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IJQRM
23,1
102
International Journal of Quality &
Reliability Management
Vol. 23 No. 1, 2006
pp. 102-112
q Emerald Group Publishing Limited
0265-671X
DOI 10.1108/02656710610637578
A management control
perspective of quality
management
An example in the automotive sector
Jos van Iwaarden, Ton van der Wiele and Roger Williams
Erasmus University Rotterdam, Rotterdam, The Netherlands, and
Barrie Dale
Manchester Business School, The University of Manchester, Manchester, UK
Abstract
Purpose – In many industries (e.g. cars and clothing) manufacturing complexity and
unpredictability have increased over the last couple of years because of an increasing variety of
products and shortening product life cycles. At the same time the manufacturers in these industries
appear to have more problems with maintaining high quality levels. This paper aims to develop a
methodology to study the effects of these developments on quality management systems.
Design/methodology/approach – At three European automotive manufacturers the two trends
have been studied by means of a case study approach. Simons’ four levers of control model is utilised
to categorise and interpret the results of the case studies.
Findings – The application of a management control model in the field of quality management is
found to be useful in explaining what changes are necessary to maintain high quality levels. From the
case studies in the automotive sector it is concluded that there is a shift in quality management
systems from a diagnostic towards a more interactive approach. This is in line with what can be
expected as a result of the increasing uncertainty in the automotive sector, caused by shortening life
cycles of car models and smaller batch sizes.
Originality/value – This research presents a novel application of Simons’ four levers of control
model to the field of quality management. Based on the experience with three case studies at European
automotive manufacturers, this approach seems to have potential.
Keywords Automotive industry, Product life cycle, Quality management
Paper type Research paper
Introduction
Two important trends in the current business climate are an increasing product variety
for customers and shortening product life cycles (Pine, 1993; Da Silveira et al., 2001;
The Economist, 2001). An increasing product variety can be seen in the ever-increasing
supply of and demand for alternative products and services in the market place. These
days, customers can chose from many different types, colours, flavours and sizes of
products. At the same time product life cycles are becoming shorter in many industries
because products are being increasingly influenced by fashion trends and more severe
(global) competition. Increasing product variety and shortening product life cycles may
have major implications for many management control systems. This paper studies
their effect on one of these control systems: quality management. Although quality
management has often been advocated as a universal system that applies to all
organisations, research has shown that it is in fact context dependent (Sitkin et al., Quality
1994; Sousa and Voss, 2001). management
In order to manage quality, organisations typically aim to do three things: cement
relationships with customers (and other stakeholders), reduce variation in key
processes, and improve processes and products in a continuous step-by-step manner.
So, quality management control systems are typically based on measures of customer
satisfaction, reduction of variation and step-by-step continuous improvement (Dean 103
and Bowen, 1994; Wilkinson et al., 1998; Handfield and Melnyk, 1998; Dale et al., 2000;
Dale, 2003).
However, the relevance and effectiveness of all of these are influenced by increasing
product variety and shortening product life cycles. The increasing speed of change may
subject the classic step-by-step plan-do-check-act (PDCA) based performance
improvement loops to major strain. Since an updated product or process may already
be in place before any improvements projected can be implemented (Sitkin et al., 1994).
Moreover, many of the traditional tools and techniques aiming at reducing variation
assume large batches of the same or similar products that are repeated over time. But
batches are becoming smaller and the likelihood that a process will be repeated in
exactly the same form is decreasing (Von Corswant and Fredriksson, 2002). So, the
possibility of variation increasing is occurring at the same time as the basic
assumptions required for traditional reduction of variation are under attack (Sitkin et al.,
1994). Therefore, many of the currently used quality management systems of firms are
based on assumptions that are challenged by the two trends and it is questionable
whether these quality management systems are still useful in the traditional format.
The empirical part of this paper is based on case study research undertaken at three
European automotive companies. The automotive industry is interesting for a number
of reasons. Firstly, it has from the beginning been leading edge in quality management
(e.g. Toyota) (Dale et al., 2000; Womack et al., 1990). Secondly, increasing product
