Benchmarking: An International Journal

TQM practices and organizational performances of SMEs in Malaysia: Some empirical

observations
M. Sadiq Sohail Teo Boon Hoong

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TQM practices and

organizational performances
of SMEs in Malaysia

SMEs in
Malaysia

37

Some empirical observations

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M. Sadiq Sohail
College of Industrial Management and Marketing, King Fahd University
of Petroleum and Minerals, Dhahran, Saudi Arabia, and

Teo Boon Hoong

Research Assistant, Monash University Malaysia, Selangor, Malaysia
Keywords ISO 9000, Malaysia, Performance, Small- to medium-sized enterprises,
Total quality management, Benchmarking
Abstract This paper examines and compares the total quality management (TQM) practices and
organizational performances of small to medium enterprises (SMEs) with and without ISO 9000
certification in Malaysia. A quality measurement framework is developed for this paper based on the
critical success factors of the TQM program. Empirical research was carried out to determine the
difference, if any, in the TQM implementation and organizational performances of SMEs with and
without ISO 9000 certification. The quality measurement framework developed for this paper
provides a benchmark of TQM practices for SMEs, which are in the early implementation stage of
the quality program and this is proposed as a quality checklist for SMEs to improve and focus on
specific areas of their respective quality program. Results based on testing the mean differences
between firms with and without ISO 9000 certification indicate that there are significant differences
in performances between certified and non-certified firms, supporting the hypothesis that ISO 9000
certification contributes to a higher organizational performance. Other findings based on the impact
of length of operation on performance are also reported. The paper discusses the implications of this.
Limitations of the study are highlighted and further research directions are suggested.

Introduction
The issues relating to implementation of total quality management (TQM) has
been a subject of interest to quality practitioners and researchers for well over
two decades. Improvement in internal efficiencies is imperative to become
competitive in the market place and the practice of quality management
techniques enables companies to improve internal efficiencies (Gunasekaran
et al., 1994) and competitiveness (Reed et al., 1996). Studies have shown that
loss of market share to the Japanese and other emerging competitors have
fueled the interest on TQM among the American and European firms (e.g. Poh
and Abd Hamid, 2001). A number of studies aimed at establishing links
between TQM practices and organizational performances have been reported
since Garvins (1988) observation that indicates that more research is vital to
M. Sadiq Sohail was formerly at Monash University, Malaysia.

Benchmarking: An International
Journal
Vol. 10 No. 1, 2003
pp. 37-53
q MCB UP Limited
1463-5771
DOI 10.1108/14635770310457539

BIJ
10,1

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38

link quality practices with performances. However, most of these have focussed
on the developed nations.
Mandal et al. (2000) observe that in developing countries where the
economies are primarily regulated by government policies and the scope of
competition is limited, the position has been distinctly different from that of the
western economies. The difference lies in the fact that developing economies
had not given the same emphasis on quality practices, as the developed
nations. However, with market globalization and the growing interdependence
of economies, many developing countries have embraced quality management
concepts in order to improve their productivity and competitiveness in
international markets (Adam et al.,1996).
While there are commitments to TQM practices, opinion has been divided on
its implementation with some researchers supporting the idea of starting with
ISO 9000 certification as a first step towards TQM (e.g. Bradley, 1994) and
others preferring to focus only on TQM (e.g. Binney, 1992). As a result of this,
there are organizations that practice TQM, but which may or may not have
obtained ISO 9000 certification. However, ISO 9000 has assumed a credible
position as an international quality assurance model amongst a wide spectrum
of choice (Rahman, 2000).
Within the context of TQM itself, some researchers raise the issue of
benchmarking the appropriate quality measurements for different
organizations. Spencer and Loomba (2001), for example, raised the issue of
benchmarking the appropriate TQM practices for small- to medium-sized
enterprises (SMEs) while others such as Youssef and Zairi (1995) took a
broader approach to benchmark the appropriate TQM practices from empirical
results of different regions of the world. The issues raised are based on the
belief that quality practices differ depending on the industry and the scale on
which organizations operate.
In the light of this, this study aims to contribute to the TQM literature by
assessing on the TQM practices and organizational performances of SMEs
with and without ISO 9000 certification in the developing economy of Malaysia.
The focus is to examine whether research models developed for industrialized
countries are applicable in the Asian region. In addition, this study also
develops a framework of quality measurements based on prescriptive,
conceptual, practitioner, and empirical literatures to generically benchmark the
quality measurements of TQM for the use SMEs in Malaysia. A review of
literature is presented in the next section. This is followed by a description of
the research methodology. Major findings are presented and the implications
discussed. The paper concludes by highlighting the research limitations.
Literature review
A wealth of literature exists on quality issues and organizational performances.
Most of these suggest that initiation of quality leads to improved

