The effect of TQM on organisational performance: empirical evidence from the textile sector of a developing country using SEM

Total Quality Management (TQM) is a widely used management philosophy across many sectors. Organisations implement TQM in order to gain competitive advantage in terms of quality, productivity, customer satisfaction, and profitability. However, the literature seems inconclusive about the positive effect of TQM on organisational performance. Several studies argue that the effect of TQM practices on organisational performance need to be evaluated in different social, cultural, and economic settings. The effect of national culture on TQM implementation is also gaining importance. Therefore, this study provides empirical evidence from a developing country of South Asia. This study was conducted in the context of textile companies of Pakistan. The data was collected from the member companies of All Pakistan Textile Mills Association (APTMA) by using a questionnaire. The questionnaires were sent to 210 textile companies and the respondents were quality or production managers. Structural Equation Modelling (SEM) was used to investigate the relationship between TQM practices and organisational performance. The findings of this study indicate that TQM has a highly positive effect on organisational performance. These findings support the divergence argument which indicates that the positive effect of TQM on organisational performance is not limited only to the companies located in developed nations, but can also be equally achieved in the other parts of the world. All the TQM elements have positive relationship with financial and non-financial results. However, the element of people does not have significant relationship with financial and non-financial results.