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Relationship between Total Quality Management, Innovation and Customer

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Topclass Journal of Business Management and Innovations Vol. 1(2) Pp. 61-66, 26 June, 2014
Available online at http://www.topclassglobaljournals.org
©2014 Topclass Global Journals

Submitted 8/3/2014 Accepted 17/4/2014

Research Article

Relationship between Total Quality Management,

Innovation and Customer satisfaction in Service
Organizations
Kamyar Golmohammadi1, Mahmood Zohoori2, Seyed Jafar Hosseinipour1, Shabnam
Mehdizadeh3
1
Department of Policy, Perdana School, University of Technology Malaysia
2
Department of Environmental Management, Faculty of Engineering, University of Putra Malaysia
3
Department of Business, Multimedia University, Malaysia

*******************************************************************************************************************************
Abstract
This research is an attempt to find a logical relationship between total quality management (TQM),
innovation and customer satisfaction through reviewing several other researches. It identifies different
practices in service industry which possibly influence different dimensions of innovation and how
these enhance customer satisfaction. In order to increase customer satisfaction, organizations can
implement TQM practices and strive after innovation. This study highlights seven TQM practices such
as management leadership, employee involvement, employee empowerment, information/analysis,
training/education, customer focus and continuous empowerment. In addition, the three dimensions of
innovation which are product, process and administrative innovations have been well elaborated to
enhance proper understanding of how firms can achieve customer’s satisfaction by means of total
quality management and innovative ideas and actions.

Key words: TQM, Innovation, Customer Satisfaction, Service Organizations

*******************************************************************************************************************************

INTRODUCTION

Customer satisfaction is a key factor in management. It is one of the significant perspectives in performance (Kaplan
and Norton 2001). Customer satisfaction is a key part in organizational productivity (Bernhardt et al., (1994; Eklof and
Westlund, (1998) Naumann et al., (2001) believes that customer satisfaction should always be considered in any
organizational planning. Agus (2004) adds that customer satisfaction is in direct relationship with applying TQM. As
Ingram and Chung (1997) indicated, there is a relationship between implementing TQM practices and improving
customer satisfaction in health care system. In addition, TQM can be an element in boosting the competitive factor in
Thailand hospitals (Pongpirul et al., 2006).

