Abstract We empirically examine a mediational model of TQM, in which TQM practices have a direct impact on customer satisfaction and an indirect impact mediated through plant performance. We adopt a survey approach using the data from 339 manufacturing companies. We first establish convergent validity, discriminant validity, and reliability of the constructs. We then examine the model using LISREL 8.10. The results suggest paradoxical relations among TQM practices, plant performance, and customer satisfaction. TQM practices have a stronger impact on customer satisfaction than they do on plant performance. Further, the plant performance, as described in the mediational model, fails to show a significant impact on customer satisfaction. This observation is explained based on an institutional argument that states that loose coupling may occur between TQM practices designed for customer demands and the activities on the plant floor designed for plant performance.
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