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Int. J. Business Innovation and Research, Vol. 6, No.

3, 2012 259

Total quality management in service sector:

a literature review

Faisal Talib*
Mechanical Engineering Section,
University Polytechnic,
Faculty of Engineering and Technology,
Aligarh Muslim University,
Aligarh, Uttar Pradesh, India
*Corresponding author

Zillur Rahman
Department of Management Studies,
Indian Institute of Technology Roorkee,
Roorkee, Uttarakhand, India

M.N. Qureshi
Faculty of Engineering and Technology,
Department of Mechanical Engineering,
MS University of Baroda,
Vadodara, Gujarat, India

Abstract: Over the last two decades, service organisations have embraced total
quality management (TQM) as an effective management tool to improve their
service quality. They have begun to show a keen interest in TQM by working
on quality and related areas. TQM has become a major area of attention to
practitioners, managers and researchers due to its strong impact on business
performance, customer satisfaction and profitability. In the light of this, an
attempt has been made to study and understand the theory and concept of
TQM, its benefits as well as various facets of service components and its
classification. This study also explores the literature on the implementation of
TQM in selected service industries. The finding of this study provides a rich
contribution towards TQM theory, its role in service sector, as well as presents
the different components of services. This paper can help business managers
and quality practitioners in better understanding TQM, service systems concept
as well as TQM implementation in service sector. The scope for future study is
presented at the end.

Keywords: TQM; total quality management; service; service industry;

banking; ICT; information and communication technology; healthcare;

Copyright © 2012 Inderscience Enterprises Ltd.

Electronic copy available at:

260 F. Talib, Z. Rahman and M.N. Qureshi

Reference to this paper should be made as follows: Talib, F., Rahman, Z. and
Qureshi, M.N. (2012) ‘Total quality management in service sector: a literature
review’, Int. J. Business Innovation and Research, Vol. 6, No. 3, pp.259–301.

Biographical notes: Faisal Talib is an Assistant Professor at Mechanical

Engineering Section, University Polytechnic, Aligarh Muslim University,
Aligarh, (UP), India. He holds Masters in Industrial and Production
Engineering and currently pursuing PhD in Total Quality Management in
Service Sector from Indian Institute of Technology Roorkee, (Uttarakhand),
India. He has more than 13 years of teaching experience. He has 40
publications to his credit in national/international journals and conferences. His
special interest includes quality engineering, TQM, service quality, quality
concepts, industrial management, operations management and quality
management in service industries.

Zillur Rahman is an Associate Professor at the Department of Management

Studies, IIT Roorkee. He is a recipient of the Emerald Literati Club Highly
Commended Award and one of his papers was The Science Direct Top 25
Hottest Article. His work has been published and cited in various journals
including Management Decision, Managing Service Quality, Int. J. Information
Management, Industrial Management and Data Systems, The TQM Magazine,
Business Process Management Journal, Int. J. Service Industry Management,
Information Systems Journal, Decision Support Systems, Journal of Business
and Industrial Marketing and Int. J. Computer Integrated Manufacturing, etc.

M.N. Qureshi is an Associate Professor at the Faculty of Engineering and

Technology, Department of Mechanical Engineering, The MS University of
Baroda. He earned his Graduate and Post-graduate degrees in Mechanical
Engineering from MS University of Baroda and later on PhD degree from IIT
Roorkee, Roorkee. He has more than 75 publications to his credit in
national/international journals and on conference proceedings. His areas of
interests include logistics and supply chain management, industrial
management, quality management, etc.

1 Introduction

In the present era of rapid changes in market and economic development characterised by
phenomenon such as globalisation, deregulation of markets, advancement in technology
and intense competition, total quality management (TQM) becomes utmost important not
only in manufacturing sector but also in service sector. It seeks to integrate all
organisational functions to focus on meeting and surpassing customers’ requirements and
organisational objectives. TQM empowers every member of the organisation and offers
the opportunity to participate, contribute and develop a sense of ownership. It is intended
to promote continuous, sustained and long-term improvement in quality and productivity,
and eliminate employees’ fear of change. According to Kumar et al. (2011), TQM is a
modern management philosophy and a journey, not a destination. They further asserted
that it is a systematic management approach to meet competitive and technological
challenges which has been accepted by both service and manufacturing organisations
globally. TQM highlights the need to improve the quality of goods and services to better
utilise the resources of organisation (Collins, 1996). Kureshi et al. (2010) argued that the
terms TQM and business improvement are used interchangeably in the quality

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TQM in service sector: a literature review 261

management research and showed significant relationship between them. Bellis-Jones

and Hand (1989) suggested that TQM is not just another management fad; it is capable of
delivering real competitive advantage. Lee et al. (2010) claimed that TQM being a
business management strategy, it also improves the quality of organisational
management, increase competitiveness and adds value to the customer as well as
provides a competitive edge for the organisations. This was also supported by Das et al.
(2008). Further, Holjevac (2008) stated that TQM is a system of enhancing and
improving flexibility, and introducing an effective and efficient business performance. He
further asserted that TQM guarantees a stipulated quality within the organisation.
Earlier, in 1970s, much of the initial attention was directed towards manufacturing
sector and was found to be effective in improving production and lowering
manufacturing costs as well as gain in competitive advantage (Garvin, 1983). The proven
potential of TQM to provide competitive advantage to manufacturing sector along with
universal applicability of the TQM concept have motivated and attracted academicians
and businesses managers to adopt TQM in the service sector as well (Issac et al., 2004;
Parasuraman et al., 1985; Sureshchandar et al., 2002). Though TQM has its origin in
manufacturing sector, it is widely believed that its principle and practices are equally
relevant to service sector as both use facilities as inputs to satisfy and surpass customers’
needs. However, it is necessary to understand the unique characteristics of services for an
effective and successful implementation of TQM in service sector. According to Talib
et al. (2011e), TQM is a set of management practices applicable throughout the
organisation and geared to ensure the organisation consistently meets or exceeds
customer requirements. They emphasised that introducing TQM practices in an
organisation is a long-term commitment. The successful implementation and adoption of
TQM practices requires planning, time and efforts. Common TQM practices for service
sector include: top management, strategic quality planning, employee management and
involvement, supplier management, customer focus, process management, continuous
improvement, information and analysis, knowledge and education are important for
continuous and industry-wide improvement (Fotopoulos and Psomos, 2009). Further,
Talib et al. (in press a, 2011f) identified 17 TQM practices for service industries based on
extensive literature review. They are top management commitment; customer focus;
process management; quality systems; teamwork; communication, training and
education; continuous improvement and innovation; supplier management; employee
involvement; information and analysis; benchmarking; strategic planning; employee
encouragement; quality culture; human resource management; and product and service
design. Further, the findings of the study by Kumar et al. (2011) reported that there was a
positive impact of TQM implementation on different dimensions of company
performance, i.e. employee relation, operating procedures, customer satisfaction and
financial results. This was also claimed and supported by Yang (2006). However, the
implementation of TQM in the service sector is in its nascent stage and literature suggests
that fewer studies have been taken on the service industries as compared to the
manufacturing counterpart (Evans and Lindsay, 2005; Gustafsson et al., 2003). In context
to developing countries like India, the extant literature further suggests that there is a
need to study applicability of TQM programme in the Indian service sector for better
understanding the current status of TQM implementation (Karuppusami and
Gandhinathan, 2007), particularly when TQM is regarded as absolutely essential for
growth, stability and prosperity.
262 F. Talib, Z. Rahman and M.N. Qureshi

The scope of this study comes from the fact that role of quality has always been an
important issue in the products and services. With the environment becoming more
competitive and turbulent, service industries are increasingly concerned with obtaining a
sustainable competitive edge (Collins, 1996). This paper, therefore, has the main
intention of presenting an overview of TQM, its applicability and benefits together with
understanding the various facets of service components. Beside, this paper also presents
the complete classification of service industries in the Indian context. Towards the end,
this paper attempts to review literature on TQM in selected service industries and
discusses the conclusions of this study along with scope for future research.

