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Total Quality Management

Vol. 18, No. 5, 509 –530, July 2007

Implementation of TQM in China and


Organisation Performance: An
Empirical Investigation

YAHAYA YUSUF, ANGAPPA GUNASEKARAN & GUO DAN†



Lancashire Business School, University of Central Lancashire, Preston, UK;   Department of Management,
University of Massachusetts – Dartmouth, USA; †Business School, University of Hull, UK

ABSTRACT This research on Total Quality Management (TQM) investigates the essences and
processes of TQM implementation and its effects on organisation performance. In particular, it
reports the results of a questionnaire survey of TQM practices in Chinese companies. The
research identifies a series of concepts under TQM and the significant benefits it can bring to
organisations to help them continuously improve, not only in product or service quality but also
in integrated company management. The results from the questionnaire indicate that the adoption
of TQM in China is extensive, and the majority of the expected benefits in the literature have
been delivered to these Chinese companies. In addition, the questionnaire also includes two
comparisons of organisation performance: one is between companies with and without TQM; the
other is among TQM companies. The findings provide evidence that TQM can positively impact
firm performance depending on the degree of implementation.

KEY WORDS : TQM, implementation, organisational performance, benefits

Introduction
Total quality management (TQM) is an approach for continuously improving the quality
of goods and services delivered through the participation of individuals at all levels and
functions of an organisation (Pfau, 1989). TQM is more than a programme; it is a way
of business management for the whole organisation. It is a holistic corporate philosophy
including three fundamental principles: total – participation of every person and every
department; quality – meeting customer needs and expectations exactly; management
– enabling conditions for total quality (Whyte & Witcher, 1992). TQM emphasises that
customer requirements and business goals are inseparable. It affirms an integrated manage-
ment approach based on a set of techniques to achieve this objective. It requires

Correspondence Address: Yahaya Yusuf, Lancashire Business School, University of Central Lancashire, Preston
PR1 2HE, UK. Email: yyusuf@uclan.ac.uk

1478-3363 Print/1478-3371 Online/07/050509–22 # 2007 Taylor & Francis


DOI: 10.1080/14783360701239982
510 Y. Yusuf et al.

cooperation among every part and demands fundamental changes in every aspect of the
organisation. It also requires continuous improvement not only in products or services
quality but also in all operations and management for creating an organisational quality
culture.
Since it originated in Japan in the early 1970s, TQM has been implemented in the devel-
oped countries, particularly the USA, Japan and countries of Western Europe, as a way of
maximizing customer satisfaction, gaining better product quality, and obtaining higher
productivity through the systematic removal of waste and the reduction of non-productive
activities, and it achieved these aims. In the last two decades, large quantities of literature
and many academic journals have been devoted to analysing the essences of TQM and
how it should be implemented in organisations (Ahire & Dreyfus, 2000; Crosby, 1979;
Galloway et al., 2000; Porter & Rayner, 1991; Smith, 1988; Swift et al., 1998). Especially
in the 1990s, a significant volume of research was performed to investigate the relationship
between practices of total quality management and organisational performance. These the-
ories and researches have gradually developed a set of TQM theoretical systems. Based on
the theoretical system and the practical results from those organisations, TQM has already
been proved a particularly successful approach to improve organisational performance.
Most of these analyses and theories were the contributions of western gurus and theorists.
In addition, Japanese and Western companies contributed by demonstrating application,
relevance and significance of the underlying theories and principles of TQM. On the
other hand, although recently companies in developing countries, such as China, have
begun to adopt TQM and to use it to improve their performances and competitive position,
there has been little empirical work in such countries. Therefore, it is necessary to investi-
gate how TQM has been implemented in these companies and what benefits it has brought
to them with the view for comparative understanding vis-à-vis the western companies.

Research Objectives and Methodology


Following on from the premise given in the background above, we decided to investigate
TQM practices in China. The key objectives are: an in-depth investigation of the
implementation of TQM; analysing how TQM implementation influences an organis-
ation’s performance; examining the extent it has been adopted and applied in Chinese
companies; and exploring what benefits it can bring to these companies.
This research begins with a literature review on issues related to TQM, focusing on the
principles of TQM, its essences, implementation, and techniques. The literature was
sourced from a wide range of sources including books, research journals, journalistic lit-
erature, internet as well as textbooks.
The method of data collection used was survey by questionnaire via email. The design
of the questionnaire involves taking a look at previous ones in the extant literature, such as
Whyte & Witcher (1992), which provided the basis for the construction of the question-
naire. Some relatively simple close-ended questions were used in order to elicit simple
and quick responses. And the questions were classified for easy understanding. In addition,
a review of the TQM literature and other research questionnaires was carried out to ident-
ify the ranges of the construct.
The questionnaire consists of 29 questions and is divided into three sections. The first
section is about the respondents’ details such as the company’s name and type, the position
of this respondent and the length of employment. Therefore, a categorical analysis can be
Implementation of TQM in China 511

conducted. Section B includes 12 questions related to the general circumstances of TQM


