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TQM in
Total quality management developing
in developing countries countries
A case of pharmaceutical wholesale
distribution in Pakistan 363
Muhammad Usman Awan and Abdul Raouf
Institute of Quality & Technology Management, University of the Punjab,
Lahore, Pakistan
Niaz Ahmad
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Abstract
Purpose – The purpose of this paper is to identify the critical success factors of total quality
management (TQM) in pharmaceutical wholesale distribution companies in Pakistan. The paper also
seeks to contribute to reduce the existing lack of TQM studies in developing countries.
Design/methodology/approach – A 29-item survey questionnaire is sent to 90 pharmaceutical
distributors. Response rate is 56.7 per cent. Confirmatory factor analysis deletes one item in the scale
purification process.
Findings – Data analysis reveal that “process design” (PD) is critical TQM success factor in
pharmaceutical wholesale distribution companies in Pakistan. Like other studies in developing
countries, top management in pharmaceutical wholesale distribution companies in Pakistan does not
adequately support the TQM implementation.
Research limitations/implications – The research is based in Pakistan only. Convenience
sampling is done. The response size of the study is small (n ¼ 51) though the response rate and
significance are high. Small response size prevents more complex analysis such as structural equation
modelling.
Practical implications – Pharmaceutical wholesale distribution companies are more focused on
“PD”. Increased top management support is required for proper TQM implementation.
Originality/value – This research provides framework to researchers to build up more TQM critical
success factor studies in similar sector and situations so that more concrete generalizations can be
made.
Keywords Pakistan, Pharmaceuticals industry, Wholesaling, Distribution operations,
Critical success factors, Total quality management, Developing countries
Paper type Research paper
Introduction
International Journal of
The pharmaceutical marketplace is facing major pressures from a broad range of Pharmaceutical and Healthcare
dynamic and powerful forces (Holdford, 2005). The global pharmaceutical industry Marketing
Vol. 3 No. 4, 2009
stands at the centre of the health of nations – rich and poor alike. The innovation of new pp. 363-380
drugs and their rapid diffusion at affordable prices have been major driver’s source of q Emerald Group Publishing Limited
1750-6123
the phenomenal increase in longevity of the human race over the past 100 years DOI 10.1108/17506120911006056
IJPHM (Rao, 2008). Government agencies and third party payers expect the provision of
3,4 pharmaceutical products to be cost effective, keeping costs to a minimum so strategic
planning has become imperative for all organizations in the pharmaceutical distribution
system (Birdwell, 1994).
Distribution is conceptualized as bundle of connected flows (Rosenbloom, 1995). An
esteemed thought in the marketing literature has been that of marketing flows with in
364 a channel of distribution. Vaile et al. (1952) have identified eight basic flows as being
essential to marketing channel performance (Figure 1) although there is no common
understanding of what should be the relevant number of flows (Flygansvaer et al.,
2008).
The central concept of these marketing flows suggests that various marketing
activities or functions should be arranged in a manner that results in customer
satisfaction (Bowersox and Morash, 1989). Total quality management (TQM) is an
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Ordering Ordering
Figure 1. Payment Payment
Marketing flows in
channels of distribution
Source: Vaile et al. (1952)
This study is an attempt to remedy a small part of this lack of information about TQM TQM in
implementation in developing countries. It seeks to identify the factors contributing developing
successfully to the implementation of TQM in pharmaceutical wholesale distribution
companies in Pakistan. Chen et al. (2004) has concluded that TQM methods and tools countries
can be utilized to implement TQM successfully in pharmaceutical logistics and TQM
implementation in pharmaceutical logistics organization has increased sales and
reduced employee turnover. However, most of the developing countries have unique 365
characteristics like lack of education and democracy, instability, corruption, shortage
of skilled labour force and raw materials, under utilization of available production
capacity, the inferiority and lack of quality standards, high scrap, low purchasing
power of customers, inadequate consumers know how, lack of balance between import
and export, foreign exchange constraints, incomplete infrastructure, etc. (Curry and
Kadasah, 2002). Understanding these characteristics, by definition, justifies the
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1. Small markets with limited income Wholesalers can make money by selling products
to retailers at low prices
2. Scattered markets throughout the countryside By selling multiple products wholesaler justifies
reaching out to these markets
3. Consumers can buy very limited volume of Wholesalers by definition handle larger variety of
many different products products than manufacturers
4. Because of the scattered populations, retailing Wholesalers, again, can reach out whereas
is also scattered manufacturers cannot
5. Manufacturers prefer to concentrate on Wholesalers develop marketing skills and support
production manufacturers
6. Scattered small-scale manufacturing Wholesalers can bring together the critical Table I.
product combinations for retailers The role of wholesalers
in bridging market gaps
Source: Samli and El-Ansary (2007) in developing countries
IJPHM Literature review
3,4 Previous studies in TQM can be categorized along several main research objectives.