variety and shortening product life cycles are already visible in the automotive
industry (Pine, 1993; The Economist, 2001; Von Corswant and Fredriksson, 2002;
Womack et al., 1990; Alford et al., 2000; Agrawal et al., 2001). Car manufacturers
introduce new models at a high pace and the option lists for cars are becoming
increasingly longer, although many features that used to be options in the past have
now become standard equipment. Life cycles are under pressure because sales drop
rapidly after a few years of production and even face-lifts can do little to counter this.
Thirdly, in an effort to retain as much as possible of mass production, many
automotive firms are sharing platforms with other brands in the same firm or with
competing firms. This indicates that manufacturers are trying to reduce complexity by
sticking to traditional mass production as much as possible, while on the other hand
they try to offer customers the experience of a unique car. Fourthly, current quality
management systems are clearly under strain in the automotive industry since the
number of product recalls has risen sharply (Simon, 2004). To complicate matters,
many of these recalls are not caused by internal problems at the car manufacturers but
they arise from problems at their suppliers and even at sub-suppliers.
This paper argues that quality management systems need to adapt to cope with
increasing product variety and shortening product life cycles. Explorative empirical
research by means of case studies at three European automotive companies provides
an indication of how quality management systems could develop.
IJQRM Quality as a management control system
23,1 The impact of the two trends of increasing product variety and shortening product life
cycles on organisations lies in their ability to increase complexity and uncertainty. The
complexity is caused by the large number of different processes that require
management attention. It is clearly more straightforward to manage a single mass
production process than to manage a number of production processes with large
104 product varieties. The uncertainty is caused by the constant flow of new product
introductions and product updates, which imply that success in the market place may
last only for a short period of time. Once competitors introduce new versions of their
products the balance may shift again. Prater et al. (2001) point out that any business
environment is a mixture of stability (predictability) and instability (adaptation to
changes). Yet increasing product variety and shortening product life cycles are moving
many firms towards more unpredictability and instability. Sitkin et al. (1994) argue
that quality management with its focus on customer requirements, continuous
improvement and the total organisational system, is basically a cybernetic control
system. They go on to claim that such control systems require “a certain degree of task
routineness and a moderate to high amount of certainty”, which implies that
“cybernetic control systems are less appropriate in situations of high uncertainty”. A
more recent survey by Mehra et al. (2001) among quality experts led to the conclusion
that quality management has to change radically in the short term, and that
instantaneous response to changing market demands will be the single most important
challenge of the future for quality management.
Consequently, to study the effects of increasing product variety and shortening
product life cycles on quality management, a model is needed that can distinguish
between, on the one hand, simple and stable environments and, on the other hand,
complex and unpredictable environments. Existing quality models like the quality
award and business excellence models (e.g. Malcolm Baldrige National Quality Award,
European Business Excellence Award, and the Deming Prize) are not appropriate for
this purpose because they do not make this distinction. Therefore, it is necessary to
search for an appropriate model outside the quality field. Sitkin et al. (1994) argue that:
Researchers must look beyond current approaches to total quality management for an
approach to quality that can work under conditions characterised by high uncertainty and
nonroutineness.
On the basis of a study of the quality management literature (e.g. Dean and Bowen,
1994; Wilkinson et al., 1998; Handfield and Melnyk, 1998; Dale et al., 2000; Dale, 2003) it
can be concluded that quality management consists of three core building blocks,
which are customer orientation, process control, and continuous improvement. Based
on these three building blocks it can be argued that quality management can be seen as
a control system since it is aiming to control an organisation’s processes and to
improve and change these processes in response to changes. Therefore, a logical place
to look for a model is in the field of management control. Such a model that can
distinguish between, on the one hand, simple and stable environments and, on the
other hand, complex and unpredictable environments, is Simons’ four levers of control
model (Simons, 1995). This model is widely used in management control literature
(Ramos and Hidalgo, 2003). The model is shown in Figure 1.
 Quality
management