2 An overview of TQM

The evolutionary philosophy of TQM which stands as a testimony today is due to the
pioneering contributions made by Juran, Crosby, Feigenbaum, etc. Juran’s (1991) quality
trilogy (planning, control and improvement), Crosby’s (1991) absolutes of quality
management (conformance to requirements, prevention, zero defects and cost of quality),
Feigenbaum’s (1990) 3 steps to quality (quality leadership, modern quality technology
and organisational commitment) and Deming’s (1986) 14 points and cycle (plan, do,
check and act, also called as PDCA cycle) constitute the most important aspects of the
TQM framework that quality gurus have recommended. The dominant emphasis of these
pioneers was on top management leadership for quality, supplier quality management,
process design and control, employee training and employee involvement in quality.
A significant number of industries have adopted some form of TQM framework in
their business and have derived most benefits (Rahman and Sohal, 2002). For instant,
many firms have utilised the Malcolm Baldrige National Quality Award framework as a
base model for TQM to improve quality and economic performance in the organisation
(Jung and Wang, 2006; Lee et al., 2010; Prajogo and Hong, 2008; Teh et al., 2009) and
have got positive and significant results. Furthermore, there is a trend towards stronger
demand for improved measures of the performance of the industries and TQM has a role
to play in relation to this (Williams et al., 2004). A review of the extant literature on
TQM in services revealed that research work has been taken on (Table 1):
x barriers of TQM implementation
x critical dimensions of TQM
x development of TQM framework
x development of TQM models
x financial outcomes of service quality (SQ) initiatives
x identification and implementation of TQM practices
x impact of TQM in service industry
x relationship between TQM and customer satisfaction
x relationship between TQM and employee satisfaction
x relationship between TQM practices and business performance
x relationship between TQM practices and quality performance
TQM in service sector: a literature review 263

x TQM and knowledge sharing

x TQM and new product development
x TQM practices and its impact on role stressors
Therefore, it is not surprising that TQM is progressively occupying centre stage for
service industries regardless of the nature of the business they are in. It is indeed true that
over the past two decades, TQM has emerged as an important field of study in the service
Table 1 Study on TQM in service sector

Area/issue References
Barriers of TQM implementation Soltani et al. (2005), Huq (2005), Mosadegh Rad
(2005), Bhat and Rajashekhar (2009), Talib et al. (in
press a), Ab-Rahman et al. (2011)
Critical dimensions of TQM Mahadevappa and Kotreshwar (2004), Saravanan and
Rao (2006), Tarí (2005), Sureshchandar et al. (2002),
Talib and Rahman (2010a), Talib et al. (in press a,
Development of TQM framework Yusof and Aspinwall (2000), Malhotra and Grover
(1998), Hafeez et al. (2006), Talib et al. (2011c,d),
Azam et al. (in press a)
Development of TQM models Sureshchandar et al. (2001), Bayraktar et al. (2008),
Bou-Llusar et al. (2009), Kakkar and Narag (2007),
Talib and Rahman (2010a), Azam et al. (in press b),
Ooi et al. (2009)
Financial outcomes of SQ initiatives Rust and Zahorik (1993), Rust et al. (1994, 1999), Brah
et al. (2000)
Identification and implementation of Aghazadeh (2002), Khamalah and Lingaraj (2007),
TQM practices Gustafsson and Johnson (2003), Behara and Gundersen
(2001), Sureshchandar et al. (2002), Talib et al. (2011b)
Impact of TQM in service industry Khan (2003), Kumar et al. (2009), Talib and Rahman
Relationship between TQM and customer Mehra and Ranganathan (2008), Gonzalez et al. (2004),
satisfaction Sahney et al. (2004), Yang (2006), Tarí (2005), Bou-
Llusar et al. (2005), Sila and Ebrahimpour (2005), Sit
et al. (2009), Yoon et al. (2006)
Relationship between TQM and employee Yang (2006), Tarí (2005), Bou-Llusar et al. (2005), Sila
satisfaction and Ebrahimpour (2005), Ooi et al. (2007a,b, 2008),
Teh et al. (2009)
Relationship between TQM practices and Prajogo and Mc Dermott (2005), Brah et al. (2002),
business performance and culture Hasan and Kerr (2003), Bou and Beltran (2005), Hafeez
et al. (2006)
Relationship between TQM practices and Flynn et al. (1994, 1995), Arumugam et al. (2008),
quality performance Brah et al. (2002), Hasan and Kerr (2003), Prajogo
(2005), Prajogo and Brown (2004), Prajogo and Sohal
(2004), Ahire et al. (1996), Talib et al. (2011d)
TQM and knowledge sharing Rad (2006), Jacobs and Roodt (2007), Hong et al.
(2004), Cheah et al. (2009)
TQM and new product development Sun et al. (2009), Langerak and Hultink (2008), Dayan
and Benedetto (2009), Lukas and Menon (2004)
TQM practices and its impact on role Teh et al. (2008, 2009), Lu and Lee (2007), Brah and
stressors Lim (2006), Phusavat et al. (2007), Gilboa et al. (2008)
264 F. Talib, Z. Rahman and M.N. Qureshi

2.1 TQM definitions

A variety of definitions of TQM have been offered over the years by different authors.
However, there is still no universal agreement on these definitions (Reed et al., 1996). It
is generally accepted that the contemporary TQM literature evolved from works of
‘gurus’ such as Deming, Juran, Feigenbaum and Crosby, but there is not only one
standard definition of TQM. Table 2 compiles different definitions of TQM found in the
An analysis of these definitions suggests that, after all, they are not very different. For
instance, most emphasise on concepts such as continuous improvement, customer focus,
human resource management and process management. In general, the most common
elements agreed upon by the TQM authors are top management commitment, customer
focus, quality data and information, employee involvement, training and continuous
improvement (Curry and Kadasah, 2002; Prajogo and Hong, 2008). Some authors also
include soft and hard TQM elements, organisation performance and benchmarking as
well. One of the most striking features of the TQM literature is the absence of any
uniform definition of TQM.
Table 2 Different definitions of TQM as reported in literature

Author(s) Definition
Deming (1986) A management philosophy which develops all management principles and
practices from the belief that continual improvement of quality is the key to
Oakland (1989) An approach for improving the competitiveness, effectiveness and flexibility
of an organisation
Berry (1991) A total corporate focus on meeting and exceeding customers’ expectations
and significantly reducing costs resulting from poor quality by adopting a new
management system and corporate culture
Oakland (1993) A new way of managing to improve effectiveness, flexibility and
competitiveness of a business to meet customers’ requirements
Zairi et al. (1994) A positive attempt by the organisations concerned to improve structural,
infrastructural, attitudinal, behavioural and methodological ways of delivering
to the end customer, with emphasis on consistency, improvements in quality,
competitive enhancements, all with the aim of satisfying or delighting the end
Roosevelt (1995) A strategic architecture requiring evaluation and refinement of continuous
improvement practices in all areas of business
Dahlgaard et al. A management process which any organisation can implement through long-
(1998) term planning, by using continuous quality management plans which lead the
organisation towards the fulfilment of its vision
Mohanty and Lakhe An approach for continuously improving the quality of goods and services
(2002) delivered through the participation of ‘all’ levels and functions of the
Palo and Padhi An integrated approach to bring continuous improvement in products and
(2005) services using proper tools, technology and training to meet customer’s
expectations on a continuous basis
Lee et al. (2010) A business management strategy seeking to improve the quality of
organisational management, competitiveness and providing value to
TQM in service sector: a literature review 265

2.2 Benefits of TQM

As long as TQM is adopted fully and practiced effectively in an organisation, many
advantages will be delivered. It will strengthen the organisational business performance
and competitive advantage. The successful implementation of TQM will result in tangible
and intangible benefits and are well acknowledged. Some of the potential benefits of
TQM are summarised in Table 3.

