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International Journal of Project Management 29 (2011) 4555

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The eect of Six Sigma projects on innovation and rm performance

Mahour Mellat Parast *
School of Business Administration, Department of Economics, Finance and Decision Sciences,
University of North Carolina-Pembroke, Pembroke, NC 28372, United States
Received 21 September 2009; received in revised form 19 January 2010; accepted 26 January 2010

Abstract
The paper develops a theoretical base for the eect of Six Sigma projects on innovation and rm performance. It has been proposed
that Six Sigma projects enhance technological innovation of the rms; however, they are benecial for rms in stable environments. Since
Six Sigma programs are focused on variance reduction and eciency, these initiatives are not very eective in dynamic environments,
where the rate of technological change is dramatic. With their emphasis on variance-reduction and eciency Six Sigma programs can
be eective in enhancing incremental innovation. In addition, due to the focus of Six Sigma projects on existing customers, they may
impede innovation for new customers. Accordingly, implementing Six Sigma projects in fast pace environments with high level of innovation and change may be a challenge, and may not result in the expected outcome. Building upon theories form process management
and quality management the paper proposes several propositions to address the eect of Six Sigma projects on innovation and rm
performance.
Published by Elsevier Ltd and IPMA.
Keywords: Six Sigma; Project management; Process management; Technological innovation; Exploration; Exploitation

1. Introduction
In the pursuit of higher operational eectiveness and
organizational performance, scholars and practitioners
are looking for new approaches to improve operational
performance, boost protability, and enhance competitiveness. As a structured methodology emerged from quality
management, Six Sigma programs have received considerable attention in the never-ending journey of process
improvement (Linderman et al., 2003, 2006; Choo et al.,
2007a,b).
Having been developed from quality management philosophy (Goeke and Oodile, 2005), Six Sigma has
attracted academic research in recent years (Raisinghani
et al., 2005; Schroeder et al., 2008). It has been identied
as a process improvement approach that dramatically
improves performance, enhances process capability, and
produces bottom line results for organizations (Dasgupta,
*

Tel.: +1 910 775 4211; fax: +1 910 521 6750.

E-mail address: mahour.parast@uncp.edu

0263-7863/$36.00 Published by Elsevier Ltd and IPMA.

doi:10.1016/j.ijproman.2010.01.006

2003; Linderman et al., 2003; Pantano et al., 2006). Evans

and Lindsay (2005) dene Six Sigma as a business process
improvement approach that seeks to nd and eliminate
causes of defects and errors, reduce cycle times and cost
of operations, improve productivity, better meet customer
expectations, and achieve higher asset utilization and
returns. According to Hammer (2002) Six Sigma employs
a project-based methodology to solve a specic performance problem recognized by an organization. The focus
of Six Sigma is on the customer rather than the product
(Douglas and Erwin, 2000).
Although scholars and practitioners cite numerous
examples on the positive eect of Six Sigma projects on
rm performance (e.g. Hoerl, 1998; Rucker, 2000; Roberts,
2004; Johnson, 2005; Foster, 2007) there are concerns and
criticisms about the eectiveness and impact of Six Sigma
projects. In the US banking industry, Bank of America
and Citigroup were considered as organizations that heavily invested in Six Sigma and beneted from it (Rucker,
2000; Roberts, 2004). Despite the popularity of Six
Sigma programs there is little theoretical support on the

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M.M. Parast / International Journal of Project Management 29 (2011) 4555

eectiveness of Six Sigma projects on organizational performance. Some argue that Six Sigma is simply a repackaging of traditional quality management which is subject to
the limitations and criticisms of quality programs (Dahlgaard and Dahlgaard-Park, 2006). Accordingly, there is a
need to better understand organizational and contextual
variables that facilitate or impede eective implementation
of Six Sigma projects.
The purpose of this paper is to develop a theoretical
framework to determine the eect of Six Sigma programs
on innovation and rm performance. To do so, the foundation of Six Sigma and its underlying assumptions will be
discussed. In addition, the role of Six Sigma projects in
addressing both incremental change (exploitation) and radical change (exploration) will be addressed. Finally, the
paper provides insight on the external variables that can
inuence the eect of Six Sigma programs on rm
performance.
2. Quality management and project management
The principles and premises of project management
have been evolved over time. Traditionally, project management has been conceived as an organized plan to
achieve pre-determined goals within a specied timeline
(Laszlo, 1994). In this viewpoint, trade-os among time,
cost, and quality are inevitable (Khang and Myint, 1999).
Recent thinking in project management treats projects as
sets of practices aiming at providing better quality products
and/or services to customers through integration with
other organizational practices and eective utilizations of
resources (Cicmil, 2000).
Project management principles, guidelines and techniques can contribute to the success of quality-related projects (Somasundaram and Badiru, 1992). This suggests a
link between quality management and project management
since customer satisfaction is regarded as one of the key
principles in quality management (Dean and Bowen,
1994). Antilla (1992) suggests that utilizing the concepts
proposed by quality standards and quality systems (e.g.
ISO-9000) is signicant in establishing the quality of projects. In that regard, research in the relationship between
quality management and project management will provide
insight on how quality concepts can be eectively utilized
in project management.
Research on quality management and project management is surprisingly rare. Cicmil (2000) addresses the lack
of research in project quality, and stresses the need to conduct more research to integrate quality concept with project
management. It is suggested that a multi-perspective
approach to project management will result is better project
outcomes (Cicmil and Terziowski, 1999). This view suggests
integration and inclusion of multiple, multi-level quality
concerns in project management through balancing the
expectation of dierent project stakeholders. Utilizing the
project management multiple perspective (PM-MP) framework, Cicmil (2000) identies three key areas for successful

