A Structural Relationship Between Total Quality Management, Strategic Control Systems and Performance of Malaysian Local Governments.

Abstract

The purpose of this study was to investigate the structural relationship between Total Quality Management (TQM) strategy, Strategic Control Systems (SCS) and Organizational Performance (OP). This study was motivated by the inconsistent findings concerning the relationship between TQM and OP as appeared in the contemporary literature. Due to the inconsistencies in the findings, a new research stream emerged which suggests for future researchers to investigate the third variable that can clarify the link between TQM and OP. Therefore, this study integrated the TQM literature and management accounting literature by investigating the control systems variable, as control systems have been widely discussed in management accounting literature as an important variable for the purpose of strategy implementation. In this study, ten critical factors of TQM strategy had been identified from the TQM literature. Performance of organization understudy was measured by using four generic dimensions of performance, namely: financial, internal process, employee and customer. Data for this study was collected from 205 departments attached to the Malaysian local government by using questionnaire as a research instrument. Stratified cluster sampling was used in selecting the sample of the study according to the characteristics of the Malaysian local government. Of 250 questionnaires distributed, 205 questionnaires which is 82% were returned and used for further analysis. The high response rate was achieved due to the research instrument being personally distributed by the researcher to each local government. This study found that the TQM, through the presence of SCS, had a stronger relationship with OP, as compared to the direct relationship between TQM and OP. Therefore, this study supported the premise of contingency theory, which holds that a strategy can be implemented more successfully through the presence of aligned control systems. Additionally, this study found a significant relationship between six critical factors of TQM strategy and organizational performance. The six critical factors of TQM strategy were management commitment; customer focus; human resource management; continuous improvement; quality information systems; and service design. This study also reported a significant relationship between TQM strategy and SCS. The relationship between SCS and OP was also reported to be significant. As this study provided insights regarding unresolved issues on the relationship between TQM and OP as reported in the contemporary literature, this study was able to expand the boundary of existing literature. For those who are skeptical on whether TQM would lead to good OP, this study revealed TQM as a strategy that is only a means towards an end. What is more important is a presence of strategically focused control systems. Thus, this study strongly suggests that managers of local governments should take necessary actions in aligning their control systems with the requirements of TQM strategy.

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