Total quality management and sustainable competitive advantage:

serial mediation of transformational leadership and executive ability

*
Rui Chena,b, Yuan-Duen Leeb and Cheng-Hua Wangb
a
Business College, HuaiYin Institute of Technology, Jiangsu, People’s Republic of China;
b
Graduate School of Business and Operations Management, Chang Jung Christian University,
Tainan, Taiwan

Improving performance through better processes should be the focus of quality

professionals. Based on the IPO (Input-Process-Output) model, this study considers
total quality management (TQM) as an input of the internal and external of an
organisation and transformational leadership (TL) and executive ability (EA) as the
mechanism (Process) to promote and coordinate internal–external elements for the
organisation obtaining its sustainable competitive advantage (SCA) (Output). Taking
samples in the southern Taiwan Science Park in Tainan city for the questionnaire survey
in this study, a total of 252 valid responses are collected and analysed to discuss the
relationships among TQM, TL, EA and SCA. Reliability analysis, validity analysis,
CFA and SEM are utilised for the analyses. The research findings are summarised as
follows: (1) TQM significantly affects TL, EA and SCA. (2) TL and EA significantly
affect a firm’s SCA and each of them has the mediating effect between TQM and SCA.
(3) Both of them have a serial mediating effect on the relationship between TQM and
SCA. Implications, limitations and future research directions are discussed.
Keywords: total quality management (TQM); transformational leadership (TL);
executive ability (EA); sustainable competitive advantage (SCA); structural equation
modelling (SEM)

Introduction
Total quality management (TQM), a kind of management philosophy (Wang, Chen, &
Chen, 2012), is considered as an effective way in the fierce international market
competition to obtain competitive performance (Wang et al., 2012; Ahmad, Zakuan, Jusoh,
Yusof, & Takala, 2014; Valmohammadi & Roshanzamir, 2015; Mehralian, Nazari, Zarei,
& Rasekh, 2016; Pantouvakis & Karakasnaki, 2017).
Previous literature showed, however, that some researchers paid their attention to only
single factors (sub-construct) of TQM construct such as information technology, learning,
organisational culture (Valmohammadi & Roshanzamir, 2015) or human talent (Pantouva-
kis & Karakasnaki, 2017). Some carried out several research on TQM practice and outcome
(Sin, Jusoh, & Ishak, 2016). Also, some scholars studied mediating and moderating factors
in the functions of TQM implementation mechanism (Prakash, Barua, & Balon, 2015;
Meh-ralian et al., 2016). However, most of them were limited to the single effect or
business effect (Ahmad et al., 2014) or financial effect while sustainable effect was not
taken into account.
Several studies indicated that transformational leadership (TL) had a positive influence on
an organisation’s sustainable competitive advantage (SCA) (Lee, McLee, & Huang,
2011; Dóci & Hofmans, 2015) and there was great necessity for the top management to perform
as leaders for implementing TQM; high leadership competencies executed each of the TQM
principles more effectively and were able to produce higher quality products. However, no
previous empirical study investigated whether TL and executive ability (EA) mediated TQM
and SCA. Nevertheless, how TQM, TL and EA jointly affect an organis-ation’s SCA determines
whether such a mediating effect exists. It is worthy of further study.
Improving Performance through better Processes should be the focus for quality pro-
fessionals in the twenty-first century (Oakland, 2005). The IPO (Input-Process-Output)
model is a classic method that identifies the inputs, outputs and required processing tasks
to transform inputs into outputs and obtain a systematic integrative effect (Pascual-Gonzá-
lez, Jiménez-Esteller, Guillén-Gosálbez, Siirola, & Grossmann, 2016; Lu & Wu, 2018).
Based on Oakland’s (2000) ‘Everything we do is a process’, this study adopts the IPO model
to link TQM, TL, EA and SCA together and proposes a conceptual framework and
observes the integrative effect. In this conceptual framework, the inputs represent the
factors in flow of TQM into the process. TL and EA are considered as the process repre-
senting the transformation of inputs. SCA represents the output flowing out of the trans-
formation process. This study enriches the cognition of the sustainability of the TQM
performance (Doeleman, ten Have, & Ahaus, 2012), presents the idea of a TQM implemen-
tation process and intends to ensure the significant value of leadership change and the fol-
lower’s EA to TQM and SCA.
As a result, the main purpose of this study is to examine three things: (1) too explore
how TL and EA foster SCA and mediate TQM and SCA; (2) to analyse the serial relation-
ship between the influence of TL and EA to the relationship between TQM and SCA; (3)
to understand the relationship among TQM, TL, EA and SCA in the southern Taiwan
Science Park.
The study is structured as follows. First, the related studies are reviewed in order to
identify the critical characters and the relationship among TQM, TL, EA and SCA, and
then the conceptual research framework and corresponding hypotheses are developed. Sub-
sequently, the research design is described and the analysis and results are discussed.
Finally, implications and limitations are discussed.