Corresponding Author’s Email: kamyargolmohammadi@yahoo.com

Golmohammadi et al..Topcls. J.B.M.I. 1(2)62
As Aghazadeh (2002) clarifies, practical use of TQM is
definitely significant in business. There are lots of other
researches in the area of customer satisfaction in service
and manufacturing industries. Al-Saggaf (1997) showed
that applying TQM practices can increase customer
satisfaction in Saudi Arabia’s electrical industries. Also,
Kanji et al., (1999) revealed that TQM can improve
customer satisfaction in UK universities. The present
research tries to identify the best TQM practices through
investigating several other researches on TQM, customer
satisfaction and innovation perspective.
The excessive request for quality and innovation is
getting more and more important for service providing
industries (Juneja et al., 2011; Karani and Bichanga
2012). This helps to remain competitive in their field of
duty and has given rise to many researchers’ motivation
to work more on the relationship between innovation and
TQM practices. This current review of literature provides
a new perspective into the relationship between TQM and
innovation.
TOTAL QUALITY MANAGEMENT
Ahire et al., (1996) described TQM as a process of
continual methods for the sustenance of customer
satisfaction. Other researchers have described it as
procedures and methods applicable in order to increase
product or services in terms of quality and efficiency.
(Steingard and Fitzgibbons; 1993)
Several companies have applied TQM practices in
order to increase their chances of competition, benefits
and innovation. The positive effects of using TQM
methods can be seen in their performance outcome
(Abdullah et al., 2009; Crosby, 1979; Deming, 1993;
Hoang, et al., 2010; Zakuan et al., 2008). Some other
researchers have analyzed the literature in order to find
out other elements which can have effect on TQM.
It was discovered that an accretion between TQM
systems and daily business systems, management
devotion, human resource entanglement in daily business
process and high management knowledge of TQM are
the most influential factors of using TQM. (Soltani et al.,
2008)
Lewis et al., (2006) investigated eight different factors
considered as critical factors for TQM implementation.
Data related to 12 countries were collected and 12
different factors were figured out as critical factors. They
include quality data and reporting, customer satisfaction,
human resource utilization, management of process
control, training and education, management
commitment, continuous improvement, leadership,
strategic quality planning, performance measurement,
customer focus and contact with suppliers and
professional associates.
Through analyzing the circumstance surrounding some
well-known TQM awards and certifications, Abdullah et
al., (2009) enlisted some significant elements affecting
usage of TQM practices on the system. These are
leadership, team working, training, organizational
learning, communication and process management.
TQM PRACTICES
Masters of quality management helped to formulate acts
of TQM. Their major frameworks are the underlying
premise of real investigations of TQM practices in written
works (Anderson et al., 1995; Flynn, et al., 1994; Kaynak,
2003; Powell, 1995; Saraph et al., 1989). In addition,
those frameworks affected the awards and certificates on
business excellence (e.g. MBNQA and EFQM). Sarpah et
al., (1989) tried to create TQM practice through
experimental researches based on quality masters
frameworks. They collected data from review of literature
in a comparing manner and with the help of 20
organizations, developed 8 TQM (Table 1). They used
other studies in order to outline managers’ participation.
Flynn et al., (1995) conducted an important research on
TQM practices improving eight measurable TQM
practices for assembling plant level. Their TQM practices
are practically in some manner identical to those
discussed by Saraph et al., (1989). Focus was more on
the employees and their awareness in manufacturing
plans using experimental data while Saraph et al., (1989)
emphasized more on literary works.
Lately, the most prominent and generally utilized TQM
practices are dependent upon the criteria of the Malcolm
Baldrige National Quality Award (MBNQA) which grew in
1987 by The National Institute of Standards and
Technology (NIST, 2012). The grant's criteria were
predominantly advanced to measure the level of QM
provision degree in both assembling and administration
associations. The MBNQA criteria utilized seven
strategies that any association can use to evaluate
quality provision and execution as shown in Table 1.
In the early days of TQM, researches were more
focused on manufacturing industries and productions
rather than services. Although with increasing rate of
service industry, the need for TQM became very
necessary in service firms (Juneja, et al., 2011). Writers
further hold that standards formed from the diverse
definitions by masters of TQM are dependent upon
quality definition: quality is greatness; quality is worth;
quality is conformance to details; and quality is gathering
or surpassing clients' desires.
There are reasons to think products are different from
services in terms of TQM application perspective. The
fundamental distinctions are that service sector is elusive
and depends progressively on clients’ assessment. The
impalpability of service sector makes estimation issue
while reliance on client assessment makes lead firms to
be client led (Juneja et al., 2011). Other studies claim that
TQM practices are different for service firms compared to

