Total Quality Management & Business Excellence

ISSN: 1478-3363 (Print) 1478-3371 (Online) Journal homepage: http://www.tandfonline.com/loi/ctqm20

An integrated structural model of QMPs, QMS and

firm’s performance for competitive positioning in
MSMEs

Manjeet Kharub & Rajiv Sharma

To cite this article: Manjeet Kharub & Rajiv Sharma (2018): An integrated structural model
of QMPs, QMS and firm’s performance for competitive positioning in MSMEs, Total Quality
Management & Business Excellence, DOI: 10.1080/14783363.2018.1427500

To link to this article: https://doi.org/10.1080/14783363.2018.1427500

Published online: 22 Jan 2018.

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Total Quality Management, 2018
https://doi.org/10.1080/14783363.2018.1427500

An integrated structural model of QMPs, QMS and firm’s

performance for competitive positioning in MSMEs
Manjeet Kharuba* and Rajiv Sharmab
a
Department of Mechanical Engineering, CVR College of Engineering, Vastunagar, Mangalpalli
(V), Ibrahimpatan (M), Hyderabad, PIN- 501510,(T.S), India; bDepartment of Mechanical
Engineering, National Institute of Technology, Hamirpur, Himachal Pradesh 17705, India

The study investigates the relationship between quality management practices (QMPs),
quality management system (QMS), firm performance and competitive positioning in
the context of micro, small and medium enterprises (MSMEs). We build a structural
model showing how QMS mediate the relationship between QMPs and firm
performance and further integrate the model to investigate the effect of firm
performance on competitive positioning. We found a significant direct relation (0.15
< β < 0.45) between strategic, tactical and operational QMPs and firm performance
and observed that their relationship is stronger (0.64 < β < 0.69) in the presence of
QMS. Results further imply that although QMS does not directly influence
competitive positioning (β = 0.05, p > 0.05), it does so indirectly by improving firm
performance (0.43 < β < 0.55). Thus, implementing QMPs, along with obtaining QMS
certification provide most privileges concerning firm performance. Further, emphasis
on cost, quality, flexibility and delivery to delight customers seems to provide a
medium by which MSMEs can sustain competitive advantage.
Keywords: quality management practices; quality management system; structural
educational modeling (SEM) competitive positioning; MSMEs

1. Introduction
Micro, small and medium enterprises (MSMEs) have been considered as the lifeblood of
modern economies and regarded as one of the leading driving force for economic develop-
ment in many countries (Chong, Chin, & Loh, 2013; Hua, 2007; Sun & Cheng, 2002). The
success of MSMEs has shown a direct positive impact on the economic growth and devel-
opment in both developing as well as developed countries (Bhuiyan & Alam, 2004; Demir-
bag, Tatoglu, Tekinkus, & Zaim, 2006; Ogunyomi & Bruning, 2016). It is recommended
that more than 95% of the market around the World is from MSMEs. MSMEs are ubiqui-
tous organizations in India they contribute almost 40% of gross industrial value, 45% of the
export and are the second largest employer of the human resources (Kharub & Sharma,
2015). Thus, MSMEs are necessary for creating perfection, technical changes and inno-
vation, scarcity reduction, revenue generation and entrepreneurs and job creation (Boso,
Cadogan, & Story, 2013). Despite the critical role played by MSMEs in India, they are
weak and constrained by lack of tangible resources, even many of them shut down
within first five years of their operation (Singh, Garg, & Deshmukh, 2008). Following
poor financial conditions, their relationship with the large-scale enterprise is reliant
mainly on the quality of their products (Cowling, Liu, & Ledger, 2012; Gunasekaran,
Rai, & Griffin, 2011).

*Corresponding author. Email: manjeetkharub@cvr.ac.in

© 2018 Informa UK Limited, trading as Taylor & Francis Group

2 M. Kharub and R.K. Sharma

In an attempt to gain competitive positioning in rapid globalising marketplace numer-

ous approaches have been pursued by various practitioners, the most notable and rec-
ommended approach is the concept of quality management (QM) (Kaynak, 2003;
Kyobe, 2004). QM has been regarded as an approach of management made up of a ‘set
of mutually guiding reinforced principles’ supported by a set of practices and techniques,
representing the foundation of a continuously improving organisation (Kim & Cho,
2003; Kumar, Kumar, de Grosbois, & Choisne, 2009). QM orientation shows the firm’s
propensity to improvement in term of product/process design, supply chain, inventory
control, the productivity, consequently, increased profitability and high customer satisfac-
tion (Lopez, Mendoza, & Masini, 2013; Sadikoglu & Zehir, 2010). Demirbag et al. (2006)
and Fuentes, Llorens-Montes, and Albacete-Saez (2007) viewed quality as a strategy con-
sists of qualitative and quantitative methods, showing firm’s aggressive behaviour to gain a
competitive advantage over rival companies.
The aim of achieving competitive advantage via implementing QM practices (QMPs) is
linked to the development of other competencies, which also make a firm objective oriented
(Kyobe, 2004). Having ISO-9000 certification and its guidelines play a significant role in
supporting this goal (Rusjan & Alic, 2010). It promises the record of every aspect of pro-
duction method, and operational procedure and emphasises that every managerial activity
need be documented (Sun & Cheng, 2002; Withers & Ebrahimpour, 2000). It is assumed
that the programmes like ISO-9000 designed to reduce process variation and eliminate
waste (Terziovski, Power, & Sohal, 2003). The ISO-9000 certification yields that the sup-
plying organisation (MSMEs) has reached a basic level of quality assurance and enthusias-
tic to enter the global market (Terziovski & Guerrero, 2014).
The above discussion clears that having ISO-9000 certificates evident firm’s efforts
towards the quality system, but still its role in the competitiveness is not clear. Also,
some scholars detected opposite results, for instance, Prajogo and Sohal (2006) imply
that implementing QMPs and QM system (QMS) could hinder organisations from being
innovative or may including bureaucracy in the system. So, it can be concluded that the
relationship between QMPs, QMS, firm performance and their impact on firm’s competitive
positioning is complicated and need further investigation. Furthermore, it has been
observed that most of the studies have been accomplished in Europe, USA & UK with
less number of studies on Asian firms, particularly in developing economies. Thus, to
arrive at consistency in responses in this study authors have collected data from MSMEs
working in a developing country and developed an integrated structural model which
addressed the following research questions:
RQ1 What are main constructs (latent variables) of QMPs and their constituting items?
RQ2 What is the relationship among latent variables of QMPs and firm performance?
RQ3 What is the effects of QMS certification (ISO-9000) on the relationship between latent
variables of QMPs and firm’s performance?
RQ4 What are the relationship between QMS certification, firm performance, and competitive
positioning?

2. Theoretical background
QM has become a ubiquitous management philosophy winning its entrance into most areas
of the current business community. At the practical level, many managers have used funda-
mentals of QM and come out with several success stories (Fotopoulos, Psomas, & Vouzas,
2010; Ooi, Cheah, Lin, & Teh, 2012; Prajogo & McDermott, 2005; Tari, Molina-Azorin, &
Castejon, 2007; Zu, Fredendall, & Douglas, 2008). Many international groups have
 Total Quality Management 3

installed QMPs as standard operations with an objective of improving overall competitive

position and sustainability (Arostegui, Sanchez, & Molina, 2015; Fuentes et al., 2007). A
pattern of common issues such as leadership quality, quality assurance, quality control, six-
sigma, customer focus, employee’s training and education, etc. has been observed in recent
studies as presented in Table 1.

