The Relationship between Quality Management Practices and Organisational Performance: A Structural Equation Modelling Approach

The purpose of this paper is to examine the relationship between the quality management practices (QMPs) and organisational performance for the manufacturing industry in Malaysia. In this study, a QMPs and organisational performance framework is developed according to a comprehensive literature review which cover aspects of hard and soft quality factors in manufacturing process environment. A total of 11 hypotheses have been put forward to test the relationship amongst the six constructs, which are management commitment, training, process management, quality tools, continuous improvement and organisational performance. The model is analysed using Structural Equation Modeling (SEM) with AMOS software version 18.0 using Maximum Likelihood (ML) estimation. A total of 480 questionnaires were distributed, and 210 questionnaires were valid for analysis. The results of the modeling analysis using ML estimation indicate that the fits statistics of QMPs and organisational performance model for manufacturing industry is admissible. From the results, it found that the management commitment have significant impact on the training and process management. Similarly, the training had significant effect to the quality tools, process management and continuous improvement. Furthermore, the quality tools have significant influence on the process management and continuous improvement. Likewise, the process management also has a significant impact to the continuous improvement. In addition the continuous improvement has significant influence the organisational performance. However, the results of the study also found that there is no significant relationship between management commitment and quality tools, and between the management commitment and continuous improvement. The results of the study can be used by managers to prioritize the implementation of QMPs. For instances, those practices that are found to have positive impact on organisational performance can be recommended to managers so that they can allocate resources to improve these practices to get better performance.