practised in respondents’ companies. The aim was to explore the current degree of TQM
implementation in these Chinese companies. The question type takes the form of a mix of
closed questions and multiple-choice questions. Some different scales were used in elicit-
ing respondents’ preferences. Section C is designed to provide insights into how things
have changed over the TQM implementation period, or over the past 2 –3 years if the
company has not adopted TQM. Multiple-choice questions and a Likert five-point scale
were used in this part. The Likert scale, with a five-point rating scale ranging from
‘strongly disagree’ to ‘strongly agree’, was for asking participants to indicate the extent
to which their organisation’s performance has changed in past years. A comparison can
be made between the companies that apply TQM and the companies that do not apply
TQM to analyse whether TQM can bring more and better benefits to firms.
The questionnaire was emailed to 120 randomly chosen companies in China. These
companies are in both the manufacturing and service industries and each company has
been founded for over 5 years and employs at least 150 people. Because the content of
these questions is about some personal experience and perspectives towards TQM in
the company, it requires that the respondents pay careful attention to performance
measures, and possess the knowledge required to answer the questions appropriately
(Whyte & Witcher, 1992). The authors believe that the most suitable person to fill the
questionnaire is the most accountable person responsible for the quality function
because they have sufficient understanding and experience of developing and implement-
ing quality management in their companies. The survey questionnaire was therefore
addressed to the quality control manager, operations/production manager, or continuous
improvement manager.
The questionnaire was distributed to the companies by email, one of the growing
methods of administering research questionnaires. We chose email to administer the ques-
tionnaire because of its advantages. First, it requires very little time to administer it and it
is relatively easy to make contact with the respondents. Second, it can avoid some biases
that come from interviews. Third, email is good at monitoring and ensuring accuracy on
sensitive questions. Even if some questions may be confidential or intrusive, respondents
would not feel uncomfortable. Consequently, it is able to ensure correct questionnaire
completion. Finally, it is a cost-effective method. Furthermore, a covering letter was
attached to the questionnaire that explained the reason and aims of the study and gave
assurances that individual responses would be strictly confidential.
The use of survey by questionnaire through email is not without its drawbacks. The
main problem with emailed questionnaires is getting someone to fill them out. Most
people read what it is about and delete it directly. Only those people who are interested
in the study will respond to it. When people respond to the questions, it is impossible to
probe for and clarify responses of a complex or ambiguous nature. Apart from the disad-
vantages of the email research method, the questionnaire itself also has some shortcom-
ings. It does not include open questions and therefore it cannot gather in-depth
responses and cannot help explain the reasons behind individual responses.

TQM Implementation
The aim of this section is to review the concepts and implications of TQM. The most
important thing in understanding TQM concepts is to know TQM’s three primary
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philosophies and their needs. Having reviewed what TQM is and why it is adopted by so
many organisations, the implementation of it is discussed. What benefits TQM can bring to
organisations are then presented.
TQM emphasises that every part and person of an organisation works together for con-
tented customers and continuous improvement. This philosophy is implied by the word
‘total’. According to Flood (1993), TQM means that everyone should be involved in
quality, at all levels and across all functions, ensuring that quality is achieved in everything
they do according to the requirements. TQM is for long-term business performance and
profitability. So it is mainly concerned with continuous quality improvement. Wilkinson
& Witcher (1990) considered TQM to be about continuously improving customer satisfac-
tion by quality led company-wide management. This goes beyond the mere application of
total quality to being a form of management itself. As one of the key aspects of TQM, con-
tinuous improvement means everyone should accept that there is always room for
improvement, and there is always a need to look for better ways to do things (Choi,
1995). This process involves reducing waste, continuously measuring customer’s needs,
and constantly assessing the performance of employees.
Nowadays, increasing numbers of organizations offer broadly the same range of
products and services. The principal differentiating factor in the eyes of customers is
often the quality of the total service offered. It is therefore being increasingly recognized
that high quality products and services and their associated customer satisfaction are the
key to survival for any enterprise (Logothetis, 1992). Organizations are conscious of
the competitive potential of quality and regard it is a new weapon for competing in
today’s marketplace. Ghobadian & Speller (1994) stated that TQM is considered to be
the most appropriate tool in pursuit of lasting quality improvement. Although quality of
the delivered product or service is important, it is the minimum requirement. Apart
from quality, TQM also encompasses reliability. It is the ability of the qualified product
to continually meet the customer’s requirements. Furthermore, TQM involves an
overall relationship with the customers of the organisation.
TQM is considered an enabling strategy capable of helping the organisation pursue and
attain some key generic strategic objectives. It is related to three dimensions of a firm’s
performance: financial and market performance, quality performance, and inventory man-
agement performance (Kaynak, 2003). The TQM process can directly influence an organ-
isation’s long term productivity and competitive position through integrating the business
environment, customer satisfaction, continuous improvement, and breakthroughs with
development, improvement, and maintenance cycles while changing organizational
culture.
TQM requires wholesale organisational changes and a re-examination of production
methods, working practices and industrial relations (Wilkinson et al., 1990). It is import-
ant to establish a positive TQM climate in the whole organisation when implementing it. If
every part and individual understands the needs, process and benefits of TQM, they can
accept it and do their job more effectively. Although there is no standard approach and
formula for implementing TQM, the process must involve many aspects of it.
These essences can be divided into hard and soft aspects. The former may include a set
of production techniques such as analysing quality process, statistical process control,
problem-solving tools, and just-in-time control. These reflect the production orientation
of traditional quality management. However, TQM, the modern quality management
approach, is beyond production concentration, so its soft side is increasingly emphasised
Implementation of TQM in China 513

by many companies. It is more related to the word ‘management’, which involve in a set of
principles: people, culture, and improvement. To implement and achieve total quality suc-
cessfully, a company should give sufficient attention to these soft elements.

Leadership and Commitment


Leadership is one of the key factors in implementing TQM. It is that quality in a person
that induces others to follow (Gilbert, 1992). TQM must be truly organisation-wide and
start with the top management in the organisation (Oakland, 1995). In a TQM process,
effective leadership should develop a clear mission statement and then build up strategies
to support the mission. The top management needs to identify the critical success factors
and to review the management structure. The leadership must ensure that the principles of
quality management are implemented continually. Moreover, participation by senior man-
agement is not enough. Only total involvement can demonstrate that TQM is supported by
senior managers and that they are serious about quality. So another important thing is
encouraging effective employee participation. Employees are the people who do things
right and leadership are the people who do right things (Puffer & McCarthy, 1996).
TQM demands that organisation move away from ‘Management by Control’ to ‘Manage-
ment by Commitment’. This principle includes participative management, empowerment
of all an organisation’s members to focus on and achieve total quality objectives, and
commitment to organizational systems that are designed to ensure total quality (Ugboro
& Obeng, 2000). Everyone in the process, top to bottom, administration to factory, head-
quarters to local sites, must play their part. Individuals and groups look to themselves to
improve what they themselves do. Apart from senior management, the middle manage-
ment also play an important role in the process. They must explain TQM principles to
the employees and ensure their responsibilities are identified. Everyone in the bottom
stage should understand their own task, and respect quality. Because most total quality
work is done far from the immediate view of senior management, it is important to
ensure every part of the company and everyone does their job correctly and positively.
Only when the whole organisation accepts the responsibility and commitment of quality
management, can the TQM process be implemented effectively.