2.1. ISO-9000 quality management system (QMS)

The industry experts divided the evaluation of QM into four different periods: inspection,
control, quality assurance, and strategic QM. The foundation of the third stage (quality
assurance) is built on a well-known and internationally recognised QMS, i.e. ISO-9000.
The standards concentrate on preventions rather than correction and store the system for
assuring the quality practices as a cycle of continuous improvement (Rahman, 2001). It
adds detail to the process and promotes formalisation in methods, which lead to improving
employee’s responsibilities, and commitments to quality (Heras-Saizarbitoria & Boiral,
2015). It develops an environment where workers understand themselves as an internal cus-
tomer and create pressure on suppliers to maintain supply chain and process innovation and
consequently, reduction in lead time (Childerhouse et al., 2013; Paik & Chang, 2014;
Rusjan & Alic, 2010). Prajogo and McDermott (2005) consider ISO-9000 certification
an excellent and first step of the organisation towards implementing QM practices. As a
marketing point of view, Terziovski and Guerrero (2014) observed that having ISO-9000
certification built confidence in customers that they will get the products with better quality.

3. Research framework and hypotheses

In summary, even the field of QM has been matured enough, and the importance of ISO-
9000 certification is understood well, but still, their relationship with firm performance and
competitiveness is required to be investigated. To this effect in this work, accordingly, an
empirical study has been designed to examine the relationship between QMPs, QMS, firm
performance and their association with competitive positioning. In controlling the direction
of the research investigation, a framework and three set of research hypotheses have been
developed. Figure 1 presents the proposed research model and hypotheses:

3.1. Quality management practices (QMP) and firm performance

The first set comprises of six research hypotheses, concerned with investigating the strength
of the connection between three latent variables (i.e. strategic, tactic and operational factors)
representing a broad range of QMPs and two indicators of firm performance (i.e. customer
satisfaction and operational performance).

3.1.1. Strategic factors

It involves the factors which help in creating goal, culture, values and system in an organ-
isation to improve the performance as well as customer satisfaction (Modrak & Dima,
2013). According to Arumugam, Ooi, and Fong (2008), no change is possible in any
aspect of firm or quality related issues without considering top management involvement.
Senior management plays a significant role in implementing quality, defining objectives,
execution of the plan, and ultimately involving employees in quality related activities
(Das, Paul, & Swierczek, 2008). The organisational culture created by top management
affects the attitude of staff members; different firms have a different culture which
Table 1. Summary of studies on the relationship between QM and firm’s performance.

4
Region, data gathering

M. Kharub and R.K. Sharma

techniques, sample size
Author Years QM constructs Performance parameters/[Mediators] and principal analysis Main findings
Kaynak 2003 Management leadership Financial and Marketing performance United state The finding of the study suggests that
Training Quality performance Questionnaire there is a positive association exist
Employee relation Inventory management performance 382 valid responses between the extent to which
Quality data reporting Path analysis company use quality practices and
Supplier QM firm performance. Further, it has
Process management been noted that management
Product management leadership is directly associated with
taking responsibilities, employee
training, sharing vision and goals,
product design, and supplier QM,
and indirectly related to quality data,
reporting and process management.
Taylor and 2003 Effect of ISO certification Implementation of TQM United Kingdom Results of the study found that small
Wright on TQM implementation Performance improvement Survey base study firms do not have a resource to
Size of firm Firm implementing sustain both ISO-9000 and TQM
Size of customer base quality practices that is why they choose former one
Time since TQM adoption 109 responses because of its tangible and
Understanding of TQM’s Empirical support for prospective nature. It is found that
purpose descriptive analysis length of time since firms practising
QM tools and techniques helps in its
successful implementations,
whereas only holding ISO certificate
having no association with
successful implementation of QM.
Tari and 2004 Leadership Customer satisfaction Alicante (Spain) Firm’s QM level and use of tools and
Sabater Quality planning Employee satisfaction ISO9000 certification techniques are positively related to
Employee management Impact on society Questionnaire/personal each other. Many companies when
Suppliers management Business results interviews with quality they begin first steps towards QM
Customer focus managers use few tools such as check sheets,
Process management flow charts, audits and graphics,
 Continuous improvement 106 firms further when they improve their QM
Learning Empirical level they tend to use other tools to a
great extent.
Bhuiyan and 2004 A case study of welding Organizations barriers to Canada The study provides descriptions of
Alam process: implementation of quality system: ISO9000 certification steps taken by firms before
Phase 1: quality system quality perception, lack of top Data collection and implement ISO-9000 certificates.
implementation plan management commitment, lack of informal conversation Further, the study concludes that
Phase 2: quality system resource and training, and with president, sale ISO standards may not apply to
implementation issues employee’s resistance to change manager, and technical small businesses. However, authors
persons suggest that company must invest in
Case study implementing quality not just to gain
certifications.
Narasimhan 2005 Quality expectations from Partnership or alliance programme United state Study results found that quality
and Nair suppliers Performance Members of American expectations from suppliers,
Information sharing and Supply proximity (mediator) product and inventory information sharing and trust
trust with suppliers control of purchasing between buyers and supplier have a
management (APICS) linear and positive effect on supply
Survey chain vicinity. Both quality
228 valid responses expectations and exchange of
Path analysis information are positively associated
with supply chain proximity.
Tari 2005 Customer focus Customer satisfaction Alicante (Spain) After extent review of the literature and
Process management Staff satisfaction ISO9000 descriptive statistics, this study

Total Quality Management

Leadership Quality performance Questionnaire/personal concluded that there is no unique
Supplier management Social impact interviews with quality model QM programme, it is a
Learning Employee satisfaction managers network of interdependent
Quality planning 106 firms components such as critical factors,
Continuous improvement Descriptive statistics practices, tools and techniques.
Employee management
Prajogo and 2006 Leadership TQM year Australian companies Study results found that:
Brown Strategic planning ISO9000 year Malcolm Baldrige (i) QM makes impact on practices and
Customer focus National Quality Award outcomes
Information and analysis (MBNQA) (ii) TQM programmes found having
People management Survey-based research/ impact on organisation culture and

(Continued)

