Relationship between Baldrige categories study using path analysis

International Journal of Quality & Reliability Management
A study of the relationships between the Baldrige categories

Gertrude P. Pannirselvam, Lisa A. Ferguson,
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IJQRM
18,1 A study of the relationships
between the Baldrige
categories
14 Gertrude P. Pannirselvam
Received October 1999 Southern Illinois University at Edwardsville, Edwardsville, Illinois, USA,
Revised April 2000 and
Lisa A. Ferguson
Hofstra University, Hempstead, New York, USA

Keywords Baldrige Award, Quality management, Performance
Abstract The categories, examination items, and framework of the Malcolm Baldrige National
Quality Award (MBNQA) criteria present the underlying relationships between the various
quality management constructs and between quality management and organization performance.
This research uses data from the Arizona Governor's Quality Award, which is based on the
MBNQA, to study the strength of these relationships using path analysis. The results of our
analysis confirm the validity of the MBNQA framework. The results from this research indicate
that leadership significantly directly or indirectly affects all of the systems constructs, except for
strategic quality planning and information management, which was not tested in the model. The
results also indicate that information management, human resources management and customer
focus have a significant effect on customer satisfaction and business results. A strong focus on
customers and employees, in addition to effective leadership and information management is
clearly shown to be essential for organization success.
Introduction
Since its inception in 1987, the Malcolm Baldrige National Quality Award
(MBNQA) criteria have evolved from just a measurement of organizational
quality to a guideline for companies moving toward performance excellence.
The Baldrige Award was established by the US Congress to promote quality
awareness in order to improve the competitiveness of US companies. With its
popularity among US businesses, the MBNQA has become an important
catalyst for improving the competitiveness of US companies and increasing
awareness of quality improvement methods (Main, 1990; Garvin, 1991; Hart,
1993; Moore, 1995; ASQ, 1998). This is not surprising, since the Baldrige
criteria provide a comprehensive framework or tool for self-assessment
(Garvin, 1991; Evans, 1997). The award criteria have helped businesses develop
a common language and philosophy concerning quality (Garvin, 1991; Hart,
1993).
The adoption and imitation of the Baldrige criteria allude to its widespread
acceptance. The award criteria have been adopted or used as a model at both
the state and local levels, as well as internationally (Kochan, 1992; Nadkarni,
International Journal of Quality &
1995; Ettorre, 1996). According to the National Institute of Standards and
Reliability Management,
Vol. 18 No. 1, 2001, pp. 14-34.
Technology (NIST), the agency in charge of managing the award, the number
# MCB University Press, 0265-671X of state and local Baldrige Award programs has increased from six in 1991 to
58 in 1998, while the number of state Baldrige Award applications increased A study of
from 111 in 1991 to 974 in 1997. Manufacturing organizations, service relationships
organizations, government units at the national, state, and local levels,
academic institutions, and other nations are all instituting quality awards and
implementing quality processes patterned after the Baldrige criteria (Kochan,
1992). More than 1.7 million copies of the MBNQA criteria have been
distributed since 1988 (NIST, 1999). In addition, NIST estimates that 15
reproduction of the criteria, in companies and via the NIST Web site, may
increase the actual distribution of the criteria to a significantly higher number.
Bemowski and Stratton (1995) conducted a study to determine how the
Baldrige criteria were being used since the number of copies of the Baldrige
criteria distributed far exceeded the number of applications received for the
award. A survey of US businesses conducted by Bemowski and Stratton
determined that the Baldrige criteria are being used by many businesses for
self-assessment. This survey also found that the respondents found the
usefulness of the criteria met or exceeded their expectations.
Even in the midst of its popularity, the merits of the Baldrige Award have
been debated since its creation (Main, 1990; Crosby and Reimann, 1991; Main,
1991; Zemke, 1991; Sims et al., 1992; Gradig and Harris, 1994; Ettorre, 1996).
During the period of 1992 to 1997, several authors (Grossman, 1994; Marsh,
1994; Ettorre, 1996) presented the argument that the decline in applications for
the MBNQA indicated a decline in interest in quality and in the award. NIST
argues that the number of applicants for the MBNQA is not an indicator of
overall interest in quality or the award program (NIST, 1999). This argument is
based, in part, on increased participation in state and local programs.
The criticism that is of interest to this research is the lack of evidence of the
relationship between the MBNQA and financial or product performance. The
bankruptcy filing from the Wallace Company, an MBNQA winner, and the not
too stellar profit numbers posted by some other winners have raised concerns
about the quality-performance link and the criteria's ability to predict
performance (Smith and Oliver, 1992; Hill, 1993). Businesses have also been
critical of the award criteria after Cadillac won the award in 1991 (Hillman,
1991). However, several sources (Maynard, 1991; Fojt, 1995; NIST, 1999)
indicate that quality has a positive affect on the financial performance of
companies. The ``Baldrige Index'', which is a fictitious stock fund made up of
the publicly traded companies that have won the MBNQA, has significantly
outperformed the Standard and Poor's 500 for the fifth year in a row (NIST,
1999; Rajan and Tamimi, 1999). A study, which was conducted in 1991 by the
General Accounting Office of the top 20 scorers in the Baldrige competition,
found a relationship between improved quality and increased market share and
profitability (Maynard, 1991). Questions have also been raised about the lack of
evidence for the causal relationships underlying the quality framework.
This research addresses two questions:
(1) Are the proposed relationships between the categories in the MBNQA
framework valid?
IJQRM (2) What is the strength of the relationships between the different quality
18,1 management constructs prescribed by the MBNQA criteria?
We address these two questions using data from a state quality award that
mirrors the MBNQA award criteria and evaluation process.
16 Literature
Several instruments to measure organizational quality have been presented in
the quality management literature (Saraph et al., 1989; Flynn et al., 1994; Ahire
et al., 1996). A number of common measures exist between the MBNQA criteria
and these other instruments; however, substantial differences between the
instruments exist. Primarily, the MBNQA criteria are more comprehensive and
less prescriptive than the other instruments. The MBNQA model places greater
emphasis on continuous improvement, customer focus, and strategic quality
planning.
When the MBNQA criteria are used to address organizational quality, it is
assumed that there is a link between quality management practices and
operational and market performance. The link between quality and
performance has been studied in the literature by several researchers. The
PIMS database has been used to study the link between product quality, cost,
market share, return on investment and profitability (Schoeffler et al., 1974;
Phillips et al., 1983; Gale and Klavans, 1985). Roth and Miller (1989) and Roth
et al. (1990) studied the effect of different quality practices on quality
performance. Their studies clearly showed that quality programs have a
significant influence on manufacturing capabilities. The constructs for quality
in these two studies were limited to a few practices and did not consider
infrastructures, such as information management, that could influence the
success of quality management practices.
More recent studies have taken a more organizational view of quality and
included infrastructural elements such as information management and human
resources management (Anderson et al., 1995; Flynn et al., 1995; Chen et al.,
1997; Poister and Harris, 1997; Lengnick-Hall and Sanders, 1997; Li, 1997;
Rungtusanatham et al., 1998; Dow et al., 1999). Some of these studies are
discussed in the next few paragraphs.
Flynn et al. (1995) conducted a comprehensive study on quality practices,
quality management infrastructures, and performance based on a survey of US
plants in the machinery, electronics and transportation industries. The
performance measures used in this study are perceived quality market
outcomes and percentage of production units that passed final inspection
without rework. Their study indicates that top management support and
supplier relationship had a direct effect on the performance of the product
design process. Top management support and workforce management had a
direct effect on process flow. Product design and process flow management
practices significantly influenced internal measures of quality such as percent
defective and market measures.
Adam et al. (1997) conducted cross-cultural quality management research on A study of
the effect of quality practices on quality and financial performance. Adam et al. relationships
grouped 52 quality practices into nine factors. Their research measured the
relationships between each of these nine factors, and their effect on quality
measures and financial measures. The results of this study indicate that
although all nine factors affected the quality performance measures, the
activities that most influenced the outcome were in the top management 17
domain (organization's knowledge of quality management, its degree of
customer focus, and management involvement). The impact of the nine quality
factors on financial measures, however, was weak.
Dow et al. (1999) conducted a survey consisting of a large, random sample of