Customer Focus
Conforming customer’s needs and expectations is the essence for success in today’s
business. Organisations that understand what customers really want and provide a
product or service to meet these requirements can gain competitive advantage and
profit. As a total approach to help an organisation achieve this objective, TQM
demands an organisation continually examine its quality system to see if it is responsive
to ever-changing customer requirements.
However, in TQM, a ‘customer’ is more than simply one who is external to the business.
It also includes the person in another department, or the person next in line, who is called
the internal customer. These people directly or indirectly relate and cooperate with each
other to establish a quality chain. Every employee is a part of the chain, from supplier
through to external customer, including both line and support functions (Lindborg,
2003). Therefore, those employees who do not have direct contact with outside customers
are encouraged to view their colleagues as internal customers and to meet their
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requirements. The organisation must see and understand the relevance of every job to the
whole chain. Under this notion, a coordination of the whole organisation can be guaran-
teed, and all effort will at last contribute to improved external customer satisfaction.
For continuous improvement, a customer’s requirements must be consistently measured
and satisfied. The company should be organised to obtain the necessary information for the
identification of customer requirements and to obtain reliable, fast feedback on the quality
levels of currently available products/services (Forza & Filippini, 1998). Methods such as
market research, enquiring sales staff, and comparing competitors can be used to collect
information.

Continuous Improvement
The aim of continuous improvement is to attain levels of performance that are signifi-
cantly higher that current levels (Hodgetts, 1998), so the company can attain long-term
survival and development. It focuses on process not events. Love & Li (1998) stated
that continuous improvements are based on systematic, incremental and habitual
improvements of processes rather than on breakthroughs and innovative advances.
This process requires eliminating error, removing slack, and reducing variation. That
is asking everyone to do their jobs and ensure processes that are more effective, effi-
cient, and adaptable. An organisation should not simply set targets for its improvement
because once targets are realised, people may relax. In addition, if targets are too ambi-
tious, it is easy for people to give up attempting to achieve them. The description of
target fulfilment should be ‘performed’ rather than ‘achieved’. The principle of continu-
ous improvement is keeping the never-ending concept in everyone’s mind and in every
job. TQM in an organisation demands every person has the determination to make
improvement using their detailed knowledge (Dale, 1992). The continuous process con-
centrates on establishing process management responsibilities, anticipating changing
customer needs, generating customer satisfaction, involvement of all employees, con-
stantly measuring and assess performance, planning, control and problem-solving, as
well as finding out improvement opportunities. Continuous improvement theory also
should be put into learning and training processes. Vits & Gelders (2002) thought
that the effectiveness of management efforts towards continuous improvement activities
can have positive effects in establishing a learning organisation.

Get Things Right First Time


TQM is totally different from traditional quality control in which supervision and inspec-
tion are emphasised. TQM undertakes a change from reactive (waiting for something to
happen) to proactive (doing something before anything happens) (Gaither, 2002). It
requires that everyone must try to get things right first time to reduce inspection and
waste. This spirit is also called ‘zero defects’. Bank (1992) stated that ‘right first time’
or ‘zero defects’ is the result of an emphasis on prevention, and the diligent use of
measurement, process controls and the data-driven elimination of waste and error.
Right first time can be regarded as a performance standard, which changes the traditional
thought that an anticipation of failure is normal in conventional work practices. The idea
of prevention is establishing a management discipline to preclude defects occurring in an
organisation’s performance cycle in order to fulfil high effectiveness and efficiency. It
requires that the process should be continually reviewed and improved. It also implies
Implementation of TQM in China 515

wider communication, staff discussion, and problem-solving. Right first time generates a
design-in approach to displace an inspect-in approach. It is one of the management
methods of TQM that gives a way of setting targets and recognising the success of
teams that meet them, so encouraging future efforts (Deming, 1982).

Just-in-Time (JIT)
JIT is an approach that aims to satisfy customers by delivering or producing the right
product at the right time and in the right place (Haag et al., 1998) without waste. As
one of the ‘hard’ approaches of the TQM process, JIT will not work well without TQM
in operation. JIT technology improves throughput speed through improving overall pro-
ductivity, eliminating the waiting time of workers and officers, and identifying their
responsibility; hence, reducing the stock of inventory between stages and cutting down
work-in-progress. As a result of lower inventory, shorter processing and lead times are
also achieved. From a total quality point of view, JIT uses the minimum amount of
resources including materials, people, and facilities, responds immediately on demand,
to meet customer’s requirements exactly (Drummond, 1992). Moreover, through a JIT
programme, an organisation can get the process right before commencing production.
The probability of defects is reduced.
When implementing JIT, Oakland (1989) suggested a two stage process: (i) establish
foundations; and (ii) introduce core techniques. Establishing foundations means the
company must be organised and managed to achieve quality, low cost, minimum lead
times and high flexibility. It requires that JIT is operated in a planned and coordinated
approach such that the organisation has a company-wide JIT climate (Wilkinson, 1998).
This is similar to the implementation of TQM. The second stage involves introducing
some core techniques including visibility, JIT purchasing, multi-function workforce and
enforced improvement. When using these techniques, an organisation must understand
a basic principle that the JIT system requires radical reorganisation, which is sometimes
termed a guerrilla method of production – small, cheap and flexible (Cullen & Holligum,
1987). The aim is to respond easily to changes and meet customer requirements. Further-
more, an emphasis in JIT implementation is the involvement of all employees, especially
those who directly face changes. JIT needs a staff who understands a variety of functions
according to process demands (Hakes, 1991).