5
Table 1. Continued.

6
Region, data gathering
techniques, sample size

M. Kharub and R.K. Sharma

Author Years QM constructs Performance parameters/[Mediators] and principal analysis Main findings
Process management managers product performance
Product quality 150 valid responses (iii) Length of years of ISO
Multiple regression certification does not have a
analysis (MRA) significant association with product
performance.
Prajogo and 2006 Differentiation Product innovation Australian companies Study results found that differentiation
Sohal Cost leadership Process innovation MBNQA and QM are significantly and
Leadership Survey-based research/ positively related to three firm
Strategy planning managers performances (i) innovation
Customer focus 150 valid responses performance (ii) product
Information and analysis Path analysis performance and (iii) process
People management performance, whereas cost
Process management leadership failed to produce similar
Product quality results.
Tari et al. 2007 Leadership Process management Alicante (Spain) The research recognised the direct,
Quality planning Continuous improvement ISO9000 certification indirect and total effect of multiple
Human resource Quality outcomes Questionnaire/personal input variables on quality outcomes.
management interviews with quality It has been noted that leadership,
Supplier management managers human resource management, and
Customer focus 106 firms continuous improvement have high
Quality tools and Path analysis and at p < 0.001 statistical
techniques significance with quality outcomes,
Learning supplier relationship (SR), customer
focus, use of quality tools and
techniques and process management
are moderately associated with p <
0.01 and learning found an indirect
relationship as p < 0.05.
Zu et al. 2008 TMC Quality performance United state The findings of the study suggest the
Customer relationship Business Performance Firms registered with synergy between seven traditional
SR American society of QMPs and Six-Sigma in improving
 Workforce management quality (ASQ) and quality performance. The study
Quality information Thomas register emphasises the importance of top
Product design Questionnaire survey management in implementing
Process management 226 valid responses quality practices and Six-Sigma in
Six-Sigma role structure Path analysis enhancing traditional human
Six-Sigma Focus on resource management practices such
metrics as planning, training, employee’s
recognition, etc.
Sadikoglu 2010 Leadership Innovation performance Turkey Study results found that QMPs have a
and Zehir Training Employee performance ISO9001:2000 significant and positive association
Employee management Firm performance certification with firm performances. It indicates
Information and analysis Questionnaire survey that companies that excel in one area
Supplier management 373 valid responses are likely to excel in other as well.
Process management Path analysis
Customer focus
Continuous improvement
Brkic et al. 2013 Factors for reviewing Financial performance The Republic of Serbia The study classifies quality tools and
current condition Employee performance ISO9000: certification techniques into a small number of
Factors for analysing Operational performance Questionnaire survey groups such as tools for reviewing
current condition Development performance 119 valid responses current conditions (decision
Factor for planning and Innovations Stepwise regression. making), tools for analysing current
control conditions (solving problems), and
tools used in production planning

Total Quality Management

and control (improvement). Further,
it has been empirically noted that
first group improves employee’s
moral, the second group has a
positive effect on customer
satisfaction, and the third group have
a high impact on capacity expansion
and development performance.
Saeidi et al. 2015 Legal Ethical Customer satisfaction Iran Study finds there is no direct
Economical Reputation Registered firms relationship between corporate
Discretionary Competitive advantage Questionnaire survey social responsibility (CSR) and firm

(Continued)

7
Table 1. Continued.

8
Region, data gathering
techniques, sample size

M. Kharub and R.K. Sharma

Author Years QM constructs Performance parameters/[Mediators] and principal analysis Main findings
205 responses performance, however, mediator
Path analysis influence firm performance
positively. According to the
findings, reputation, and competitive
advantage is consequences of
increased customer satisfaction.
Arostegui 2015 Flexible IT infrastructure IT competence Span Study results found that IT competence
et al. IT technical Knowledge SABI database can be evaluated thought (i)
IT managerial knowledge Questionnaire study flexibility infrastructure, (ii) IT
IT integration 230 responses knowledge at managerial level (iii)
Leadership Path analysis IT experience at the technical level
Strategic planning and (iv) integration of IT in the
Customer focus strategies of firms. The study
Information analysis showed the impact of IT competency
Human resource on QM through four parameters as
Process and supplier discussed above and concluded that
management the existence of IT skills in
enterprises has a direct relationship
with QM implantation.
Dubey et al. 2015 Leadership TQM India The study investigates the link between
Institutional pressure Environment performance Database from All Indian leadership, SR, TQM and
SR Rubber Association environmental performance in
(AIRA) sustainable supply chain network.
Questionnaire study Study results found a positive
174 valid responses statistical association between SR,
Path analysis TQM and environmental
performance. Further, the study
identified the effect of the
institutional pressure introducing as
a modifier.
2015 Six Sigma Customer satisfaction India The case study investigates the impact
Sunder and Case study approach
Antony DMAIC methodology
Onkelinx 2016 Employee human capital
Sunder 2016 Lean Six Sigma (LSS)
Action research approach
DMAIC methodology
. First, call resolution %
. Net promotor score
. Voice of the customer
. Voice of the process
Export intensity (Internationalisation
strategy)
Customer satisfaction
Key performance indicators (KPI)
Banking call centre
Questionnaire (Kano
model)
28 bank’s stakeholders
Belgium The role of firm-level human capital in
Manufacturing SMEs
Secondary data
5800 SMEs
Descriptive statistics and
correlations
Retail banking industry Study results found that
of Six Sigma on Banking’s call
centre. Study results observed multi-
fold benefits of Six Sigma
implementation in call centres
including (i) creating quality DNA
(ii) building ideation mind-set (iii)
promoting process thinking and data
orientation. Furthermore, the
successful completion of Six-Sigma
based project shows the saving equal
to the worth of $0.27 million.
the internationalisation of SMEs has
been explored. Study results found
that SMEs are following the gradual
path towards internationalisation
and investment in human capital is
positively related to it. The author
suggests that SMEs need to follow
the strategy of ‘learning by doing’ to
attain individual expertise and skill.
implementation of LSS has a
Total Quality Management
positive impact on both the frontline
workers and the top management. It
is evident that changing speedups
means with upgraded governance
promotes the organisation changes.
As an example, the project brought
in saves worth INR 1.6 million,
hence study recommended the
implementation of LSS in banking
operations.
9
10 M. Kharub and R.K. Sharma

Quality Firm
Management performance
Practices (QMP) Indicators

H2a H1a
Strategic
Factors Customer
H1b satisfaction
H1c
H3b Competitive
Quality Positioning
Management Tactical
Factors H3c
System H1d
(QMS)
Operational
H1e Performance

Operational
Factors H1f
H2b
H3a

Figure 1. Theoretical model of the relationship between QM practices and firm performance.

governs its performance as well as a system of quality implementation (Onkelinx, 2016).

Since the method of QM has been referred as a never-ending process it continuously devel-
ops, the top management facilitates quality leaders via allocation of resources and required
facilities to training, hence, support the continuous improvement. Moreover, in the modern
extremely aggressive marketplace, it is essential that top management create and maintain a
friendly relationship with customers to obtained quick and first-hand information regarding
product’s features and quality needed (Kharub & Sharma, 2015; Taylor & Taylor, 2014).
So, the strategic factors comprise of issues like the role of top management, organisational
culture, continuous improvement, and quality assurance, etc. Accordingly, the literature
leads to the following hypotheses:
H1a: There is a positive and significant relationship between strategic factors and customer
satisfaction.
H1b: There is a positive and significant relationship between strategic factors and operational
performance.

3.1.2. Tactical factors

Implementing QM is the result of continuous improvement in all aspects of the firm (Tari,
2005). It requires careful planning, employee dedication with management vision to make it
possible (Talib & Rahman, 2010). Previous research shows that involvement of employees
in various activities such as planning, decision-making, and problem-solving is an indi-
cation of quality implementation (Narasimhan & Nair, 2005; Prajogo & Brown, 2006).
Employee’s participation in actual quality practices facilitates them to use quality tools
and techniques for data gathering and analysing which improves their morale. Increased
moral motivate them to learn new things, and implementation of that enhance their
career potential (Dubey, Gunasekaran, & Samar, 2015; Fotopoulos et al., 2010). According
to Kumar, Garg, and Garg (2011), QM develops committed and competent employees that
further help them to improve their leadership and other management skills. Further, the
 Total Quality Management 11

researchers like Martinez-Costa and Jimenez-Jimenez (2009); Sadikoglu and Zehir (2010)
emphasised on the value of proper reward and recognition systems and their awareness
among employees. They observed that the knowledge of quality awards and prior certifica-
tion of standards like ISO-9000 make a significant difference in employee’s beliefs and
creates a quality supportive environment (Kumar et al., 2009). Overall, the mechanism
of quality implementation creates an environment of coordination that strengthens the
relationship with the internal and external customers (Talib, Rahman, & Qureshi, 2013).
Thus, based upon above discussion the tactical factors consist of issues like employee invol-
vement, competitive spirit, their knowledge regarding quality awards and system, infor-
mation and analysis, and communication systems, etc. Accordingly, the next hypotheses
are proposed as follows:
H1c: There is a positive and significant relationship between tactical factors and customer
satisfaction.
H1d: There is a positive and significant relationship between tactical factors and operational
performance.