Literature review and hypothesis development

The positive effect of TQM andSCA
TQM grew out of the early 1980s in the USA and was adopted under the guidance of W.
Edward Deming in Japanese. Based on Deming’s logic, higher quality leads to higher
productivity through reduced rework, rejects and wastes, and lower costs and custo-mer
complaints, and ultimately increases market share. According to Deming, TQM is a
management philosophy that makes use of a particular set of principles, practices and tech-
niques to expand business and profits that provides a bypass to enhance the productivity by
avoiding rework, rejects, waste, customer complaints and high costs.
Some scholars defined TQM as an organisation’s culture that supported the constant
attainment of customer satisfaction through an integrated system of tools, techniques and
training. Some scholars gave their definitions of TQM from the perspective of mechanism and
outcome, defining TQM as the fulfilment of customer needs and continuous improve-ment of
quality, making it the responsibility of every employees. Some scholars identified TQM by
practices (Kanji & Wallace, 2000). From the above review, in general terms, TQM is an
enhancement to the traditional way of doing business. It can be a managerial philos-ophy
(Sureshchandar, Rajendran, & Kamalanabhan, 2001), an organisational perception
and culture (Valmohammadi & Roshanzamir, 2015), a technique and working mechanism
(Prakash et al., 2015; Mehralian et al., 2016), and also a process, practice (Kanji & Wallace,
2000) and outcomes (Ahmad et al., 2014).
Competitive advantage is rooted in the logic of value creation and distribution (Wade
& Hulland, 2004). An organisation is said to enjoy competitive advantage when the value
created in an economic exchange is greater than the value that could be created (Branden-
burger & Stuart, 1996). Sustainability was traditionally defined as a condition which a
firm’s competitive advantage resisted erosion by competitor behaviour. Supporters of the
resource-based view of the firm introduced the notion of inability to replicate, saying that
‘a competitive advantage is sustained only if it continues to exist after efforts to dupli-cate
that advantage have ceased’. Business Excellence in ‘best’ practice is to establish the
direction (Oakland, Tanner, & Gadd, 2002). The framework for lean quality developed in
Oakland and Marosszeky’s book (2017) provides a foundation for organisational excel-
lence, offers a powerful new perspective for policy-makers and helps create the organis-
ational prerequisites necessary for the effective deployment of technologies. Ten Have, ten
Have, Stevens, vander Elst, and Pol-Coyne (2003) made a study on the question why large
complex organisations were capable of getting business excellence in a longer term change
and formulated four guiding concepts as the basis for a distinctive approach to organising
direction (referring to an organisation’s common vision and its choices in terms of strategy
and paths set.), consistency (referring to the translation of the common vision and success
factors from one management level to the next), coherence (concerning the horizontal
attunement among processes, chains, sectors, departments and individuals, where breaking
the boundaries between departments or sectors was central) and feedback (referring to
people being given the opportunity to learn at all levels and at all different time intervals)
(Doeleman et al., 2012).
Above writings signify competitive advantage as the ability to stay ahead of the present
or potential competition. It also provides the understanding that resources held by a firm
and the business strategy will have a profound impact on the generation of competitive
advan-tage. TQM is an integrated management philosophy that has been found to strongly
influ-ence organisational performance. TQM has become the critical slogan when a
corporate pursues of competitive advantage in competition (Sureshchandar et al., 2001).
TQM focuses on continuous process improvement (Wang et al., 2012) and is a proved
technique to guarantee the survival in world-class competition. TQM implementation
enhances the morale of employee fulfilment to increase firm efficiency (Lazari &
Kanellopoulos, 2007). TOM-linked learning involves company-wide training that acquires
a strategic value for organisations (Claver, José Tarí, & Pereira, 2006) and enhances the
staff’s skill level and service commitment. Therefore, this study suggests that TQM has a
positive effect on a firm’s SCA. So the following hypothesis is proposed.
Hypothesis 1 (H1). Total quality management (TQM) positively affects sustainable competi-
tive advantage (SCA).

The positive effect of TQM on TL and EA

TL is a leadership style different from transactional leadership (Lee et al., 2011; Dóci &
Hofmans, 2015). TL emphasises the symbolic behaviour of a leader (e.g. inspirational, visionary
messages and values), as opposed to the economic transactions between the leader and
employees (Judge & Piccolo, 2004). Transformational leaders focus on employ-ees’ attention
to the long-term goals of the group or organisation and instil a sense of higher purpose in them
(Dvir, Eden, Avolio, & Shamir, 2002; Bono & Judge, 2003). Recent
research on TL focused on the beneficial consequences in relation to employees, including
improved well-being, self-efficacy, creativity, job satisfaction, reduced burnout, emotional
exhaustion and stress (Dóci & Hofmans, 2015). Several studies identified leadership as a
promoter of TQM, and noted that leadership was crucial to the success of any efforts towards
the change of the operational philosophy of a company (Sumukadas, 2006). According to the
research findings of Anupam Das, it is necessary for top management to perform as leaders
when implementing TQM. TQM activities stimulate the emergence of TL (Huang & Ingber,
2005). In line with this analysis, the next hypothesis is put forward:
Hypothesis 2 (H2): Total quality management (TQM) positively affects transformational lea-
dership (TL).
Only solid execution could put a brilliant strategy into practice (Neilson, Martin, & Powers,
2008). Based on thousands of assessments of the organisation’s capabilities, the author
found that lots of employees considered that their companies were not very good at quickly
translating ‘important strategic and operational decisions into action’. They focused on ‘the
fundamentals of good execution’ and put forward their standpoint of excel-lent execution
path of ‘clarifying decision rights and making sure information flows where it needs to go’.
James Richardson proposed ‘an Integrative Framework for Strategy Execution’. His
proposed Business Model included three main parts: value proposition, value creation and
delivery system, and value capture. Chatterjee et al. (2016) presented COAR (Customer,
Objectives, Activities and Resources) map to develop execution impera-tives. The authors
considered EA as a set of interlinked activities that converted business strategies into
effective operations.
It is found from above review that the EA involves many aspects of authority, communi-
cation, information flow, value creation and delivery and activities, etc. This research con-siders
human resources as the first factor in EA and focuses on how to stimulate humans’ enthusiasm,
positivity and dynamic role. Early studies indicated that the relationship between TQM and
leadership/employee was a mutually effective relationship. TQM activi-ties stimulate the
emergence of TL, employee fulfilment and learning. In an organisational level, TQM practice,
as a part of organisational culture, shapes the TQM-oriented organis-ation culture and promotes
an organisation to change, and then all organisation members’ change. Based on this analysis,
the next hypothesis is proposed.
Hypothesis 3 (H3): Total quality management positively affects Executive ability.