Table 3 A list of selected benefits of TQM as reported in literature

TQM benefits Reference(s)

Reduced cost of operation Oakland (1993), Hendriks and Singhal (1997),
Holjevac (2008)
Improved employee involvement Dale (1994), Antony et al. (2002), Lewis et al.
(2005), Talib et al. (2010c)
Improved communication Anjard (1998), Antony et al. (2002), Lewis et al.
Increased productivity Antony et al. (2002), Oakland (1989), Mohanty
and Lakhe (1998), Samson and Terziovski
(1999), Anderson et al. (1995)
Improved quality and less rework Mohanty and Lakhe (1998), Antony et al. (2002),
Reed et al. (1996)
Improved customer satisfaction Antony et al. (2002), Anderson et al. (1995),
Samson and Terziovski (1999), Reed et al.
(1996), Talib et al. (2010c)
Improved sustainable competitive advantage Antony et al. (2002), Reed et al. (1996), Powell
(1995), Holjevac (2008)
Promoting continuous improvement and Corbett and Rastrick (2000), Reed et al. (1996),
innovation Bounds et al. (1994), Talib et al. (2010c)
Enhanced customer service and loyalty Samson and Terziovski (1999), Reed et al.
(1996), Anderson et al. (1995)
Improved organisational management Oakland (1989), Samson and Terziovski (1999),
Kumar et al. (2011)
Improved employee relations and satisfaction Samson and Terziovski (1999), Anderson et al.
(1995), Holjevac (2008)
Improved financial performance Reed et al. (1996), Salaheldin (2009),
Christensen (1995), Hendriks and Singhal (1997),
Talib et al. (2010c)
Improved process and performance management Lewis et al. (2005), Hendriks and Singhal (1997)
Improved products and services Walton (1986), Hendriks and Singhal (1997),
Garvin (1988)
Improved employee moral and reduced errors Ab-Rahman et al. (2011), Kumar et al. (2011),
Walah et al. (2002), Salegna and Fazel (2000)
Increased social responsibility and ethics Holjevac (2008), Horner and Swarbrooke (1996)

3 An overview of services

Various service systems have been emerged out since early 1980s. These service systems
are based on different criterion. Of these four are worthy – Chase (1978), Schmenner
(1986), Wemmerlov (1990) and Lovelock (1983). Chase (1978) segments by the extent
of customer contact in the delivery of the service. Schmenner (1986) classifies services
266 F. Talib, Z. Rahman and M.N. Qureshi

using two dimensions, with the degrees of interaction and customisation on one axis and
the degree of labour intensity on the other. Wemmerlov (1990) more recently presented a
service system scheme, where the variables of differentiation are the degree of
routinisation of the process, the ‘object’ of the service process and customer contact.
While Lovelock (1983) has proposed classification of services into four distinctive
categories based on what a service organisation is actually processing and how does it
perform that task. Beside these four service system schemes, Liu and Wang (2008)
classify the structures of the previous classifications of services based on the schemes
concepts, i.e. discrete item scheme, continuum scheme and matrix scheme. Lusch and
Vargo (2008) perceived services as supplements to physical goods and referred as good-
dominant logic, where tangible goods are the primary focus of economic exchange.
While Lovelock and Wirtz (2007) formulated non-ownership-based service paradigm
underlying in it the marketing exchanges, which do not result in a transfer of ownership
from seller to buyer are different from those that so. Another study by Gebaver et al.
(2008) suggested a comparable classification for business services, where services are
divided into three groups: customer services, product-related services and customer
support services. Katzan (2008) speaks about information services – a resource capable
of supporting a service event based on information. Other studies on service system
schemes and classification are by Gebaver et al. (2006), Edvardsson et al. (2005),
Schmenner (2004) and Mayer et al. (2003).
A service organisation may be servicing individual customer or alternatively it may
be servicing their possessions. Further, the servicing may be physical as in case of
purchasing washing machine, the customer also receives services such as installation,
maintenance and repair or visiting a restaurant. Alternatively, the servicing may be
intangible as in case of education, information, museums, banking or securities.
Summary of selected schemes for service classifications are listed in Table 4.
Table 4 Summary of selected schemes for service classifications
Reference(s) Classification dimensions
Chase (1978) Extent of customer contact in the delivery of service
Lovelock (1983) Nature of service, relationships, judgement, demand pattern and delivery
Schmenner (1986) Degree of interaction/customisation and labour intensity
Wemmerlov (1990) Degree of routinisation of the process, the object of the service process
and customer contact
Mayer et al. (2003) A 2D model using personal of service assembly and process of delivery
Schmenner (2004) Degree of variation of customisation and interaction, relative throughput
Liu and Wang (2008) Discrete item scheme, continuum scheme and matrix scheme
Gebaver et al. (2008) Business services for growth of product, customer services, product-
related, services and customer support services
Lovelock and Wirtz Distinction between marketing through services or service marketing,
(2007) product-related services and service as a product
Lusch and Vargo (2008) Service-dominant logic, where tangible goods are the primary focus of
economic exchange
Godlevskaja et al. (2011) Services categorisation schemes are grouped under eight service
paradigms: goods vs. services or manufacturing vs. services paradigm,
contemporary service industries paradigm, non-ownership service
paradigm, goods-focused paradigm, services-for-growth paradigm,
service-focused paradigm, relationship paradigm and service in
automated environment
TQM in service sector: a literature review 267

3.1 Definitions of service

Services have been defined in many ways but with no general agreement as to what really
constitute services. But before drawing attention towards the varieties of definitions on
services, it is important to draw distinction on different categories of services. Service
can be divided into four distinct categories (Zeithaml et al., 1996):
x Service industries and companies: Whose core product is a service, e.g. hotels
(lodging), railways (transportation), banks (financial services), education, etc.
x Services as product: Range of intangible product offerings that customers value and
pay for in the marketplace, e.g. information technology (IT) consulting services
offered by Accenture, IBM, telecommunication services offered by MTNL, BSNL,
training services, shipping services, etc.
x Customer service: Service provided in support of a company’s core product, e.g.
maintenance of equipment, installation of machine or e-gadget, on-site and off-site
services, customer care centres, etc.
x Derived service: Value derived from physical goods is the derived service, e.g. razor
provides barbering services, computer provides information and data manipulation
services, drugs and medicines provide medical services, etc.
The different definitions of services have been compiled in Table 5.

Table 5 Various definition of service as reported in literature

Author(s) Definition
Cowell (1984) Activities, benefits or satisfactions, which are offered for sale or are
provided in connection with the sale of goods
Stanton (1986) Those separately identified, and essentially intangible, activities that
provide want of satisfaction and that are not necessarily tied to the
sale of a product or another service
Gummersson (1987) Something that can be bought and sold but which you cannot drop
on your foot
Quinn et al. (1987) It includes all economic activities whose output is not physical
product or construction, is generally consumed at the time it is
produced and provides added value in forms that are essentially
Kotler and Turner (1993) Any kind of performance that one party can offer to another that is
essentially intangible and does not results in the ownership of
Zeithaml et al. (1996) Services are deeds, processes and performances
Lovelock and Wirtz (2004) An economic activity that creates value and provides benefits for
customers at specific times and places by bringing about a desired
change in, or on behalf of, recipient of the service
Edvardsson et al. (2005) A value co-creating processes with customers
Karwan and Markland (2006) A package made up of a set of tangible and intangible elements
Bygstad and Lanestedt (2009) Services are a non-material equivalent of a goods
268 F. Talib, Z. Rahman and M.N. Qureshi

3.2 Service characteristics

Services nowadays in most of the modern products are combination of both tangible and
intangible acts. For instance, take the case of hair dressing at barbershop, the customer
will likely also benefit from a number of hair care products and might even purchase
some for home use. When purchasing an air conditioner, the customer also receives
services such as installation, maintenance and repair. To understand the nature and
meaning of services, it is important to know the different features of services. The four
distinctive characteristics referred by some researchers as 4I’s of services, namely
(Dotchin and Oakland, 1994; Hope and Muhlemann, 1997):
x intangibility
x inconsistency
x inseparability
x inventory.

3.2.1 Intangibility
It is one of the most important distinctive properties of service. Service has no physical
attributes and as a result impossible for a customer to taste, feel, hear or smell before they
buy it. The customer cannot assess the intangible aspect of service before the event and
hence, customers often must use the reputation of a service organisation and its
representatives to judge quality (Dotchin and Oakland, 1994). Zeithaml (1981) observed
that services often cannot be evaluated in advance of the user. The customer must rely on
experience of the service itself or ‘on trust’. However, service providers can take account
of customer psychology and make plans to cope with the difficulties of demonstrating
their offerings, while designing a new or revised service package.

3.2.2 Inconsistency
Inconsistency in most of the service literature is also referred to as variability or
heterogeneity. Heterogeneity of services occurs in consequence of explicit and implicit
service elements relying on customer preferences and perception. Differences exist in the
outputs of service provider producing the same service over a time within the same
organisation. The interaction between customer and provider may vary by customer
(Sasser et al., 1978). This inherent variability makes it difficult to set precise quantifiable
standards for all of the elements of service.