Competitive Benchmarking
Benchmarking, one of the most important approaches to TQM, is widely used by many
companies to help them become better in their field. The concept of Benchmarking is
defined by the Society of Management Accountants of Canada as: ‘A systematic and con-
tinuous measurement process; a process of continuously comparing and measuring an
organisation’s business processes against business leaders anywhere in the world to
gain information which will help the organisation take action to improve its performance’
(Parker & Harrison, 1995). The purpose of benchmarking is to provide a target for improv-
ing the performance of the organisation in order to achieve superiority in the market place.
Apart from benchmarking with the leaders in the industry, the company also needs to
assess its competitors’ performance. The aim is to discover best practices and adopt
them in the company to achieve competitive advantages.
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According to Bank (1992), the competitive benchmarking process has five steps:

1. Decide what is going to be benchmarked. This may cover all departments and products
in the organization as well as customers.
2. Select the competitors who are the best in terms of the aspects that one’s company
wants to measure.
3. Decide on the most appropriate measurements that will be used and develop a strategy
for collecting data.
4. Determine a competitor’s strengths and assess those strengths against one’s own
performance.
5. Develop an action plan.

In the process, people must have the determination to learn from others because bench-
marking involves finding gaps, problem solving, and continuous change. The link
between benchmarking and TQM is improving performance based on industry best prac-
tice and should directly contribute to meeting customer requirements.

Cost of Quality
The cost of quality refers to all the business costs incurred in achieving a quality product or
service (Munto-Faure, 1993). It includes prevention costs, appraisal costs, internal failure
costs, external failure costs, the cost of exceeding customer requirements, and the cost of
lost opportunities. Poor quality can result in the costs being more than 20% of the sales in
manufacturing companies and 35% of the sales in service companies. The aim of TQM is
to reduce these costs and reduce them again over time. Lower and appropriate quality costs
can identify opportunities for quality improvement and establish cost and price priorities.
Reducing all known and unknown quality costs by preventing errors and failure taking
place is a central concept in TQM. This is often emphasized in the TQM quality cost
model. When more effort is put into defect prevention, it can positively affect internal
failure costs, which are for correcting products or services that do not meet quality stan-
dards before delivery to the customer (Bank, 1992), and affect external failure costs, which
are for correcting products or services after delivery to the customer. Once a high level of
prevention is achieved, appraisal costs, which are to determine conformance with quality
standards, can also be reduced with confidence. There is a requirement for an organisation
to establish a quality cost programme to collect and report information, analyse relative
costs, and compare with other companies in order to develop a quality improvement strat-
egy. In detail, organisations need to invest in the right prevention activities, continuously
evaluate and redirect the prevention effort, and reduce failure costs by problem solving
(Lederer & Rhee, 1995).
For cutting the cost of exceeding requirements and the cost of lost opportunities, an
organisation should pay attention to coordinating all its parts and people. TQM can mini-
mise the costs of poor and uncertain quality because it is a way of getting everybody to
improve the quality of their work. And it provides a unifying framework that brings a
range of ‘good management practices’ to bear simultaneously (Gehani, 1993). Once
people are able to communicate easily with each other in pursuit of a common goal in
the organisation, these costs can be decreased due to high understanding, responsibility
and cooperation.
Implementation of TQM in China 517

Employee Involvement
The emphasis throughout all stages of TQM implementation should be involving all
employees in decision-making, problem-solving, and the financial success of the firm.
That is, TQM encourages all levels of people to become more closely related to the organ-
isation’s goals and objectives (Collard, 1989). The basic concept is that everyone is
responsible for producing quality goods and services, meeting customer requirements,
and achieving a company-wide TQM organisation. Everyone is in control of their work
and is able to participate in the business of the organisation. Involvement means to
empower employees, give them information, increase their knowledge and reward
quality performance (Oliver, 1998). Empowerment usually requires a change in the organ-
isation’s infrastructure which means giving up authority by senior management. This prin-
ciple demands the whole organisation establishes a quality chain, every part has its own
contribution. It also requires employee involvement to continuously improve quality
and increase productivity. The philosophy has been implied not only in all stages but
also in almost every aspect of TQM, such as commitment, meeting customer requirements,
and Just-in-time.
Another important point of employee involvement is everyone should understand that
they have their own internal customers who receive their work. So every employee
ought to discuss with these internal customers their needs. This is the first step to
knowing the requirements of each other and can help to satisfy external customers.
Apart from asking every member of staff to participate in the quality process, an organis-
ation should also pay attention to shared responsibility. Individuals and groups have
common objectives but different tasks. So they must do their own work well and under-
stand the work of others to make sure the whole process operates effectively.

Teamwork
The use of teams to implement TQM is becoming increasingly prevalent in a growing
number of companies. As Mabey & Salaman (1995) pointed out, one of the most import-
ant aspects of TQM is the use of practices that enable teamwork and cross-functional
problem solving. The daily work of quality problems, such as performance, cost, and
delivery of products and services, inevitably requires teamwork across organisational
boundaries. Teamwork is central to managing change and implementing plans, solving
problems, and creating empathy and a sense of involvement. It is good for building up
trust, improving communications and developing interdependence.
Teamwork requires the cooperative effort and contribution of a number of people with a
common goal. This is what is called ‘synergetic partnership’. It can enable team members
to get on well with their continuous improvement. Another essence of teamwork is
empowering and motivating people. An organisation should pay attention to doing
quality work, establishing quality climate, and developing a team approach. All these
are focused essentially at enabling people to feel, accept, and discharge responsibility
(Tjosvold, 1991). According to Oakland, there are two types of teams associated with
quality management: quality improvement teams, and quality circles (Oakland, 1989).
Quality improvement teams contribute to the two major components: content and
process, which mean the tasks of quality projects and how to deal with them. These
teams are also involved in the entire production and operating system. The quality
518 Y. Yusuf et al.

circle is a group of workers doing similar work who meet voluntarily, on a regular basis,
and recommend solutions. The purpose of a quality circle is to provide the motivation for
people to actively engage in deciding their own actions now and the future course of
actions (Kanji & Asher, 1996).