The positive effects of TL and EA on SCA

Much attention has been paid to the conditions or contexts under which TL behaviours
improve work outcomes (Dóci & Hofmans, 2015). Leadership is a key linkage between
strategy, through people into the performance and outcome (Oakland, 2005, 2011). TL gen-
erates competitive advantages for an organisation as a whole, as it boosts job performance
and organisational success and improves branch-level financial performance and sales
results (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008; Liu, 2013). TL, used
for predicting leadership effectiveness in individual, group and organisation levels, also
has positive effects on leadership effectiveness and performance. Transformational leaders
can strongly influence the team environment, and encourage subordinates to work for the
common goal by changing their attitudes and values.
Empirical studies also showed a significantly positive relationship between TL and effi-
ciency. TL behaviours created a TL climate, could encourage positive behaviours among staff,
and greatly affected organisational outcomes (Walter & Bruch, 2010; Oakland,
2011), especially in managing turbulent business (Liu, 2013). Liu’s work developed a new
framework in integrating the evaluation of manufacturing strategy and TL with the technol-
ogy level together, and through sense and respond proactive operations improving the com-
petitiveness potential to manage turbulent business situation, and TL plays a more
important role in the changing environment of crisis management (Liu, 2013). TQM
implementation means management commitment, ability to change, continuous training
and education, use of empowerment and teamwork, and giving adequate attention to
internal and external customers. Transformational leaders are able to inspire the followers
to change their expectations, perceptions, and motivations, and thus to work towards
common goals and achieve superior performance. Therefore, the following hypotheses are
proposed in this study.
Hypothesis 4 (H4): Transformational leadership positively affects sustainable competitive
advantage.
Empirical studies showed a significantly positive relationship between authority/communi-
cation and working efficiency. A critical factor for successful execution is an atmosphere
of open communication, participation, which is driven by the leadership style, and
communi-cation throughout the organisation is important to developing and maintaining
employee’s support (Oakland & Tanner, 2006). The executive functions were adaptive and
goal-directed behaviours that enabled individuals to override more automatic or establish
thoughts and responses. Researchers also defined that it was top management’s duty to lead
the movement for quality. In this sense, leaders were expected to define organisational
strategy and mission, value and principles that would inspire TQM-oriented management
practice. At the same time, through effective authority and communication to all members,
the strategic activities obtained good working efficiency. Some scholars mani-fested that
leadership behaviours created incentive climate and led to effectiveness (Walter & Bruch,
2010). In line with the above literature review, the following hypothesis could be inferred.
Hypothesis 5 (H5): Executive ability positively affects sustainable competitive advantage.

The positive effect of TL on EA

TL positively influences IWB (Innovative work behaviour), which includes idea generation
as well as idea implementation (Afsar, Badir, & Bin Saeed, 2014). Wu and Wang’s (2015)
research results based on 76 teams in the same organisation indicated that TL contributed
to team proactivity by cultivating positive group affective tone within teams and the
function of positive group affective tone in shaping team proactivity was stronger when
team task variety was higher. TL had a significant positive impact on organisational
learning and knowledge management process capability. Also, some other empirical
studies indicated that individualised consideration could stimulate and enhance employees’
initiative and creativity. Accordingly, the hypothesis is proposed as follows.
Hypothesis 6 (H6): Transformational leadership positively affects executive ability.

The mediating effect hypothesis

Based on the previous review, analyses and hypotheses, this study adopts the IPO (Input-
Process-Output) model to build a new managerial framework. The research seeks to deepen a
comprehensive understanding of the relationships among TQM, TL, EA and sustainable
advantage. One of the main purposes of this research is to explore the positive effect of
TQM (input) on SCA (output) via TL and EA (Process) so that the following hypotheses
are put forward.
Hypothesis 7 (H7): Transformational leadership has a mediating effect between TQM and sus-
tainable competitive advantage.
Hypothesis 8 (H8): Executive ability mediates the relationship between Total quality manage-
ment and sustainable competitive advantage.
Additionally, TL positively affects EA based on H6; the Hypothesis 9 is proposed as
follows:
Hypothesis 9 (H9): Transformational leadership and Executive ability have the serial
mediating effect on the relationship between Total quality management and sustainable
competitive advantage.
Figure 1 presents the conceptual framework of the research based on the classical IPO
(Input-Process-Output) model and depicts the main research stream and their integrative
effects of this study.

