had resulted in highly positive effects. In
particular, the most frequently cited effects were the development of a quality culture
(with 77% of firms experiencing this effect) and improved training (72.7%). Increased
profits and increased sales were less frequently cited, with 63.6% and 50% of firms
experiencing these effects, respectively. Walley (2000) provided insights to the effect of
TQM in SMEs in the UK farming sector. Respondents were asked to rate the impact of
TQM on a range of criteria. Based on the responses of 25 farmers who had implemented
TQM (15.2% of the sample), Walley (2000) concluded that although some farmers had
indicated that TQM had resulted in slight decreases in criteria such as cost efficiency
and profitability, on average TQM appeared to have a small positive effect on overall
performance. Criteria where TQM had a major impact were quality awareness and
employee morale. Rahman (2001) studied the relationship between TQM practices
and three business outcomes in SMEs in Western Australia. He developed a
questionnaire which asked respondents to rate themselves on the degree to which they
practiced 36 TQM mechanisms. The questions pertained to the similar six quality
criteria that have been examined in Anderson and Sohals (1999) study. Business
outcomes were defined in terms of revenue, profit, and the number of customers. A self
rating scale was used to measure business outcomes. The questionnaire was sent to 250
SMEs, and 49 usable responses were received. Rahman (2001) documented that
leadership, processes, products and services, people, and customer focus were
significantly correlated with revenue, profit, and the number of customers.
EsinSadikoglw ,CemalZehir (2010) and

Alessandro Brun (2010) investigated the

relationship between TQM practices with innovation and employee performance. The
theoretical model developed for the study explains how different TQM practices i.e.
leadership, training, employee management, information and analysis, supplier
management, process management, customer focus, and continuous improvements
effects on employee performance which leads to innovation performance and this in
later stages effects the firm overall performance. Some researchers have found a
positive effect of TQM (Easton and Jarrell, 1998; Hendricks and Singhal, 2001a,b);
whereas other researchers found a negative incidence of TQM on all of the measures
(Chapman et al. 1997). Other researchers also have found a neutral result (Adam, 1994;
Powell, 1995; York and Miree, 2004). Hence, that indicates the inconsistent results of

those studies, However, that could lead to a methodological problem and conceptual
approaches used by researchers which may have led to conflicting results but, in
response.

INDEPENDENT VARIABLES: TQM measurement: The TQM program

components used in the study include the following: 1. Commitment to Quality: It is

important in implementing a TQM program to getthe commitment to the program of top
management and the companys keystakeholders.

2. Employee Involvement: The

qualitymanagement efforts of the organizationshould be fully supported by the

members of the organization, especially the rank and file employees and middle
management. Top management should be involved in planning, designing,
implementing and monitoring the program. 3. Customer Focus: The ultimate objective
of TQM is to satisfy and delight the customers. It is important, therefore, to implement
strategies to determine customer needs and requirements, to monitor their level of
customer satisfaction, and to respond to their concerns. 4. Fact-based Management:
Employees need to be educated on the use of quantitative and statistical techniques to
monitor and improve the quality of products and processes. 5. Process Monitoring and
Control: The effectiveness of the firms process strategies and quality management
program should be regularly monitored to ensure that targeted quality performance
outcomes are met.

6. Incentive and Recognition System: Since quality management

programs will promote teamwork and process-based approaches, appropriate

incentives and recognition systems need to be designed to continuously motivate
employees to support the program. 7. Continuous Improvement: The quest for quality
should be continuing. Employees need to be encouraged to adopt productivity
improvement programs.

DEPENDANT VARIABLE: Financial performance measurement:

FACTOR ITEMS
-Financial performance
-Return on investment

-Earnings growth
-Sales growth
-Market share
-Return on assets
-Cash flow
The review of the literature on the status of TQM components and organizations
performance return has been analyzed in order to see the TQM components and its
effect on organizations performance. The analyses are carried out by applying several
factors which provide a sufficient understanding of the context within which the issue
studied and analyzed. The discussion provides an important framework for this study in
term of the variables that are going to be used in term of measuring TQM. Therefore, the
variables that will be used to measure market sentiment are undertaken by Talavera, G.
V. (2004).