project management: project context, project content and

organizational behavior. Project context deals with the
organizational context, specic industrial settings, and organizational or business strategies. The primary focus of project content is to make sure project objectives and methods
of achieving them have been properly dened in the early
project stages (Turner and Cochrane, 1993). The organizational behavior aspect is concerned with designing an eective project structure, dealing primarily with human element
of project management (Anderson, 1992). Attention to these
characteristics will ensure that a project can achieve its
desired objectives and will lead to higher quality projects.
While previous studies have revealed key determinants
of project success and sharpened our insight on how to
design and plan eective projects, quality and innovation
issues in project management have received little attention.
Furthermore, the link between organizational processes
and project management has been overlooked in previous
studies. To ll this gap in the literature, To ll this gap in
the literature, this paper focuses on Six Sigma projects.
Six Sigma projects are primarily improvement projects trying to enhance improvement in organizational processes
and routines thorough focusing on pre-determined and
specic goals. This paper is primarily focused on the eect
of Six Sigma projects on rm innovation and performance.
Since Six Sigma projects are characterized under quality
management, the focus on Six Sigma projects can contribute to our understanding of the link between quality, innovation and project management. Therefore, it is believed
that looking at Six Sigma projects can enhance our understanding of eective implementation of project management and project outcome.
3. What is special about Six Sigma?
The fundamental dierence between Six Sigma and
other process improvement programs (such as TQM, Lean,
and the Baldrige model) is related to the ability of Six
Sigma in providing an organizational context that facilitates problem solving and exploration across the organization. While Six Sigma programs have their roots in the
quality movement, they are dierent from other quality
programs (e.g. lean systems or ISO-9000) due to their limited time-frame, measurable and quantiable goals and the
project structure (Andersson et al., 2006; Dahlgaard and
Dahlgaard-Park, 2006).
It has been claimed that Six Sigma enables organizations
to become more ambidextrous by switching structure, act
organically when being challenged by new ideas and operate
mechanically in focusing on eciency (Schroeder et al.,
2008). Ambidextrous organizations manage trade-odd
between conicting goals (alignment and adaptation)
through utilizing and implementing dual structures. In
these forms of organizations while some of the business
units are focusing on eciency, other business units emphasize innovation and change (Duncan, 1976; Gibson and
Birkinshaw, 2004). This dual structure enables organiza-

M.M. Parast / International Journal of Project Management 29 (2011) 4555

tions to focus on both exploitation and exploration,

addressing both eciency and innovation (March, 1991).
However, the ability of Six Sigma for achieving both eciency and innovation has been challenged from dierent
perspectives.
First, Six Sigma is characterized under the family of process management programs (Hammer, 2002; Benner and
Tushman, 2003; Evans and Lindsay, 2005). Benner and
Tushman (2003) argue that the utilization of process management methodologies favors incremental (exploitative)
innovation at the expenses of eliminating radical (explorative) innovation. Programs such as TQM, Business Process Reengineering and Six Sigma all focus on improving,
rationalizing, and enhancing organizational processes
(Hammer and Champy, 1993; Powel, 1995; Harry and
Schroeder, 2000). With emphasis on process improvement
and variance-reduction Six Sigma would impede product
innovation and radical change.
Second, Six Sigma projects focus primarily on understanding and identication of critical characteristics to
the existing customers (Harry, 1998; Dasgupta, 2003;
Linderman et al., 2003; Evans and Lindsay, 2005). This
specic attention to the existing customers, coupled with
focus on continuous improvement eorts in organizational
processes and routines may be achieved at the expense of
threatening the ability of the rm to identify new customers
and introduce new products and/or services. As evidenced
by Benner and Tushman (2003) incremental process innovation (such as Six Sigma) are fundamentally designed to
meet the needs of existing customers.
Third, as a spin-o of quality management, Six Sigma
maintains a strong emphasis on setting specic goals
(Linderman et al., 2003). According to Pande et al. (2000)
setting a clear goal is central to Six Sigma. Customer
requirements are translated into the development of Six
Sigma project goals (Schroeder et al., 2008). However, this
focus on specifying measurable goals for Six Sigma is in
contrast with the viewpoints of the founders of quality management (Deming, 1986; Linderman et al., 2003). In that
regards, one could argue that Six Sigma programs can not
initiate, develop, and maintain sustainable quality systems,
and can not address the core principles of quality management such as a culture of learning, continuous improvement
of processes, and a system view of the organization.
Accordingly there is a need to investigate the scope, limitations, and premises of Six Sigma projects, and determine
their eect on rm performance. Since Six Sigma has been
categorized under process improvement programs, It is
believed that looking at Six Sigma from the process management perspective could provide insight on how Six
Sigma programs improve organizational processes and rm
performance.
4. Research objective
The objective of this study is twofold. First, it investigates the eect of Six Sigma projects on rm innovation.