Methodology and measurement

Questionnaire development and pilot-test
Testing the above hypotheses requires data on TQM, TL, EA and SCA. The main method
employed in this study was a survey research using multiple items. In order to get the
required data, all questionnaires were firstly designed. The authors met several times with
the scholars, experts and managers in practice to analyse and determine what should be
included to reflect the existing constructs in the survey. These activities were based on three
principles. First, the questions should reflect the character necessary for an organisation
and be understood easily by the respondents. Second, the questions

Figure 1. Conceptual framework of research.

should help organisations outperform their competitors and obtain SCA in the changing and
complex marketplace. Third, the survey should be concise as much as possible. Based on the
principles and the literature discussed above, the questionnaire items were drawn from, four
questionnaires were selected and adopted rooter in Wang et al. (2012), McFadden, Henagan,
and Gowen (2009), Neilson et al. (2008) and Doeleman et al. (2012), and repro-duced in
Appendix. Table 1 lists the constructs, definitions and sources of scales.
The TQM construct represented the TQM-oriented activities and was measured on a 7-point
scale taken from Wang et al. (2012), a previously published TQM survey in Taiwan whose
Cronbach’s alpha value is 0.96, composite reliability (CR) value is 0.90, including 7 dimensions,
28 items. According to this research’s need, 6 dimensions, 24 items of the scale was adopted.
The TL construct was measured using multiple items based on validated scale derived from
McFadden et al. (2009) described the leader who has the sense of mission, vision, optimism and
enthusiasm, emphasises implementation, and shows consideration and initiation through his/her
behaviours in their organisations. The original scale was com-posed of 3 dimensions, 8 items
and CR value is 0.933, AVE = 0.637. Based on Chinese culture situation cognition, this study
summarised as two dimensions characterising two aspects of personal life and work. The EA
construct was measured using the scale devel-oped by Neilson et al. (2008), which represented
the degree that employees have been auth-orised and given enough communication in all
aspects, and composed of 2 dimensions, 5 items. The SCA construct was measured using the
scale developed by Doeleman et al. (2012) based on the four guiding concepts of ten Have et
al. (2003). It was composed of 11 items and reported to be validated (Doeleman et al., 2012).
The questionnaire was first in English-edition. Since the survey was conducted in Chinese
context, managers in practice and academics were invited to cope with the trans-lation. In order
to keep up with the pace of questionnaire between two editions, the method of back-translation
was adopted. In addition, the terminology and interpretation of items were all disposed to the
extent to Chinese context and respondents’ knowledge was required to respond appropriately
and at last the final draft of questionnaire was achieved.
Soon afterwards, respondent anonymity, meaning anonymity of the item measurement, and
pilot-tested by 100 employees at all levels were operated to view possible defects and doubts.
Result of the pilot-test appeared that all variables had reliability exceeding the

Table 1. Construct measurement.

Construct Construct definition Construct source
Total quality The organisation adopts customer focus, Wang et al. (2012)
management internal/external cooperation, continuous
improvement, employee fulfilment, learning
and process management
Transformational Leaders have the sense of mission, vision, McFadden et al. (2009)
leadership optimism and enthusiasm, emphasise
implementation, and show considerate and
initiative behaviours
Executive ability Degree that employees have been authorised Neilson et al. (2008)
and given enough communication in all
aspects
Sustainable competitive The organisation wins the best condition in Doeleman et al. (2012)
advantage direction, advantage consistency, coherence
and feedback

standard value 0.7 suggested, and two items that did not significantly contribute to the
reliability were eliminated.
 In the end, the formal questionnaire was completed, of which TQM had 6 sub-dimen-
sions with 24 items, TL had 2 sub-dimensions with 8 items, EA had 2 sub-dimensions with
5 items, and SCA had 4 sub-dimensions with 11 items. The questionnaire included 48 items
that were retained for the present research. Items were measured on a 7-point Likert-type
scale ranging from strongly disagree to strongly agree.

Sample and data collection

The samples used in this study were collected from southern Taiwan Science Park in Tainan
city. To encourage high participation, respondents were offered an executive summary of the
study findings on the completion of the study. The effective sample size was 252 and the overall
response rate was 63% (252/400). The sample size of 252 was adequate for models.

Results and analyses

Reliability and validity analyses
Two-step structural equation modelling was employed for model testing. Maximum likeli-hood
was used for all parameter estimation with Amos 21. First confirmatory factor analysis (CFA)
was conducted to evaluate the model used to measure the modelled constructs. CFA enabled
the testing of reliability, convergent validity and discriminate validity of the measurement
model. The reliability and internal validity of the measurement model were examined by
calculating theCR and average variance extracted (AVE).
Table 2 shows that all the constructs have acceptable CR coefficients, since they exceed
0.6 (Bagozzi & Yi, 1988). The AVE of each measure accounts for more than 50% of the
variance, as suggested by Bagozzi & Yi (1988), and indicates that the variance captured by
the construct exceeds that due to the measurement error (Fornell & Larcker, 1981).
Therefore, the measurement model has adequate internal validity.
Convergent validity measures the correlation between two observed variables used to
measure the same construct and is expected that the estimated pattern coefficient on the
underlying construct factor of the estimated pattern of each coefficient is significant. Items
have factor loadings exceeding 0.45. Table 2 lists the convergent validity result of each
latent variable. The standardised factor loadings of each sub-dimension exceed 0.45 and
are significant. Convergent validity thus is achieved for all the study constructs. Dis-
criminate validity is assessed using the approach suggested by Fornell & Larcker (1981).
Examining the AVE for each of the latent constructs and comparing this with the squared
correlations among the constructs reveal that the shared variance among any two constructs
(that is, the square of their inter-correlation) is always less than the average var-iance
explained by the construct, suggesting discriminate validity. Table 3 lists the result of
discriminate validity. This study concludes that all measures exhibit construct validity.
Based on all of the reliability and validity analysis, the constructed scale appears to exhibit
satisfactory measurement quality and is adequate.

