Impact of total quality management on sustainability performance

Abstract

Total quality management (TQM) has been a significant philosophy since the 1950s when companies were developing their operations. Its implementation is, however, difficult because there is no detailed and accepted definition of the matters that it covers. Efforts have been made to solve this problem in Europe and America with the EFQM and MBNQA criteria, respectively. The large-scale implementation of the TQM way of thinking is supported by the ISO 9001 certification, which is considered to be the first step. The understanding of TQM has been facilitated due to the latest quality standard updates in the TQM way of thinking. Currently, there is a global trend in the industry that aims to improve sustainability performance. Business sustainability is considered to be divided into economic, environmental and social sustainability. This tripartiteness is called the Triple Bottom Line. This quantitative dissertation aims to increase the understanding of the TQM content through a broader definition of the dimensions related to the company's performance. In addition, the dissertation examines the impact of extended TQM and certification on companies' sustainability performance. The dissertation provides useful information for the management of SMEs about how the dimensions of TQM currently affect the sustainability performance of SMEs. On the other hand, this research shows managers items whose real functionality they can evaluate in their organization together with their staff in order to find performance-related development items. The data for the dissertation were collected from Finnish SMEs, about half of which were certified. The companies represented both the service sector and the industry.

The results show that in industrial and small enterprises (5‒49 employees), certification has a positive effect on the dimensions of TQM, but a similar effect was not observed in medium-sized (50‒250 employees) enterprises or the service sector. Risk Management and Stakeholder Management indirectly affect the profitability of companies. Business management systems and HR practices affect environmental sustainability, while only business management affects social sustainability.