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organizational performances (e.g. Sohal et al., 1992). While there is no dearth of

quality literature on successful examples and cases of quality initiatives in
western economies, very little has been reported in the Asian context.
A survey reported by Kim and Im (1993) suggested that Korean
manufacturing companies are aggressively restructuring their manufacturing
process to move away from the low cost low quality products to high quality
products. Another study in the Asia-Pacific region conducted by Sohal et al.
(1992) examined Australian manufacturing companies to assess the quality
management practices and observed that companies were adapting quality
management practices. A longitudinal study by Sohal and Eddy (1994)
observed that there were significant improvements in the diffusion of quality
practices since the previous study.
A few empirical studies have been conducted to establish the link between
TQM practices and organizational performances in the context of Malaysia.
Poh and Abd Hamid (2001) compared management practices of TQM and nonTQM companies from the perspective of middle level employees. Results based
on a survey of 200 respondents from 12 companies indicated that there were
significant differences in management practices between TQM and non-TQM
companies. Undertaking a study of medium-sized service firms, Abdul Jalil and
Abdullah (2001) examined the relationship between the perceptions of the
employees in ISO 9000 implementation and organizational outcomes. Based on
a survey of 64 employees, the study concluded that the work impact of ISO
9000 was not correlated with the efficiency and market outcomes of ISO 9000
certification, but the employee involvement, influence and perception with ISO
9000 were. Aziz et al. (2000) compared the quality practices in the
manufacturing industry in the UK and Malaysia. They conclude that there
are several similarities and differences in the use of quality practices, which
they attribute to the practices promoted by the respective governments.
Another study to assess the organizational effectiveness of ISO 9000 standards
in the Malaysian context has found to improve product and service quality
(Idris et al., 1996).
Another school of TQM literature is related to researchers interest in finding
answers to the question of the appropriateness of quality measures in a
measurement checklist of an organization, given the differences of
organizations across industries and the scope of operation. Spencer and
Loomba (2001), in their study, examine the extent of TQM practices used by
smaller manufacturing firms in the USA and propose a benchmark of quality
measurements to be used as policy makers guide. Their survey (which
incorporates a construct of: human relations; aspects involving training;
employee involvement and management leadership; process improvement
methods; customer focus; and manufacturers own supplier efforts) found that
smaller manufacturers appear to be focused more on the controlling process
and little effort is given on problem solving methods.

SMEs in
Malaysia

39

BIJ
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A review of literature has not identified any studies that have undertaken a
comprehensive and comparative analysis of TQM practice and organizational
performance of SMEs with and without ISO 9000 certification in the Malaysian
context. With this reasoning, there is a need for further research to establish a
setting of reference to analyze the quality practices by Malaysian SMEs.

