• P-ISSN 0974-6846 E-ISSN 0974-5645

Indian Journal of Science and Technology


Indian Journal of Science and Technology

Year: 2018, Volume: 11, Issue: 20, Pages: 1-6

Original Article

Relationship between Total Quality Management Practices and Financial Performance of Small and Medium Sized Manufacturing Companies in the Philippines


Objectives: To identify the predominance of Total Quality Management (TQM) practices in small and medium sized manufacturing companies in the Philippines and its relationship to financial performance. Methods: Questionnaires were administered among the owners/managers of the 50 small and medium manufacturing firms which were chosen through multi-stage random sampling. The questionnaire was composed of questions relating to quality practices in terms of management commitment and leadership, continuous improvement, total customer satisfaction, employee involvement, education and training, and reward and recognition. Descriptive statistics and Pearson Product Moment of Correlation were used to analyse the data in the study. Findings: The results reveal that the TQM practices in terms of management leadership and commitment, customer satisfaction, and continuous improvement are highly predominant while employee involvement, training and education, and rewards and recognition are only moderately predominant. Furthermore, aside from continuous improvement which was found to have a significant relationship to the solvency of the companies, there was no significant relationship between the other areas of TQM and the financial performance of the companies in terms of liquidity, solvency and profitability. These results run parallel with the fact that the rewards of TQM are highly long-range which means that any investment in the quality efforts now may not necessarily lead to any positive improvement in financial performance at once, or in the short term. This is the reason why there is a high degree of management commitment necessary in order to keep the improvement efforts afloat. This study has produced an important insight that a long-term dedicated SME quality development campaign can be an ideal strategy to improve productivity. Improvements: A comparison on the adoption of TQM between companies in terms of time period would give insights of the effects of TQM, if any, when conducted over long-term.

Keywords: Profitability, Quality, Small and Medium Enterprise, Total Quality Management


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