These include identifying critical TQM factors, examining issues and/or barriers in the
implementation of TQM and investigating the link between TQM factors and
performance (Sebastianelli and Tamimi, 2003). One research objective of this study is
related to the identification of TQM critical success factors, so the literature related to
366 TQM critical success factors identification is reviewed in this section.
Various studies have been carried out attempting to identify critical success factors
of TQM. They tend to emphasize three different areas (Tari, 2005; Claver et al., 2003),
i.e. contribution from quality leaders, formal evaluation models and empirical research.
Dale (1999) identifies management leadership, training, employee’s participation,
process management, planning and quality measures for continuous improvement as
consistent findings in the work of quality leaders such as Crosby, Deming, Juran,
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many”. In the “vital few” group, 14 factors accounted for 80 per cent of the critical
success factors of TQM while the remaining 42 “useful many” factors accounted for
20 per cent of occurrences frequency only. The 14 factors identified as the “vital few”
are given in Table IV. Karuppusami and Gandhinathan (2006) also confirmed the
finding of Sila and Ebrahimpour (2003) that top management commitment is the most
critical success factor for TQM.
S. No. Factors
13 Bench marking
Table IV. 14 Information and analysis
Fourteen “vital few”
TQM factors Source: Karuppusami and Gandhinathan (2006)
This brief review of literature related to critical success factors of TQM therefore
suggests that top management/leadership support is overall the most common,
important and critical success factor in the implementation of TQM.
However, most of the previous research in TQM cited in the review papers above is
based on research in developed countries. Quality gurus presented their ideas on the
basis of their individual experiences in developed countries. Formal evaluation models
of TQM are developed for companies operating primarily in the USA, Europe and
Japan. The demand for TQM can no longer be the prerogative of the developed world
only however. Some of the developing countries are breaking through traditional trade
barriers and opening their markets to international competitors (Temtime and
Solomon, 2002). TQM is thus becoming more significant in developing countries also.
There is still lack of information however about the nature and stage of
implementation of TQM in countries in some regions of the world including Asia,
South America, Africa and the Middle East (Sila and Ebrahimpour, 2003). This study is
also an attempt to reduce this lack of information about TQM in developing countries.
The developing country selected for this study is Pakistan. The authors could find
no studies on the identification of critical success factors of TQM in companies in
Pakistan. The pharmaceutical wholesale distribution sector was chosen as the
successful impact of TQM implementation to financial growth and reduced employee
turnover in this sector has been previously studied (Chen et al., 2004). However, no
previous studies either in developed or developing countries appear to have focused on
the identification of critical success factors of TQM in pharmaceutical wholesale
distribution sector. It has also been concluded in the literature that the channels of
distribution in existence in a specific national market are a result of specific culture and
tradition (Jain, 1996) so each country may be unique in this regard.
The research objective for this study is therefore twofold: One is to identify which
factor(s) is the critical success factor in the implementation of TQM in pharmaceutical
wholesale distribution companies in Pakistan (a previously ignored sector in TQM
critical success factor studies). Second objective is to reduce the current deficiency of
TQM studies in developing countries.
Methodology TQM in
This research is novel in its situation. There is no readily available sample. It is not a developing
replicate study in that sense and aspects of the methodology have had to be developed from
first principles. Because pharmaceutical wholesale distribution companies are distributed countries
all over Pakistan a postal survey was chosen as the appropriate research strategy. Various
questionnaires have been previously used in TQM studies. Basic information about seven
previous TQM measurement questionnaires is summarized in Table V. 369
The questionnaire used for this study (available from the contact author) is a refined
version of the Rao et al. (1999) questionnaire. The questionnaire proposed by Rao et al.