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40
SMEs in Malaysia
Since 1990s, Malaysia has been transforming from a commodity-based
producing nation to being a manufacturer of industrial products that is geared
towards exports. The SMEs continue to play a critical role in the countrys
industrialization program through the strengthening of both forward and
backward industrial linkages. The SMEs assume these roles by complementing
the activities of the large-scale industries through integration into the
mainstream industrial development. SMEs are involved in the process of
providing critical parts and components as well as expanding their market
internationally. It is envisaged that with the growth of SMEs, industrial base
will be strengthened further leading to enhance an export-led growth.
At the turn of the new millennium, the SMEs had accounted for more than 80
percent of the total manufacturing establishments in Malaysia. Within this
total, 88 percent were small-scale enterprises and the remaining 12 percent
belonged to the medium scale enterprises. It is observed that the SMEs in
Malaysia have continued to undergo intensive product specification, design
and engineering activities, improvement in marketing and distribution to
further enhance their prosperity especially in preparing them for the global
market. Efforts are being taken by them to improve technology accumulation
and enhancing the quality of labor force through education, experience and
skill development, optimizing the benefits and incentives made available by the
government of Malaysia.
With the trend towards global market orientation and trade liberalization,
SMEs are moving towards implementing quality systems. Larger
organizations competing in an increasingly global market are reliant on
SMEs to provide sub-contracting facilities, where there are observable
tendencies of heavy reliance on subcontracting and a trend of focusing on core
activities. Consequently, large organizations are widely dependent on a
network of suppliers, most of which will be SMEs.
It is, therefore, imperative for SMEs to meet quality standards, as large
organizations need assurance of high quality goods and services from SMEs.
The SMEs are expected to complement the activities of the large scale
industries through provision of essential inputs and components that will form
the critical linkage between industries, thus building and enhancing the
backbone of Malaysias long term industrial development program.
With favorable environmental factors, the SMEs in Malaysia are expected to
transcend from their present state to undertake a more important role in order

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to support the requirements of Malaysias industrialization process. The

importance of the small and medium industries will become more significant as
the country expands its industrial base in meeting the challenges of the new
millennium.

SMEs in
Malaysia

Research model and hypothesis

Based on a review of literature, it is a basic proposition of this study that the
three components, TQM, ISO 9000 and performances measurements that are
linked to achieve organizational outcome. Consequently, a conceptual model is
developed to address the research paper as shown in Figure 1. Organizational
performances is enhanced directly through either implementation of TQM
philosophy or ISO 9000 certification, but organizations already adopting TQM
philosophy can have their performance further enhanced indirectly through
ISO 9000 certification. The evaluation of the quality management practices can
be seen in two different ways:
(1) the impact of TQM on the firms performances; and
(2) the additional effect of ISO 9000 on TQM practice and consequent
impact on the firms performance.

41

The model includes the various criteria of quality management where within
each criteria focus, a set of performance measurement variables have been
developed to measure the extent of which the quality management dimensions
has been practiced.
The main hypothesis postulated for this study is as follows:
H1. ISO 9000 certification enhances performance in quality management
practices.

Figure 1.
Research model
developed for this study

BIJ
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Consequently, a sub-hypothesis is developed to investigate, whether time has

been a contributing factor to superior quality management practices. The subhypothesis is:
H1a. Apart from formal certification(s), time has been contributing to the
performance in quality management practices.

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42

The sub-hypothesis is developed based on the rationale that firms that operate
for a longer period will effectively exploit its learning curve, thereby
performing better in quality management practices relative to newer firms.
Research methodology
Survey instrument
To provide empirical evidence on the differences in TQM implementation and
organizational performances of SMEs with and without ISO 9000 certification,
in Malaysia, a mail survey was conducted. The survey instrument consisted of
the critical criteria construct presented in Figure 1 which were largely based on
the following literatures.
Rahman (2000) in conceptualizing a framework of TQM approach used the
criteria specified in the Australian Bureau of Excellence, which is structured
around leadership, strategy and planning, information and analysis, people,
customer focus, processes, products and services and organizational
performances.
Motwanis (2001) use of prescriptive, conceptual, practitioner, and empirical
research identifies critical constructs of TQM. The performance measures
identified include top management commitment, quality measurement and
benchmarking, process management, product design, employee training and
empowerment, vendor quality management, and customer involvement and
satisfaction. Thiagaragan and Zairi (2001) provide a TQM implementation
framework specifically for the Malaysian context. The same study identifies
the quality factors that are critical for TQM to flourish in the Malaysian
organizations.
Adopting these guidelines, a four-page survey instrument was developed,
which was structured into three parts. Part I established the ISO 9000
certification status of the respondent organizations. Part II measured the extent
of various management practices of the respondents. The extent of each of
these management practices holistically served as the conceptualization of
good or poor TQM practices. Basing on the literature cited above, 36 constructs
were developed to measure the performance of TQM practices in organizations
with and without ISO 9000 certification. The instrument was developed based
on six criteria, which were as follows:
(1) employee training and development;
(2) process management;
(3) quality measurement and benchmarking;