47

Using theories from process management and innovation,

the paper attempts to answer the following questions:
1. Do Six Sigma projects improve rm innovation?
2. If so, how can Six Sigma projects enhance innovation
capability of a rm?
Second, the paper addresses the eect of Six Sigma on
rm performance. By relating Six Sigma projects to key
external variables the paper assesses the role of these environmental factors as moderating variables that can inuence the eect of Six Sigma on rm performance.
5. Literature review: process management
The central theme of operations management is process
management. Due to the complexity and dynamisms inherent in management of processes in the operations setting
research in process management remains a challenge in
operations management eld (Bua, 1980). On the other
hand, the impact of internal and external sources of uncertainty and variability related to operations management
complicates the management, coordination and eectiveness of processes (Klassen and Menor, 2007).
Process management has strategic and operational
implication which interacts with all levels within the organization (Benner and Tushman, 2003). At the strategic
level, research shows that process management programs
(e.g. TQM, the Baldrige model, Business Process reengineering) positively impact business result and enhance
protability (Powel, 1995; Hendricks and Singhal, 1996;
Easton and Jarrell, 1998; Das et al., 2000; Douglas and
Judge, 2001; Hendricks and Singhal, 2001a,b; Kaynak,
2003). At the operational level, the transformation of input
(e.g. raw material, labor) to the output (e.g. products and/
or services) has been the primary focus of operations management, where it is responsible for evaluation, integration
and coordination of activities that transform inputs to outputs (Silver, 2004). According to Klassen and Menor
(2007) eective process management requires trade-o at
both operational and strategic levels, i.e. the balance
between the strategic impact of the process (long-term)
vs. the operational aspect (short-term). For example,
inventory management requires taking into account the
cost of holding the inventory (operations) while at the same
time considering the safety stock to maintain an acceptable
level of customer satisfaction (strategic).
An important issue in process management is the alignment between the rms operations strategy and its process
management trade-o (i.e. cost vs. quality). It has been
argued that the ability of the rm to respond to changes
in a highly dynamic and evolving market will be at risk if
process management maintains a narrow and tight scope
on operations. For example, if a rm focuses entirely on
inventory reduction and eciency in material handling systems while facing a highly evolving market, its ability to
respond to customer demands and market changes will

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M.M. Parast / International Journal of Project Management 29 (2011) 4555

be threatened. In fact, strategic alignment between market

and process management is the key in process management
decisions (Bower and Christensen, 1995; Klassen and
Menor, 2007). This view challenges the traditional view
of process management where it has been primarily dealt
with reducing variability in the rms operations
(Pannirselvam et al., 1999; Silver, 2004). Eective process
management in markets where customer preferences are
changing rapidly and the rate of product/service innovation is high cannot be sustained with emphasis on eciency
and variance reduction. Rather, it requires exibility and
adaptability.
The above discussion asserts that technological and
organizational context moderate the eect of process management on operational (short-term) and business (longterm) objectives of a rm. Too much emphasis on process
management may impede rms ability for innovation and
responsiveness to new customers (Sterman et al., 1997).
Since Six Sigma is categorized under the umbrella of process management programs, technological and organizational contexts moderate the eect of Six Sigma projects
on operational and business results.
5.1. Organizational processes
With the focus of Six Sigma programs on process
improvement, understanding dierent types of processes
within a rm will provide insight on how Six Sigma and
process improvement are related. Processes can be dened
under three categories: Work Processes, behavioral processes, and change processes (Garvin, 1998). Work processes focus on accomplishing tasks. They can be divided
into processes that produce goods/services (operational
processes) and those that support them (administrative
processes). Operational improvement happens when work
processes are redesigned and restructured. To get the best
out of work processes both operational processes and
administrative processes should be improved. The next category of processes is behavioral processes. Having their
roots in organizational theory and group dynamics, behavioral processes focus on behavioral patterns across the
organization. Three distinguished patterns of behavioral
processes are decision making, communication, and learning processes. Finally, change processes are those that deal
with the sequence of activities over time. They describe
how individuals, groups, and organizations act, develop
and grow over time.
While work processes and behavioral processes take a
static view of the organizational processes, change processes exhibit a dynamic view of the process, dealing with
the patterns and dynamics of change over time. Despite
the fact that gradual and incremental improvement in each
types of processes are achievable, to get best of process
improvement initiatives organizations need to look at the
interaction and interconnectedness among these three types
of the processes. For example, a signicant improvement in
production eciency cannot happen without improving its