Training
People are at the centre of, and fundamental to, the TQM process. Striving to maintain
high levels of quality depends on the best use of the talents and abilities of a company’s
entire workforce. In the TQM literature, there exists a well-established link between train-
ing and firm performance (Reed et al., 2000). Training in quality-related concepts and
tools is regarded as the most important factor in actually increasing employees’ capacity
to do their job, finding out and solving problems, releasing the full potential of workers and
continuously improving quality. Further, training is usually related to changes. These
changes include the variety of the business environment, improvement of organisational
performance, higher requirements of operation, and the level of the employees. Training
alone will not change people’s behaviours, but training in the new skills is the first step
toward change (Wilkinson & Willmott, 1994).
For training to be that effective, it must be planned in a systematic and objective manner
(Costin, 1996). The training activities can be considered in the form of a cycle improve-
ment. The first stage in the process is to make everyone aware of what the training is all
about through gathering suggestions and feedback, and then get acceptance. In the two
steps, training objectives should be defined. These objectives attempt to achieve quality
requirements. Senior management must ensure that objectives are clarified and priorities
set. The third step is to adopt what has been agreed upon. The effective implementation of
quality training programmes demands considerable commitment and adjustment by the
trainers and trainees alike (Besterfield, 1995). Senior and quality managers have their
roles and functions in allocating responsibilities for training. A training programme can
be divided into many forms, for example, on-the-job training and off-the-job training,
formal training and informal training. Whatever types of training the organisation takes
up, all members must receive training in quality awareness, problem solving, safety,
and technical aspects of the job. The last step is to assess the result for the sake of deter-
mining whether further training is required.

Communication
There is nothing more important to an organisational action process than getting com-
munications right. Good communication is a great motivator, avoids misunderstandings
and reduces the costs of quality by avoiding mistakes (Cohen & Brand, 1993). All
managers, supervisors and staff in any organisation must recognise the value and effects
of good communication as a significant factor in creating and maintaining standards for
TQM successful implementation.
Communication can take many different forms such as verbal and written communi-
cation, visual communication as well as example. Management should learn the character-
istics of the various methods and select the appropriate ones for the various situations.
Effective communication is a two-way process (Porter, 1980). Teamwork and continuous
improvement demand open channels of upward communication. Managers and team
Implementation of TQM in China 519

leaders must listen to their people, must be sensitive to their suggestions and must be posi-
tively responsive to their criticism. Furthermore, they should be good at presentation, con-
trolling and answering questions, encouraging participation, and credibility. They should
also be trained on these aspects to improve their personal abilities. In addition, manage-
ment must provide employees with opportunities to communicate. People should be
made to feel that upward communication is not just possible, but desired. Sometimes,
an organisation must make relentless communication to let all people know what is
going on, and to explain, listen and modify (Richard, 2000). If an organisation could
implement all this, it is likely that a TQM programme will be achieved in full.

Recognition and Reward


Recognition and reward are both effective motivators and stimulators for desired perform-
ance and employee satisfaction. They are the key forms of positive reinforcement and for
letting people know they are valuable members of the organisation. People will strive to
win them, not only for themselves but also for their team. Recognition and reward are
acknowledged and promoted for goal-related activities.
Recognition should be provided for the correct effort and results, for teams and individ-
uals, for suggestions and achievements. But this does not always mean money. It should
generate the employees’ feeling of being appreciated, being approved, and having peer
recognition. Reward can be given in many forms, times and places but must be meaningful
and deserved. It should be appropriate to the situation by being rank-ordered – the higher
the achievement, the higher the reward (Besterfield, 1995). It also need be properly pre-
sented so that fellow employees can know about it and understand it. An organisation
must use recognition and reward not to force people do things excellently but to encourage
them to do so.

Empirical Data, Results and Analysis


This section analyses the results and findings of the emailed questionnaire. The analysis
consists of three parts: first, to what extent TQM has been adopted in these target
companies is calculated; secondly, the details of TQM implementation inside the compa-
nies are described; finally, the companies’ performance is explored. Apart from analysing
the changes in organisation performance of those TQM companies, there were two
comparative analyses: one was comparing which has better performance between TQM
Companies and companies without TQM; the other was comparing the impact of the
degree of TQM implementation on performance among TQM companies. The objectives
here are to find out if TQM has positive effects on organisation performance and whether
Chinese companies that have implemented TQM perform better than others that have not
implemented it.

Sample Demographics
The questionnaire was sent to 120 randomly chosen Chinese companies and 36 of them
answered the questions with a total response rate of 30%. Among these, 58.3% of the ques-
tionnaires were completed by manufacturing companies, the other 41.7% by service
companies.
520 Y. Yusuf et al.

The titles of the survey respondents include vice president, general manager, executive
manager, quality manager, operations manager, and project manger. Additionally, the
respondent’s functions were concerned with quality management. So it can be said that
they would have paid careful attention and have sufficient knowledge of quality practices
and performance measures. Moreover, the majority of respondents have been employed in
their companies for more than 5 years. Therefore, we feel that their understanding and
experience are proper to respond to this survey and that their answers are representative
of and reflect the general practices of TQM implementation and organisation performance
of companies in China.

Results and Analysis


The adoption of TQM. This part of the analysis aims to find out whether the company
understood and implemented TQM or not. If they did not, the proportion of how many of
them would consider adopting TQM in the future is calculated.
A total of 69.4% of the survey companies claimed that they understood TQM, with 68%
of these involved in manufacturing. Another 30.6% thought they had never heard about
TQM, with 63.6% of these in the service sector. It seems that TQM is understood more
in manufacturing than in the service sector.
From all the responses, 61.1% were currently implementing or have implemented TQM,
with 72.7% of these in manufacturing. These results point out that TQM is a widely
adopted management approach in Chinese organisations, especially in manufacturing.
Among those that are not implementing or have not implemented TQM, 64.3% were
service companies. These companies are not implementing TQM probably because they
are unaware of it, or are aware of it only recently – half of them insisted they would
adopt TQM in the future. Table 1 shows the percentages of those considering implement-
ing TQM.
In addition, fewer service companies appear to have implemented TQM at present,
possibly because it originated in manufacturing and has not been a common occurrence
in service industry until recently.