manufacturing sites to identify the primary dimensions of quality management
and investigate the relationship between quality practices and quality
outcomes. The results indicate that the practices can be divided into nine
dimensions. Of these dimensions, workforce commitment, shared vision and
customer focus combine to yield a positive correlation with quality outcomes.
The other dimensions of benchmarking, use of teams, personnel training,
advanced manufacturing systems, just-in-time principles and co-operative
supplier relations do not relate to quality outcomes.
Other researchers have addressed the quality management dimensions and
quality-performance links as part of other research objectives. Anderson et al.
(1995) and Rungtusanatham et al. (1998), focused on the Deming management
method in their studies by addressing the effects of visionary leadership,
internal and external cooperation, learning, process management, continuous
improvement, and employee fulfilment on customer satisfaction. Poister and
Harris (1997) studied the impact of quality improvement efforts on work
quality and labor productivity in the highway maintenance industry. Li's
(1997) study on hospital quality evaluated the relationship between service
quality management and the analysis of service process and workforce
development. The results of all these studies also indicate a significant
relationship between quality efforts and outcome measures.
There has been some theoretical and empirical research based on the
Baldrige framework. Evans (1997) provides a theoretical foundation for causal
models based on the 1997 MBNQA criteria. Evans suggests studies addressing
the key linkages among business results, linkages between management
practices and results, and the linkages between the six approach/deployment
categories. The causal models suggested by Evans reflect the direct and
indirect effect of the leadership triad (leadership, strategic planning, and
market focus) on human resource development and management and process
management and the effect of all the categories on internal (business) and
external (market) results. Evans and Ford (1997) present results from a limited
survey of Baldrige examiners after they attended the examiner training
sessions. The study evaluated how the 11 core values that the criteria are based
on are reflected in the seven categories. The results suggest that each category
reflects at least one principal core value of the criteria.
IJQRM Winn and Cameron (1998) empirically examined the relationships between
18,1 the MBNQA categories using data from higher education. They administered a
190-item survey based on the MBNQA criteria to all permanent non-
instructional staff at a large mid-western university. Factor analysis indicated
that the seven categories were reliable and valid. Winn and Cameron used
confirmatory path analysis to determine if the relationships between categories
18 as suggested by the MBNQA framework are supported. The results of the
LISREL analysis indicated that not all of the relationships in the framework are
entirely supported. Therefore, Winn and Cameron use exploratory analysis to
suggest an alternate statistically significant model. The alternative framework
includes the direct effects of leadership on each of the four systems categories,
the direct effects of strategic quality planning on management of process
quality and customer focus and satisfaction, the direct effect of human resource
development and management on quality and operational results, and the
direct effects of management of process quality on customer focus and
satisfaction and quality and operational results. Winn and Cameron conclude
that leadership affects the outcomes by mediating effects through the
organizational systems.
The above review indicates that several quality management constructs
have been empirically tested for relationships between quality management
and business performance. Causal models based on the MBNQA framework
have been proposed and tested. There is only some limited support for some of
the relationships between the Baldrige categories. As a result, alternate
statistically significant models based on the Baldrige criteria have been
suggested. In this research, we use confirmatory analysis on data from a state
quality award process to validate the relationships between the MBNQA
categories as suggested by the Baldrige framework and criteria.
The MBNQA quality model