Structural model and hypotheses testing

Measurement model testing
The hypotheses are tested using simultaneous maximum-likelihood-estimation and AMOS
software. Table 4 shows that the measurement model exhibits a better fit with the data, with
Table 2. Construct reliability and convergent validity.
a a
Number SFL t-Value
a a a
Construct of items (min–max) (min–max) α CR AVE
Total quality management (2nd order CFA) 6 0.72–0.93 13.05–19.51 0.97 0.95 0.75
Customer focus (TQM1) 3 0.82–0.88 22.58–30.29 0.88 0.88 0.72
Internal/external cooperation (TQM2) 2 0.85–0.91 12.10–18.29 0.87 0.82 0.69
Continuous improvement (TQM3) 3 0.71–0.87 14.70–22.71 0.88 0.88 0.77
Employee fulfilment (TQM4) 3 0.76–0.82 116.49–17.63 0.84 0.85 0.67
Learning (TQM5) 4 0.85–0.88 17.05–19.47 0.92 0.92 0.74
Process management (TQM6) 4 0.79–0.86 20.58–27.81 0.92 0.91 0.68
Transformational leadership 2 0.92–0.93 10.09–10.24 0.96 0.92 0.85
(2nd order CFA)
Consideration (TL1) 3 0.81–0.92 15.49–16.75 0.90 0.90 0.75
Initiating (TL2) 5 0.85–0.89 19.31–23.44 0.94 0.94 0.76
Executive ability (2nd order CFA) 2 0.92–0.93 10.85–10.97 0.94 0.92 0.85
Authority (EA1) 2 0.87–0.91 11.67–14.08 0.88 0.88 0.79
Communication (EA2) 3 0.85–0.91 13.05–13045 0.92 0.91 0.78
Sustainable competitive advantage 4 0.91–0.94 9.09–9.39 0.97 0.96 0.85
(2nd order CFA)
Direction (SCA1) 2 0.89–0.91 17.04–17.21 0.90 0.89 0.81
Consistency (SCA2) 2 0.90–0.91 18.55–20.14 0.90 0.90 0.82
Coherence (SCA3) 4 0.83–0.90 16.72–20.24 0.92 0.94 0.80
Feedback (SCA4) 3 0.88–0.92 14.49–20.29 0.92 0.93 0.80
aSFL, standardised factor loading; α, Cronbach’s α coefficient; CR, composite reliability; AVE, average variance
extracted.

fit indices of RMA, NFI, CFI, RFI, IFI, PNFI, PGFI and Root Mean Square Error of
Approximation (RMSEA), Goodness-of-Fit Index (GFI), Adjusted Goodness-of-Fit Index
(AGFI), and Comparative Fit Index (CFI) fully or almost fulfilling the respective benchmarks
(Bagozzi & Yi, 1988). As the χ2 value is very sensitive to sample size, it fre-quently results in
rejecting a well-fitted model. The study, therefore, uses sample size for dependent measures of
goodness-of-fit and the χ2/df ratio less than 5 is used as a threshold of an acceptable model fit.
All χ2/df ratios are less than 5 and indicate an acceptable fit.

Structural model testing

Statistical software of Process is utilised for testing the hypotheses proposed. Table 5 shows the
path coefficients for the model and their significance. Regarding the hypothesis tests, all of the
hypothesised relationships are supported for the estimated structural model.
From the phase of testing, the validity of the path hypothesis is verified by studying the stat-
istical significance of the value of every structural parameter. From the testing output, it is con-
firmed that TQM significantly and positively affects both TL (Path coefficient TQM to TL is
0.94, p*** < .000) and EA (Path coefficient TQM to EA is 0.37, p*** < .000). Furthermore, TL
and EA significantly and positively affects SCA (Path coefficient TL to SCA is 0.27, p*** <
.000, EA to SCA is 0.55, p*** < .000). Therefore, H2, H3, H4 and H5 are supported.