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(4) top management commitment;

(5) customer involvement and satisfaction; and
(6) strategy and planning.
A five-point Likert scale, where 1 represented poor/very low and 5 being
excellent/very high, was utilized to measure the extent to which managers
agree that the management practices were implemented. Part III consisted of
questions designed to collect classification information on respondent
organizations. These details included duration of operation, industry that the
respondents operate in, and respondents position in organization.
Sampling method and procedure
Samples for the population were drawn from a membership list of the SMEs of
Malaysia. The population was spread across Malaysia. Using simple random
sampling, a total of 500 samples were picked. In distributing the questionnaire,
a key person of the respondent organization was identified and interviewed
through the medium of telephone. Such screening criterion was applied to
ensure that the respondent has adequate knowledge of the respondent
organizations TQM practices.
These firms were then mailed with the questionnaire containing a cover
letter and pre-paid reply envelope address to top management. A total of 101
responses were obtained in the following five-week period. This represented a
response rate of 20.2 percent, which compares favorably to response rate other
similar recent studies (e.g. Rahman, 2000) and is considered reasonably
adequate, given the low rate of responses associated with mail surveys. A total
of 21 of the responses were not useable due to insufficiency and incomplete
data. Analysis of the responses is presented in the next session. This resulted to
only 80 questionnaires used in the final analysis for this paper.
Research findings and discussion
Respondent organizations
Out of the 80 valid questionnaires used in the final analysis of this research
paper, 29 organizations (36 percent) possessed ISO 9000 certification while 51
(64 percent) were not ISO 9000 certified (see Table I). This uneven proportion is
justified by the fact that the ISO 9000 standard has only recently begun to
attract interest in Malaysia (Abdul Jalil and Abdullah, 2001). Industry wise, the
breakdown was as follows.
For the construction and engineering industry, two organizations were
certified while eight were not certified. The chemical and extractives industry
recorded no certified organization but had three uncertified organizations. The
industry of durable manufacturing, however, recorded equal proportions on both
certification statuses while its counterpart, non-durable manufacturing, recorded
one certified organization while six uncertified. The services industry recorded a
total of six and 14 organizations in each respective category (see Table I).

SMEs in
Malaysia

43

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Survey respondents
Of the 80 valid responses used in the final analysis, 44 (55 percent) were
completed by respondents of top management while 36 (45 percent) were
completed by respondents of middle management (see Table II).

44

Length of operation
The mean year of operation of all companies in the research sample was 10.35
years. Frequency tabulation reveals that four organizations (5 percent) have
operated less than five years while 32 (40 percent) operated between five and
nine years. 29 organizations (36.25 percent) has operated between 10-14 years
and 15 (18.75 percent) has operated between 15-50 years (see Table III).
Factor analysis
In order to group the 36 items in the questionnaire into meaningful clusters,
factor analysis was conducted via principal component analysis. Principal
component analysis was used because it seeks to include as many factors as
there are in the analysis. In considering the suitable rotation strategy,

Table I.
Industry breakdown
of ISO 9000 certified
and uncertified
firms
Table II.
Breakdown of the
frequency of
respondents that
completed the
questionnaires in
the study

Construction/engineering
Chemicals/extractives
Manufacturing (durable)
Manufacturing (non-durable)
Services
Total

Top management
Middle management
Total

Years in operation
Table III.
Breakdown on the
years of operations
of respondents in
the study