Organizations that aim at being world-class focus on instilling a few core
values such as good leadership, customer focus, respect for employees, and
continuous improvement. The MBNQA criteria are formulated around such
core values.
The core concepts are embodied in the MBNQA framework that consists of
seven categories. The framework has four basic elements: driver, system,
measures of progress, and goals. Table I presents the seven categories and the
examination items used under each category. The driver is senior leadership,
which creates values and goals and guides the pursuit of quality. It is measured
by the first category, leadership. This category focuses on how top
management emphasizes quality at all levels and communicates this emphasis
throughout the organization (NIST, 1993).
The system consists of processes for meeting the company's quality goals
and performance requirements. These processes are measured by information
management, strategic quality planning, human resources management,
product and process management, and part of the customer focus and
Research construct and loadings

Customer
Strategic Product/ focus and
Information quality HR process Business relationship Customer
MBNQA categories and items Leadership management planning management management results management satisfaction
Leadership
Senior executive leadership 0.82
Management for quality 0.84
Public responsibility 0.75
Information and analysis
Management of data 0.82
Benchmarks 0.81
Company level data 0.83
Strategic quality planning

Performance planning process 0.83
Performance plans 0.76
HR management
Human resource plans 0.76
Employee involvement 0.82
Employee training 0.82
Employee performance 0.81
Employee well being 0.80
Management of process quality
Design quality 0.77
Process management 0.79
Support services management 0.79
Supplier quality 0.73
Quality assessment 0.76
(continued)
categories
reliability of the model
Factor loadings and
Table I.
relationships
19
A study of
20
18,1
Table I.
IJQRM
Research construct and loadings