Mediating effects analysis

Mediating effect of TL factor
Software of Process and Bootstrap are utilised for assessing and testing the mediating role of
TL in the relationship between TQM and SCA. The output indicates that indirect value is
 10 R. Chen et al.
a
Table 3. Discriminate validity coefficient.
TQM1 TQM2 TQM3 TQM4 TQM5 TQM6 TL1 TL2 EA1 EA2 SCA1 SCA2 SCA3 SCA4
TQM1 0.85
TQM2 0.69** 0.83
TQM3 0.64** 0.78** 0.84
TQM4 0.62** 0.74** 0.81** 0.80
TQM5 0.62** 0.77** 0.83** 0.85** 0.86
TQM6 0.67** 0.74** 0.79** 0.76** 0.85** 0.83
TL1 0.58** 0.73** 0.75** 0.74** 0.78** 0.75** 0.87
TL2 0.65** 0.70** 0.79** 0.76** 0.81** 0.83** 0.85** 0.87
EA1 0.66** 0.71** 0.72** 0.70** 0.76** 0.76** 0.76** 0.78** 0.89
EA2 0.63** 0.77** 0.75** 0.72** 0.79** 0.79** 0.79** 0.80** 0.85** 0.88
SCA1 0.59** 0.69** 0.73** 0.70** 0.77** 0.76** 0.77** 0.77** 0.78** 0.79** 0.90
SCA2 0.62** 0.72** 0.76** 0.74** 0.81** 0.80** 0.81** 0.80** 0.90** 0.84** 0.89** 0.91
SCA3 0.65** 0.73** 0.79** 0.78** 0.83** 0.81** 0.80** 0.85** 0.87** 0.83** 0.85** 0.85** 0.89
SCA4 0.58** 0.71** 0.76** 0.78** 0.79** 0.72** 0.78** 0.78** 0.84** 0.81** 0.82** 0.83** 0.87** 0.90
a
Diagonal elements (bold) are the square root of average variance extracted (AVE) between the constructs and their measures. Off-diagonal elements are correlations between constructs.
Table 4. Testing indicators of the measurement model.
Indicators Threshold TQM TL EA SCA
2
Absolute fit index χ (p-value) The smaller, 469.005 24.727 14.128 121.929
the better (.000) (.017) (.007) (.000)
2
χ /df 1∼5 2.696* 1.301* 3.555* 3.029*
GFI >0.9 0.850 0.975* 0.980* 0.911*
AGFI >0.9 0.801 0.953* 0.924* 0.846
PGFI >0.5 >0.5 0.640* 0.515* 0.561* 0.525*
RMR <0.08 0.050* 0.018* 0.017* 0.02*
RMSEA <0.08 0.082 0.035* 0.101 0.09
Baseline comparisons NFI >0.9 0.907* 0.987* 0.987* 0.962*
CFI >0.9 0.939* 0.997* 0.991* 0.973*
RFI >0.9 0.887 0.981* 0.968* 0.944*
IFI >0.9 0.936* 0.997* 0.991* 0.973*
Parsimony-adjusted PNFI >0.5 0.751* 0.670* 0.595* 0.664*
measures PCFI >0.5 0.778* 0.667* 0.596* 0.672*
*means fit with threshold.

0.2896, p*** < .000, BootLLCI = 0.1777 and BootULCI = 0.4158, LLCI and ULCI are the
same sign that the indirect effect is significant. Therefore, TL positively and significantly
mediates the relationship between TQM and SCA (Table 6). Hypothesis 7 thus is supported.
Furthermore, the ratio of indirect effect to total effect is 0.2869, Boot LLCI = 0.1761
and Boot ULCI = 0.4127, LLCI and ULCI are the same sign, thus the mediating effect of
TL is partial (Table 7).

Mediating effect of EA factor

The method of Process and Bootstrap are utilised for assessing and testing the mediating
role of EA in the relationship between TQM and SCA. The output indicates that the indirect
value is 0.2424, p*** < .000, Boot LLCI = 0.1598 and Boot ULCI = 0.3434, LLCI and
ULCI are the same sign; thus the indirect effect is significant. Therefore, EA positively and
significantly mediates the relationship between TQM and SCA (Table 6). Hypothesis 8
thus is supported.
Furthermore, the ratio of indirect effect to total effect is 0.2402; so the mediating effect
of EA is partial (Table 7).

Table 5. Path coefficient testing.

Hypothetical Structural path
No. H Path relationship value (α = 0.05) LLCI/ULCI Y/N
H1 TQM→SCA + 0.2889*** 0.1703/0.4076 Supported
H2 TQM→TL + 0.9743*** 0.9407/1.0440 Supported
H4 TL→SCA + 0.2972*** 0.1397/0.4007 Supported
H7 TQM→TL→SCA + 0.2896*** ______ Supported
H3 TQM→EA + 0.5691*** 0. 4219/0.7019 Supported
H5 EA→SCA + 0.4315*** 0.3360/0.5260 Supported
H8 TQM→EA→SCA + 0.2424*** ______ Supported
H6 TL→EA + 0.4484*** 0. 3237/0.5730 Supported

P*** < .000.

The relationship between two hypothetic mediators
The test of output shows that TL positively affects EA (Structural path value = 0.4484,
Boot LLCI = 0.3237 and Boot ULCI = 0.5730, p*** < .000). The indirect effect of
TQM→TL→EA→SCA is 0.1885, p*** < .000, Boot LLCI = 0.1218 and Boot ULCI =
0.2771 (Tables 5 and 6), LLCI and ULCI are the same sign; so the indirect effect is signifi-
cant. Therefore, TL and EA have serial mediating effects between TQM and SCA. Hypoth-
esis 6 and hypothesis 9 thus are supported.
Furthermore, the ratio of indirect effect to total effect is 0.1867; so the serial mediating
effect of TL and EA to the relationship between TQM and SCA is partial (Table 7).