The implementation of TQM inside the company. The aim of this part was to deter-
mine the extent that TQM has been implemented in Chinese companies. It enables us
to determine the degree of TQM implementation and to explore relevant implications.
There is no evidence from the results that TQM failed in any company. In the Likert
five-point scale, 63.6% of the respondents agreed that TQM was successfully implemented

Table 1. Question 3: would you consider implementing TQM in the future?

1. Definitely not 0%
2. May not 7.1%
3. Undecided 42.9%
4. May will 35.7%
5. Definitely will 14.3%
Implementation of TQM in China 521

in their companies. Another 13.6% have strong feelings about this. It can be said that TQM
has been widely accepted and implemented in Chinese companies.
About half the companies surveyed have been running TQM for longer than 5 years and
could be considered at the stage of maturity in TQM implementation. Only 4.5% have
applied TQM for less than a year. Other percentages are shown in Table 2. These data
show that TQM implementation in most of these companies has already entered a well-
structured and experienced phase.
There were nine companies that applied TQM in all of their departments, which
accounted for 40.9% of total cases. Among these, eight have adopted TQM over 5
years and one for 3 –5 years. More than two thirds of all companies implemented TQM
in production, quality assurance, sales/customer service, R&D, accounting, and market-
ing. The data from this survey indicate that the longer the company has implemented
TQM, the more departments were involved in it.
Half of the respondents stated that their employees have been trained for an average of
3– 5 days per season. We think this figure is reasonable and in line with evidence from
the literature. Further, some 18.2% of TQM companies trained their staff for 6 –10 days
per season and another 9.1% did more than 10 days. But 22.7% of the sample paid less
attention to training, and all of these companies have only practised TQM for less than a
year. The employee involvement rates of 54.2% of these companies are between 50%
and 90%. Another 18.2% of companies involved more than 90% of their employees.
Only 4.5% of the cases involved less than 10% of their employees. The data also
show that if a company is experienced in TQM, it tends to emphasise greater employee
involvement.
Slightly less than 60% of senior managers were involved in all TQM issues with
46.2% of them having applied TQM for more than 5 years. Another 36.4% participated
in the core implementation activities. Only 4.5% of the companies stated that their senior
managers took part in TQM activities only when problems happened. These results draw
a similar picture with department and employee involvement; that is, the more TQM
experience in the company, the more individuals and parts of the company would be
involved in it.
The vast majority of the companies reported that they surveyed external customers since
implementing TQM. Of these, 71.4% surveyed such customers frequently – almost once
per season – and other 28.6% did it annually. It can be concluded that all of these TQM
firms paid attention to their external customer requirements. Surveys were done less fre-
quently for internal customers than external ones. A total of 45.5% of these respondents
said they considered their internal customers’ needs in all TQM issues. There are
22.7% of the companies that thought about internal customers, whilst 9.1% of the cases
said they never considered the internal customers.

Table 2. Question 5: how long has your company implemented TQM?

1. Less than a year 4.5%


2. 1 – 2 years 18.2%
3. 2 – 3 years 13.6%
4. 3 – 5 years 13.6%
5. Over 5 years 50%
522 Y. Yusuf et al.

All of the responding TQM companies have adopted continuous quality improvement.
This clearly shows that there is a significant appreciation for the need for continuous
improvements in their quality approach.

Company performance. This part presents the analysis of the survey data on Chinese
companies irrespective of their TQM status, whether they have adopted TQM or not, to
determine, first, if the TQM implementation efforts have improved their organisational
performance or what benefits TQM brought to these companies; secondly, if the firms
that use TQM perform better than those that did not use the programme; finally, if the
more extensively TQM was implemented in a company, the better the performance of
the company. The analysis focuses on four main areas of employee, operation, customer
satisfaction, and finance.

Employee. Half of the TQM companies agreed that the numbers of their employee
involvement have increased since introducing TQM. Another 31.8% strongly agreed
with an increase in employee involvement and 59.1% of the respondents said they
agreed that employee satisfaction has been greater than before in their companies. This
question of employee satisfaction also registered 18.2% of the sample strongly agreeing.
A total of 63.6% of the companies felt their employee turnover has decreased with 40.9%
and 22.7% in the ‘agree’ and ‘strongly agree’ categories respectively. The results seem to
indicate that TQM made a difference to employees, impacting on them positively. It
appears to offer more opportunities for employees to get involved in the quality activities.
This may also imply that the adoption of the TQM process makes employees feel valued
and enhances self-worth. As a result, it suggests that employees became more flexible and
proactive in that they were willing to solve problems and work in their companies. The
survey of ‘information sharing’ showed that there was general agreement of opinion on
information sharing with 68.2% in the strongly agree and 27.3% in the agree categories.
It demonstrates that an integrated TQM approach can lead to more communication and
understanding.
The results from those companies which did not apply TQM present a set of lower
figures in the entire employee dimension discussed above. Half of them agreed that
their employee involvement has increased and another 7.1% strongly agreed. However,
there were 21.4% of the respondents uncertain of employee involvement. Moreover,
approximately 43% of the companies were either unaware of, or strongly disagreed
with, a connection between quality and employee satisfaction enhancement. Any connec-
tion with employee turnover reduction was similarly discounted.