Customer
Strategic Product/ focus and
Information quality HR process Business relationship Customer
MBNQA categories and items Leadership management planning management management results management satisfaction
Business results
Quality results 0.81
Operational results 0.81
Business results 0.76
Supplier quality results 0.70
Customer focus and satisfaction
Customer expectation 0.75
Customer relationship
management 0.81
Commitment to customers 0.76
Satisfaction determination 0.80
Satisfaction results 0.77
Satisfaction comparison 0.77
Test statistic for research constructs
Cronbach's alpha 0.85 0.86 0.77 0.90 0.88 0.85 0.86 0.74
vc 0.65 0.68 0.63 0.64 0.59 0.59 0.61 0.59
satisfaction category. Of these constructs, information management, strategic A study of
quality planning, and human resources management provide the essential relationships
quality management infrastructure. Table I shows the examination items for
each of the system constructs.
Product and process management and customer focus and relationship
management are the core quality management practices. Company results are
used as the measures of progress examined in the category of business results. 21
Finally, the goal of the quality process is improved value to the customer.
Each of these seven categories represents a construct that is measured by
the examination items under it. Each examination item measures either the
approach and deployment of quality practices (namely the tools and concepts
that are used to manage the quality) or the results of these quality management
practices. The categories of leadership, information and analysis, strategic
quality planning, human resources development and management, and
management of process quality evaluate the quality management practices.
The category of quality and operational results measures internal business
results. The customer focus and satisfaction category contains four
examination items that measure the practices the organization uses to improve
its commitment to and relationship with its customers and two examination
items that measure the customer satisfaction results. In this research we are
interested in identifying the strength of the relationship between quality
management practices and results from these practices. We, therefore, split this
category into two constructs ± one that evaluates the practices and one that
evaluates the results. Henceforth, the MBNQA framework is presented as an
eight construct model. These eight constructs, as well as the examination items
in each construct, are listed in Table I. The framework connecting and
integrating the constructs is presented in Figure 1.
The MBNQA framework theorizes the role that leadership, the quality
management infrastructure, and the quality management practices have on the
business and marketplace outcomes. These relationships are represented in
Figure 1.
The MBNQA
quality-performance
model
IJQRM Figure 1 by the arrows leading to and from the eight constructs. The
18,1 relationships indicated in Figure 1 are derived from the Baldrige framework
and the links between the categories and examination items as described in the
notes under each examination item (NIST, 1993). Of particular interest to
researchers and practitioners is the strength of the relationships between the
quality management constructs in the MBNQA criteria. Previous research on
22 the validation of the Baldrige criteria points to the fact that the constructs
identified by the categories of leadership, information management, strategic
quality planning, human resources, and product and process management are
correlated with each other (Pannirselvam et al., 1998). These correlations
indicate that quality improvement efforts concentrated on only one or a few of

these categories would be less effective. Managers will need to plan and execute
a concerted effort to improve several areas of organizational quality in order to
achieve world-class quality. However, does one of these categories affect a
firm's performance more than the other categories? Further, does each quality
management construct influence firm performance directly or is the influence
indirect through the impact on other constructs? In the process of validating the
MBNQA framework, this research also addresses the effect of the quality
management practices on company performance measures ± operational
results and customer satisfaction.
Hypotheses
The objective of this research is to test the quality-performance model as
presented by the Baldrige criteria. Figure 1 presents this model indicating the
relationships between the different quality management and performance
evaluation constructs. The exogenous (independent) factors in the model are
leadership and information management. The endogenous factors are strategic
quality planning, human resources management, product and process
management, customer focus and relationship management, business results,
and customer satisfaction results.
The hypotheses tested in this research can be broken down into three
subsets. These hypotheses are represented by the links provided in Figure 1.
H1: Hypotheses about quality management infrastructure.
H1a: The strength of the strategic quality planning process is directly
related to leadership and information management.
H1b: The effectiveness of an organization's human resources
management is directly related to leadership and information
management.
H2: Hypotheses about the core quality management processes.
H2a: Product and process management is directly related to strategic
quality planning, human resources management, and
information management. It is indirectly related to leadership
through the mediating effects of strategic quality planning and
human resources management.
H2b: Customer focus and relationship management is directly related A study of
to strategic quality planning, human resources management, and relationships
information management. It is indirectly related to leadership
through the mediating effects of strategic quality planning and
human resources management.
H3: Hypotheses about the quality-performance links. 23
H3a: Business results is directly related to product and process
management and customer focus and relationship management.
It is indirectly related to leadership, information management,
strategic quality planning, and human resources management
through the mediating effects of product and process