3.2.3 Inseparability
Inseparability is a characteristic of a service which indicates that it cannot be separated
from the creator–seller of the product and thus, it has the property of simultaneity.
Simultaneity occurs because the customer has to be present before any services can take
place. Whereas foods are produced first, then sold and consumed, most services are sold
first and then produced and consumed simultaneously (Zeithaml et al., 1996). Morris and
Johnston (1987) argued that the employee providing the service must first diagnose
individual customer expectations then customise the service on the basis of the diagnosis.
TQM in service sector: a literature review 269

The employee must also assess the quality of his or her performance, as it takes place,
against their assessment of the customers’ expectations, while remain ready to detect and
respond to any adverse customer reactions which may occur.

3.2.4 Inventory
Another distinguishing characteristic of service is that they are produced and consumed at
the same time that causes elimination of inventory. This characteristic is also called as
perishability. Service cannot be saved, stored, resold or returned. A seat on a train or in a
theatre or telephone line capacity or a tax consultant’s time not used cannot be reclaimed
and used or resold at all later time. Perishability is in contrast to manufacturing goods that
can be stored in inventory or resold another day or even return if the consumer is
unhappy. Perishability makes these actions an unlikely possibility for most services.
Thus, perishability also requires that service production and service delivery often must
exist simultaneously (Dotchin and Oakland, 1994).

3.3 Sectoral classification

The usual method adopted by economist to understand the relative importance of various
segments of an economy is to divide it into three sectors of activity (Zeithaml et al.,
x primary sector (agriculture and mining)
x secondary sector (manufacturing, electricity, gas, water supply and construction)
x tertiary sector (services).
This three-sector economic theory is also called as the three-sector hypothesis developed
by Colin Clark and Jean Fourastié. According to this hypothesis, the focus of an
economy’s activity shifts from the primary sector, through the secondary and then finally
to the tertiary sector (Figure 1) based on the gross domestic product (GDP) output.

Figure 1 Stages and divisions of economy into three sectors

270 F. Talib, Z. Rahman and M.N. Qureshi

3.3.1 Primary sector

The contribution of this sector comes from agriculture, agribusiness, fisheries, forestry,
all mining and quarrying industries. In short, it is predominantly dependent on natural

3.3.2 Secondary sector

This sector comprises manufacturers and industries. It is mainly dependent on the
products of the primary sector as raw material and produces goods for consumption. This
sector has broad classifications such as energy industry, steel production, automobile
industry, textile industry, etc.

3.3.3 Tertiary sector

This is the service sector where the output is not goods but various services that make life
comfortable. This sector includes government, financial, education, health, etc. Figure 2
presents the contribution of each sector to India’s GDP. The service sector is a major
contributor to the nation’s GDP and manufacturing and agriculture sectors which were
dominant earlier in developing nations are comparatively growing slowly as compared to
After considering the global economic development trends as well as India’s GDP
contribution towards service (tertiary) sector, it is clear that national economic
advancement is spearheaded by the service sector. If India has to achieve the same degree
of development as the advanced (developed) countries, India will need to focus on the
service sector as the engine for development and growth. To understand this in a better
way, service sector needs to be classified.

Figure 2 Contribution of three sectors to India’s GDP, 2009


Agriculture sector
Industrial sector

Service sector
57.28% 25.77%

Source: i3, CMIE (2010).

TQM in service sector: a literature review 271

3.4 Service sector classification

Service sector is very wide in its gamut, covering all human activities whether it is
education, health, information and communication technology (ICT), banking,
transportation, etc. It is not easy to classify service sector in a simple and useful manner
due to variability or heterogeneity characteristic of service. However, the classification
proposed by i-cube, (information infrastructure for institutions), Centre for Monitoring
Indian Economy Private Limited (i3, CMIE, 2010), India, covers almost all important
aspects of service. It is a more standard approach to classify service sector and is
presented in Table 6. The contribution of these service industries (Table 6) to India’s
GDP as on 2008 is depicted in Figure 3.
Table 6 Classification of service sector
Industry Services
Hospitality industry (hotel and x Hotels and restaurant
x Tourism
Recreational industry x Production and distribution of films
x Media broadcasting
x Exhibition of films
x Media content
x Animation content provider
x Other recreational services
Wholesale and retail trading x Trading
x Retail trading
Transport services x Road transport and allied services
x Railway transport and allied services
x Air transport and allied services
x Shipping transport and allied services
x Transport logistics services
Financial services x Banking services
x Investment services
x Asset financing services
x Other fund-based financial services
x Fee-based financial services
x Other financial services
Communication services x Telecommunication services
x Courier services
IT industry x Computer software
x Information technology enabled services (ITeS)
Other (miscellaneous) services x Health services
x Education
x Business consultancy
x Storage and distribution
x Other miscellaneous services
Source: i3, CMIE (2010).
272 F. Talib, Z. Rahman and M.N. Qureshi

Figure 3 Total contribution of service industries to India’s GDP (in %), 2008

Public administration Others, 2.31 IT/Software , 6.2

and defence, 5.18

Banking , 7.48
Real estate and
business, 7.53

Healthcare, 2.09**
Storage , 0.06

Transport , 6.36
Communication , 6.05

Education, 3.78*
Hospitality , 10.24

Note: *Expenditure on education by education and other departments as percentage of

**Expenditure on healthcare by government as percentage of GDP.
Source: CSO (2010) and i3, CMIE (2010).

4 Literature review of TQM in service sector

The scope of this section is to study and explore an in-depth literature review on the
issues related to TQM focusing on the impact of TQM implementation and its
applicability in different service industries.
After reviewing the voluminous literature, it was classified into four categories
depending on the importance, nature of literature available and future requirement for
further improvement. The classification categories so chosen are:
x TQM in healthcare
x TQM in banking
x TQM in hospitality (including hotels and tourism)
x TQM in ICT (including telecommunication services, ITeS and computer software
TQM in service sector: a literature review 273

The reasons for choosing the above mentioned four industries are as follows:
x These industries represent the backbone of the Indian economy They share about
56% (more than half) of the service sector’s GDP at factor cost in the country (i3,
CMIE, 2010). Thus, they play an effective role in the growth and development of
Indian economy as well as in the Indian service sector. Figure 4 depicts the GDP
contribution of these industries in the service sector.
x As per the annual report to the people of employment published by Ministry of
Labour and Employment (MoL&E), Government of India (GOI), July 2010, the
service sector especially ICT, hospitality, healthcare and financial (including banking
services) are highly labour-intensive industries and provides substantial employment
(MoL&E, GOI, 2010). Hence, they have shown their major presence in the Indian
service sector.
x According to the CMIE, the net annual income generated by these industries is
steadily increasing from last five years except during the global economic slowdown
period of 2008–2009, which shows some decline in the net annual income. But in the
coming years, it is predicted that net income of these industries will again rise. This
shows that these industries play a major role in the progress and development of
x In addition, these service industries are large enough to capture and represent almost
all the critical features of customer-perceived quality and the key dimensions of
excellence that management may encounter (Al-Marri et al., 2007; van Dun et al.,
2011; Yusuf et al., 2007).
x Finally, these industries reflect the Indian service sector mainly by its wide
variability of Quality Management (QM)/TQM implementation levels.

Figure 4 Total GDP contribution of four service industries in Indian service sector (in %), 2008

Source: CSO (2010) and i3, CMIE (2010).

274 F. Talib, Z. Rahman and M.N. Qureshi

4.1 TQM in healthcare industry

One of the important services in the Indian economy has been health. This is one of the
largest and most challenging sectors and holds a key to the country’s overall progress.
Currently, the health sector of India accounts for about 1.9% of its GDP. Also, total
public expenditure (both central and state governments) is raised to 1.4% of GDP in
2009–2010 (Planning Commission Report on Health, Government of India, 2010).
Therefore, during the eleventh five year plan, while the central government makes every
effort to augment resources for health, state governments will be persuaded to assign at
least 7–8% of state expenditure towards healthcare.
In India, the past few years have witnessed an increasing concern over the quality of
healthcare services. The government policies have significantly changed the healthcare
scenario in India. Quality has been shown to be an important element in the consumers’
choice of hospitals. In light of these changes, there is an emerging need to improve the
quality of healthcare services. Further, the changing market and accreditation pressures
have motivated hospitals to implement TQM concepts. The TQM application in hospitals
is seeking ways to lower costs and improve care. Several researchers have asserted that
successful implementation of TQM can result in significantly superior outcomes in
healthcare organisation (Karasa et al., 2008; Miller et al., 2009; Short and Rahim, 1995)
such as the upgradation of SQ, improvement in healthcare quality and productivity, and
satisfying both internal and external customer.
Several research studies have been carried out on the implementation of TQM in
healthcare industry in different parts of the world. These studies are summarised in
Table 7 as reported in the literature.