supporting administrative processes, the way decisions are

made in the organization (behavioral process), and understanding the nature and pattern of organizational change
over time (change processes).
With reference to Six Sigma programs as a process management initiative, it appears that it has been heavily
focused on improving work processes (primarily task processes). There is little understanding of the implementation
of Six Sigma on improving or reshaping behavioral and
change processes. In fact, there are two challenges to implement Six Sigma programs for behavioral and change processes. First, Six Sigma programs maintain a strong focus
on specifying measurable and quantiable goals
(Linderman et al., 2003). While in the case of work processes (especially task processes) that might be achievable,
there is little evidence on how to set specic and measurable goals for improving and/or restructuring behavioral
and change processes. Second, Six Sigma programs are
developed through translating the voice of customers (primarily the external customers) to specic improvement
projects. Referring to dierent types of processes within
an organization, it can be argued that task processes have
the advantage of receiving the input from external customers. That is not the case with behavioral and change processes, where the voice of external customers can not be
heard. In fact, such a link between the voice of external customers, and behavioral and change processes has not been
established. Putting it dierently, to the extent that Six
Sigma projects fail to address the voice of internal customers, they fail to improve behavioral and change processes.
Therefore, Six Sigma programs can not develop, maintain,
and establish sustainable process improvement programs
since Six Sigma programs have not been designed to integrate all processes in their process improvement eorts.
5.2. Process management and rm performance
While the proponents of process management cite
numerous benets from process improvement programs,
the eect of process management on rm performance
has been mixed, and has failed to yield the promising
results (Benner and Tushman, 2003). Researchers have
failed to nd any signicant relationship between process
management programs and rm performance (Powel,
1995; Samson and Terziovski, 1999). In addition, while
process management programs have increased performance in the auto industry, they appear to decrease performance in the computer industry (Ittner and Larcker, 1997).
One could argue that process management programs are
best implemented in the stable markets (e.g. auto industry)
while their applicability in the evolving markets is limited
(e.g. computer industry).
Most of the research on process management has been
conducted under the quality management umbrella.
Research in quality management and rm performance
does not provide a clear answer on the eect of quality
management on rm performance. Empirical studies show

M.M. Parast / International Journal of Project Management 29 (2011) 4555

that quality management practices (as an integrated process management program) increase rm performance
(Hendricks and Singhal, 1996; Easton and Jarrell, 1998;
Kaynak, 2003). In contrast, other studies show that implementation of quality management programs has improved
operational performance in the short-term but fails to
maintain it on the long-term (Sterman et al., 1997). There
is no evidence that the performance of successful rms
has been improved because of implementation of quality
management programs; rms which had high level of performance maintained that level of performance after implementing quality management programs, and the adoption
of quality management was not the main factor for maintaining their competitive advantage (York and Miree,
2004).
To address the inconsistencies in the above nding, several propositions have been made. One possible argument
is that rms do not adopt all requirement of quality management and fail to fully implement it (Westphal et al.,
1997; Easton and Jarrell, 1998; Zbaracki, 1998). Another
explanation is the lack of t between quality management
and the culture of the rm (Sterman et al., 1997; Cameron
and Barnett, 2000). Quality management failure has been
also attributed to the gap between top management rhetoric about their intentions for quality and the reality of
implementation in each subunit. This becomes further
complicated when organizations fail to address the balance
between higher control (process improvement) and high
commitment and motivation for innovation (Beer, 2003).
Previous studies show that improvement programs such
as quality management can present rms with a trade-o
between the short-term and long-term benets (Sterman
et al., 1997). A fundamental question on process improvement is to determine whether rms emphasizing process
management programs can achieve the dual goal of
short-term (eciency) and long-term (innovation) performance. Furthermore, to the extent that rms execute process improvement programs (such as Six Sigma), how are
the dual goals of control (eciency) and learning (innovation) is addressed? Here, the goal is to look at Six Sigma,
and determine how it can enhance the ability of the rm
to achieve the paradox of control (exploitation) and learning (exploration).
6. Six Sigma as an integrated process management
methodology
Research on Six Sigma has been primarily focused on
anecdotal evidence and case studies (Schroeder et al.,
2008). Academic research on Six Sigma has been accelerated in recent years (Linderman et al., 2003; McAdam
and Laerty, 2004). McAdam and Laerty (2004) argue
that successful implementation of Six Sigma requires attention to both process perspective (methodology) and people
perspective (behavior). While early research on Six Sigma
has been focused on the technical side of Six Sigma in terms
of tools, techniques and methodologies, recent studies have