management and customer focus and relationship management.
H3b: Customer satisfaction is directly related to product and process
management, customer focus and relationship management, and
business results. It is indirectly related to leadership, information
management, strategic quality planning, and human resources
management through the mediating effects of product and
process management and customer relationship management.
Methodology
Data
The primary objective of this research is to study the relationships between the
Baldrige categories. However, since the data from the MBNQA award process
are confidential, an alternate source for suitable data had to be found. Since
many states have developed quality award programs patterned on the MBNQA
criteria, we decided to validate the criteria from a state quality award as a basis
for generalization of the results to the MBNQA criteria.
We evaluated several state quality awards to use as a surrogate for the
MBNQA criteria. These assessments were based on:
. the similarity of the purpose, structure, and standards for the award;
. the similarity of the evaluation criteria;
. the similarity of the evaluation process;
. the similarity of selection and training of the examiners, senior
examiners, and judges; and
. the similarity of potential applicants for the award.
The Arizona Governor's Quality Award (AGQA) was found to be sufficiently
close to the MBNQA based on the above criteria. The committee that crafted
the AGQA consisted of experienced MBNQA examiners. With permission, the
MBNQA criteria, model, and process were imported to form the guidelines for
the AGQA (Sowards, 1993). The reader is referred to a more detailed
description of the similarities between the MBNQA and AGQA in
Pannirselvam et al. (1998).
IJQRM The data from the 1993 AGQA process were used to test the hypotheses in
18,1 this research. The sample used in this research consisted of the 69
organizations that applied to the AGQA in 1993. The applicants to the AGQA
submitted an application explaining how the organization addresses each of
the 28 examination items. This application was used to evaluate the
organizations on the 28 examination items. The applicants were evaluated by a
24 group of examiners who were trained in the AGQA criteria and evaluation
process.
In the first stage of the evaluation process, individual examiners assess these
applications and score them on a scale of 0 to 100 (in ten-point increments) for
each of the 28 examination items listed in Table I. These individual scores that
the applicants received in the first stage of the evaluation process were used in
this research to test the MBNQA model's quality-performance link. There were
51 examiners. Three or four examiners evaluated each of the 69 applicants,
resulting in 272 individual examiner responses. Analysis of the variability in
examiner scoring indicated no significant examiner bias.
The individual examiner responses were used to test the hypotheses listed in
the previous section. The examiners for the AGQA award are trained to apply
the MBNQA criteria to information in the application for the award. As a result
of this training, the examiners provide objective ratings for the organization
along each examination item. As a result, the examiner ratings are good
surrogates for the self-reported ratings that are typically used in this kind of
research. In fact, the objectivity of the examiners may lead to a less biased data
set than self-reported ratings.
Of the 69 applicants, 26 were small businesses (less than 100 employees), 26
were medium-size businesses (between 100 and 500 employees), and 17 were
large businesses (greater than 500 employees). The number of employees
ranged from seven to over 6,000. Some of the applicants were divisions of
national or multinational corporations. The sample used in this research
included 19 manufacturing businesses, 36 service businesses, four healthcare
organizations, four educational institutions, and six government agencies. The
details of the applications from the individual organizations are confidential so
we cannot identify the specific similarities and differences in quality practices
used among the applicants. However, we can state that the different types of
businesses used very similar quality management practices and outcome
measures. Manufacturing organizations are becoming more flexible and
customer responsive, while service firms are becoming more focused on quality
process and output. As a result, the distinctions between the two sectors blur
with respect to quality management issues. Both focus more today on customer
satisfaction with a product, a service, or a combination of the two. Often, the
approaches employed, the specific tools used, and measurement systems for
quality are quite similar in the two sectors. In the government and not-for-profit
sectors, a gradual but discernible shift is moving toward a ``business approach''.
These organizations are beginning to think of their constituents and clients as
``customers'' and are focusing on process improvement strategies to enhance
productivity and quality performance. Comments from AGQA examiners A study of
indicated little or no difficulty in applying the criteria to these types of relationships
organizations. In addition, analysis of this data set showed that there was no
significant difference in ratings between different organization types
(Pannirselvam, 1997). Based on the similarities and the applicability of the
criteria across different types of organizations, we decided to analyze their data
together. 25
Analysis
Path analysis was used to estimate the strength of the relationship between the
eight constructs. Path analysis is a multivariate analysis method to examine