105

Figure 1.
Simons’ four levers of
control model

Simons’ four levers of control model is used to balance control mechanisms in an

organisation in order to realise the business strategy. The model distinguishes four
different types of control mechanisms:
(1) Beliefs systems.
(2) Boundary systems.
(3) Diagnostic control systems.
(4) Interactive controls systems.

Two of these four levers increase individual freedom (i.e. beliefs systems and
interactive control systems), and two restrict individual freedom (i.e. boundary
systems and diagnostic control systems).
Beliefs systems are used to inspire and direct the search for new opportunities. A
beliefs system is the explicit set of organisational definitions that senior managers
communicate formally and reinforce systematically to provide basic values, purpose,
and direction for the organisation. The definitions espouse the values and direction
that senior managers want subordinates to adopt. These core values are linked to the
business strategy of the firm. A formal beliefs system is created and communicated
through such documents as credos, mission statements, and statements of purpose.
Boundary systems are used to set limits on opportunity-seeking behaviour.
Boundary systems delineate the acceptable domain of activity for organisational
participants. Unlike beliefs systems, boundary systems do not specify positive ideals.
Instead, they establish limits, based on defined business risks, to opportunity
seeking.Diagnostic control systems are used to motivate, monitor, and reward
achievement of specified goals. Diagnostic control systems are the formal information
IJQRM systems that managers use to monitor organisational outcomes and correct deviations
23,1 from preset standards of performance. These feedback systems, which are the
backbone of traditional management control, are designed to ensure predictable goal
achievement. Three features distinguish diagnostic control systems:
(1) The ability to measure the outputs of a process.
(2) The existence of predetermined standards against which actual results can be
106 compared.
(3) The ability to correct deviations from standards.

Interactive control systems are used to stimulate organisational learning and the
emergence of new ideas and strategies. Interactive control systems are formal
communication systems that managers use to involve themselves regularly and
personally in the decision activities of subordinates. Based on the unique strategic
uncertainties they perceive, managers use these systems to activate search. Interactive
control systems focus attention and force dialogue throughout the organisation. They
provide frameworks, or agendas, for debate, and motivate information gathering
outside of routine channels. These control systems stimulate search and learning,
allowing new strategies to emerge as participants throughout the organisation respond
to perceived opportunities and threats. An interactive control system is not a unique
type of control system: many types of control systems can be used interactively by
senior managers.
The four different control levers in the model of Simons and their relation to
strategy are summarised in Table I.
Any control system in an organisation can be classified according to the types that
Simons (1995, 1999) distinguishes. The four different types of control systems work
together to realise the business strategy. To be able to do this successfully, there
should be a balance between the different types of control systems. If there is too much
focus on just one or two types of control systems, the organisation may have
difficulties in realising its strategy.
The right mix of control systems depends partly on environmental factors like the
predictability and complexity of the market in which the organisation is operating. If
the environment is predictable and not complex, an organisation can put more

Control system Purpose Communicates Control of strategy as

Beliefs systems Empower and expand Vision Perspective

Table I.
Relating the four levers of
control to strategy
search activity
Boundary systems Provide limits of Strategic domain Competitive position
freedom
Diagnostic control Coordinate and monitor Plans and goals Plan
systems the implementation of
intended strategies
Interactive control Stimulate and guide Strategic uncertainties Pattern of actions
systems emergent strategies
Source: Simons (1995, p. 304)
emphasis on the diagnostic control systems and boundary systems. However, if the Quality
environment is unpredictable and complex, a stronger focus on beliefs systems and management
interactive control systems is necessary. In the current environment the two trends of
increasing product variety and shortening product life cycles bring about
unpredictability and complexity for many organisations.
The same reasoning that applies to general control systems also applies to specific
control systems, like quality management. Therefore, quality management systems 107
can also be classified according to the four levers of Simons’ model. Moreover, the two
mentioned trends of increasing product variety and shortening product life cycles are
expected to have a major impact on quality management. So, a shift is expected from a
major focus on diagnostic quality management systems to a more important role for
interactive quality management systems.

Methodology
To empirically test the hypothesised shift towards an increased importance of beliefs
systems and interactive control systems in a situation of uncertainty and complexity,
three case studies have been conducted at European automotive manufacturers
(OEMs). Because of the explorative nature of this research, a case study approach is a
suitable methodology (Yin, 2003).
In all three organisations interviews have been held with the quality manager,
supply chain manager, logistics manager, production manager, and human resources
manager. In addition, three relevant first tier suppliers have been selected by the
quality managers of each of the OEMs. At each of these suppliers interviews were held
with the quality manager or the account manager for the OEM (in one of the three cases
with both).
All interviews were conducted by two interviewers and each interview took
between 1.5 and 3 hours. The interviews inside the OEM organisation were all focused
on the changes in management systems that have taken place over the last ten years in
the field of responsibility of the interviewee. The interviews at the suppliers focused
on the changes that have taken place in the way the relationship between the supplier
and the OEM is managed by the OEM. Each interview was written down by both
interviewers and, based on these two write-ups, a final write-up of the interview was
produced. Out of these write-ups the most important quality management issues and
developments were derived by means of discussions between the two interviewers and
a group of academic quality experts. The derived issues and developments were
presented to the interviewees during a discussion meeting in which these managers
could express their perceptions and opinions.
In addition to the interviews at the OEMs and the suppliers, information has been
collected by means of plant tours and by studying minutes of relevant meetings and
quality management procedures and policies.