49

paid attention to the psychological, contextual and human

side of Six Sigma such as reward systems for Six Sigma
(Buch and Tolentino, 2006), goal setting (Linderman
et al., 2006), organizational context (Choo et al., 2007a),
and psychological safety (Choo et al., 2007b).
Six Sigma has been traditionally focused on cost reduction and eciency; however recent studies show that it
could be used as a methodology to increase protability
(Sodhi and Sodhi, 2005), and it could drive creativity
(Biedry, 2001), enhance organizational learning (Wilklund
and Wilklund, 2002), and facilitate innovation (Byrne
et al., 2007). In terms of performance variation, the human
side of Six Sigma exhibits the highest level of variation
between dierent groups in an organization (Fleming
et al., 2005). In addition, it requires top management commitment, highly disciplined approach, and training (Hahn
et al., 2000).
Dierent theoretical frameworks have been used to
understand Six Sigma implementation. Building upon goal
theory literature, Linderman et al. (2003) address the role
of specifying challenging goals for Six Sigma projects,
where Six Sigma projects with challenging goals result in
a greater magnitude of performance. They also indicate
that the use of a structured method (in Six Sigma projects)
increases performance. In another study, Linderman et al.
(2006) empirically show that goals can be eective when Six
Sigma projects employ Six Sigma tools and methods. However, specifying unrealistic and very challenging goals are
counterproductive, resulting in frustration and lack of
motivation for team members.
From a knowledge management perspective, Choo et al.
(2007a) develop a knowledge-based framework for Six
Sigma projects. By focusing on two complementary sources
of knowledge creation in Six Sigma projects prescribed
methodology and organizational context they argue that
Six Sigma projects that can make a balance between the
eective implementation of prescribed methodology (e.g.
tools and techniques such as quality control) and context
(e.g. leadership, organizational culture, and Black Belt
roles) can generate higher level of knowledge. To the extent
that rms can manage such a balance, a sustainable quality
advantage will be maintained.
Previous studies on Six Sigma address the role of Six
Sigma as a highly structured and disciplined approach to
process improvement. While there is agreement on the ability of Six Sigma on enhancing operational performance
(e.g. process improvement) there is little understanding
on the eect of Six Sigma on improving rm performance
over time (Foster, 2007). In addition, the literature does
not provide insight on the role of organizational and contextual variables on the eectiveness of Six Sigma
programs.
7. Six Sigma, process management, and innovation
The development and introduction of any innovation
initiative (such as Six Sigma as a process management

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M.M. Parast / International Journal of Project Management 29 (2011) 4555

program) can be viewed as a mechanism for organizational

adaptations since they are used or reinforced by organizations in response to environmental changes (Brown and
Eisenhardt, 1997). Despite the dierences among process
management programs (such as TQM, Baldrige Award,
Six Sigma) in terms of scope, methodology and their
approach all of them have a common mission: improving
organizational processes (Hammer and Champy, 1993;
Ittner and Larcker, 1997; Harry and Schroeder, 2000).
Because of the focus of process management programs
in variance reduction (eciency) eorts for improving the
operations and continuous improvement of activities in a
rm, over-emphasis on these programs aects the balance
between exploitation and exploration (Benner and Tushman, 2003). In other words, too much focus on process
management will have negative eects on innovation,
which may negatively aect the long-term performance of
the rm (Garvin, 1991; Hill, 1993). To nd the impact of
process management on rm performance in both shortterm and long-term, we need to take a closer look on the
eect of process management on innovation.
7.1. Process management and innovation
Process management inuences innovation of the rm in
several ways. First, it attempts to balance the allocation of
resources to activities across the rm (Christensen and
Bower, 1996; Klassen and Menor, 2007). Second, process
management deals with minimizing sources of variability
in internal and external activities (Pannirselvam et al.,
1999; Silver, 2004). This may result in focusing on specic
types of innovations that are consistent with reducing variability in the processes (Henderson and Clark, 1990). That
is the case with Six Sigma programs where it is aimed at
innovation in design and development processes (Harry
and Schroeder, 2000).
To understand the eect of Six Sigma on innovation we
need to be familiar with dierent types of innovations.
Researchers have looked at innovation from dierent perspectives. Innovations could aect the technological base
of the rm, the subsystems/routines/procedures, and the
markets/customers the rm is serving. Abernathy and
Clark (1985) classify technological innovation into two
dimensions: (1) the degree to which they are close to current technological path and (2) their degree of closeness
to existing markets/customers. While incremental changes
are built upon the current technological capabilities of
the rm, by fundamentally changing the current technological base rms can exhibit radical change (Green et al.,
1995). Technological innovations aect the systems and
processes within a rm (Tushman and Murmann, 1998).
They may aect the subsystems, routines or processes without aecting the integration and interconnectedness among
processes and routines, which results in modular innovation. On the other hand, they may bring architectural innovation, change the way subsystems, routines, and
procedures are linked, and totally restructure the congu-

ration and interconnectedness among procedures and routines of the rm.