sets of relationships represented by linear causal models (Li, 1975; JoÈreskoj and
SoÈrbom, 1993). A path analytic model decomposes the observed correlations or
covariances among the scale variables to estimate the path coefficients in the
model. The Baldrige framework represents the causal relationships between
the quality management practices and organization performance. Therefore,
this methodology is suitable for measuring such a relationship.
A covariance structure model was analyzed using LISREL 8. A covariance
structure model merges the factor analytic and path analytic models and
simultaneously estimates the latent variables from the observed variables and
the strength of the relationships between the latent variables (Long, 1983). In
this research we attempt to confirm an existing model. We, therefore, used
confirmatory analysis to analyze the covariance model. LISREL 8 was used to
estimate the factor loadings for each item in the eight constructs, the strength
of the path coefficients and the adequacy of the whole model. Since the
objective of this research is to confirm the validity of the MBNQA framework,
the only model tested was the model represented by the framework presented
in Figure 1.
Results
Confirmatory analysis of the covariance structure, using LISREL 8, provided
estimates for the factor analytic and path analytic models. The overall fit of the
model can be tested by using the ML 2. For a good fit, the 2 value should be
low and non-significant. The 2 value for the model is 738.98, which was
significant (p = 0.0). This would suggest that the model is not confirmed by the
sample data. The significance levels of 2, however, are sensitive to sample size
and multivariate normality. Therefore, other indicators of fit, such as 2/df,
Bentler's (1990) comparative fit index (CFI), JoÈreskoj and SoÈrbom (1993)
goodness of fit index (GFI), Bollen's (1989) incremental fit index (IFI), and the
Tucker and Lewis (1973) fit index (NNFI), that correct for these factors should
also be used to assess the adequacy of the model (JoÈreskoj and SoÈrbom, 1993).
The 2/df is 2.21, which is less than the ratio of five suggested in the literature
(Marsch and Hocevar, 1985). All the measures of goodness of fit for the model
tested are above the desired 0.9 level, except for one. The CFI, IFI, NNFI and
IJQRM GFI are 0.92, 0.92, 0.91, and 0.84, respectively. These fit indices indicate an
18,1 acceptable fit between the model and data (Bollen, 1989).
These factor loadings estimated using LISREL 8 were used to calculate the
reliability of each construct. The factor loadings and reliability estimates are
presented in Table I. The internal consistency method was used to test the
reliability of the research constructs. As suggested by Nunnally (1967), the
26 coefficient alpha developed by Cronbach (1951) was used to test for internal
consistency. A Cronbach alpha value of 0.70 is considered the criterion for
internal consistency for established scales (Nunnally, 1967). As can be seen
from the alpha values in Table I, the internal consistency of the seven
categories is between 0.77 and 0.89, well above the minimum recommended
value of 0.70.
Two constructs (strategic quality planning and customer satisfaction) used
in this research have only two examination items. It is generally suggested that
more than two items should be used to ensure the reliability of the construct.
Although the Cronbach alpha values for these constructs were acceptable, we
decided that a more conservative measure for reliability should be calculated to
confirm that these constructs were reliable. Therefore, Fornell and Larcker's
(1981) vc, which measures the amount of variance captured by the category in
relation to the amount of variance due to measurement error, was also
calculated for each construct. The mean average variance explained by each
factor, vc, are all greater than 50 percent indicating that the variance captured
by each construct is greater than the variance due to measurement error
(Fornell and Larcker, 1981). The reliability of the eight constructs was thus
established through the model estimates of the Cronbach's (1951) alpha and
Fornell and Larcker's (1981) vc.
The standardized path coefficients for the set of causal relationships are
presented in Figure 2. As in the case of regression analysis, path analysis uses
the error term to determine the effects of variables not captured in the path
diagram. The t-values associated with each path coefficient facilitate the
determination of the statistical significance of the coefficient. The R2 value for
each dependent variable indicates the percentage of variation in the construct
explained by the variables included in the path. For example, the leadership
construct and the information management construct explained about 37
percent of the variance in the strategic quality planning construct. In addition,
the t-values indicate that while information management has a significant
impact on strategic quality planning, leadership does not. The R2 value for each
equation tested and the significance of the path coefficients are also indicated in
Figure 2.
Figure 2 shows the direct effect of one construct on another by the arrow
joining the two constructs. Indirect effects of constructs can be determined by
following a series of forward-pointing arrows. For example, while the model
does not include a direct effect of leadership on product and process
management, we can determine any indirect effect it might have by examining
the direct effects of leadership on strategic quality planning and human
A study of
relationships
27
Figure 2.
The MBNQA
quality-performance
model
resources management and the direct effects of these two constructs on product
and process management.
The indirect effect of leadership on product and process management can be
calculated as:
direct effect of leadership on strategic quality planning * direct effect of
strategic quality planning on product and process management
+ direct effect of leadership on human resources management *direct
effect of human resources management on product and process
management
= 0.182*0.247 + 0.358*0.688
= 0.291.
The indirect effects of the other constructs were calculated using the same
logic. Table II presents the indirect effects thus calculated along with the direct
and total effects. The total effect of a construct is the sum of its direct and
indirect effects.
H1a was partially supported by the results. Information management has a
significant direct effect on strategic quality planning. However, the effect of
leadership on strategic quality planning was not significant at the 0.05 alpha
level. H1b was supported by the significant path coefficients. Both leadership
IJQRM Direct Indirect Total
18,1 Hypothesis Path effect effect effect
1a Leadership ± strategic quality planning 0.182 0.182