Operations. The generality of the TQM respondents tended to agree that the numbers
of product/service defects, errors and breakdowns in their firms have decreased. The find-
ings show approximately 41% in agreement. The results appear to indicate that the
reduction or elimination of non value-added activities and defects are the benefits from
TQM in improving the quality of products or services. About 54.5% of the responses
show that product lead time has been decreased. The results provide clear evidence that
these respondents felt that TQM had a positive influence on the reduction of lead time.
Except for 13.6% of the respondents who reported being unaware of the change of
quality cost, all others said there was a reduction in cost of quality having implemented
TQM, with 27.3% agreeing and 59.1% strongly agreeing. It proves that costs can be
Implementation of TQM in China 523

diminished with TQM in place. More than three-quarters of the respondents thought the
waste in their firms had decreased. There are similar pictures for the productivity and effi-
ciency gains in these companies. About 81.8% of the participants strongly agreed or agreed
that productivity of their firms had improved and 91% felt their efficiencies had been
enhanced. These developments may be regarded as the results of increased employee invol-
vement and improved operations.
The situations in those companies without TQM were not as optimistic as those with
TQM. Even though the survey outcomes from these companies also confirmed that
there were some improvements in their operations, the evidence seems not to be sufficient.
Half of these non-TQM respondents agreed there were positive changes in product/
service defects, errors and breakdown. It looks like their arguments were in stalemate.
With respect to product lead time, cost of quality, and waste, 42.9%, 37.5%, and 50%
of the respondents, respectively, disagreed that things got better in their companies.
Table 3 and 4 show productivity and efficiency improvements in both TQM and non-
TQM companies:

Customer satisfaction. A customer’s response to products or services is one of the


most important criteria for organisational performance improvement. In this research,
there are two questions about customer satisfaction. Half of the TQM respondents
claimed to strongly agree that the number of customer complaints has decreased, whilst
27.3% and 22.7% agree and are uncertain, respectively. This is likely related to the pre-
viously discussed issues of diminished product/service defects and reduced product
lead time; improved quality is likely able to decrease customer complaints. When asked
about customer satisfaction, an overwhelming percentage of the respondents stated that
they strongly believe there was an increase in customer satisfaction. This is in line with
the expectation that TQM would help increase customer satisfaction.
Like the two areas discussed above, customer satisfaction in the companies without
TQM is also inferior to that of TQM companies. In total, 42.8% of the respondents
reported their customer complaints have decreased but there were another 42.9% who
had no idea about this and another 14.3% reported to the contrary. In addition, 64.3%
of the companies stated their customer satisfaction has increased whilst there were
35.7% otherwise. Furthermore, it is important to note that even if the customer were sat-
isfied with the products or services offered by a company, it does not imply they would not
switch to a competitor if they were offered better quality goods or services. This can
explain why some companies have already achieved relatively good quality products,
but are unable to deliver high customer satisfaction. That is because their products or

Table 3. Question 21: the productivity has improved

Without TQM company TQM company

1. Strongly disagree 0% 1. Strongly disagree 0%


2. Disagree 7.1% 2. Disagree 13.6%
3. Uncertain 21.4% 3. Uncertain 4.5%
4. Agree 42.9% 4. Agree 40.9%
5. Strongly agree 28.6% 5. Strongly agree 40.9%
524 Y. Yusuf et al.

Table 4. Question 21: The efficiency has improved

Without TQM company TQM company


1. Strongly disagree 0% 1. Strongly disagree 0%
2. Disagree 21.4% 2. Disagree 0%
3. Uncertain 21.4% 3. Uncertain 9.1%
4. Agree 28.6% 4. Agree 45.5%
5. Strongly agree 28.6% 5. Strongly agree 45.5%

services are not as good as the ones provided by competitors, or the speeds at which they
improved their quality were slower than their competitors. As the findings from this
research point out, TQM companies were better than other companies in customer satis-
faction since TQM is a process in which best quality and continuous improvement are par-
ticularly pursued.

Finance. A company’s financial performance can be evaluated from its competitive


position of profit, sales, and market share. In this survey, the results indicate a tendency
towards agreement that the competitive position of the TQM company has strengthened,
with those agreeing and strongly agreeing accounting for 41% and 36% respectively.
These data provide evidence that TQM can lead to a better competitive position
through continuously achieving the best quality in the marketplace. A total of 81.8%
said that the profits in their companies have increased. Similarly, 54.5% strongly agreed
that there were upward trends of their sales. This may be attributed to increased employee
involvement and customer satisfaction. The question of enhanced overall market share
also reveals that 90% of TQM companies think market share has improved. The respon-
dents were also asked about their companies’ reputation post-implementation of TQM.
The vast majority of them thought their firm’s reputation has been advanced, with
68.2% strongly agreeing. These findings indicate that TQM is an important enabler of
better financial improvement for most organisations.
When non-TQM companies were asked, more than half of them claimed there were
positive changes in their financial situations as well as in their market share and repu-
tation. Together, 35.7% of the respondents agreed and another 35.7% strongly agreed
that their firms’ overall market share has increased. Perhaps this implies that TQM
does not have a forceful impact on market share because market share is subject to a
wide range of external factors, such as the general condition of the economy and
supply and demand conditions in a particular industry. But at least it is possible to con-
clude that TQM can positively influence market share according to the superior data
from TQM companies discussed above. Approximately 93% of the participants said
that their companies’ reputations have improved. It is arguable that because most of
these firms are more than 5 years old, although they have not adopted TQM, they
certainly had their own ways to develop. Therefore, there were improvements in their
perceived reputation. But what should still be recognised is that TQM can and does
improve a company’s reputation through offering the best quality products or services
to the market, building the organisations reputation in the process whilst establishing
an integrated organisational culture.
Implementation of TQM in China 525

Based upon the analysis above, it can be concluded that, to some extent, the companies
that did not adopt TQM have not achieved the same good organisational performances as
those companies that did implement TQM, or that they have not improved their perform-
ances to the same degree as the latter. In other words, the findings from this survey demon-
strate that TQM can assist companies in improving their organisational performance and
bring a series of benefits to them.