(1999) was selected for this study as it had been used before in both developed and
developing countries – including a developing country (India), which neighbours
Pakistan. A second reason for the selection of the Rao et al. (1999) questionnaire was that
this has the highest number of constructs as compared to other questionnaires. One view is
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that the higher the number of constructs in the questionnaire, the easier it is to refine the
constructs using focus group discussions. Given this research was on a new population,
focus group refinement was a component of the methodology (Morgan, 1993).
The Rao et al. (1999) questionnaire was thus refined after a focus group discussion
with ten representatives of pharmaceutical wholesale distribution companies. The
contact author acted as the moderator for the focus group discussion. As a result of the
focus group discussion and then subsequent evaluation of the initial drafts of refined
questionnaire by statisticians, linguistic experts and the authors, a refined
questionnaire with ten constructs and 35 items was finalized.
The number of constructs in the refined questionnaire was reduced to ten as
compared to 13 in the Rao et al. (1999) questionnaire. The construct “quality citizenship”
was dropped because all of the participants in the focus group discussion were of the
view that this construct is an unnecessary extension of the construct “top management
support” (TMS). The construct “product/process design” (PD) was re-named as “PD”
because the sector selected for this research study is a service sector and the term
product design is more associated with the manufacturing sector. The constructs
“quality information availability” and “quality information usage” were merged into a
new construct “quality information availability and usage” (QIAU) because of the
argument by the majority of the participants that quality information availability and
quality information usage are highly integrated activities and separation of these two
constructs may confuse respondents. A similar argument was the reason behind merger
of the constructs “internal quality results” and “external quality results” into the new
construct entitled “results of implementing quality management” (RIQM).
The number of items in the questionnaire was reduced to 35 as compared to 62 in
the Rao et al. (1999) questionnaire. Items were dropped or modified mainly because of
lack of relevance of items in the pharmaceutical wholesale distribution companies of
Pakistan, inability to conceive the content of items by the practitioners and replication
of items. The scale used in the refined questionnaire was a five-point scale (1, very low;
2, low; 3, medium; 4, high; 5, very high; and U, unable to respond).
For survey research, probability sampling is preferred over non-probability sampling
(Saunders et al., 2000), but according to Trochim (2006) there may be circumstances where
it is not feasible, practical or theoretically sensible to undertake probability sampling. This
study is the first known research study related to pharmaceutical wholesale distribution
companies in Pakistan. There are believed to be almost 350 national and small
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3,4
370
Table V.
IJPHM
instruments
TQM measurement
Comparison of various
Features Instruments
Authors Saraph et al. Flynn et al. (1994) Ahire et al. Grandzol and Rao et al. (1999) Joseph et al. (1999) Claver et al. (2003)
(1989) (1996) Gershon (1998)
Number of
constructs 8 11 12 07 13 10 11
Respondents Divisional Multiple respondents Plant Chief executive Chief executive Chief executive Quality managers
quality managers officers officers, quality officers, general
managers managers managers, chief
quality managers
Industry Across Machinery, Motor vehicle Suppliers to USA Across industry Across industry Across industry
focus industry electronics, and parts and Navy’s and aviation in ISO certified
transportation accessories supply office companies
companies
Country USA USA USA USA USA, India, India Spain
China, Mexico,
and Taiwan
pharmaceutical wholesale distribution centres working in different cities of Pakistan TQM in
(Qassim, 2005) but there is no existing reliable sampling frame. As the respondents were developing
distributed all over Pakistan, it was also not possible to build the sampling frame from the
ground-up by the researchers themselves, so non-probability purposive-convenience countries
sampling was done. A multinational pharmaceutical company based at Lahore (Pakistan)
and distributing its medicines throughout Pakistan, using a broad network of large
wholesale distributors, supported this research by providing a list of its distributors. 371
There were 46 wholesale distribution centres for wholesale distributors of this
pharmaceutical company. Three other pharmaceutical wholesale distributors were also
included in the sample because these wholesale distributors were operating all over
Pakistan and had contracts of exclusive wholesale distribution with leading
pharmaceutical companies. One of these wholesale distributors had 22 branches and
the others had 12 and ten branches, respectively, across Pakistan. The questionnaire was
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therefore sent to 90 pharmaceutical wholesale distribution centres based all over Pakistan
via registered post. The covering letter for the research was written to the chief executives
of the pharmaceutical wholesale distribution centres. The pharmaceutical company,
which provided the list of its wholesale distributors wrote letters to its distributors
encouraging them to participate in this research study. The other three wholesale
distributors also issued circulars to its branches encouraging them to participate in the
study. Out of 90 despatched questionnaires, 51 responses were obtained. The response rate
was 56.7 per cent, which is an acceptable response rate.