Information management ± strategic quality
planning 0.733*** 0.733***
28 1b Leadership ± human resources management 0.358** 0.358**
Information management ± human resources
management 0.582** 0.582**
*
2a Leadership ± product and process management 0.291 0.291*
Information management product and process
management 0.004 0.582** 0.586**

Strategic quality planning ± roduct and process
management 0.247 0.247
Human resources management ± product and
process management 0.688*** 0.688***
2b Leadership ± customer focus 0.259* 0.259*
Information management ± customer focus 0.126 0.470** 0.596**
Strategic quality planning ± customer focus 0.111 0.111
Human resources management ± customer focus 0.668*** 0.668***
3a Leadership ± business results 0.235* 0.235*
Information management ± business results 0.520** 0.520**
Strategic quality planning ± business results 0.130 0.130
Human resources management ± business results 0.591** 0.591**
Product and process management ± business results 0.238* 0.238*
Customer focus ± business results 0.640*** 0.640***
3b Leadership ± customer satisfaction 0.206* 0.206*
Information management ± customer satisfaction 0.483** 0.483**
Strategic quality planning ± customer satisfaction 0.075 0.075
Human resources management ± customer
satisfaction 0.538** 0.538**
Product and process management ± customer
satisfaction ±0.200 0.092 ±0.108
Customer focus ± customer satisfaction 0.669*** 0.248* 0.917***
Table II. Business results ± customer satisfaction 0.388** 0.388**
Direct and indirect
effects Notes: * p < 0.05; **
p < 0.01; ***
p < 0.005
and information management have statistically significant direct effects on

human resources management. Test of H2a and H2b yielded similar but mixed
results. Human resources management had a significant direct effect on
product and process management and customer focus and relationship
management. The effect of strategic quality planning on product and process
management and customer focus and relationship management, however, was
not significant at the 0.05 alpha level. Although information management did
not have a significant direct effect on product and process management and
customer focus and relationship management, it did have a significant indirect
effect on both constructs primarily through human resources management.
Leadership had a significant indirect effect on product and process A study of
management and customer focus and relationship management primarily relationships
through its effect on human resources management.
The results for the two hypotheses (H3a and H3b) about the quality-
performance link were very similar. Customer focus and relationship
management had a significant direct effect on both business results and
customer satisfaction. The indirect effects of information management and 29
human resources management were also significant for both performance
constructs at the 0.01 alpha level. The indirect effect of leadership on the two
constructs was significant at the 0.05 level. The indirect effect of strategic
quality planning on each performance construct was not significant at the 0.05
level. Product and process management did not have a significant effect on
customer satisfaction. However, its effect on business results was significant at
the 0.05 level. Finally, business results had a significant direct effect on
customer satisfaction.
Discussion and conclusions