Table 7 Research studies on TQM in healthcare as reported in the literature

Industry Author(s) Main purpose of the study Approach Major findings

Healthcare Kozak et al. To identify employees’ Exploratory study TQM perception is
(2007) perceptions of the extent associated with importance
to which TQM of employee’s responsibility
programmes are and participation, patient’s
implemented into their satisfaction, responsibility of
hospital organisations; and upper-level management,
to explore whether or not measurement and reward
they perceive any problems system and support of
with a successful upper-level management
implementation of TQM
Lee et al. To reveal the problems Literature For the successful
(2007) associated with review on the implementation of TQM
unsatisfactory delivery developmental system in a hospital requires
of services in the current problems of hospital control, developing
healthcare system of China’s an incorporated performance
China as experienced by contemporary measurement system and a
patients of diverse socio- healthcare system broad approach for quality
economic backgrounds, progress
including SQ, accessibility
and affordability
TQM in service sector: a literature review 275

Table 7 Research studies on TQM in healthcare as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Horng and To know the extent of TQM Questionnaire The nature of the network
Huarng adoption by the individual survey of 76 relationship and prospector
(2002) hospitals in Taiwan and to hospitals in strategy, the two constructs
test a multi-level model Taiwan out of five identified
addressing the issue of TQM constructs are positively and
adoption as one type of significantly related to the
organisational adaptation extent of TQM adoption
Raja et al. Comparing quality awards Cross-sectional Provide insights into the
(2007) and the selection criteria for methodology and relationships among the
assessing healthcare principal dimensions such as
processes quality status in component relationship between
private sector healthcare analysis (PCA) leadership, resource
institutions were used measurement, people
management, process
management and customer
Kunst and Identifying and exploring Cross-sectional Different
Lemmink success parameters of high methodology and variables/parameters are
(2000) quality performance and factor analysis linked to progress in TQM
their inter-relationships using PCA were and business performance
used Positive link between
progress in TQM and
perceived SQ by customers
Mosadegh Investigate the success of Cross-sectional Top management’s
Rad (2005) TQM and barriers to its methodology and commitment increased the
successful implementation correlation successful implementation
approach were Barriers related to
used implementation: human
resources, strategic and
structural problems
Salaheldin Examining the Cross-sectional Common understanding
and implementation of TQM in methodology and exists between managers
Mukhalalati the healthcare sector in Mann–Whitney about the significance of top
(2009) Qatar and determining the test were used management support,
most implemented TQM employee training and
initiatives, the level of involvement in the TQM
understanding and implementation
knowledge of TQM and the Vital role of supplier in
critical success factors supporting quality
(CSFs) of TQM improvement
Duggirala Identifying the dimensions Cross-sectional Seven distinct dimensions of
et al. (2008) of patient-perceived TQS in methodology and patient-perceived TQS
the healthcare sector and multiple highlighted
there impact on patient’s regression Positive and significant
satisfaction analysis were relationships among the
used dimensions and patient
satisfaction have been found
276 F. Talib, Z. Rahman and M.N. Qureshi

Table 7 Research studies on TQM in healthcare as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Arasli and Proposing a quality Cross-sectional Public sector is in a much
Ahmadeva improvement model for methodology and worse position than the
(2004) health promotion in ANOVA test private sector in terms of
hospitals in Northern were used total quality
Cyprus as well as comparing The proposed model could
and understanding their contribute to total quality
existing problems and practices of hospitals in
challenges developing countries
Ovretveit To present an overview Theoretical Describes reasons behind the
(2000) of TQM initiatives in literature review rise in interest in health
European healthcare quality and quality methods
in Europe in the last one and
a half decade. Then explains
how TQM is different from
other approaches and its
strengths and weaknesses for
healthcare quality
improvement. And finally
concludes with a summary
of lessons for health
organisations introducing
TQM which arises from the
European experience
Karasa et al. To assess the contributions Literature review, The cultural changes needed
(2008) of internal marketing to questionnaire to maintain the success of
the success of TQM survey, TQM applications in the
applications by means of descriptive organisation were not
employee communication statistics, achieved, there were
and participation Chi-square tests problems in the internal
were performed communication system,
and used effective participation of
employees was not
achieved, and public
relations and internal
marketing activities were not
employed in a sufficient
Nwabueze To delineate the essential Survey-based The personality traits are
(2011) leadership traits for the study seen as ineffectual for TQM
effective implementation implementation by National
of TQM in a healthcare Health Service Chief
environment Executives. Therefore,
organisations should
concentrate on the use of the
so-called traditional
paradigm of leadership:
planning, organising,
controlling and commanding
TQM in service sector: a literature review 277

Table 7 Research studies on TQM in healthcare as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Hariharan To develop a comprehensive Utilises a quality Stakeholders identified
and Dey framework for improving management various intensive care unit
(2010) intensive care unit framework by issues. Managerial
performance combining cause performance, organisational
and effect processes and insufficient
diagram and staff were considered as
logical major issues. Finally, a
framework logical framework was
developed to plan an
improvement project to
resolve issues raised by
clinicians and patients
Ababaneh To investigate empirically Questionnaire Bureaucratic, supportive and
(2010) the impact of organisational survey along innovative cultures have a
culture and quality with descriptive significant and positive
improvement practices in statistics, Pearson influence on quality
Jordanian public hospitals correlation, improvement practices.
regression Compared with bureaucratic
analysis and and supportive cultures,
ANOVA test innovative culture appears to
were employed play a stronger role in
quality improvement
Noor To provide an empirical Questionnaire Practice of quality
Hazilah analysis on the practice of survey along with management was found to
(2009) quality management among one-way be significantly higher in
employees of Malaysian ANOVA, factor district hospitals than in the
public hospitals at the district, analysis and national referral centre.
state and national level validity tests However, there was no
hospitals, and aims to perform significant difference in
a comparative analysis on perception on
quality management practices implementation outcome
among the three levels of between the three levels of
hospitals hospitals
Azam et al. To identify and critically Review of This paper provides insight
(2012b) analyse the quality literature on about contemporary quality
parameters in health care healthcare quality parameters for HCE on
establishment (HCE) with critical critical analysis of relevant
described in the literature analysis in literature
relation to their
over all impact
on patient
evolving also an
integrated quality
model for HCE

4.2 TQM in banking industry

The banking industry is the largest and progressive industry in the service sector which
caters to the needs of the different categories of people and become a mass consumption
service. Notably, the SQ tends to play an important role in high involvement industries
278 F. Talib, Z. Rahman and M.N. Qureshi

like banks (Al-Marri et al., 2007). Banking in India is fairly mature in terms of supply,
product range and reach – even though reach in rural India still remains a challenge for
the private sector and foreign banks.
Ministry of Finance, GOI has divided Indian banks into three types – public sector
banks, private sector banks and foreign banks (Ministry of Finance, Government of India,
2009). Currently, India has 27 public sector banks (i.e. with the GOI holding a stake), 22
private banks (these do not have government stake, they may be publicly listed and
traded on stock exchanges) and 30 foreign banks (Ministry of Finance, Government of
India, 2009). Beside this, around 100 scheduled commercial banks are also actively
participating and making business in the Indian banking sector. The overall growth of
GDP in banking and financial services as per Central Statistical Organisation (CSO,
2010) and i3, CMIE (2010) is estimated to be 7.09% in 2008, representing an increase
from the level of growth of 6.7% during 2007, indicating a performance and
infrastructure growth of this sector. According to the survey, Indian banks have combined
network of over 55,000 branches and 20,000 ATMs. This predicts that the Indian banks
are in a position to deal with total quality service (TQS) and are at par with other largest
international banks.
Many studies have proved that the performance of banks is significantly and
positively linked with the SQ (Bellou and Andronikidi, 2008; Krishnaveni and Divya,
2006; Ladhari et al., 2011; Longbottom and Hilton, 2011) and to achieve quality in
service, the TQM is highly essential (Al-Marri et al., 2007; Kassem, 1998). The TQM is
discussed and implemented in various dimensions by different researchers. Some of these
studies on TQM in banking industry are presented in Table 8.