Table 1. Examples of some influential TQM practices
Saraph et al. (1989) Flynn et al. (1995)
Top management support,
Management leadership,
customer relationship, supplier
supplier’s quality management,
relationship, workforce
employee relations, training,
management, work attitudes,
role of the quality department,
process flow management,
process management, quality
statistical and reporting control
data and reporting, design and
and feedback, product design
measurement control
control process
Table 2. TQM practices in manufacturing and services
TQM practices in service organizations
Human focus
Focus on top management and visionary leadership
Continuous improvement
Emphasis is on interpersonal relationship and communication skills
Statistical process control is inappropriate in professional services
Check customer defections
Quality measurement through customer satisfaction
Physical evidence has an impact on service quality
manufacturing firms as shown in Table 2. Lenka et al.,
(2010).
Manufacturing firms are different from service
organizations in methodology, operation, quality of items
and client ties. Manufacturing firms concentrate on the
procedure and item quality, while service providers center
progressively on client fulfillment. Elements like social
avocation and appropriation of natural management
framework as described in ISO certificates are more
considered in manufacturing organizations.
There are different aspects in TQM practices such as
information analysis and statistical process control,
however service organizations do not frequently utilize
these aspects. Instead, they place more trust on
customer’s feedback on service quality. On the other
hand, manufacturing firms rely more on contractors and
suppliers. Training on statistical processes is more
important for them.
On the contrary, training is more on interpersonal and
verbal skills in service firms (Lenka, et al., 2010; Talib et
al., 2011, 2012). Jitpaiboon and Rao (2007) investigated
different dimensions of TQM via: top management
commitment and leadership, Benchmarking, customer
focus and satisfaction, service marketing, social
responsibility, human resource management employee
satisfaction, service culture, continuous improvement and
Information analysis. They argue that there might be a
slight distinction between services and manufacturing
organizations in practice.
Golmohammadi et al..Topcls. J.B.M.I. 1(2)63
MBNQ (2007) Bon and Esam (2012)
Leadership, Management leadership,
Employee Involvement,
Customer and market
Employee empowerment,
focus, workforce focus,
Information and analysis,
strategic planning,
process management, Training and education,
information and analysis, customer focus
business performance
Continuous, empowerment
TQM practices in manufacturing organizations
Product/technology focus
Focus on top management and visionary leadership
Continuous improvement
In recruitment and selection, emphasis is on technical skills
Statistical process control is presented universally
Elimination of product defects
Quality management by statistical techniques
Physical evidence is not applicable
TYPES OF INNOVATION
There are two steps towards innovation (i) a procedure
for making plans and fittingly actualizing them (ii)
conclusions which are final outcomes. Procedure
consists of the way or ways ideas can be put into action,
while outcomes are end results of a service or
manufacturing firm.
There are two primary inputs crucial for expected
conclusions. In the first instance, staff of an association
must have the capacity to make and manage the settings
that back imaginative plans. Secondly the staff must have
the ability to choose which thoughts are worthwhile and
productive (Skarzynski and Gibson, 2008). It is a
necessity for organizations to be familiar with innovative
methods they need to know how to treat and respond to
any type of innovation and creativity(Hurmelinna-
Laukkanen, et al., 2008). There are three significant
approaches to this namely incremental/radical innovation,
technological/administrative innovation and
product/process innovation (Zhao, 2005).
Incremental and Radical Innovation
Innovations are radical to the extent that they are new
and exceptionally different from others. Incremental
improvements include corrections or changes to existing
items or administrations (Burgelman, et al., 2009). They
Golmohammadi et al..Topcls. J.B.M.I. 1(2)64
are made by adding new factors to the service or product.
They may alter or enhance customer satisfaction.
Technological and administrative Innovation
Implementation of new technologies into processes or
products is technological innovation (Damanpour, 1988).
This can guaranty a long term success in competitive
advantages in the market (Grover et al., 2007).
Managerial improvement alludes to the usage of new
plans enhancing organizational methodologies,
schedules, structures or frameworks (Elenkov et al.,
2005). Authoritative development is connected with inner
methods supporting the conveyance of an administration
or item.
Product and Process Innovation
Technological innovation consists of two dimensions:
product innovation and procedure innovation. If there is a
boost in quality of a product or service, or an innovation
in creating a new product, it is called product innovation
(Burgelman et al., 2009). Process innovation implies
innovative procedures created to enhance effectiveness
of production (Tarafdar and Gordon, 2007).
INNOVATION AND TQM
Several studies have tried to measure organizational
creativity and innovation level. Some have developed
models to measure innovation levels that are applicable
in high enterprises in Taiwan (Liu et al., 2010). These
measurements are in the form of questionnaires inquiring
about different high and middle managers of about 150
different technological industries. Their model has some
similarities with Hage (1999), some of which include the
percentage of benefits created through innovations,
giving ranks to new products, services or procedures,
frequency of new ideas, range of human resources and
other related factors (Gambatese and Hallowell, 2011).
In measuring innovation based on firm’s performance,
Voss (1992) counts on financial enhancement gained
through competition, resource utilization, procedure
flexibility, service quality scale, creativity effectiveness,
usage speed and cost implementation. Kanerva and
Hollanders (2009) discussed another measurement
model based on European Innovation Scoreboard (IES)
to specifically measure service creativity. Their
measurement model is made of business research and
development (R&D) costs, non R&D creativity costs,
companies’ internal creativity, external innovative
participation, company renovation, resource innovation
creators, average creative portions where it has reduced
labor force costs, newly introduced products to market,
knowledge based services and knowledge based
services export. Another research holds that managers
and staff characteristics are the most crucial factors
affecting innovation (Gambatese and Hallowell, 2011).
Others have reported that the better an organization can
handle the educational confrontations, the more
innovative they can be (Hausman, 2005). There is no
global tie between TQM and literature which only reveals
a mixed relationship (Bon and Mustafa, 2012). This
mixture comes from the variety of TQM methods and its
different aspects as well as different definitions of
innovation.
According to Hoang et al., (2006), practicing TQM can
positively affect innovation level as well as the quantity of
service and products made in both products and services
firms. They conducted their research based on data
collected from Vietnam. Martinez-Costa and Martinez-
Lorente (2008) found out that there is a link between
innovation and TQM. They gathered and analyzed the
data from 451 manufacturing and service firms in Spain.
They found a positive relationship between innovation
and TQM practices. They stated that firms need to use
and practice TQM not just for enhancing execution
through stressing in empowering and moving the
creativity cult. Santos-Vijande and Alvarez-Gonzalez
(2007) dissected information from 93 manufacturing and
service organizations in Spain as well. Their results
showed that TQM has notable impact on managerial
innovation.
These discoveries likewise indicated that the
connection between TQM and specialized development
is subjected to the firm creativity and company's
innovation cult. On the other hand they believed that
TQM-innovation relationship is subject to market
disorder. Sadikoglu and Zehir (2010) conducted an
experiment on 373 companies which are ISO
(9001:2001) certified companies in Turkey. They found a
firm connection between innovation and employee
performance asserting that a company’s competitive
advantage is affected by employee innovation, which is
affected by managerial positive attitude towards
employee empowerment. This leads to increase in
employee’s satisfaction as a chain reaction. Leavengood
and Anderson’s (2011) researched on companies in USA
in search of a Link between TQM and innovation and
showed that the level of creativity is relatively low in
quality orientated firms. They argued that innovation
oriented companies are more customer protective, while
quality oriented companies are more reactive into
customer needs leading them into dangerous margins.
As a general conclusion, different factors can affect the
relationship between TQM and innovation. First, they are
pretty much different from each other. Some researchers
(Prajogo and Sohal, 2001) found a negative impact of
some practices, while others found no obvious tie (Singh
and Smith, 2004). However, the greater part of outcomes
demonstrated a backing of the positive capacity of TQM