3.1.3. Operational factors

It consists of dimensions which have the direct effect on the product’s quality and perform-
ance. As per Kumar et al. (2009) process design good or bad have a direct impact on quality
as well as the performance of the product, a fool-proof design of equipment, on the other
hand, enhance productivity and reduces accidents. The design must meet the need and
expectations of customers, so knowledge regarding customers (internal as well as external)
helps to improve overall performance. Use of quality tools such as flow diagrams, check
sheets, control charts, and internal audit, etc., and techniques such as Six-Sigma, JIT and
ERP, QFD, etc. have proved their importance in actual practices (Zu et al., 2008). So,
the operational factors consist of issues such as product and process design, customer
focus, actual knowledge and use of quality tools and techniques, etc. Therefore, the next
hypotheses will attempt to find the relationship as follows:
H1e: There is a positive and significant relationship between operational factors and customer
satisfaction.
H1f: There is a positive and significant relationship between operational factors and operational
performance.

3.2. QMPs, QMS and firm performance

The second set of research hypotheses shows the mediating effects of QMS (ISO-9000) on
the relationship between QMPs and firm performance. The process of achieving a quality
certification influences every phase of an organisation (Brkic, Djurdjevic, Dondur, Klarin,
& Tomic, 2013; Terziovski et al., 2003). Primarily it designs and implements a documen-
tation system in an organisation, which guides to record responsibilities, process and pro-
cedures to achieve the goal of continuous improvement. The two wonderful benefits have
been well discussed in the literature. First, its emphasis on meeting the customer require-
ments help in instilling confidence in the organisation and second, it secures agreement
of coordination and preparation of products and services in an optimum cost and
resource-efficient way (Heras-Saizarbitoria & Boiral, 2015). So based on the literature,
we assume that when these three latent variables (i.e. strategic, tactic and operational) of
QMPs align with QMS make significant differences in firm performance. So, the next set
of hypotheses is proposed as follows:
12 M. Kharub and R.K. Sharma

H2a: QMS mediate the relationship between QMPs and customer satisfaction.
H2b: QMS mediate the relationship between QMPs and operational performance.

3.3. QMS, firm performance and competitive positioning

The third set of research hypotheses shows the relationship between QMS and competitive
positioning and the role of firm’s performance. The quality standards allow a firm to assure
their customers with providing consistent quality of products and enable them to differen-
tiate from other MEMEs who have not attained such certificates. It permits them to bargain
more efficiently and realise significant higher prices for a particular product (Singh et al.,
2008). The maximum number of MSMEs in the region are the vendors of large firms, in
the current competitive market, ISO certification play a vital role in getting project and
association with large companies (Hilmersson, 2014; Terziovski & Guerrero, 2014).
Working on QMS guidelines can reduce manufacturing lead-time, the amount of material
rejection and energy spent on rework which consequently helps in improving flexibility,
delivery times and unit cost effectiveness. The subsequent improvement in operational per-
formance may diminish the line between the order winner and qualifier and awards a com-
petitive edge. Therefore, the following hypotheses are being proposed:
H3a: There is a direct relationship exist between QMS and competitive positioning.
H3b: Customer satisfaction mediates the relationship between QMS and competitive position-
ing of firms.
H3c: Operational performance mediates the relationship between QMS and competitive posi-
tioning of firms.

4. Research design
This section guides the researchers about the steps taken to accomplish the objectives of this
study. It consists of the procedure of constructing the measuring instrument, determination
of sample size, survey administration, respondent profile, and test for data adequacy and
techniques used for analysis.

4.1. Construction of measuring instrument

The work provided by Onkelinx (2016); Ooi et al. (2012); Shin, Lee, Kim, and Rhim
(2015); Talib et al. (2013); Terziovski and Guerrero (2014), formed the basis for the con-
struction of instrument and measures used in the study. The measurement of items related to
QMPs, QMS and competitive advantage, however, required a more in-depth examination.
The questionnaire was consists of two sections. Section A includes general information
about the organisation and respondent’s profile. It also determines the degree to which
respondent is aware of quality practices and their effects on completive positioning.
Section B consisted of three parts, where respondents were asked to evaluate measures
by circling only one number on a five-point Likert scale anchored at 1 = not important
and 5 = critically important. Part A of this section is intended to measure the extent to
which the organisation is using the QMPs. Part B measured the respondent’s opinion on
the attributes representing competitive positioning. Similarly, Part C presented the role of
QMS and firm performance measures in competitive positioning. Based on the five-point
Likert scale, part C evaluates the degree to which having ISO-9000 certification impact
on firm’s performance. The entire section B comprised of 33 items.
 Total Quality Management 13

As suggested by Nanda, Gupta, Kharub, and Singh (2013), a complete questionnaire

was pilot tested for the validity. For its betterment, three academics and two industrial
experts gave their valuable suggestions. Input from experts was used to modify research
questionnaire, and the pilot study showed that it needed few minor changes in wording
and elimination of three items that were not relevant to MSMEs. After questionnaire
design the next step was, to determine appropriate sample size.

4.2. Sample size determination and respondent’s profile

The sampling procedure and respondents profile are presented in Table 2. The data for this
study was obtained from a field survey of the firms situated in the state of Himachal Pradesh
(H.P), India. For this purpose, MSMEs operating in the mechanical, electrical and elec-
tronics, automobile, food and textile manufacturing units were selected. According to
Cochran formula (1977), the sample size was found to be 381 units. Data collection is
carried out in two phases, in phase I, we mailed questionnaire to all units and sent
postage-paid with cover letter and self-addressed envelope. When we did not receive a suf-
ficient number of responses, we decided to conduct personal interviews in phase II. The first
phase (email and postal) contributed 94 responses whereas the second phase added 156
useful replies. Although we plan to access the whole sample population (n = 381), only
250 responds were returned, a 65.6% response rate.
We preferred that respondent hold a higher position in the firm. Another concern was
that respondent must be familiar with QMPs and QMS being used and have sufficient
knowledge regarding their effect on performance as well competitive positioning.