Data analysis
The research for this paper is a part of larger scale study whose objective is to
understand the impact of implementation of TQM on customer satisfaction in
pharmaceutical wholesale distribution companies in Pakistan. However, the objective
of this particular paper is to identify the critical success factors contributing
significantly in the implementation of TQM. So, the portion of the larger scale study
related to relation of implementation of TQM to customer satisfaction in
pharmaceutical wholesale distribution companies are beyond the scope of this
paper. Responses related to the construct “customer orientation” were therefore not
included in the data analysis. Thus, nine constructs with 29 items were selected for
data analysis. The constructs selected for data analysis were:
(1) top management support (TMS);
(2) strategic planning process in quality management (SPPQM);
(3) quality information availability and usage (QIAU);
(4) employee training (ET);
(5) employee involvement (EI);
(6) process design (PD);
(7) supplier quality (SQ);
(8) bench marking (BM); and
(9) results of implementing quality management (RIQM).
In the above-mentioned constructs RIQM was the dependent variable and all other
constructs were independent variables.
IJPHM The primary approach for scale purification when a theoretical foundation drives
3,4 survey development is to rely on confirmatory factor analysis (CFA) to ensure scale
unidimensionality, followed by scale reliability and construct validity assessments
(Anderson and Gerbing, 1982). CFA using LISREL 8.8 was conducted for each of the
nine constructs to determine unidimensionality of the constructs. All the constructs
except EI emerged as constructs for which no item deletion was required to obtain the
372 required values of assessing criteria. One item was deleted from the construct EI and
thus the number of items for final analysis was reduced to 28 after CFA.
According to Sila and Ebrahimpour (2005), empirical evidence in CFA is generally
assessed using criteria such as the comparative fit index (CFI), the root mean square
error of approximation (RMSEA), the significance of parameter estimates, and the
amount of explained variance. Goodness of fit index (GFI) is another measure of overall
fit (Mahour, 2006). Table VI summarizes the results of CFA:
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.
CFI. This index compares the proposed model with a null model assuming that
there are no relationships between the measures. A CFI value greater then 0.90
indicates an acceptable fit to the data (Bentler, 1992). Table VI indicates that all
the CFI values are 1.00, which suggests very good model fit.
.
GFI. This index indicates the relative amount of variance and covariance jointly
explained by the model. GFI values range from zero to one, with higher values
indicating better fit. According to Chau (1997), scores in the 0.8-0.89 range are
interpreted as reasonable fit whereas scores of 0.9 and above represent good fit. All
values of GFI in Table VI range from 0.87 to 1.00, which suggests very good model fit.
.
RMSEA. This is an index used to assess residuals and adjusts parsimony in the
model. Its value must be equal to or less than 0.08 for an adequate model fit (Hu
and Bentler, 1999). Table VI indicates that all RMSEA values are less then 0.08
indicating adequate model fit.
.
Parameter estimates. Table VI shows that all the parameter estimates, i.e. factor
loadings are statistically significant.
.
Amount of explained variance. The amount of explained variance for all
constructs in Table VI range from 0.09 to 0.97 thus indicating acceptable squared
factor loadings.
Once the unidimensionality of the constructs was demonstrated using CFA, the
reliability of the each construct and the overall questionnaire with the remaining items
was evaluated by the determination of Cronbach’s coefficient alpha. In general,
reliability coefficients of 0.70 or more are considered adequate (Cronbach, 1951;
Nunnally, 1978; Murphy and Balzer, 1989). Only the values of constructs PD and SQ
are less then 0.70. These values (0.61 and 0.44, respectively) are still acceptable as van
de Ven and Ferry (1980) suggest 0.35 as the limit of acceptable value of Cronbach’s
coefficient alpha. The overall value of Cronbach’s coefficient alpha for the 28 items
remained in the questionnaire after CFA was 0.85. This value is acceptable.