Less than 5
5-9
10-14
15-20
Total

ISO 9000-certified

ISO 9000-uncertified

Total

2
0
20
1
6
29

8
3
20
6
14
51

10
3
40
7
20
80

Frequency

Percent

44
36
80

55
45
100

Frequency

Percent

4
32
29
15
80

5
40
36.25
18.75
100

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orthogonal varimax rotation was used because it minimizes the number of

variables which have high loadings on any one given factor, resulting in easier
identification of each variable with a single factor (Rennie, 1997). Apart from
that, orthogonal rotation of items also increases the generalizability of the
research findings (Rennie, 1997), which is deemed important in an empirical
research.
Only items with factor loading of 0.40 and above were considered significant
in interpreting the factors. Here, the item, Employees are encouraged to
develop new and innovative ways for better performance (see Table IV), was
removed because it did not correlate with any of factorial groups produced.
Out of the 36 items, six factors were produced. These factor groups
addressed the criteria developed for the research study, as displayed in Figure 1
(see also Table IV). In selecting the number of factorial groups to be extracted,
the Kaiser criterion was adopted. Kaiser criterion, which was proposed in the
1960s, states that all components with eigenvalues under 1.0 are to be dropped.
Thus, all the six factors that has eigenvalues greater than 1 are extracted.
These six factors accounted for 67.3 percent of the total variance.
The six factorial groups extracted were given the appropriate name in
accordance with the criteria they represent from the proposed research model
(see Figure 1). The name given for each factorial group and their associated
criteria are:
(1) employee empowerment and development, representing the criteria
employee training and development;
(2) organizational control and performance, representing the criteria of
process management;
(3) information availability and analysis, representing the criteria of quality
measurement and benchmarking;
(4) leadership, representing the criteria of top management commitment;
(5) customer management and quality satisfaction, representing the criteria
of customer involvement and satisfaction; and
(6) strategy planning, representing the criteria of strategy and planning (see
Table IV for the items which measures the respective factorial groups).

Factor
I
II
III
IV
V
VI

SMEs in
Malaysia

45

Alpha scores Revised alpha scores

Employee empowerment and development
Organizational control and performance
Information availability and analysis
Leadership
Customer management and quality satisfaction
Strategy planning

0.8754
0.9264
0.8156
0.8124
0.8190
0.7312

0.9213

Table IV.
Cronbach alpha for
factorial groups

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46

Cronbachs coefficient of reliability

The items in the factorial groups were also tested for reliability and validity. A
reliability test was undertaken to ensure that the research findings has the
ability to provide consistent results in repeated incidences. To check the
reliability aspect of the items and its factorial groups, internal consistency
analysis using SPSS was performed. The items were grouped into its respective
factorial group and coefficient alpha (Cronbachs) was calculated. The
coefficients ranged between 0.7312 for factor group strategy and planning
and 0.9264 for factor group organizational control and performance. Also, out
of the 36 items used to measure respondent organizations TQM performance,
one item was eliminated because it showed no correlation with any factorial
groups from the SPSS output. This deteriorated the revised reliability alpha of
the factor group organisational control and performance slightly, from the
alpha value of 0.9264 to 0.9215, but nevertheless well above the value of 0.6
which as suggested by Nunally (1967) is sufficient value in a an exploratory
research. Thus, this indicates that all items and factorial groups of this research
are sufficiently a reliable measure (see Table V).
Content validity of quality practices performance criteria
Validity refers to the degree to which the instrument measures the concept the
researcher wants to measure (Bagozzi and Philips, 1983). To ensure that the
empirical findings accurately reflect the proposed constructs and provide
confidence, content validity were undertaken for this study. A measure has
content validity if there is a consensus among researchers that the instrument
includes items that covers all aspects of the variable being measured. For this
study, the items included in the survey instrument have been developed based
on a framework that has been built on the basis of well established empirical,
prescriptive, conceptual and practitioner researches. Further, considering that
content validity is not numerically evaluated but subjectively assessed, we
consider the instrument developed for this study to have content validity.
Hypothesis test between ISO 9000-certified and -uncertified organizations
The means and standard deviations for the six factors for firms with and
without ISO 9000 certification are shown in Table VI. The mean ranges
between 3.44 to 3.74 for firms with ISO 9000 and 3.02 to 3.31 for firms without
ISO 9000. The scale used shows that a score of more than 3 indicate an
agreement with a particular item. Thus the factor group mean score shows that
all factorial groups with their respective criteria measured are agreed upon as
important TQM practices regardless of firms certification status.
In overall, certified firms have a higher extent of agreement, as compared to
their uncertified counterparts. For firms with ISO 9000 certification, the highest
factor group mean score is for the factor group customer management and
quality satisfaction (3.74). This is then followed by the factorial groups
strategy planning (3.67), leadership (3.58), information availability and