Table 8 Research studies on TQM in banking industry as reported in the literature

Industry Author(s) Main purpose of the study Approach Major findings

Banking Al-Marri To examine CSFs for Empirical case About 16 CSFs were
industry et al. (2007) TQM implementation in studies were identified. They are top
UAE banking sector collected from management support,
250 banks in continuous improvement,
UAE that have benchmarking, customer
embarked on focus, recognition and
TQM successfully reward, service design,
service technologies, service
culture, social
responsibility, service caps,
quality department, quality
system, human resource
management, problem
analysis and strategy
Vermeulen Discusses the importance Questionnaire No respondents found to
and Crous of training and education survey-based study agree that their
(2000) of TQM in the organisations have a well-
commercial banking developed TQM training
industry of South Africa strategy and plan
About 33ѿ% of respondents
have indicated that their
organisations have a well-
developed TQM training
TQM in service sector: a literature review 279

Table 8 Research studies on TQM in banking industry as reported in the literature (continued)

Industry Author(s) Main purpose of the studyApproach Major findings

Mellahi To examine critical Case study-based The results showed that
and factors for successful approach successful TQM
Eyuboglu implementation of TQM implementation requires
(2001) in the Turkish banking management’s unwavering
sector commitment to TQM and
enthusiasm, formal national
bodies to introduce
organisations to TQM and
provide assistance during and
after TQM implementation, and
a highly educated and
competent management team
Kayis et al. To propose a model Questionnaire Tested the developed model and
(2003) linking perceived SQ, survey found significant relationships
customer satisfaction, methodology was and path links between
customer loyalty and used and perceived SQ, customer
employee satisfaction correlation satisfaction and customer
while implementing analysis was loyalty as well as between TQM
TQM among Australian performed practices and employee
and Korean banking satisfaction
Safakli To assess the need of Literature review Need for updating and
(2004) TQM in the banking and questionnaire implementing new rational
sector of the Northern survey management methods followed
Cyprus by motivation and training of
employees and employers
Continuous monitoring of
customer satisfaction is also
necessary to make TQM more
Selvaraj To present the important Questionnaire The important TQM factors are:
(2009) TQS factors in Indian survey top management commitment
commercial banks and methodology was
examines the level of used and t-test, human resource management
implementation of TQM one-way ANOVA technical and important systems
practices in three groups and multiple customer focus
of Indian banks discriminant
analysis were employee satisfaction
applied service culture
social responsibility
Li et al. To survey the entire Meta-analysis Result shows that they have
(2001) population of licensed approach 68% success rate for quality
banks in Hong Kong on initiatives
their quality management They have also gained customer
initiatives and to analyse satisfaction, efficiency and
the current status of quality awareness
quality management
initiatives in Hong Kong They tend to devote more effort
in meeting service standards
and providing prompt services
280 F. Talib, Z. Rahman and M.N. Qureshi

Table 8 Research studies on TQM in banking industry as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Sureshchandar To propose a holistic Empirical study Identified 12 dimensions of
et al. (2001) model for TQS by using TQM for banking sector:
illustrating the confirmatory top management
relationships between factor analysis commitment and visionary
identified dimensions (CFA) approach leadership, human resource
with a specific focus on management, technical
the banking sector system, information and
analysis system,
benchmarking, continuous
improvement, customer
focus, employee
satisfaction, union
intervention, social
responsibility, servicescapes
and service culture
Arasli et al. To measure the SQ Descriptive, The expectations of bank
(2005) perceptions of Greek factor analysis customers were not met,
Cypriot bank customers and multi-variate where the largest gap was
regression obtained in the
analysis were responsiveness-empathy
applied dimension
Longbottom To investigate service Longitudinal Service improvement
and Hilton improvement initiatives survey-based initiatives have focused on
(2011) within a major UK bank study the use of popular business
and assess issues which models, SERVQUAL,
may have contributed to balanced scorecard (BSC)
the current financial crisis and European Business
Excellence Model. Results
show that participant
perceptions towards these
models are generally
negative, with a high
incidence of failure to
achieve expected results and
negative organisational
Ladhari et al. To compare perceptions Questionnaire Respondents in both
(2011) of bank SQ among survey along with countries reported high
Tunisian and Canadian CFA, ANOVA levels of perceived SQ in
customers and to and linear banks. However, Canadians
determine which regression were reported higher perceived
dimensions of SQ make also used SQ than Tunisians for all
the greatest contribution five SERVQUAL
to overall customer dimensions
satisfaction and loyalty
TQM in service sector: a literature review 281

Table 8 Research studies on TQM in banking industry as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Vinodh et al. Reports a research Statistical tests An exclusive financial
(2006) project which was and validating the accounting system was
begun by adopting a framework designed to portray the
new technique called performance of Innovative
total quality function TQFD framework. The
deployment (TQFD) results of statistical tests on
the feedback data indicated
the practical validity of the
frameworks and models
developed in this research
Shih et al. To establish an Questionnaire The findings show that there
(2011) understanding of the gap survey, are perceived gaps in human
in perceived quality descriptive capital of banks. The option
between employees statistical ‘employees are satisfied
(internal) and customers analysis, with work performances’ is
(external) of banks reliability considered to be important
concerning all the analysis, t-test by customers but not by
indicators of the different of independent bank personnel. On the
dimensions of intellectual samples were other hand, banking
capital with the conducted personnel believe that their
perspectives of BSC education level is important,
but it is not emphasised by

4.3 TQM in hospitality industry

The World Economic Forum Report (2009) on travel and tourism competitiveness
indicates that India is ranked at 11th place in the Asia Pacific region and 62nd overall. It
is ranked the 14th best tourist destination for its natural resources and 24th for its cultural
resources with a number of world heritage sites (Ministry of Tourism, Government of
India, 2010). Beside this, Indian hospitality industry has contributed many more
achievements and is being one of the fastest growing industries in terms of gross revenue
and foreign exchange earnings. It also stimulates growth and expansion in other
economic sectors such as agriculture, horticulture, handicrafts, transportation,
construction, etc., as well as gives momentum to growth of service exports. It is a major
contributor to the national integration process of the country as well as preserver of
natural and cultural environment. Studies have further shown that hospitality sector is one
of the fastest growing sectors across the world and constitutes one of the basic factors of
a country’s economic growth (Holmes, 2007; Politis et al., 2009). Towards the
contribution to the Indian economy, according to CSO (2010) and i3, CMIE (2010), the
contribution of hospitality industry to GDP was 15.9% in 2008 which includes 8.3% for
tourism, 1.56% for hotels and restaurants, and remaining for other trade services. This
figure will sky rocket in 2010 when Delhi hosts the Commonwealth Games. It is also
expected that hospitality sector is expected to generate tremendous employment and
foreign exchange by 2019.
282 F. Talib, Z. Rahman and M.N. Qureshi

Quality is considered to be of great importance in the hospitality industry especially

TQM. With the emergence and popularity of TQM, the hospitality industry continues to
be heavily involved in the implementation of TQM-related practices. Lazari and
Kanellopoulos (2007) reported in their study that cooperation between internal and
external elements is critical for successful TQM implementation and enhances the moral
of employee fulfilment and increasing hotel efficiency. Li et al. (2007) further asserted
that leadership and guest focus are the principles most commonly incorporated into TQM
programmes of hotel. Finally, hospitality industry has identified out performers in TQM
committed hotels and is likely to improve customer satisfaction and ultimately financial
performances (Claver-Cortés et al., 2008). Therefore, TQM has received a lot of attention
in the tourism and hospitality journals. TQM approach has been applied to all segments
of the hospitality and tourism industry in the literature (e.g. hotels, restaurant, food
services, etc.) The extant literature on TQM in the hospitality sector has been summarised
and presented in Table 9.
Table 9 Research studies on TQM in hospitality industry as reported in the literature

Industry Author(s) Main purpose of the study Approach Major findings

Hospitality Claver-Cortés To analyse how TQM is A cluster and Managerial factors are
industry et al. (2008) associated with some regression significantly further developed
managerial factors and to analysis were in hotels with a stronger TQM
verify whether more TQM- conducted commitment, which also have
committed hotels achieve higher performances
higher performance
Sila and To analyse and compare Exploratory Leadership, guest and market
Ebrahimpour the TQM practices of three research using a focus, and information and
(2003) luxury hotels located in the case study analysis emerged as the three
north-eastern part of the approach most significant TQM factors
US as well as the effect of successfully implemented in
these practices on their these three hotels
business results Strategic planning emerged as
one of the most difficult
factors to implement
Holjevac To emphasise business Literature review Business ethics increases the
(2008) ethics as a dimension of and theoretical reputation and market
TQM in tourism in helping approach competitiveness of an
Croatia approximate EU enterprise
standards To restore trust in business,
ethical leadership is more
Business ethics prescribes
profit making
Chartrungruang To study the relationship Questionnaire There are differences between
et al. (2006) between customer service survey guests and staff, and that these
and TQM training in the methodology differences vary in the case of
hotels located in Western with one-way both Western and Thai hotels
and Thai hotels as well as ANOVA The SQ skills needed by
to examine the perceptions approach and frontline staff were also found
of staff towards guest- PCA and t-test to differ in the case of
orientation and the were used Western and Thai hotels
provision of quality guest
TQM in service sector: a literature review 283