Application of the Simons model

Before discussing the cases, the interpretation of the Simons model is elaborated on in
general. The Simons model is used in the following way for each of the three cases:
(1) Elements of the quality management control system are positioned in the four
quadrants of the Simons model (i.e. beliefs systems, boundary systems,
diagnostic control systems, and interactive controls systems) by assessing the
IJQRM focus of each of these elements. Some elements may fit more than one quadrant
23,1 of the Simons model, however we group them on the basis of their major focus.
(2) The shifts over time are identified by comparing the current situation with the
situation five to ten years before.
(3) The future trends are defined based on the current developments and the
expectations about developments that are becoming more important in the
108 coming five to ten years.

In the interviews we focus as much as possible on concrete examples of developments

and changes that have taken place over time in the quality management system of each
of the three case companies. Based on these developments we were able to develop
insights into the positioning of the quality management system in relation to the four
quadrants of the Simons model. By positioning the elements of the quality
management system that are relevant at different moments in time, trends are
emerging.
Three case studies at European OEMs have been undertaken. Some basic
information about the cases is presented in Table II.

Interpreting the results of the case studies

The results of the case studies at the three OEMs have been interpreted by means of
the Simons model by placing the identified quality management elements and
developments in the four levers. This means that each element or development has
been judged by a group of academic quality experts and positioned in one or more
levers of the Simons model. Figure 2 shows an example of developments and issues in
the area of process control in one of the three case studies. The numbering indicates the
sequence of developments. Solid arrows indicate a development that has happened
already, while dashed arrows indicate a current development or planned/expected
future development for which already some evidence has been found.
The developments in Figure 2 can be described as follows. Over the years the
importance of the supply chain has increased for this manufacturer and parallel to this
there has been an evolution in the management and control of the quality of the
suppliers. More than five years ago this manufacturer used incoming inspection to
diagnostically measure the quality of incoming supplies. So, in this stage the quality
management system used can be classed as a diagnostic control system because it

Company A Company B Company C

Market segment Trucks Small cars Lower premium cars

Type of production Brand responsibility Contract manufacturing Production location
Annual production volume 45,000 150,000 80,000
Number of different models
assembled 2 3 1
Number of employees 3,500 4,300 2,000
Factory location The Netherlands The Netherlands UK
Table II. Number of first tier suppliers 400 250 220
Characteristics of the Major suppliers on-site in No Yes Yes
cases studied supplier park
 Quality
management