An organization's quality management procedures and performance, internally
and in the market, are greatly dependent on the infrastructure built to support
its quality management process. The MBNQA criteria represent leadership as
the driving force that influences all other elements of quality management. The
results from this research partially validate this role of leadership emphasized
by the MBNQA criteria. The results from this research indicate that leadership
significantly directly or indirectly affects all of the systems constructs, except
for strategic quality planning and information management, which was not
tested in the model. These results are similar to the results from previous
research which test the quality-performance relationships. Flynn et al. (1995)
concluded that top management support has a significant effect on human
resources management. Adam et al. (1997) show through their research that
leadership has a significant impact on training and product quality. Winn and
Cameron's (1998) model, based on exploratory factor analysis, also revealed
that the main effect of leadership was on the system dimensions, not on the
outcome dimensions.
The MBNQA criteria also emphasize the need for good human resource
practices and employee involvement in order for an organization to make
substantial progress in its quest for quality. Human resources management is
clearly an important part of an organization's quality management process.
Management of human resources determines the effectiveness of the
organization's product and process management and customer focus and
relationship management efforts. Through these two constructs, human
resources management has a significant indirect impact on the organization's
performance. The results from this research provide ample evidence of the
important role that human resources management plays in improving an
organization's quality focus. The results from this research are similar to the
findings of Flynn et al. (1995) and Adam et al. (1997).
IJQRM The MBNQA criteria emphasize that access to and use of company and
18,1 industry information (through benchmarking) is essential to setting quality
goals and allocating resources to achieve these goals. Information management
is essential to effective planning and execution of the plans. This research
provides strong support for this theory through the significant relationships
between information management and the other infrastructure, core
30 management practices, and performance constructs.
The greatest determinant of organization performance, in the market and
internally, is customer focus and relationship management. This construct
examines the actions an organization takes to understand and anticipate its
customers' needs and maintain a good relationship with its existing customer
base. The results from this analysis underscore the value of customer focus and
effective customer relationship management. This construct had the most
significant effect on both business results and customer satisfaction results.
This focus on customers is also emphasized throughout the MBNQA criteria in
its planning and execution of the other quality management constructs.
Winn and Cameron (1998) found that their research did not validate the
Baldrige framework. As a result, they performed modifications of the
framework to derive a model that was statistically significant. It is interesting
that our analysis has provided evidence to confirm the validity of the Baldrige
criteria. The differences in the results can be partially explained by the
differences in the sample studied and the process used to collect the data. Winn
and Cameron used the self-reported rankings from a survey conducted at a
university in the mid-western USA. This research is based on data obtained
from an actual application process to a state quality award. As a result, the
data used in this study is a third-party evaluation of self-reported data and
information. Also, the training that the examiners undergo improves their
objectivity in evaluating the organizations. Therefore, one could argue that
such data might be more objective than self-reported scale item data.
This research used data from a state quality award (AGQA) to test the
strength of the relationships between the MBNQA categories. Since this study
employed a limited sample, replications of this analysis, using samples from
other state award programs or surveys based on the MBNQA criteria, are
needed to confirm our conclusions. One must be cautious in drawing general
conclusions from the results of this research. In making generalizations, one
must consider the extent to which the AGQA criteria and process parallel the
MBNQA criteria and the extent to which the sample data reflect the population
of organizations to which the MBNQA model may be applied. Future research
on the MBNQA criteria should seek more varied data sources, such as other
state and local award data, to confirm the results of this study.
This study was based on the MBNQA criteria and AGQA data for 1993.
Since then, some changes have been made to the criteria, the most significant of
which were in the 1997 MBNQA criteria (Bemowski, 1996). Indeed, the
MBNQA model and criteria are described as a living program, changing and
developing with our advancements in knowledge and improvements in
industry practice. The examination items and some of the categories have been A study of
rearranged and renumbered to provide a stronger customer and organizational relationships
focus and a more clear representation of the relationship between the different
categories. However, as Bemowski (1996) points out, even as the criteria evolve,
the criteria's underlying theme of a systematic approach to quality remains
unchanged. The 1993 criteria still represent a possible model of organizational
quality that is used by organizations in developing their business and quality 31
strategy and practices. Therefore, validating the model provides useful
information to managers in deciding where they should focus their efforts in
their journey toward becoming a quality organization.
We do, however, need to address one major change in the MBNQA. Since the
1997 criteria, the MBNQA model assumes that the customer focus of an
organization not only influences the outcome measures, but also influences the
infrastructure constructs of human resources management and product and
process management. This effect has not been tested in this research. The
results from this study indicate that customer focus and relationship
management has a very significant direct effect on business results and
customer satisfaction. Future research on the MBNQA criteria must focus on
validating the important role of customer focus on the quality management
practices of an organization.
In this study, relationships between the quality management constructs and
between quality management and performance were tested at the category
level. More detailed analysis at the item level will provide better insights about
how each of the items is related to specific items in other categories. Evans
suggests that such research is essential for a clear understanding of how the
various quality management factors affect each other and business
performance (Evans, 1997). This study is based on cross-sectional data. It
would be interesting to evaluate the impact of quality management practices in
general, and the MBNQA criteria and award process in particular, on the
aggregate level of quality and performance among businesses in a particular
region or industry. Longitudinal analysis of award data at various local,
regional, and national levels should be used in future research to address this
issue.
The MBNQA criteria take a multifaceted view of quality management and
encourage organizations to broaden their view of quality management from a
product quality focus to an organizational focus. In doing this, the criteria
emphasize the organizational infrastructure that is essential to maintain and
improve core quality improvement processes. This research shows that the
criteria and framework provide a model that reflects the relationships between
the various aspects of management that determine an organization's
performance. An organization that focuses on just its primary quality
management procedures, such as quality control techniques and product
design process, is unlikely to be successful. A strong focus on customers and
employees, in addition to effective leadership and information management are
clearly shown to be essential for organization success.
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Relationship between Baldrige categories study using path analysis

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Hofstra University, Hempstead, New York, USA

Dow et al. (1999) conducted a survey consisting of a large, random sample of

The MBNQA quality model

Research construct and loadings

Strategic quality planning

Research construct and loadings

indicate that quality improvement efforts concentrated on only one or a few of

through the mediating effects of product and process

eight constructs. Path analysis is a multivariate analysis method to examine

1a Leadership ± strategic quality planning 0.182 0.182

management 0.004 0.582 0.586

and information management have statistically significant direct effects on

Discussion and conclusions

Vol. 3 No. 26.

International Journal of Production Research 51:18, 5625-5643. [Crossref]

Quality Management & Business Excellence 19:11, 1173-1188. [Crossref]

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