Table 9 Research studies on TQM in hospitality industry as reported in the literature


Industry Author(s) Main purpose of the study Approach Major findings

Keating and To review the literature on Review of the Top management sponsorship and
Harrington the implementation of literature the provision of training and value
(2003) quality programme in the promotion throughout the
hotel industry organisation were found to be
important factors in the Irish
Quality management in
contemporary hospitality
organisations is lacking in
involvement, communication and
teamwork dimensions
Salameh and To examine the relationship Methodology Evidence of relationship between
Barrows (2001) between TQM and used was training and TQM is strengthening
employee training in in-depth in restaurant environment
restaurant industry of Canada interviews with

Training does result in a

continuous performance
improvement, positive impact on
the level of the SQ delivered,
preparing employees for the change
process, low turnover rates, higher
morale, etc.
Daghfous and To assess and explore the Exploratory Proposes a conceptual model to
Baskhi (2009) degree to which UAE study using illustrate the value of IT-enabled
hotels are using IT descriptive organisational change and
strategically to integrate approach knowledge management for a
and improve back-end through better understanding of the
operations and customer questionnaire strategic challenges facing
service with special focus survey IT/information system (IS)
on TQM, customer managers in the hotel industry
relationship management and
supply chain management
Pyo (2000) To discuss the perspectives Literature Identified a variety of important
and research agenda of review components of TQM (such as
quality research in tourism training/education, etc.) as they
and hospitality relate to the hospitality and
tourism industries
Arasli (2002) To discuss the TQM Empirical Three- and five-star hoteliers’
philosophy of performance analysis policies and implementations in
and receptiveness in northern Cyprus are still very
northern Cyprus hotels unfamiliar with the TQM
Further, these hotels need some
new, cheap, simple and logical
total quality approaches
284 F. Talib, Z. Rahman and M.N. Qureshi

Table 9 Research studies on TQM in hospitality industry as reported in the literature


Industry Author(s) Main purpose of the study Approach Major findings

Breiter and To attempt a summary Questionnaire survey Size, affiliation and lodging
Bloomquist survey of TQM using statistical tests segment are significantly
(1998) programmes in the hotels approach associated with hotels’ using
of the US TQM
The most common barrier to
TQM success is failure of
management leadership
Politis et al. To present the Two surveys using The implementation of the
(2009) development of a business questionnaires were model in a number of high-
excellence model conducted: the first one class Greek hotels shows its
applicable in the for the development of applicability and suitability to
hospitality industry the model’s criteria and be used as a benchmarking
sub-criteria, and the system
second one for the
assessment of the criteria
and sub-criteria weights
Tarí et al. To identify the levels of A cluster analysis was Three levels of quality and
(2010) commitment to quality carried out, then ANOVA environmental commitment
and environmental and regression analysis have been identified. The
management in the were performed findings showed that the
Spanish hotel industry, commitment to quality and
and to test the relationship environmental practices
between those influences hotel performance
commitment levels and
firm performance
Wang et al. To investigate the Survey research using TQM positively affects hotel
(in press) relation of TQM, market questionnaire, structural performance. Market
orientation and hotel equation model (SEM) orientation positively affects
performance and to and discriminate analysis hotel performance. Market
understand market for analysis and testing orientation has the mediating
orientation has the effect between TQM and hotel
mediating effect on the performance
relationship between
TQM and hotel
Tarí et al. To study whether quality A structured questionnaire Certified hotels develop better
(2009) certified hotels develop with closed questions is the key factors and have better
some managerial key used to collect data and performance
factors in a significantly reliability, and validity test
better way and have better was conducted
TQM in service sector: a literature review 285

Table 9 Research studies on TQM in hospitality industry as reported in the literature


Industry Author(s) Main purpose of the study Approach Major findings

Williams To develop understanding Interviewees were Three types of information are
et al. (2010) about the quality of user- conducted with small needed by the person using
generated content (UGC) sample of five regular UGC on hotel websites:
on websites from the hotel room purchasers objective information about
customer’s point of view the hotel; information about
the reviewer’s qualifications
and information about the
reviewer’s beliefs and
Mak (2011) To find out why tour Utilised a multiple-case A number of negative aspects
operators implement study approach, to the ISO 9000 certification
quality assurance, and interviewing the senior were found, including the high
what problems and managers of three cost of implementation,
challenges they face in accredited tour operators lukewarm reception by staff,
doing so using formally structured reduced effectiveness over
questions time and that consistency of
procedures did not equate to
good or improving quality

4.4 TQM in ICT

The era of economic liberalisation and globalisation has ushered in a rapid change in the
service industry. As a result, over the years, India is witnessing a transition from
agriculture-based economy to a knowledge-based economy. The knowledge economy
creates, disseminates and uses knowledge to enhance its growth and development. One of
the major functional pillars of this economy is ICT, ITeS and software development
services industry. IT and software industry has been one of the fastest growing business
over the last two decades. India has targeted this industry as the highest priority area and
is actively pursuing IT and software business in the global market mainly in Europe and
the USA. A large number of Indian software companies have acquired international
quality certification. The Department of Communication and IT has been making
continuous efforts to make India a front-runner in this age of information revolution.
Several policies have also been framed on the key issues of IT infrastructure, e-
governance as well as IT education. Currently, the IT and software sector of India
accounts for about 5.8% of its GDP (2009) as compared to 5.5% of GDP (2008) with an
increase of 0.3% of GDP between 2008 and 2009 (NASSCOM, 2010).
Beside this, the communication sector (including telecommunication services) is also
a major driver of the Indian economy. The share of this sector to GDP has increased from
0.7% in the 1980s and 1% in the 1990s to 3.6% during 2005. In 2008, the sector
accounted for 5.65% of GDP (i3, CMIE, 2010). The communication sector has
outperformed other sectors if looking at the growth rates of this sector from last five
years. Adding another star towards the achievement, communication sector has also had a
significant impact on employment in the country. It is predicted that the sector will
generate an additional 8.5 million jobs by 2014–2015, taking the total number of jobs in
the sector to above 10.3 million (Ministry of Communication and Information
Technology, Government of India, 2010).
286 F. Talib, Z. Rahman and M.N. Qureshi

In recent years, ICT, ITeS and software have become a critical component in various
service industries such as the telecommunication, banking, education, etc. The quality of
communication, IT and software component is of paramount concern to everyone,
including users and developers. Both practitioners and academicians agree that ICT, ITeS
and software quality improvement techniques lead to a reduction in costs. The need for
TQM in ICT, ITeS and software industry becomes highly relevant (Sparrow et al., 2006;
Wali et al., 2000). The consensus is that there is a greater need to foresee and respond to
the customer needs and to assure quality in communication, IT and software development
The summarised reported literature on TQM in ICT, ITeS and software industry is
presented in Table 10.