109
Figure 2.
An example of
developments and issues
in an OEM’s process
control

measured the compliance to preset quality standards. When this manufacturer realised
the amount of time and resources this policy was consuming, it started to move
towards quality assurance by means of supplier assessments and ratings. With this,
the quality performance of each supplier is monitored on a day-to-day basis and
recorded in a supplier database. The ratings of suppliers are used in the decision
process that takes place when new supply contracts are given to suppliers. As the
quality management system uses predetermined performance measures that lead to a
ranking of suppliers from which the top performing suppliers will be selected for future
contracts, it is again diagnostic in nature. In recent years, a development has been
started towards co-development between the manufacturer and its suppliers, requiring
communication and discussion about new products. For example, the manufacturer
reveals its plans for future products to its suppliers and asks for comments on how to
identify and address possible quality problems whilst the product is still in the design
phase. This is an interactive way, as the manufacturer discusses its new designs with
suppliers and uses the knowledge and experience of these suppliers to improve the
product design.
Because the sequence of developments in time is known, it becomes clear which
levers were important at specific moments in time and which receive the most
attention. From Figure 2 it becomes clear that the supplier focus of this manufacturer
has shifted over time from the right side of the matrix (i.e. diagnostic control systems)
towards the left side (i.e. interactive control systems). However, this shift does not
mean that a previous lever gets no attention once the focus is on another lever. In most
cases the manufacturers in this research kept existing quality management systems in
place but felt the need to put more emphasis on different kinds of quality management
systems in order to achieve their quality strategy.
Figure 2 also shows that (for the example presented) two levers of the Simons model
(i.e. beliefs systems and boundary systems) receive no attention because there is no
quality management system in place in the organisation that controls the suppliers
from the perspective of these two levers. The absence of certain levers in the
management of the quality of the manufacturer’s suppliers is clearly demonstrated by
the matrix in Figure 2, which allows managers to think about the consequences of
missing levers. In the example in Figure 2 there is no boundary system (i.e. the
manufacturer has imposed no clear boundaries for the quality level of its suppliers).
IJQRM This indicates that top management thinks that such boundaries are not necessary
23,1 because the ranking systems that are in place ensure that only the best performing
suppliers are awarded new contracts. Therefore, it may not be necessary to define
minimum quality levels. However, the boundary systems do not only define minimum
levels of quality but also maximum levels. These maximum levels may be just as
important as minimum levels because superior quality may come at a high price. So,
110 although it may be desirable to have the highest possible quality, this may not be the
smartest strategy from a cost perspective. In the automotive industry, products need to
last only for a limited number of years, so it is not necessary to manufacture car parts
that last. This suggests that the relationship between the technical lifespan of a car
part and its costs is important. If increasing the technical lifespan means that the costs
go up, the manufacturer should question whether it is really necessary to go for the
highest quality car part with the longest lifespan.
It can be argued that the presence of quality management issues and their
developments over time in relation to the different levers of the Simons model may give
an indication of the quality maturity of the organisation. So, if a company has quality
management systems in all four levers of the Simons model, it may be more quality
mature than a company that does not have quality management systems in all four
levers.

Conclusions
In the current business environment the two trends of increasing product variety and
shortening product life cycles have an impact on the quality management system of
firms. The automotive sector has been chosen as research area because it is
experiencing the influence of both these trends. In this paper a methodology has been
developed that uses Simons’ four levers of control model to categorise quality
management systems. Based on this methodology it is possible to indicate the direction
in which changes in quality management systems are needed.
From the three case studies it has become clear that many quality management
elements have been in the area of diagnostic control already for a long time. More
recently, a shift is becoming visible in which also elements are emerging that can be
defined as interactive control approaches. This is in line with the theoretical
assumptions of the Simons model, which imply that in situations of uncertainty more
interactive forms of control are needed.
The presence of quality management issues and their developments over time in
relation to the different levers of the Simons model give also an indication of the quality
maturity of the organisation. If a company has quality management systems in all four
levers of the Simons model, it may be more quality mature than a company that does
not have quality management systems in all four levers.
This research has presented a novel application of Simons’ four levers of control
model to the field of quality management. Based on the experience with three case
studies at European automotive manufacturers, this approach seems to have potential.
However, the methodology that has been used for this research needs to be developed
further to improve its usefulness for scientific research and practical application.
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IJQRM About the authors
Jos van Iwaarden, the corresponding author, can be contacted at the Erasmus University
23,1 Rotterdam, Room H16-07, PO Box 1738, 3000 DR Rotterdam, The Netherlands. Tel:
þ31104081321; Fax: þ31104089169; E-mail: vaniwaarden@few.eur.nl
Ton van der Wiele can be contacted at the Erasmus University Rotterdam, Room H15-06, PO
Box 1738, 3000 DR Rotterdam, The Netherlands. Tel: þ31104081354; Fax: þ 31104089169;
E-mail: vanderwiele@few.eur.nl
112 Roger Williams can be contacted at the Erasmus University Rotterdam, Room H15-06, PO
Box 1738, 3000 DR Rotterdam, The Netherlands. Tel: þ31104081353; Fax þ 31104089169;
E-mail: williams@few.eur.nl
Barrie Dale can be contacted at the Manchester Business School, University of Manchester,
Booth Street West, Manchester M15 6PB, UK. Tel: þ 441612003424; Fax þ 441612008799; E-mail:
barrie.dale@umist.ac.uk

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