According to Mentzer et al. (1999), Cronbach’s coefficient alpha is a meaningless
calculation with a two or less item scale, since its purpose is to compare each item to the
remaining items in the scale as a group. So, item to total correlation (ITC) were
evaluated for the constructs SPPQM, SQ and BM as these constructs had only two
items. All these values are above 0.70 so all ITC values are acceptable.
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Construct No. of items x 2-test Degree of freedom p-value CFI GFI RMSEA Factor loading R2
Summary of goodness of
fit statistics for CFA
373
Table VI.
TQM in
IJPHM After assessing unidimensionality and reliability, the next issue was to assess content,
3,4 convergent and discriminant validity of the questionnaire. According to Nunnally
(1978), content validity depends on how well the researchers created measurement
items using the relevant literature to cover the content domain of the variable being
measured. The evaluation of content validity is therefore a judgmental process not
open to numerical evaluation (Mahour, 2006). As mentioned previously the selection of
374 construct items in this study was based on extensive review of the literature and then
subsequent refinement by focus group discussion with representatives of
pharmaceutical wholesale distribution companies in Pakistan. The instrument thus
had strong content validity.
The convergent validity of each scale was checked with Bentler-Bonett normed fit
index obtained during CFA. According to Ahire et al. (1996) this index measures the
extent to which different approaches to measuring a construct produces the same
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results. A value of 0.90 and above demonstrates strong convergent validity (Hartwick
and Barki, 1994). The Bentler-Bonett coefficient for all the constructs refined after CFA
was greater then 0.90, indicating high convergent validity.
Discriminant validity measures the degree to which a construct and its indicators
are different from another construct and its indicators (Bagozzi et al., 1991). Evidence of
discriminant validity can be assessed in multiple ways (Mentzer et al., 1999). One of the
ways is by comparing the Cronbach’s alpha of a construct to its correlations with other
model variables (Sila and Ebrahimpour, 2005). According to Ghiselli et al. (1981), if the
value of alpha is sufficiently larger than the average of its correlations with other
variables, this is an evidence of discriminant validity. The difference between the
alpha value of each construct and the average correlation of each construct with the
other constructs was adequately large (0.32-0.67), providing evidence of discriminant
validity.
After assessing scale unidimensionality, scale reliability and construct validity,
correlation, regression and stepwise regression analysis was done using SPSS 15.0.
Results
Table VII presents the correlation among all variables.
Kendall’s tau coefficient was used as Field (2005) recommends its use in the case of a
small non-parametric data set. Hypothetically, the higher the value of correlation
between two variables, the more related to each other these variables are. Table VI
indicates that there are in total 15 significant correlations. However, the dependent
variable RIQM has only two significant correlations, one with construct PD (r ¼ 0.377
– significant at the 0.01 level) and other with construct ET (r ¼ 0.267 – significant at
the 0.05 level). PD has no significant correlation with any of the other independent
variables. ET has significant correlation with only one independent variable, i.e. TMS
(r ¼ 0.250 – significant at the 0.05 level). Therefore, on the basis of correlation analysis
it may be concluded that only the constructs PD and ET are significantly correlated
with the dependent variable.
The next step in the analysis was regression analysis because regression analysis
determines which independent variable(s) explain variability in the outcome, how
much variability in the dependent variable is explained by the independent variable(s)
and which variable(s) is significant over other variables in explaining the variability of
the dependent variable (Mahour, 2006). All independent variables were entered in the
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TMS r 1.000 0.517 * 0.230 * * 0.250 * * 0.230 * * 0.087 0.131 0.234 0.042
p 0.000 0.028 0.021 0.036 0.437 0.218 0.028 0.695
n 51 51 51 48 47 47 51 51 50
SPPQM r 1.000 0.232 0.235 * * 0.363 * 20.099 0.507 * 0.340 * 2 0.109
p 0.033 0.036 0.001 0.396 0.000 0.002 0.326
n 51 51 48 47 47 51 51 50
QIAU r 1.000 0.497 * 0.128 0.176 0.064 0.013 0.194
p 0.000 0.251 0.122 0.554 0.901 0.072
n 51 48 47 47 51 51 50
ET r 1.000 0.165 0.166 20.019 0.036 0.267 * *
p 0.141 0.145 0.862 0.749 0.017
n 48 47 47 48 48 47
EI r 1.000 0.124 * * 0.259 * * 0.263 0.101
p 0.285 0.022 0.020 0.374
n 47 46 47 47 46
PD r 1.000 20.048 0.055 0.377 *
p 0.680 0.633 0.001
n 47 47 47 47
SQ r 1.000 0.209 2 0.111
p 0.055 0.313
n 51 51 50
BM r 1.000 0.027
p 0.803
n 51 50
RIQM r 1.000
p
n 50
Note: Correlations are significant at the *0.01 and * *0.05 levels (two-tailed)
countries
developing
variables
Correlation among
Table VII.