4.3. Detecting outliers and data adequacy test

First, by data screening cases with missing values were eliminated. Second, unengaged
responses were identified based on the values of standard deviation (SD), i.e. the case
with SD < 0.5 was eliminated. A total of five cases were removed during data screening.
Therefore, the final sample used to test the research hypotheses was reduced to 245
replies, yielded a useful response rate of 64.3%.
Variable normality test using skewness and kurtosis: The parametric statistical methods
required that the dependent variable be nearly normally distributed for each level of the
independent variable (Cramer & Howitt, 2004). The normal curve is familiar, classic bell
shape curve to indicate the distribution of data (Doane & Seward, 2011). The skewness
(X ) is a standard of the ‘asymmetry’ and kurtosis (λ) is a degree of peakedness of distri-
bution of the curve. If the skew estimation of a normal distribution is zero, it typically indi-
cates symmetric distribution. The skewness values of variables were found between
−0.421 < X < 0.321, which are within permissible limits of −2 to +2 (Dubey et al.,
2015). Similarly, kurtosis values were observed between 3.056 < λ < 5.135, (i.e. λ ≥3 ),
showed that data is adequate for analysis. To test non-response (or participation) bias,
we conducted a t-test on randomly selected 15 items from both groups (Kyobe, 2004).
The test revealed that there is no significant difference between the data collated in two
different phases (p > 0.05). To examine the common method bias, we adopted Harman’s
one-factor-test (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). First, we performed
with 5-factors, and another was 1-factor model having all measured variable loading on
it. The value without rotation was as 0.764 for the proposed 5-factors model and 0.321
for the 1–factor model. Thus we verified that there is no common method bias issue.
 14
M. Kharub and R.K. Sharma
Table 2. Sample size calculation, and the profile of respondents plants.
Sr. No. Equation Parameters descriptions Calculated value Accepted sample size
1 Z2p · q Z = value of selected alpha of 0.025 in each tail = 1.96. n0 = 384.6 381
n0 = (the alpha level 0.05 indicates the level of risk)
C2
n0
2 n= (p)(q) = estimate of variation = 0.25. n = 380.47
1 + (n0−1 /N) (p is the probability of selecting a particular observation = 0.5, and q can be
calculated using equation q = 1-p = 0.5)
C = accepted margin of error = 0.05.
N = the number of units or total population in state = 39512
Work profile Percent (%) Working experience (years) Sr. No. QM implementationa Cumulative percentage
3 Respondent profile Quality manager 30.54 10∼15 Before 1990 1%
Plant manager 32.24 20 ∼ 40 5 1990–1995 1%
Production Manager 19.15 15∼20 1996–2000 4%
Engineering Manager 18.07 10∼15 2001–2005 10%
2006–2010 48%
2011-onwards 73%
Total 100
Category Percent Sectors Percent
4 Company profiles Small 45 Mechanical 28
Micro 24 6 Electrical 21
Medium 31 Automobile 20
Pharmaceutical 23
Otherb 8
Total 100 Total 100
a
Many plants had implemented more than one type of QM systems, ISO13485; ISO 9001:2008.
b
Other MSMEs including food, paper, wood, glass and ceramic, and textile mills.
 Total Quality Management 15

4.4. Technique used for analysis

In this study, we employed quantitative research approach. It allows solving a complex
research assignment by breaking into simpler elements. It gives statistical evidence for con-
nections between endogenous and exogenous constructs. Also, the quantitative approach
provides robust validity and reliability. The analysis steps for this study comprised of
three stages development procedure; firstly, EFA then CFA and at last structural models.
Several other studies successfully used this technique for their detailed research in
various fields. According to Galbreath and Shum (2012); Wu and Ku (2013), the structural
equation modeling (SEM) is more appropriated, and superior method in both theoretical
and empirical ground compares to traditional regression analysis. Gotz, Liehr-Gobbers,
and Krafft (2010), explained that SEM is a second generation statistical technique,
which simultaneously tests the causal relationship between multiple dependent variables
and independent variables. Experts claim it is better than regression because it can
reduce bias by taking measurement errors into account. Preacher, Zyphur, and Zhang
(2010); prove empirically that an SEM procedure consistently will be more influential in
preparing the mediation results. Therefore, SEM was found as a proper statistical analysis
technique for this study.

5. Analysis and results

5.1. EFA results
The results of Kaiser-Olkin (KMO) and Bartlett test (BT) show that all constructs were
homogeneous and adequate. The result of KMO test was found adequate, which is
greater than 0.60, which indicates sufficient inter-correlations, and also Bartlett’s test of
sphericity was found significant as X2 = 63, 52.95; p = 0.000 < 0.01 (Das et al., 2008).
There measure ensured the sample adequacy for Exploratory Factor Analysis (EFA).
EFA is used to uncover the underlining pattern among a large number of variables and
explain them in term of their common underlying dimensions (latent variables). It deter-
mines the extent to which the observed variables are linked to their respective latent vari-
able. Two basic methods (i) Principal Component Analysis (PCA) and Principal Factor
Analysis (PFA) can be used for EFA. This study employed PCA using varimax rotation.
Only those items that have factor loading greater than 0.5 were included (Hair, Black,
Babin, Anderson, & Tatham, 2006). Out of total 33 items, three were eliminated during
pilot testing, from remaining 30; one item was removed during EFA (Eigenvalue < 1).
All cumulative percentages of variance were found more than 60%. Then we opted for a
reliability check with Cronbach’s alpha value (α), which should be greater than 0.7
(Panayides, 2013). All construct surpassed the 0.70 thresholds thus showing reliability.
Finally, for further analysis, we left with 29 items. The detail results are presented in
Table 3.

5.2. CFA results

To further refine the scale Confirmatory Factor Analysis (CFA) was performed on the
resulting EFA model. CFA confirm the relationships between underlining variables and
latent variables. By pre-established theory and EFA’s results, CFA confirms if the observed
variables are loaded as predicted on the expected number of latent variables. We established
construct validity and then unidimensionality (Kaynak, 2003). As EFA reviews only theor-
etical basis, on the other hand, CFA can check factor correlations, standard variable loading
on multiple factors (Brown, 2015).
 16
M. Kharub and R.K. Sharma
Table 3. The measurement model statistics.
PCA for measurement model (EFA) Confirmatory factor analysis (CFA)
Construct Items 1 2 3 4 5 Variance explained (%) (α) Standardize loading Measuring error CR AVE
ST ST1 .527 .309 .180 .356 .336 53.11 0.89 0.80 0.19 0.911 0.720
SF2 .826 .109 .135 .227 .238 0.83 0.18
SF3 .786 .154 .184 .270 .231 0.90 0.12
SF4 .859 .179 .155 .139 .192 0.86 0.15
‡
SF5 .583 .315 .295 .270 .321
†
.428 .207 .396 .188 .458 –
TF TF1 .377 .626 .310 .168 .271 49.37 0.82 0.90 0.11 0.882 0.654
TF2 .286 .774 .265 .190 .241 0.90 0.10
TF3 .020 .677 .120 .256 .391 0.74 0.28
TF4 .132 .747 .143 .242 .202 0.67 0.30
‡
TF5 .447 .697 .134 .151 .172
‡
TF6 .240 .685 .291 .120 .155
OF OF1 .185 .189 .750 .284 .150 54.18 0.87 0.86 0.13 0.908 0.627
OF2 .148 .171 .830 .222 .144 0.90 0.09
OF3 .003 .038 .817 .266 .089 0.77 0.22
OF4 .219 .186 .736 .097 .284 0.65 0.31
OF5 .177 .218 .668 .189 .253 0.62 0.32
OF6 .223 .227 .666 .355 .291 0.90 0.11
‡
OF7 .226 .217 .665 .299 .399
CS CS1 .241 .267 .215 .727 .250 51.52 0.86 0.80 0.26 0.909 0.715
CS2 .168 .168 .256 .794 .265 0.76 0.27
CS3 .167 .191 .334 .810 .109 0.87 0.15
CS4 .332 .210 .276 .750 .173 0.94 0.07
‡
CS5 .177 .275 .237 .652 .426
‡
CS6 .383 .156 .501 .537 −.103
OP ES1 .176 .243 .232 .222 .801 61.77 0.89 0.89 0.15
ES2 .293 .295 .209 .166 .757 0.92 0.10 0.932 0.734
ES3 .125 .201 .169 .200 .851 0.79 0.26
ES4 .220 .133 .166 .157 .819 0.75 0.28
ES5 .370 .340 .219 .162 .692 0.92 0.10
Source: *SF = Strategic factor; TF = Tactical factor; OF = Operational factor; CS = Customer satisfaction; OP = Operational performance.