Discussion, conclusions, implications and limitations

Discussion and conclusions
The present study utilises southern Taiwan Science Park in Tainan city as its subject, SEM is
utilised for obtaining a more detailed picture of underlying relationships and the proposed model
is examined. The principal findings are as follows: (1) TL and EA respectively mediate the
relationship between TQM and SCA and (2) have serial mediating effects on the relationship
between TQM and SCA. (3) The proposed theoretical model of the relation-ship among TQM,
TL, EA, and SCA has adequate goodness-of-fit.
The present study shows that the proposed theoretical model of the relationship among
TQM, TL, EA and SCA could be supported by literature and empirical data collected from
southern Taiwan Science Park in Tainan city, and thus the proposed theoretical model is
rational and suitable. It also shows that TQM positively affects an organisation’s SCA.
Some aspects of this result are consistent with the results obtained by the other previous
researchers (Sureshchandar et al., 2001) such as business effect (Ahmad et al., 2014) or
financial effect, but expand the outcome cognition scope of time-point to long term and
achieve the sustainability level concerning direction, consistence, coherence and feedback
(Doeleman et al., 2012). This study is also consistent with Wang et al.’s (2012) study,
which indicated that TQM-linked activities generated spirits of learning and continuous
improvement.
Furthermore, this study discovers that TQM has a positive and significant effect on TL. This
result is consistent with those who stress that in a TQM context top management are able to
create a vision and promote change as at the heart of successful TQM implemen-tation
(Oakland, 2011; Chiarini, Opoku, & Vagnoni, 2017). That is to say, in the view of IPO model,
leadership, especially TL, plays very positive and important role in the TQM-oriented active
process and TL is the critical factor in the TQM-concerned SCA.
Additionally, this study finds that TL and EA foster an organisation’s SCA and serially
mediate the relationship between TQM and SCA (Tables 5 and 6) to enrich the cognition of

Table 6. Mediating effect and Bootstrap testing.

Path Effect P-value (α = 0.05) Boot LLCI Boot ULCI

Total 1.0095 .0000 .9400 1.0790
Direct 0.2889 .0000 .1703 0.4076
Indirect:(total) 0.7206 .0000 .5926 0.8577
TQM→TL→SCA 0.2896 .0000 .1777 0.4158
TQM→TL→EA→SCA 0.1885 .0000 .1218 0.2771
TQM→EA→SCA 0.2424 .0000 .1598 0.3434
Table 7. The ratio of effect and Bootstrap testing.
Item Ratio of effect Boot LLCI Boot ULCI
Indirect/ total effect Total 0.7138 0.5900 0.8509
TQM→TL→SCA 0.2869 0.1761 0.4127
TQM→TL→EA→SCA 0.1867 0.1201 0.2772
TQM→EA→SCA 0.2402 0.1587 0.3398
Indirect/ direct effect Total 2.4938 1.4392 5.7051
TQM→TL→SCA 1.0023 0.4725 2.3378
TQM→TL→EA→SCA 0.6523 0.3092 1.6379
TQM→EA→SCA 0.8391 0.4455 1.9402
P*** < .000.

the mechanism from TQM to SCA. Several previous researchers found that certain factors,
such as job satisfaction, lean production (Ahmad et al., 2014) and learning capability and
business innovativeness were the mediators of the causal effect of TQM on SCA. This
study finds that TL and EA respectively have mediating effect on the causal relationship of
TQM and SCA. In other word, this study finds the new mediator of TQM to SCA and,
therefore, adds new understanding of the mechanism of TQM to SCA. What’s more, this
study further finds that TL positively affects EA and both of them have the serial mediating
effect on the causal relationship of TQM to SCA and thereby indirectly tests the business
model which proposes that leadership and execution plays the critical role in value
proposition and value creation and delivery system.

Theoretical and managerial implications

As mentioned above, this study utilises research methods of SEM and serial mediat-ing
effect analysis finds and confirms that TL and EA respectively mediate and further have a
serial mediating effect on the relationship between TQM and SCA and so has enriched and
developed the theory of the cognitive mechanism of TQM practices. This finding extends
the previous work on the TQM-oriented outcome and the mechanism ((Ahmad et al., 2014;
Haffar, Al-Karaghouli, Djebarni, & Gbada-mosi, 2017) and is of potential value for future
research to have a deeper insight into the variables that shape the TQM-oriented activity.
This is the theoretical contribution of this study.

Additionally, the findings in the present study may provide a number of impli-cations
for certain management practice. (1) Based on the result of direct effect, TQM positively
affects SCA and is the practicable path of organisation in pursuit of sustainable
development. TQM-adopting organisations could pay more attention to certain aspects of
TQM-linked activities. Elements of TQM, such as continuous improvement, employee
fulfilment and learning, are most important for firm’s TQM practice (Wang et al., 2012;
Jaca & Psomas, 2015; Amin et al., 2017). Manufacturers must effectively reinforce these
elements in ways as creating a strong learning atmos-phere, providing enough incentive
and opportunity to learn and strengthening the system management and innovation. (2)
Based on the result of indirect effect, TL and EA respectively mediate the causal
relationship between TQM and SCA that man-agers must establish the idea of the process.
TQM-oriented sustainable outcome needs steadfast practical process. In these process, the
leader of an organisation must be full of passion and mission, arouse the enthusiasm of the
staff and present full participation
(McFadden et al., 2009; Amin et al., 2017). TQM-adopting organisations should make
great efforts to motivate human resources and shape positive value, advocate optimism and
enthusiasm, and strengthen the work vision, mission and confidence. This means that
leadership and EA are the key processes to an organisation’s SCA (McFadden et al., 2009;
Amin et al., 2017). (3) Based on the serial mediating effect, TL and EA serially mediate
the causal relationship of TQM to SCA. In order to obtain SCA, TQM-concerned activity
must pay great attention to the human resource aspect of an organisation. First of all, the
leader level must reach a consensus as to the TQM-oriented practice and make a
commitment. The management must formulate a manage-ment philosophy and
communicate in order to give a clear direction to all organisation members. The strategies
and organisational goals must be translated into objectives on all management levels and
communicated accordingly in order to keep the consistency. Encouraging discussion and
dialogue in work process has the same importance (Doele-man et al., 2012). All of these
may increase staff satisfaction and lead to strong EA and support the sustainability of the
organisation (Ahmad et al., 2014; Wang et al., 2012; Haffar et al., 2017; Amin et al., 2017).