Technological innovations can also aect the market/
customers the rm is serving. They may address the needs
of the existing customers/markets or the new/emerging customers and/or markets (Christensen and Bower, 1996).
While improvement in current technological base are suitable for addressing the needs of existing customers/market,
products and/or services designed for new customers/markets need dierent type of technological capabilities, technologies that are fundamentally dierent from the current
technological trajectory of the rm (Christensen, 1998).
Since Six Sigma programs translate the voice of customers
into independent process improvement projects, they
enhance the technological innovation of the rm. Accordingly, it is proposed that
P: Six Sigma programs signicantly improve technological innovation of a rm.
The key decision regarding Six Sigma programs is to
determine their impact on (1) the technological base of
the rm (incremental vs. radical), (2) the processes, procedures, and routines within the rm (modular vs. architectural), and (3) new customers/markets or existing
customer/markets (sustaining vs. disruptive technologies).
7.2. The eect of Six Sigma on innovation and rm
performance
Six Sigma programs attempt to improve the processes
with the rm with the focus on reducing variability in organizational processes and routines (Linderman et al., 2003;
Schroeder et al., 2008). A popular framework for Six Sigma
is DMAIC which encompasses Design, Measure, Analyze,
Improve, and Control phases (Hammer, 2002; Linderman
et al., 2003, 2006; Knowles et al., 2005). This structured
methodology helps Six Sigma programs to identify the root
causes of the problem, look for solution, and improve the
process.
It should be noted that in the search for improvement in
organizational routines and procedures, Six Sigma eorts
are primarily focused on improving eciency within an
existing technological base of the rm (Benner and
Tushman, 2003). Because of the focus of process improvement programs on continuous and incremental change,
they are best suited for improving the existing technological trajectory of the rm. In the pursuit of reducing variability and increasing eciency, Six Sigma programs
ensure that the new technological innovation (in processes
or systems) are very close to the current technological base
of the rm. Accordingly,
P1: Six Sigma programs positively aect incremental
innovation of the rm.
Six Sigma programs improve organizational procedures
and routines. Six Sigma assumes that the current organizational processes are sound but they need minor (incremental) improvement to be ecient (Hammer, 2002). Six Sigma
does not change the integrity and interconnectedness of

M.M. Parast / International Journal of Project Management 29 (2011) 4555

organizational processes; rather, in improves them.

Therefore,
P2: Six Sigma programs positively aect modular innovation in the rm.
According to Douglas and Erwin (2000) Six Sigma is a
concept that concentrates on the customer rather than
the product. The primary target for Six Sigma improvement eorts are the existing customers. Information and
data from the existing customers are collected and analyzed, and Six Sigma projects are dened to improve the
processes in order to meet customer requirements. Organizations strive to reduce or eliminate the number of customer complaints received with the perceptions that fewer
complaints equate to increased customer satisfaction. This
will result in introducing new products and/or services
which is targeted to the existing customers. Therefore,
P3: Six Sigma programs positively improve innovation
for the existing customers.
Knowledge about customers perceptions and attitudes
regarding an organization, and its products and/or services
will greatly enhance its opportunity to make better business
decisions. Harry (1998) states that Six Sigmas philosophy
recognizes that there is a direct correlation between the
number of defects, wasted operating costs, and the level
of customer satisfaction.
The focus of Six Sigma has been to address the needs of
the exiting customers (Linderman et al., 2003; Evans and
Lindsay, 2005). Customer requirement are translated into
quantiable goals. Kwak and Anbari (2006) argue that
eective implementation of Six Sigma projects requires
strong customer focus. In fact, within the DMAIC process
(Design, Measure, Analyze, Improve, and Control) understanding the requirements and expectations of customers
needs to be addressed. Pande et al. (2000) recommend that
organizations rst look at the problem from the customer
side when dealing with a problem. It is believed that a customer-oriented rm will focus on integrating the input
from customers into its Six Sigma projects, where it will
tackle projects that have the highest impact on customer
satisfaction (Johnson, 2005). All of the above conrms
the focus of Six Sigma on addressing the voice of the existing customers. Accordingly,
P4: Six Sigma programs improve customer satisfaction
for the existing customers.
As indicated earlier Six Sigma projects focus on reducing
variability of the organizational processes and routines.
Organizations use Six Sigma initiatives to deal with a specic problem. In that regards, they tailor their process
improvement eorts to address a specic problem raised
by existing customers. In their pursuit for process improvement, organizations improve their existing products/services to meet or exceed customers expectation. Such
incremental improvements could have two benets for the
rm; rst, it improves customer satisfaction for their existing customers, and second, it could attract new customers
due to the changes they have made to the products. Accordingly, at the early stage of Six Sigma implementation, rms