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†
items removed during EFA.
‡
Items removed during CFA, AVE = Average Variance Explained, CR = Composite Reliability.

17
18 M. Kharub and R.K. Sharma

5.2.1. Construct validity

The construct validity involves two components namely (i) convergent validity and (ii)
divergent validity.

5.2.1.1. Convergent validity. A variable is considered to have construct validity if it

measures precisely the theoretical aspect for which it was intended to measure. The con-
struct validity involves two components namely (i) convergent validity and (ii) divergent
validity. The scholars (Kaynak, 2003; Saeidi, Sofian, Saeidi, Saeidi, & Saaeidi, 2015)
suggested the use of CFA to assess convergent validity. If the values of average variance
explained (AVE) is greater than 0.5 and standardised composite reliability (SCR) greater
than 0.7 indicate the validity of the model. The details results are presented in Table 3.
SCR and AVE are well above then particular cutoff value. Therefore, we can conclude
that the constructs of our theoretical framework possess convergent validity.

5.2.1.2. Discriminant validity. It estimates the discrete characteristics of measures repre-

senting particular construct. It is required that each measure should not correlate too much
with a measure of another construct to maintain own separate identity. In another word, an
instrument has discriminate validity if the absolute value of correlations between measures
of different factors using the same method of measurement is lower than the total value of
square root of AVE (Gefen, Straub, & Boudreau, 2000). All latent variables found having a
significant relationship with each other. However, the correlations coefficients were lower
than absolute value of square root of AVE, entries are shown in bold in Table 4, suggested
that model fulfil discriminant validity.

5.2.2. Unidimensionality
It intimates whether a set of measures describes one or more than one construct. Multiple
signs lose unidimensionality which is not preferred. In this study, we followed the study by
Podsakoff et al. (2003) and checked measure of fit using χ2/df., which should be less than 3
for a good model fit. Similarly, Hair et al. (2006) recommend that if CFI is higher than 0.8,
the factors are considered to be unidimensional. The results of fit indices for overall
measurement model was estimated and presented in Table 5. All fit indices satisfied the rec-
ommended cut-off values and demonstrated that the measurement model is reliable and
strongly supported by the data collected (Kaynak, 2003). So the proposed model proceeded
to SEM analysis.

Table 4. Dicriment validity, descriptive statistics, and bivariate correlation for the variable in the
research model.
Latent variables 1 2 3 4 5 Mean S.D MVS ASV
Strategic factors 0.848a 2.85 0.76 0.504 0.455
Tactical factors 0.71 0.808a 3.70 0.75 0.548 0.471
Operational Factors 0.64 0.64 0.791a 2.60 0.74 0.504 0.421
Customer satisfaction 0.65 0.65 0.71 0.845a 3.21 0.82 0.504 0.421
Operational 0.68 0.74 0.60 0.59 0.857a 3.55 0.83 0.548 0.421
performance
Source: N = 245; MVS = Maximum shared variance; ASV = Average shared variance.
a
Square root of AVE; all correlations are significant at the p < 0.001 level (2-tailed).
Table 5. Test results of the measurement model and structural model.
Structural model
Recommended values for satisfactory
Goodness-of-fit statistics Measurement model SEM I SEM II fir of a model to data
χ2/df 489.15/210 = 2.33 478.23/204 = 2.34 577.94/268 = 2.16 <3.0
Root mean square error of approximation (RMSEA) 0.07 0.07 0.07 <0.08
Akaike’s information criterion (CAIC) 918.23 946.32 1117.54 <Saturated model and independent model
CAIC for saturated model 1794.35 1794.35 2281.94
CAIC for independent model 5359.27 5302.03 5745.56
Parsimony goodness-of-fit index (PGFI) 0.64 0.63 0.65 >0.5
Parsimony normed fit index (PNFI) 0.75 0.73 0.75 >0.5

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Comparative fit index (CFI) 0.94 0.94 0.94 >0.90

19
20 M. Kharub and R.K. Sharma

5.3. Structural models and hypotheses test results

We tested our research hypotheses by constructing two structural model using SEM.
Figure 2 presents SEM–I which shows the relationship between QMPs and firm perform-
ances. SEM–II is an integrated model which connects QMPs and competitive positioning,
and simultaneously it presents the mediating role of QMS and firm performance. Figure 3
presents the integrated model. Each path in the figure indicates the estimated path coeffi-
cient and Table 6 indicates associated t-values and results of path diagram.

5.3.1. Hypothesis results

The first set of research hypotheses state that QMPs have a positive relationship with firm
performance. For these hypotheses to be supported, the paths from components of QMPs to
firm performance should have a positive and statistically significant value of regression
Beta (β). The β value shows the strength of association between a dependent and indepen-
dent variable and has an associated t-value for each relationship. The results from Figure 2
and Table 6 show that the paths coefficients (β) from all components of QMPs (i.e. strategic,
tactic and operational factors) to both customer satisfaction and operational performance are
positive and statistically significant (0.15 < β < 0.45, p < 0.001). Thus the finding supports
first set of hypotheses, e.g. H1a to H1e. All absolute fit measure such as Chi-square = 2.34,
RMSEA = 0.07; GFI = 0.64 and increment fit measure such as NFI = 0.73; CFI = 0.94 meet

Figure 2. SEM–1 The relationship between QM practice and firm performance.

 Total Quality Management 21

Figure 3. SEM-2 integrated model for QMP, QMS, firm performance and competitive positioning.