Conclusions
This research contributes to the development and understanding of TQM implementation
in China and the effects of its practices on organisation performance. Based on the
review of relevant literatures, and the results and findings from questionnaire-based
empirical analysis, this research demonstrates that TQM does have positive impacts
on firm performance and has been adopted as a useful approach in a number of
Chinese companies.
The TQM literature suggested that TQM is an integrated management approach and a
long-term process. It relates to a wide range of issues. A good implementation of TQM
is through executing all aspects of TQM and establishing a new quality culture in the
organisation. To be successful, it must be top-management driven and focus on maximis-
ing efficiency and effectiveness, through improving systems and processes, as well as
aligning business objectives and customer requirements. The key to implementing
TQM is combining a series of philosophies and techniques with practices in the organ-
isation and making sure the total quality management principles are planted into every-
body’s mind and are run in every department’s day-to-day work. The senior managers
should first realise the significance of TQM and play an indispensable role in leadership
and commitment. They must personally involve themselves in the quality affairs to show
their support and stimulate the formation of a company-wide quality culture. Training,
communication and internal customer needs should be emphasised to increase employee
involvement and the coordination of the organisation. TQM techniques such as JIT
should be used to reduce cost and lead time. Defects, errors and breakdown ought to
be reduced by every individual, and departments should work towards doing things
right at first time. Attention must be paid to all of these requirements in order to
satisfy external customer’s requirements, which is one of the most important business
objectives in the organisation. All these points are worthwhile considering the amount
of evidence that successful TQM implementation can positively influence company’s
performance.
Using a questionnaire method, the research gathered and analysed data on four measur-
able areas that could reveal the extent of TQM implementation in China and the impact of
TQM strategies on Chinese company performance. These areas were employee relations,
operating procedures, customer satisfaction, and financial performance. This survey is a
time-effective method without making excessive demands for both respondents and
researcher. The results of the questionnaire show a consistently positive pattern of organ-
isational performance for those organisations that have implemented TQM. With a TQM
process in place, the companies showed better performance than before and better than
those that did not adopt TQM. Furthermore, there are indications that if the degree of
TQM implementation is extensive, the performance would be better still. These patterns
suggest that there is a positive association between the application of TQM and tangible
526 Y. Yusuf et al.

benefits. Therefore, it can be concluded that total quality management does have a direct
impact on organisation performance. However, TQM alone cannot guarantee a company
all the improvements and the desired level of customer service. It also does not necessarily
guarantee the superior profitability and improved returns because these are performance
criteria delivered only by organisations with higher quality of products and services com-
pared with the competition. So achieving TQM best practice is important to deriving a
company’s full advantage.
Finally, although this research successfully achieves the set objectives, there are oppor-
tunities for further research. Further in-depth investigation needed to explore the relation-
ship between TQM, Chinese organisational culture, the wider business cultural milieu in
China and business performance.

Acknowledgements
The authors are most grateful to Professor Gopal K. Kanji and anonymous reviewers for
their helpful comments, which helped to improve the presentation of the paper
considerably.

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Appendix A. TQM Questionnaire


Thank you for the participation of this research. All the information you provide will be
conducted confidentially. If there are any questions that you feel are too confidential or
excessively intrusive please do not feel you have to answer.
528 Y. Yusuf et al.

Section A – Company Details


Company’s name ___
Company’s type (manufacturing or service) ___
Your position ___
Length of employment ___

Section B – Implementation of TQM


1. Do you understand TQM? —Yes —No
2. Does your company implement TQM? —Yes —No
[If yes, please go to question 3]
[If no, please go to question 2]

Definitely not May not Undecided May will Definitely will


3. Would you consider
implementing TQM
in the future? 1 2 3 4 5

[Please go to Section C ]

Strongly Disagree Disagree Uncertain Strongly Agree Agree


4. Do you think TQM
in your company
is successful? 1 2 3 4 5

5. How long has your company implemented TQM?


A Less than a year
A 1 –2 years
A 2 –3 years
A 3 –5 years
A Over 5 years

6. In which parts of your company is TQM applied?


A Production
A Quality assurance
A Sales/customer service
A R&D
A Distribution
A Administration
A Purchasing
A Accounting
A Marketing
A All departments
Implementation of TQM in China 529

7. How many days does the average employee spend in training per season?

A Less than 3 days


A 3 –5 days
A 6 –10 days
A Over 10 days

8. What percentage of your employees is involved in TQM?

A Less than 10%


A 10 – 49%
A 50 – 90%
A 90 – 100%

When problems In primary In majority


Not at all appear issues In all issues issues
9. Are your senior
managers involve
in TQM projects? 1 2 3 4 5
10. Have you surveyed your external customers since implementing TQM?
—Yes —No
If yes, how often are they surveyed?

A More frequently
A Annually
A Less frequently

When problems In primary In majority


Not at all appear issues issues In all issues
11. Do you ever
consider the internal
customers needs? 1 2 3 4 5

12. Does your company adopt Continuous (quality) Improvement? —Yes —No

Section C – Organisation performance


Instruction: If your company does implement TQM, please regard these questions as
benefits of TQM; if your company does not implement TQM, please regard them as
your company’s performance. Meanwhile, consider your overall operations for the past
2– 3 years.
530 Y. Yusuf et al.

Please circle the number of the response which best represents the level of agreement
that your company has with the following statements.

Strongly Strongly
agree Disagree Disagree Uncertain Agree
13. The number of employees 1 2 3 4 5
involvement has increased.
14. Employee satisfaction has 1 2 3 4 5
increased.
15. Employee turnover has 1 2 3 4 5
decreased.
16. Information sharing has 1 2 3 4 5
increased.
17. The number of product/service 1 2 3 4 5
defects, errors, or breakdowns
have decreased.
18. Product lead time 1 2 3 4 5
has decreased.
19. Cost of quality has decreased. 1 2 3 4 5
20. The waste has reduced 1 2 3 4 5
21. The productivity has improved. 1 2 3 4 5
22. The efficiency has improved. 1 2 3 4 5
23. Customer complaints 1 2 3 4 5
has reduced
24. Customer satisfaction 1 2 3 4 5
has increased.
25. The competitive position of 1 2 3 4 5
your company has strengthened
26. The profit has increased 1 2 3 4 5
27. The sales have increased. 1 2 3 4 5
28. The firm’s overall market 1 2 3 4 5
share has increased.
29. The firm’s reputation is 1 2 3 4 5
improved.

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