51

have the opportunity to enhance their customer base

through either focusing on their existing customers or
addressing the needs of new customers. The challenge for
the rms at their early stage of Six Sigma initiative is to
whether continue their eorts on improving their existing
products/services (focusing on existing customers) or
restructure their existing processes (aiming at new customers). Therefore, it is expected that at the early stage of Six
Sigma project organizations develop the capabilities to
develop new products or services; these products could be
either within the existing technological trajectory of the rm
(incremental innovation) or follow an entirely new technological trajectory (radical innovation). In fact, due to the
way they translate and integrate customer requirements,
Six Sigma projects provide rms with a foundation to either
incrementally develop their existing processes or radically
change their entire processes. In that regards, as rms
devote their resources and attention to improving their
existing processes and routines with focus on their existing
customers, they may ignore radical innovation. In other
words, while at the early stage of Six Sigma rms may be
motivated to restructure their processes and routines to
achieve radial innovation, too much emphasis on Six Sigma
projects shifts the direction of the rms to incrementally
improve their current technological trajectory. Therefore,
P5: Six Sigma programs have a bi-polar eect on radical
innovation of the rm. The customer orientation of the
rm (existing vs. emerging customers) moderates the eect
of Six Sigma on radical innovation.
Consistent with the previous proposition, Six Sigma
projects (at their early stage of implementation) provide
rms with the foundation to address the needs of both
existing customers and the new customers (i.e. the opportunity to address process improvement and innovation).
However, as organizations focus too much on Six Sigma
projects, they systematically focus on the needs of their
existing customer base. Therefore, one could expect that
too much emphasis on Six Sigma projects may paralyze
organizations to develop new products/services for their
new customers. Accordingly,
P6: Six Sigma programs have a bi-polar eect on innovation for new customers. Focus on existing customers moderates the eect of Six Sigma on innovation for new
customers.
The relationship among Six Sigma, innovation and rm
performance has been presented in Fig. 1. Six Sigma projects have a positive eect on incremental innovation of
the rm (P1). Customer satisfaction for existing customers
is increased as organizations invest more on their Six Sigma
projects (P4). As the result of improvement in customer satisfaction along with incremental innovation rm performance will be enhanced.
8. Six Sigma and rm performance
The degree to which Six Sigma programs are eective
can be contingent upon the stability of the customer base

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M.M. Parast / International Journal of Project Management 29 (2011) 4555

Customer
satisfaction for
existing customers
Firm performance

Six Sigma

Incremental Innovation

Fig. 1. The eect of Six Sigma projects on rm performance.

or the environment. When organizations are serving a specic customer base and the customer base is expected to
remain stable over time, Six Sigma programs can maintain
a strong focus on translating the voice of customers into
improvement projects. This is due to the fact that within
stable customer base, customer requirements are expected
to remain stable over time. The same pattern could be envisioned within stable markets/environments. In such an
environment, the rate of innovation and change is predictable, and patterns of innovation and change can be easily
projected. More specically, the focus of innovation and
change is on improving organizational processes (eciency) rather than improving new products (innovation).
Petroleum industry could be a good example of a stable
customer base. While the price of oil uctuates dramatically over time, the gas stations provide standard and specic products. To improve organizational eectiveness in
such an environment rms need to focus on improving
their operational eectiveness to reduce the operational
cost, resulting in reducing variability in their processes
and procedures. In contrast, in consumer electronics new
products and services are oered so frequently that requires
restructuring, redesigning and reevaluating organizational
processes and routines by organizations. Accordingly, it
is proposed that
P7: To the extent that the customer base is stable, Six
Sigma programs positively aect rm performance. In
other words, customer base moderates the eect of Six
Sigma programs on rm performance.
It has been shown that contextual variables such as
industry structure and competition aect the implementation of process management programs (Das et al., 2000;
Lai and Cheng, 2003; Zhao et al., 2004). While within
evolving markets the rate of innovation and change is dramatic stable markets exhibit little change in industry structure and intensity of the competition. Constantly evolving
markets require constant change in developing new products and services, where rms are forced to introduce
new products and service to remain competitive. The locus
of innovation in dynamic markets is product/service innovation. This inclination toward competitiveness requires
exploration and learning rather than exploitation and control. In contrast, stable markets/environments are characterized by established products/services, where little
attention is given to developing new products and/or services. In such environments, organizations need to focus