the suggested criterion and appears an accepted SEM-I model fit. The results of fit indices
are presented in Table 5.
In case of the second set of hypotheses which state that QMS mediate the relationship
between QMPs and firm performance. To support these hypotheses it required that the value
of standardising β coefficient of paths between QMS and both indicators of firm perform-
ance should be higher than the paths coefficient between QMPs and firm performance.
Results in Figure 3 indicate that both the path coefficients (i.e. QMS to customer satisfac-
tion and QMS to operational performance) are higher compared to paths coefficients from
QMPs to firm performance (in Figure 2). The results indicate the second set of hypotheses,
i.e. H2a and H2b, which state that QMS mediate the relationship between QMPs and firm
performance, is supported.
Similarly, the third set of hypotheses, which state that (i) there is a direct relationship
between QMS and competitive positioning (ii) firm performance mediates the relationship
between QMS and competitive positioning. The results in Figure 3 and Table 6 indicate the
direct impact of QMS on competitive positioning (β = 0.05, p > 0.05), which is not statisti-
cally significant. Hence the H3a is not supported. To support H3b and H3c, it required at
least one positive significant path from any component of firm performance to competitive
positioning. Study results observed that the firm’s performance fully mediate the relation-
ship between QMS and competitive positioning as the paths coefficient from both customer
satisfaction to competitive positioning (β = 0.69, p < 0.001) and operation performance to
competitive positioning (β = 0.64, p < 0.001) are positive and statistically significant.
Hence, the hypotheses H3a and H3b cannot be rejected.
All absolute fit measure such as Chi-square = 2.16, RMSEA = 0.07; GFI = 0.65 and
increment fit measure such as NFI = 0.75 and CFI = 0.94 meet the suggested criterion
and appears an accepted SEM-II model fit (See column 4, Table 5). The list of items
 22
M. Kharub and R.K. Sharma
Table 6. Construct structural model and hypotheses results.
Hypotheses Standardize parameter estimates
Path
Sr. No. Links in the model Number Sign coefficient (β) t-value R2 Results
1 Strategic factors − Customer satisfaction H1a + 0.29 4.52*** 0.64 Supported
2 Tactical factors − Customer satisfaction H1a + 0.19 3.04** Supported
3 Operational factor − Customer satisfaction H1e + 0.44 6.93*** Supported
4 Strategic factors − Operational performance H1b + 0.30 4.61*** 0.69 Supported
5 Tactical factors − Operational performance H1b + 0.45 6.46*** Supported
6 Operational factor − Operational performance H1f + 0.15 2.76* Supported
7 QMP − QMS −Customer satisfaction H2a + 0.69 12.73*** 0.47 Supported
8 QMP − QMS − Operational performance H2b + 0.64 10.37*** 0.42 Supported
9 QMS − Competitive positioning H3a + 0.05 0.61 0.76 Not supported
10 QMS − Customer satisfaction − Competitive positioning H3b + 0.55 ₸ Supported
11 QMS − Operational performance − Competitive positioning H3c + 0.43 ₸ Supported

Source: ₸ constrained items in SEM model. ₸ constrained items in SEM model.

*t-values > 2.50 are significant at p < 0.05;
**t-values > 3 are significant at p < 0.01;
***t-values >3.5 are significant at p < 0.001
Kaynak (2003), Hair et al. (2006).
 Total Quality Management 23

associated with the model fit, their standardised factor loading and t-values are presented in
Table A1 Appendix 1.

6. Discussion
In this paper, authors empirically investigated the relationship between QMPs, QMS, firm
performance and their impact on competitive positioning. Several notable findings are
evident from study results. From the literature, it is clear that the components of QMPs
(i.e. strategic, tactic and operational) help in creating culture, adds values and details to
the actual working procedure of an organisation. The expectation was that if firms chose
to improve performance and customer relationship, it must place equal emphasis on all
components, failing to which can hinder the goal to become a quality-oriented organisation.
This appears to be happening in the industrial sectors under considerations, where, all com-
ponents of QMPs provide a positive link (0.15 < β < 0.45) with customer satisfaction and
operational performance.
In Figure 2, among the six paths coefficients, the strongest link is observed between the
tactical factors and operational performance (β = 0.45, p < 0.001). The reason for this
finding is that tactical aspects strengthen the human resource and leadership in an organis-
ation and provides a mechanism for careful recruitment of task-oriented skilled employees
(t = 0.72, p < 0.001). It focuses on the employee’s training (t = 0.89, p < 0.001) and
improves their potential to work in a team, their commitment to quality, offers provision
for rewards for better performance and considers their interests and satisfaction (t = 0.74,
p < 0.001). Involvement of employees in quality-related decisions builds pride at profi-
ciency, improves awareness of organisational goal, increase teamwork to solve quality
related problems, hence, improve job satisfaction (t = 0.92, p < 0.001). A skilled, multitask-
ing, aware, motivated and satisfied employee is more likely to improve operational per-
formance. These results are in line with the results of a study conducted by and Heras-
Saizarbitoria and Boiral (2015); Ooi et al. (2012); Sila (2007)
… QM elements are people-oriented which contribute positivity on practices like employee
involvement, their training and education, reward and recognition system. These results
were supported by Kharub and Sharma (2015) they found that active involvement of employ-
ees in continuous improvement creates a quality culture that makes a positive impact on firm’s
operational performance. Similarly, many authors (Childerhouse et al., 2013; Das et al., 2008;
Saeidi et al., 2015) have observed customer satisfaction as most essential outcomes of QM
practices.
Similarly, the second highest relationship is found between operational factors and customer
satisfaction (β = 0.44, p < 0.001). It is logical to consider that the workers with rigours training
and enthusiastic to use quality tools and technique help in improving the product and process
design by suggesting drawing of simple, reliable and manufacturable products (t = 0.88, p <
0.001). The teamwork with an attitude of problems solving approach reduces the process com-
plexity and variations thus drive to achieve efficient process management (t = 0.86, p < 0.001).
The quality approaches initiated after collecting and analysing the first-hand information from
customer’s (t = 0.68, p < 0.001) help in increasing higher client relationships (t = 0.62, p <
0.001). The results are agreed with findings of Zu et al. (2008).
… the study highlighted the importance of data, design and objective measurement in the actual
implementation of QM practices. Also, they strengthen the outcomes of studies conducted by
Chong et al. (2013; Vijayaram, Sulaiman, Hamouda, and Ahmad (2006) where authors found
that QM establishes a stable production process which not only improves product’s quality but
also reduces rework, scrap and needs for buffer stock. With the same tendency, our findings are
in line with Prajogo and Brown (2006) where authors argued that customer value created
24 M. Kharub and R.K. Sharma

through providing high-quality products at lower costs contribute positively to customer satis-
faction. Based on findings authors emphasised that employees must use data during solving
quality related problems.
The strategic factors show the approximately equal impact on both customer satisfaction (β =
0.29) and operational performance (β = 0.30), which are statistically significant at p < 0.001.
The items under this component have been considered critically important by scholars for
successful implementation of QM programme (Talib et al., 2013; Taylor & Wright, 2003).
For example, top efficient and committed management encourages customers to visit plant
(s), receive feedbacks and gathers information about current market demands (t = 0.85, p
< 0.001). Senior management creates policies to support quality culture (t = 0.73, p <
0.001), allocate resources for training and assure that every employee is involved in continu-
ous improvement (t = 0.76, p < 0.001). It shows firm’s commitment to quality assurance (t =
0.78, p < 0.001). The results of this section are in line with the findings of previous studies by
Kaynak (2003); Sadikoglu and Zehir (2010); Talib and Rahman (2010)
… these studies summarised that the success of achieving real changes in organisation relies on
whether top management understands and believes in quality principles and whether they are
ready to restructure organisational policies. The study results also support finding by Kharub
and Sharma (2015); Kumar et al. (2011) … where authors found that top management strat-
egies have a significant impact on critical success factors (CSFs) of QM practices, i.e. the
employees’ training & involvement, leadership, the culture of open communication and co-
operation through the value chain.
A QMS offers a formalised way of recording responsibilities, methods, and procedures at
the workplace to reach the goal of continuous improvement. The QMS such as ISO-9000
allows firms to ensure that their customers are getting consistent quality products. As
expected, the QMS is found successful in mediating the relationship between QMPs and
firm performance. This study observed a significant gain from having QMS (β = 69, p <
0.001), in widening the market opportunities as a result of increased customer satisfaction
rather than improvement in quality itself (maximum β = 44, p < 0.001). These results are in
line with Sila (2007) where the author suggested considering QMS as a subset of QMP.
Study results provide support for the authors’ opinion to consider registration of
ISO9000 QMS as a pre-requested programme to QM implementation (Arumugam et al.,
2008; Bhuiyan & Alam, 2004; Fotopoulos et al., 2010). Furthermore, our findings
strengthen the arguments of Terziovski and Guerrero (2014) … having ISO9000 regis-
tration provides cost and risk management benefits and improves customer’s satisfaction.
Further, according to the studies conducted by Terziovski et al. (2003); Withers and Ebra-
himpour (2000), QMS emphasise upon design, development, process installation and
improvement, waste reduction, and employee’s involvement, similar to QMPs. Our
results confirm their findings as each component of QMPs found having positive and sig-
nificant relation with QMS (0.18 < β < 0.42), and the alignment of QMS with QMPs
improves operational performance (β = 0.64, p < 0.001). In other words, results show
that the total impact of QMPs is higher in the presence of QMS. Previous studies also
noted synergy between QMPs and QMS, i.e. Bhuiyan and Alam (2004); Prajogo and
Brown (2006); Withers and Ebrahimpour (2000).
We did not found any direct relationship between QMS and competitive positioning
(β = 0.05, p > 0.05) the results are in line with Taylor and Wright (2003)
… the mere holding of ISO certification does not mean successful implementation of quality.
This is further supported by Terziovski and Guerrero (2014), where authors concluded that
ISO-9000 certification is not statistically significant with product innovation or just conforming
to standards firms may achieve limited benefits, not competitive positioning.
 Total Quality Management 25