Employee
empowerment
and
development

Organizational Employees work as team but guided by clear goals

control and
Employees are encouraged to develop new and innovative
performance
ways for better performance
Employees understand respective role
Organization has knowledge of lost customers and
investigate reason
Organization had introduced at least one new
product/service in the past 1 year
Organization had at least one product/service
improvement in the past 1 year

Employee training
and development

Process
management

Ensures that employees focused on continuous

improvements
Opportunity for personal growth available
Reward employees who help improve product/service
quality
Employees awareness of long-term business goals
Employees receiving training in awareness, detection,
measurement and evaluation of quality in work
Employees record customer complaints for improvement
ideas
Employees have knowledge of satisfied customer in
continuing patronage

Factor groups Performance measure items

Criteria

0.641

0.704

0.542

0.567
0.705

0.454
0.700

0.677

0.649

0.412

X
0.560

0.650

0.646

VI

(continued)

0.470

Factor grouping and loadingsa

II
III
IV
V

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SMEs in
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47

Table V.
Varimax rotated
factor matrix of
items

Table V.

Information
availability
and analysis

Leadership

Quality
measurement
and benchmarking

Top management
commitment

Management act to understand customer needs and

update everyone on these needs
Involvement and commitment to improve quality by
enforcing total quality commitment to all staff
Allocating quality issues priority as criteria in decision
making
Data collected and continuously monitored in customer
needs changes

Regular reviews on organizations quality performance

Knowledge, availability, access and collection of data
Organization analyses all work processes and systems
Availability of key performance figures for analysis and
decision making
Availability of regular strategic planning

Ability to monitor all production/services processes to

improve quality
Use of statistical process control to monitor
production/service processes
Capability in always incorporating quality factors in
product/service design
Increase profitability in past three years due to company
quality programs
Revenue increase due to quality improvements
Increase in number of customers in the last three years

Factor groups Performance measure items

0.583

0.562

0.436

0.520

0.403

0.636
0.513
0.535

0.465

0.554

0.754

0.608
0.633

0.447
0.672
0.655

0.436

0.630

0.737

0.616

0.441

VI

(continued)

0.515

0.554

Factor grouping and loadingsa

II
III
IV
V

48

Criteria

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Strategy
planning

Strategy and
planning

0.600

0.535

I
0.419

0.432

0.702

0.408

6.2

0.523

0.477

VI

0.548

0.736

0.587
0.448
0.568
0.424

16.3
14.3
11.2
9.7
9.5
Notes: Total variance explained 67.3 percent. Factor loadings smaller then 0.4 are suppressed and not reported in the Table

Variance explained
(percent)

Customer
management
and quality
satisfaction

Customer
involvement and
satisfaction

Clear and focused quality goals

Ask customers of expectation(s) in products/services
Ask customers satisfaction in products/services
Have precise knowledge of customer expectations
Companys effort in continually making
products/services improvements
Believe that strategic plans (and tactical plans) are linked
to quality values
Inclusion of continuous quality improvements in
planning process
Customer complaints analyzed and used for
product/service improvement

Factor groups Performance measure items

Criteria

Factor grouping and loadingsa

II
III
IV
V

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Table V.