on process improvement and eciency rather than innovation since the sources of competitive advantage is process
improvement. Therefore, it is proposed that
P8: To the extent that the environment is stable, Six
Sigma programs positively aect rm performance. In
other words, the environment moderates the eect of Six
Sigma programs on rm performance.
9. Discussion
Eective process management programs integrate customer point of view when dening their improvement initiatives. While some of these programs (e.g. BPR) are
designed to restructure internal operations of the rms others (e.g. TQM) incrementally change their operational performance (Herzog et al., 2007). Regardless of the type,
scope and promise of process management programs, the
fundamental dierence among process management programs are the degree to which either they keep the organizations existing core competency or provide the
opportunity for organizations to pursue a new and radical
technological base.
It has been argued that processes management programs
such as TQM cannot provide rms with sustainable competitive advantage. Traditionally these programs have been
developed to improve certain characteristics in the processes to achieve higher level of operational eciency, with
respect to the voice of customers. The arguments presented
in this paper suggest that suggests that the failure of process management programs such as Six Sigma can be
related to their inability to address radical innovation as
well. By translating voice of customers to viable projects
Six Sigma programs improve process characteristics that
are critical to the customers. To be eective and yield the
best results, Six Sigma programs should address the needs
of both existing and future customers. However, such a
focus has not been traditionally associated with Six Sigma,
i.e. translating voice of the customers has been attributed
to the viewpoint of existing customers.
At a more conceptual level, Six Sigma projects deal with
tasks, processes and operations. As Garvin (1998) stated it
appears that they are best designed to deal with task processes. Six Sigma processes cannot handle behavioral processes since these processes cannot provide any input for
Six Sigma programs. Improvement in decision making,
communication, and learning processes cannot be achieved
with Six Sigma projects since they are designed to deal with
specic, quantiable and measurable improvement goals.
In addition, Six Sigma projects fail to address the pattern
and evolution of rm overtime. Eective Six Sigma implementation requires attention to all three types of processes
within the organizations. Six Sigma programs have shown
little evidence to assure us their capability to deal with
behavioral and change processes. Therefore, radical and
sustainable process improvement cannot be achieved from
Six Sigma projects due to their lack of attention to behavioral and change processes.

M.M. Parast / International Journal of Project Management 29 (2011) 4555

9.1. Implication for practice

The ndings of this paper will be helpful for organizations focusing on Six Sigma and improvement projects.
Organizations need to develop project selection guidelines
to make sure they benet from their Six Sigma projects.
This means that organizations should dene their Six Sigma
projects with reference to their business strategy. If the
emphasis is on eciency and reducing costs, Six Sigma projects have a very high rate of success, assuming the resources
for project (human resource and capital) are secured. Project managers should expect to benet a lot from Six Sigma
projects if two conditions are met: (1) the rm (or the business unit) is focusing on eciency and (2) the rate of change
in the industry is low (stable industry). Implementation of
Six Sigma projects in a highly dynamic and evolving environment with high rate of innovation and change is very
risky due to the inability of Six Sigma projects in addressing
radical change. Therefore, in dening and developing Six
Sigma projects organizations should be careful to select
projects that satisfy the above conditions.
9.2. Limitations and future research
The paper addressed the eect of Six Sigma projects on
innovation and rm performance using theories from process management and innovation. It is believed that empirical research is needed to further validate the propositions.
It is recommended that the type of industry (service, manufacturing), the environment (stable, dynamic) and the customer base (stable, evolving) be taken into account. In
addition, the size of the organization should be considered
as a control variable in future research.
One of the challenges in conducting research in Six
Sigma is to clearly distinguish between Six Sigma projects
and other process improvement initiatives. Organizations
may refer to their process improvement programs as Six
Sigma programs, where in reality they may not be true
Six Sigma projects. Therefore, attention should be devoted
to carefully select organizations that implement Six Sigma
programs.
Another possible avenue for research is to determine the
eect of other quality initiatives on the success of Six Sigma
projects. The implementation of quality management programs (such as lean or the Baldrige model) provides organizations with the ability to more systematically focus on
organizational processes so that they can eectively implement total quality philosophy (Dahlgaard and DahlgaardPark, 2006). Therefore, it would be interesting to see if
there is any dierence in terms of performance between
organizations which have implemented other quality programs with those which only focused on Six Sigma.
10. Conclusion
Six Sigma programs have been utilized as a structured
methodology to improve organizational processes. With

53

their focus on the viewpoint of customers, they systematically translate critical-to-quality characteristics into
improvement projects. While it has been argued that
Six Sigma programs enable rms to become more ambidextrous through their dual focus on eciency (exploitation) and innovation (exploration) review of the literature
on process management reveals that they may impede the
ability of the rm for radical innovation, forcing the rm
to pursue the current technological trajectory. In addition, as rms heavily capitalize on their Six Sigma programs, their ability in indentifying, monitoring, and
understanding the needs of their future customers may
be paralyzed.
To get the best out of Six Sigma programs, organizations need to carefully address the needs of their current
customers while monitoring the formation of new markets
and/or customers. In its current form, Six Sigma programs
do not guarantee a sustainable competitive advantage for
the rms due to their focus on existing processes, products,
and customers. This is due to the fact that they have not
been developed to address radical improvement in organizational processes and routines. There is no doubt that
organizations can benet from Six Sigma programs; however, such benets are not sustainable until Six Sigma programs develop mechanisms to address product innovation,
pattern of change in customer base, and environmental
uncertainty while improving organizational processes.
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