375
TQM in
IJPHM regression model. Only the construct PD emerged as a statistically significant predictor
3,4 of dependent variable. The regression model explained 48.6 per cent of the variability
of dependent variable with standard error 2.39. Analysis of variance (ANOVA) showed
that the model was statistically significant ( p-value ¼ 0.001). This analysis suggested
the conclusion that there is a linear relationship between the independent variable PD
and the dependent variable.
376 Stepwise regression makes it possible to identify predictors that are considered
useful at an early stage but lose their usefulness when additional predictors are
brought into the model (Mahour, 2006). All independent variables were therefore
entered in the stepwise regression model and PD emerged as statistically significant
predictor of dependent variable. The stepwise regression model explained 36.3 per cent
of the variability of the dependent variable with standard error 2.42. ANOVA showed
that the model was statistically significant ( p-value ¼ 0.000). Stepwise regression
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therefore confirmed the finding of the standard regression that PD is the only factor
contributing significantly in the implementation of TQM in pharmaceutical wholesale
distribution companies in Pakistan.
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Management, University of the Punjab, Lahore, Pakistan. This paper is a part of his PhD thesis
entitled “Development of pharmaceutical distribution model for customer satisfaction”. He was a
visiting Researcher at Institute for Retail Studies, University of Stirling, UK from January to
December 2007. He has more than seven years of industry and teaching experience. His research
interests are TQM, customer satisfaction and service quality. Muhammad Usman Awan is the
corresponding author and can be contacted at: usman@iqtm.pu.edu.pk
Abdul Raouf is a Professor and patron in the Institute of Quality and Technology
Management, University of the Punjab, Lahore, Pakistan. He has more than 40 years of research
and teaching experience. He has published extensively in the areas of quality, safety and
maintenance of production systems. Recognizing his scholarly pursuits, he was bestowed upon
the coveted title of “Sitara-e-Imtiaz” by the Government of Pakistan. The Higher Education
Commission of Pakistan conferred upon him the title of Distinguished National Professor. He is
or has been on the editorial board of refereed international journals like Journal of Quality in
Maintenance Engineering, International Journal of Industrial Engineering, International Journal
of Operations & Production Management, International Journal of Quality & Reliability
Management, International Journal of Health Care Quality Assurance, Journal of Human
Ergology, Arabian Journal of Science and Engineering, International Journal of Production
Research, Journal of Engineering Sciences, and Supply Chain Management: An International
Journal.
Niaz Ahmad is a Rector of National Textile University, Faisalabad, Pakistan. He has more
than 20 years of industry and teaching experience. His research interests are TQM and
environmental engineering. He is a Chief Editor of International Journal on Quality and
Innovation and Journal of Quality and Technology Management.
Leigh Sparks is a Professor of Retail Studies and chair of division of Marketing at Stirling
Business School, University of Stirling, Scotland, UK. He was an undergraduate at the University
of Cambridge, and completed his PhD at St David’s University College, Lampeter. He has been a
Professor at Stirling since 1992. He has also been the Director of the Institute for Retail Studies
and the Dean of the Faculty of Management. He was a Visiting Professor at Florida State
University, Tallahassee from July 2000 to July 2001, and Visiting Professor at the University of
Tennessee, Knoxville from June to December 2006. He is Co-Editor of the leading European retail
journal, The International Review of Retail, Distribution and Consumer Research, published by
Taylor & Francis. He has edited a number of books and has published over 100 refereed journal
articles as well as many practitioner, trade and newspaper pieces.
Pharmaceutical and Healthcare Marketing 4:4, 309-323. [Abstract] [Full Text] [PDF]