Research limitations and future research directions

Nevertheless, as everything has two sides, this study is not free from limitations. First, the
questionnaire in this study was translated form English-edition but used in the Chinese
context. Future study may firstly create scales based on the Chinese culture. Second, the
use of a single method of data collection is another potential limitation. The sample is only
in one scientific industrial park in Tainan; the findings are only tested here and may limit
the generalisability of the results in different context. Future researchers may adopt a more
scientific way and use a wider sample objects to study so as to ensure and enhance the
generalisability of the research conclusion. Finally, only mediating factors were taken into
account in the proposed model and other identified mediating or moderating factors
(Ahmad et al., 2014; Haffar et al., 2017) were omitted. Whether it would be significant if
these omitted factors join in the proposed model is still the future research direction.

Disclosure statement
No potential conflict of interest was reported by the authors.

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Appendix. Questionnaire items

Total quality management

Customer focus

(1) Our activities are centred on satisfying our customers.

(2) Satisfying our customers, and meeting their expectations, is the most important thing we do.
(3) Senior executives behave in ways that lessen the importance of customers.

Internal/external cooperation

(1) Leader emphasises activities that lead to a lack of cooperation between units and our
suppliers.
(2) Managers, supervisors and employees from different departments work independently to
achieve their own department’s goals.
(3) In the company, teamwork is commonplace—the expected way of doing business.
 (4) Employees are hesitant to voice their opinions, make suggestions or inquire about any of
the activities of the organisation.
(5) In the company, everyone participates in improving our products, services and processes.

Continuous improvement

(1) Employees usually do not get an opportunity to suggest changes or modifications to the
exist-ing processes.
(2) The organisation encourages continual study and improvement of all its products, services
and processes.
(3) The organisation has received recent compliments and recognition for improving its pro-
ducts/services/processes.

Employee fulfilment

(1) My work duties and responsibilities contribute little to satisfying my need to create quality
products/services.
(2) I like my job because I’m doing what I want to do.
(3) Employees in the organisation are dedicated to their jobs.

Learning

(1) Managers and supervisors ensure that all employees receive training that helps them under-
stand how and why the organisation does what it does.
(2) Managers and supervisors participate in specialised training on how to conduct business,
whether dealing with employees or external customers.
(3) Many employees in the organisation do not possess sufficient knowledge about the basics
of our industry.
(4) Few employees in the organisation understand the basic processes used to create our pro-
ducts/services.

Process management

(1) Preventing defective products/services from occurring is a strong attitude in the organisation.
(2) The processes used in the organisation do not include in-process measures of quality.
(3) The processes for designing new products/service in the organisation ensure quality.
(4) Explaining the variation in processes is rarely used as an analysis technique in the organisation.
(5) Senior executives look at the organisation costs of products and service, including indirect
and overhead costs.
(6) Managers and supervisors understand how to motivate employees and encourage them to
perform at their highest levels.

Transformational leadership (TL)

How frequently does each item below describe the LEADER of your organisation?
Consideration

(1) Talks about … values …

(2) Talks optimistically …
(3) Talks enthusiastically …

Initiation

(1) Specifies the importance …

(2) Considers the moral …
 (3) Articulates a compelling vision …
(4) Emphasises the collective mission …
(5) Expresses confidence …

Sustainable Competitive Advantage

Direction:

(1) The management has formulated a management philosophy

(2) The management philosophy is communicated by the management.

Consistency:

(1) The strategy and organisational goals are communicated on a regular basis.
(2) The strategy and organisational goals are translated into objectives on all management
levels and communicated accordingly.

Coherence:

(1) The work processes of others within the organisation are regularly discussed.
(2) The coherence in work processes is regularly discussed within the organisation.
(3) Performance is measured and rewarded when it contributes to the goals realised.
(4) When improvements are realised they are implemented step by step.

Feedback:

(1) In the management dialogue, I am not told whether I do my work well.

(2) In the management dialogue, it is difficult for my manager to assess the quality of my per-
formance objectively.
(3) In the management dialogue, I am informed about how my work is related to that of other
staff members.

Executive ability
Authority

(1) Everyone has a good idea of the decisions and actions for which he or she is responsible.
(2) Important information about the competitive environment gets to headquarters quickly.
(3) Once made, decisions are rarely second-guessed.

Communication

(1) Information flows freely across organisational boundaries.

(2) Field and line employees usually have the information they need to understand the bottom-
line impact of their day-to-day choices.