BIJ
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Factors

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50
Table VI.
t-test between ISO
9000 certified and
uncertified
organizations

Employee empowerment and development

Organizational control and performance
Information availability and analysis
Leadership
Customer management and quality satisfaction
Strategy planning

Firms
Firms with without
ISO 9000
F-test
t-test
ISO 9000
Mean SD Mean SD ( p-value) ( p-value)
3.49
3.44
3.51
3.58
3.74
3.67

0.62
0.61
0.57
0.63
0.59
0.64

3.16
3.02
3.14
3.26
3.31
3.37

0.68
0.71
0.67
0.69
0.72
0.64

0.035*
0.000*
0.074
0.620*
0.001
0.856*

0.00**
0.00**
0.00**
0.00**
0.00**
0.01**

Notes: * For these factor groups, homogeneity of variance is not assumed. ** Tested significant
at 95 percent level of confidence

analysis (3.51), employee empowerment and development (3.49), and lastly

organizational control and performance (3.44).
For firms without ISO 9000 certification, the highest factor group mean score
is recorded by the group, strategy planning (3.37), followed by factorial
group, customer management and quality satisfaction (3.31), leadership
(3.26), employee empowerment and development (3.16), information
availability and analysis (3.14), and organizational control and
performance (3.04). For both categories of respondents, there were small
standard deviations, which indicate a general consensus within the responded
firms, on the importance of the respective factorial groups to the quality
practices of TQM.
In testing the mean differences between firms with and without ISO 9000
certification, there were significant differences between firms with ISO 9000
certification and without certification. This supports our hypothesis that ISO
9000 certification contributes to a higher organizational performance.
Tests based on length of operation
An analysis based on length of operation was then undertaken. Organizations
were grouped in two categories, the first being those operating for less than
ten years and the second one being those in operation for more than ten
years. An independent t-test did not uncover any significant differences in
most factor groups, except for factor group of organizational control and
performance between certified and non-certified firms for firms operated
less than ten years.
Differences were then significant for all factor groups for firms that had
operated for more than ten years. The finding prompted the intuition for a sub
hypothesis that TQM excellence not only lies with the compliance of ISO 9000
standards but also partially affected by time factor. This can be explained by
the theory of the learning curve, which states that the longer the firms remain

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in operation, the better is the learning of management knowledge and

experience.
Hence, the analysis, which is based on the length of operation reveals the sub
distinguishing factor of time when actual significant differences are observed
in the group of organization that have operated for more than ten years and not
with organizations which has operated less than ten years.
Implications and conclusion
The hypothesis tested in this study received full empirical support. The results
were consistent with the evidence from literature that ISO 9000 standards have
a positive impact on organizational performances (Bradley, 1994). The findings
of this study are, however, in contrast, to the findings of Rahman (2000), which
assessed the impact of quality management factors on organizational
performance for SMEs in Western Australia, in which no significant
differences between the impact of TQM practices on organizational
performances for firms with and without ISO 9000 certification were
reported. Perhaps, the contrary findings could be due to the regional context
and the limitation of sample size.
That there is a greater degree of agreement on application of TQM practices
by firms with ISO 9000 than without ISO 9000 has certain policy implications.
With the emergence of quality as a top priority, this finding justifies the need
for SMEs to obtain ISO 9000 certification. However, with ISO 9000 standards
beginning to attract a greater attention in Malaysia and with more and more
number of SMEs obtaining the certification, this should not be seen as a
problem.
With a considerable depth of literature reviewed in developing the
instrument for this study, this could be used for SMEs in Malaysia to serve as a
framework to assess and benchmark their own quality practices and
performances generically to those of firms with ISO 9000 certification.
However, it would be almost impossible to produce an exhaustive list of quality
measurement variables, given that all firms and their environments and the
degree of focus on areas of the quality program are different. Nevertheless, this
study proposes a way for SMEs to explore further to understand the link of
quality and performances in their respective organizations.
While this study assesses the impact of quality management factors on
organizational performances of SMEs in Malaysia with and without ISO 9000
certification, the study itself was not entirely free from limitations. The limited
sample size, although comparable with several studies (e.g. Rahman, 2000;
Garvin, 1991; Powell, 1995) is considered small. The results of the study must
therefore be treated with caution. Another limitation of this study is that it does
not consider the effect of industry type on organizational performance. Further
research is suggested to assess the impact of industry type on organizational
performance.

SMEs in
Malaysia

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52

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