TQM practices
Innovation
 Management leadership,
 Employee Involvement,  Product Innovation
 Employee
 Process Innovation
empowerment,
 Information and  Administrative
analysis,
Innovation
 Training and education,
 Customer focus
 Continuous,
empowerment
Figure 1. Proposed Framework
on advancement. Also, no such study explored the effect
of TQM on enhancement in administrative firms or
industries. All the studies accompanied the ordinary TQM
approaches that interfaced practices of TQM with
assembling firms and industries.
INNOVATION AND CUSTOMER SATISFACTION
Customer satisfaction is a business term assessing what
amounts of an item supplied by organization has had the
capacity to fulfill or satisfy the client. Customer
satisfaction was discovered to have a positive effect on
repurchase propositions. Yusuf (2012) gave a high value
to the impact of innovation on service quality or perceived
value since there is an obvious connection between
service quality and customer satisfaction. There are
enough clues to state the effect of innovation on
customer satisfaction.
Proposed Framework
From the foregoing, one can conclude on the existence of
a relationship between TQM practices, innovation and
customer satisfaction. In addition, previous literature
supports the existence of the relationship between
innovation and customer satisfaction. A framework can
be formulated to demonstrate this (Figure 1).
CONCLUSION
In order to increase customer satisfaction, organizations
can implement TQM practices and strive after innovation.
This study highlighted seven TQM practices such as
Management leadership, Employee Involvement,
Employee empowerment, Information/analysis,
Training/education, Customer focus and Continuous
Golmohammadi et al..Topcls. J.B.M.I. 1(2)65
Customer
Satisfaction
empowerment. In addition, the three dimensions of
innovation which are product, process and administrative
innovations have been well elaborated to enhance proper
understanding of how firms can achieve customer’s
satisfaction by means of total quality management and
innovative ideas and actions.
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