However, QMS influence competitive positioning through improving customer satisfaction

(β = 0.55, p < 0.001) and operational performance (β = 0.43, p < 0.001). This link is correct
because enhanced firm performance facilitates MSMEs with high profits and financial stab-
ility to invest in new technology, flexibility in the manufacturing system, the building of
stable quality foundation and the establishment of new delivery channels, therefore,
provide a competitive advantage. These conclusions are in line with Amoako-Gyampah
and Acquaah (2008); Ooi et al. (2012) … in these studies, authors found an indirect influ-
ence of QM on firm’s competitive strategy.

6.1. Managerial implications

The structural models developed in this study will attract the attention of managers to three
latent variables (i.e. strategic, tactic and operational factors) comprised of 14 items (seeTa-
ble A1, Appendix 1), covering the extensive range of QMPs and their effects on customer
satisfaction and operational performance. The study develops two SEM models, i.e. SEM-I
and SEM-II. The results from SEM-I can motivate the leaders to contribute their time,
efforts, training, and capitals in the right direction. Whereas, the results from SEM-II
improve the understanding and purpose of holding ISO-9000 certification and the possible
advantages that can ensue from following its guidelines.1 Managers can use the SEM
models to assess where their firm stands in the QMP journey and competitive positioning.
The study results emphasised that to evaluate quality, managers must consider reliable
and valid items remained and satisfied the recommended values of structural models in the
study. After testing the strength of the relationship between latent variables, the study con-
tributes to the existing literature by attending that the better understanding of ISO-9000
guidelines enhances business performance through customer satisfaction and operational
performance that will lead toward a sustainable competitive positioning. The study
makes a further contribution through the application of SEM models used to identify the
influence of ISO-9000 certification on selected firm’s performance parameters and illustrat-
ing how theories can be tested.

7. Conclusion, limitations and future scope

The study contributes to the QM literature by providing an integrated model of QMPs and
competitive positioning and the mediationg role of QMS and firm performance. For this
purpose, the study addressed four research questions.
RQ1 What are main constructs (latent variables) of QMPs and their constituting items?
RQ2 What is the relationship among latent variables of QMPs and firm performance?
RQ3 What is the effects of QMS certification (ISO-9000) on the relationship between latent
variables of QMPs and firm’s performance?
RQ4 What are the relationship between QMS certification, firm performance, and competitive
positioning?
In response to RQ1, study results found three primary latent variables (e.g. strategic, tactical
and operational factors) consist of 14 reliable and valid items. In response to RQ2, the find-
ings provide empirical evidence in which it seems that the QM practices have a positive
association with customer satisfaction and operational performance. In reply to RQ3,
study results show that QMS is successful in mediating the relationship between QMPs
and firm performance. Also, we found significant improvement in their relationship in
the presence of QMS.
26 M. Kharub and R.K. Sharma

The study suggests that MSMEs should obtain QMS and must pay attention to continuous
improvement. In response to RQ4, the study did not find any direct relationship between
QMS and competitive positioning. However, QMS influence competitive positioning by
improving firm performance. The survey is confined to MSMEs operating in sectors
such as mechanical, electrical, and automobiles, pharmaceutical, etc.
In a future study, it might be interesting to collect date from the service industry. The
increased sector-wise response might be interesting to compare the performances among
different sectors. The SEM models developed in this study can also be tested by conducting
a similar study in another country. Also, the moderation effect of contextual factors such as
firm size, entrepreneur ability, the degree of competition, organisational learning and effect
of quality awards can be studied to evaluate the complicated relationship among these vari-
ables as well.

Note
1. To improve the competitive strength of the MSMEs, the Govt. Of India has introduced an ‘ISO
9000 certification fee reimbursement scheme’. The system reimburses 75% of the costs, subject
to a maximum of Rs.75,000, for acquiring ‘Quality Management System (QMS)/ISO 9000 cer-
tifications’ by the MSMEs. Due to this ISO9000 certification has been significantly increased in
India as it was at the 5th position in 2014 compared to the 9th position in 2009, behind only the
China, Italy, Germany, and Japan (www.dcmsme.gov.in).

Acknowledgement
The authors would like to thank the Editor in Chief and anonymous reviewers for their valuable com-
ments and suggestions to improve the quality of the paper.

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

Funding
The financial support received from Department of Science and Technology, Ministry of Science and
Technology, Govt of India vide letter No 100/FD/4232/2012–13 under the project grant is highly
acknowledged. National Science and Technology Management Information System.

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30 M. Kharub and R.K. Sharma

Appendix 1: Survey items

Table A1. List of major items remains after model fit.

Study results
Standardize factor
Latent variables Items loading t- value
Strategic factors Top management commitment 0.85 ₸
Quality culture 0.73 11.30***
Continuous improvement 0.76 10.22***
Quality assurance 0.78 12.21***
Tactical factors Employee involvement 0.92 ₸
Training and education 0.89 18.96***
Rewards and incentives 0.74 11.68***
Leadership qualities 0.72 12.36***
Operational factors Product and service design 0.88 ₸
Process management 0.86 16.05***
Information and Analysis 0.68 11.33***
Internal customer concept 0.62 11.05***
Restructuring 0.62 11.09***
Quality tools and techniques 0.94 13.39***
Customer satisfaction Reduction in customer 0.88 ₸
complaints
Level of customer satisfaction 0.83 17.34***
New customer 0.81 13.65***
Customer feedbacks 0.88 17.59***
Operational Rework and scrap 0.90 15.25***
performance Lead time 0.91 15.29***
Process improvement 0.82 21.10***
Product quality improvement 0.75 ₸
Process capability 0.93 14.78***
Competitive positioning Cost 0.49 ₸
Flexibility 0.71 8.66***
Delivery 0.70 8.61***
Quality 0.85 9.78***
Source: ₸ constrained items in SEM model.
***p < 0.001.