Table 10 Research studies on TQM in ICT as reported in the literature

Industry Author(s) Main purpose of the study Approach Major findings

ICT, ITeS, Rahman and Investigates relationship Questionnaire Synergy between TQM
and Siddiqui between TQM and IS and to survey was and IS is catching fast in
software (2006) analyse the realisation of conducted to India
industry pragmatic goals by Indian various Indian Improvement in the
firms through TQM for IS companies of quality of products and
different classes services
such as insurance,
banking, software Optimisation of human
manufacturers, etc. resources and cost and
time of production were
reduced are other benefits
Issac et al. To identify the critical Empirical study Develops a validated
(2004) factors of TQM in using CFA instrument for effective
software industry and to approach implementation of TQM
provide a holistic in software industry
framework to implement
TQM throughout the
software development cycle
in the software industry
Parzinger and To present the salient Empirical study Identifies eight constructs
Nath (1998) underlying constructs using factor pertinent to an effective
essential for successful analyses TQM programme in
implementation of TQM software development
programme in software
development industry
Parzinger and To study the effectiveness Empirical study A positive relationship
Nath (2000) of TQM programmes in using correlation between the TQM
improving software quality analysis implementation factors
and to examine the and the indicators of
relationships between TQM software quality was
implementation factors and found
several measures of
software quality
TQM in service sector: a literature review 287

Table 10 Research studies on TQM in ICT as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Sohn et al. To present a systematic SEM approach A model was proposed that
(2008) approach for improving the can be used as a tool for
quality of official statistics improving the quality of
in Korean information and official ICT statistics
telecommunication industry
Vitharana and To identify the critical Empirical study Identified six critical
Mone (1998) factors and proposed an factors: management
instrument to measure them commitment, education and
for software quality training, customer focus,
management process management,
software metrics and
employee responsibility
Pezeshki et al. To investigate the An empirical study Results indicate that there is
(2009) asymmetric relationship using questionnaire a dynamic relationship
between performances of and Kano customer between service attributes
service attributes and satisfaction model and overall customer
customer satisfaction and the importance- satisfaction. The importance
through a case study in the performance of service attributes can be
mobile telecommunication analysis method for derived from their
industry to prove that the analysis and performance and this can be
importance of a service comparison were proved in the mobile
attribute is a function of the applied telecommunication sector
performance of that attribute
Hsu and Su To examine how quality Questionnaire Most of the Taiwan’s
(2002) management practices are survey were telecommunication
implemented in Taiwan’s conducted to collect companies were fairly weak
telecommunication industry the data and in quality performance.
statistical methods Advanced quality
such as SPSS and management training
SAS were used for programmes are seldom
analyses implemented and the
companies do not rely on a
few reasonably reliable
Gunasekaran To propose a model-TQM The approach used The TISIT model is capable
et al. (2006) integrated with software and were conducting six of eliminating or reducing
information technologies case studies, an the perception,
(TISIT), that integrates the exploratory study understanding, design,
TQM foundations with and literature process and operations gaps
software and information studies to design a which have emerged in
technologies model called TISIT today’s organisations due to
global competition
Su et al. (2001) Use of TQM in the Taiwan’s Questionnaire- The quality performance of
computer and its peripheral based survey using most of Taiwan’s computer
industry Friedman rank test and peripheral companies
and Pearson are still vulnerable
correlation analysis
288 F. Talib, Z. Rahman and M.N. Qureshi

Table 10 Research studies on TQM in ICT as reported in the literature (continued)

Industry Author(s) Main purpose of the study Approach Major findings

Santouridis To investigate crucial factors Field research was Customer service, pricing
and Trivellas that lead to customer loyalty conducted. structure and billing system
(2010) in the mobile telephony Reliability tests are the SQ dimensions that
sector in Greece, namely SQ and statistical have the more significant
and customer satisfaction analyses were also positive influence on
performed customer satisfaction, which
in turn has a significant
positive impact on customer
Sharma et al. To theorise the changes The paper utilises The study extends the scope
(2010) surrounding the introduction institutional theory of institutional analysis by
of a management control and drawing on explaining how institutional
innovation, TQM techniques, empirical evidence contradictions impact to
within Telecom Fiji Limited from multiple create and make space for
sources including institutional entrepreneurs,
interviews, who in turn, modify existing
discussions and routines or introduce new
documents routines in fluid
organisational environments
which also exhibit evidence
of resistance
Loukis et al. To empirically investigate and Utilises Cobb– Both BPR and TQM have
(2009) compare the moderating Douglas considerable positive
effects of business process production moderating effects of a
reengineering (BPR) and function similar magnitude on the
TQM on the business value (a moderated relationship between ICT
generated for firms by their regression model) investment and firm value-
ICTs investment added. Also, different BPR
and TQM activities have
different moderating effects
on ICT business value,
process simplification and
process improvement
Rothenberges The study proposed a Validation of the Results reported an increase
et al. (2010) construct of development model by analysing in development quality was
quality as the key determinant software project positively associated with
of software development data collected from increases in both
productivity and product a benchmarking development productivity and
quality consortium in India product quality
Khan (2010) The study investigates the Questionnaire and An integrated approach is
total qualify management semi-structured required to implement the
dimensions, based on Deming interview were TQM practices to realise
management model, in used, and strategic quality objectives.
telecommunication industry regression analysis The study extends the
of Pakistan and also assesses was also utilised applicability of the Deming
the TQM practices of cellular management model to a new
mobile telephone operators industry
and suggests measures for
improving their
TQM in service sector: a literature review 289

5 Conclusions

This research paper has presented a vast array of literature on TQM and its applicability
in the service sector. This effort is more systematic in explaining various facets of service
components and its classification. Beside this, this paper also contributes to the theory,
definition and benefits of TQM as well as extant literature review of TQM in different
service industries. Based on the review of relevant literature and the findings from the
current literature survey, this study demonstrates that TQM has positive impact on
service organisation performance and has been adopted as a useful approach in a number
of foreign as well as Indian major service industries, such as healthcare, banking,
education, hospitality and ICT, ITeS and software industry. This paper presents some
selected studies on TQM implementation in different service industries. Further, the
outcome of this research suggests that TQM is applicable to the service sector and is
responsible for growth and development of country’s economy. Its implementation is
associated with better business performance and more rigorously it is being implemented,
the better the business performance.
However, the success or failure of TQM in service systems largely depends on the
initiatives and enthusiasm of members constituting the service organisation. The TQM
literature suggested that organisations that want to implement TQM effectively must have
patience, because TQM is a long-term process and requires major changes in cultural
aspects as well as employee mindset in an organisation. Therefore, to make TQM
movement a success, a new initiative has to be generated across the globe and following
initiatives need to be taken:
x identify the key areas of service
x identify the key practices for successful implementation of TQM
x commitment by the top management in implementing TQM for continuous
x a vision for the change
x customer focus and orientation should always be there
x management structure issue
x human resource focus
x environmental focus
x innovation focus
With such initiatives, TQM can be successfully applied to service industries to achieve
better results. This paper can help managers in better understanding the TQM, service
system concept as well as TQM implementation in service sector. This study also helps in
better understanding the sectoral classification as well as service sector classification in
Indian context as proposed by different organisations and bodies.
290 F. Talib, Z. Rahman and M.N. Qureshi

5.1 Limitations and future research

The authors understand that there are some limitations, which must be considered for
future research. Firstly, the classification of the service categories is somewhat subjective
and based on the certain indices such as GDP at factor cost, employment rate, annual
income and importance of customer-perceived quality in the specific industry, which may
change from time to time. In addition, the actual categorisation of service industries was
the result of the judgement of the authors. Although due care has been taken by the
authors but there is possibility of omitting any other service industry. Secondly, this study
was confined only to service sector consisting of four service industries (i.e. healthcare,
banking, hospitality and ICT). It is suggested that future research should cover not only
these four service industries but also industries such as education, transportation, real
estate, recreational services, wholesale and retail trading, and business consultancy
services, where TQM concept can enrich the working style and organisation
performance. Thirdly, during the literature review of TQM in service sector, empirical
studies dealing with different issues of TQM and SQ appear to be lagging behind, as most
of them examined were not empirical in nature. More conceptual, case studies and
empirical research is needed to clarify and validate relationships among theoretical
constructs, which can be integrated into practical managerial frameworks. Fourthly,
future research is called for those areas where no or least work has been taken by the
researchers as found during the literature review. Some of the gaps identified were
research on sustainability development in TQM, total quality environment management,
TQM in managed care organisations, criteria for effective implementation of TQM,
identifying and examining dimensions that drive the application of multi-dimensionality
of TQM from both internal and external perspective, etc. Fifthly, as with many research
studies, there is a risk that additional relevant literature has not been considered or
included in this review. Thus, this literature survey on TQM in service industries is only
limited to the included research work used in this study. Future studies can also look at
other major TQM areas and issues, and a broader classification may be proposed that
may include analytical studies, business excellence frameworks in service industries, etc.
Further, the present literature survey considered to have made a significant contribution
towards TQM in service sector and proves to be useful as an example of a methodology
that might be used to track the extent of TQM implementation in service industry by the
researchers and academicians. Finally, from an implementation perspective, service
industries are in need of systematic and dynamic performance management approach.
Such approaches should be able to measure, monitor, track and continuously improve the
different aspects of organisational performance.


The authors would like to gratefully acknowledge the anonymous referees and the Editor-
In-Chief Prof Angappa ‘Guna’ Gunasekaran for their helpful and invaluable comments
which helped in improving the presentation of this paper considerably.
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