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Final Thesis TOTAL QUALITY MANAGEMENT ADOPTION AND PERFORMANCE: A STUDY OF FAMILY OWNED AND NON-FAMILY OWNED ENTERPRISES IN MALAYSIA TAN BOON IN DOCTOR OF PHILOSOPHY FACULTY OF BUSINESS AND FINANCE UNIVERSITI TUNKU ABDUL RAHMAN MAY 2018 TOTAL QUALITY MANAGEMENT ADOPTION AND PERFORMANCE: A STUDY OF FAMILY OWNED AND NON-FAMILY OWNED ENTERPRISES IN MALAYSIA BY TAN BOON IN A thesis submitted to the Department of Marketing, Faculty of Business and Finance, Universiti Tunku Abdul Rahman, in partial fulfilment of the requirement for the degree of Doctor of Philosophy MAY 2018 ii ABSTRACT TOTAL QUALITY MANAGEMENT ADOPTION AND PERFORMANCE: A STUDY OF FAMILY OWNED AND NON-FAMILY OWNED ENTERPRISES IN MALAYSIA Tan Boon In The relationship between total quality management (TQM) and organizational performance in both manufacturing and service organizations has been previously studied around the world. In Malaysia, there is insufficient research being carried out in the scenario of family owned and non-family owned businesses. Hence, this study will look into ISO certified (or planning to apply for ISO or any other quality certifications) family owned and non-family owned enterprises from the quality management perspective towards improvement in organizational performance based on four perspectives, namely employee satisfaction, customer satisfaction, product quality and strategic business performance. One hundred and eighty six respondents gathered through self-administered questionnaires were analyzed with Partial Least Squares Structural Equation Modeling (PLS-SEM) method to test the relationship between TQM practices (i.e. leadership, strategic planning, human resource management, process management, customer focus and information and analysis) and organizational performance using SmartPLS software. The findings from this study have identified leadership and customer focus positively and significantly associated with organizational performance. In addition, this study also provides evidence that firm size, industry type and firm’s ownership (family or non-family owned) do not have moderating effects of TQM practices on organizational performance. The findings of this study offer useful insights for practitioner of iii family owned and non-family owned enterprises to evaluate tools that could be effective in the implementation of TQM practices in influencing the organizational performance. The contribution of this study attempts to narrow the gap and reflect the business community from the context of family owned and non-family owned firms who wish to improve organizational performance by implementing TQM practices. It is suggested that six TQM principles selected from the Malcolm Baldrige National Quality Award (MBNQA) model can provide a comprehensive understanding on how TQM practices would influence on organizational performance among the Malaysian’s family owned and non-family owned enterprises. iv ACKNOWLEDGEMENT This thesis will not be possibly completed without the kind guidance and assistance from the following persons whom I would like to thank them personally and express my sincere appreciation to them. First and foremost, to both my supervisors Dr. Wong Kee Luen and Professor Dr. Choong Chee Keong for their unselfish guidance and continuous coaching throughout the last few years of my learning and writing towards this completion. My superior when I was attached to FBF UTAR, Professor Dr. Ooi Keng Boon, has been the advisor who constantly motivating me and showing me the path to completion of this thesis. Without him the journey would be exceedingly much more challenging for me. At the same time, my FBF colleagues, especially the examiners who have taken so much time to ensure my works are elevated and improved to befit the expectation of the university. Colleagues who have constantly motivate and encourage me despite the fact that I have left the teaching job in university a few years ago, especially Wong CH, Dr. Lee VH, Garry Tan, Sim JJ, Jason Teo, Bobby Chua, Stephanie Loo, Lam SY just to name a few whom I truly treasure their care and friendship. Lastly; my wife Jennifer and my three children (Audrey Xi Jia, Adrian Xi Kuan and Anthony Xi Juan) have obliged and supported me in this endeavour. v APPROVAL SHEET This thesis entitled “TOTAL QUALITY MANAGEMENT ADOPTION AND PERFORMANCE: A STUDY OF FAMILY OWNED AND NON-FAMILY OWNED ENTERPRISES IN MALAYSIA” was prepared by TAN BOON IN and submitted as partial fulfilment of the requirement for the degree of Doctor of Philosophy at Universiti Tunku Abdul Rahman. Approved by (Dr. WONG KEE LUEN) Date: MAY 2018 Supervisor Department of Commerce and Accountancy, Faculty of Business and Finance (Prof. Dr. CHOONG CHEE KEONG) Date: MAY 2018 Co-Supervisor Department of Economics, Faculty of Business and Finance vi SUBMISSION SHEET FACULTY OF BUSINESS AND FINANCE UNIVERSITI TUNKU ABDUL RAHMAN Date: MAY 2018 SUBMISSION OF DISSERTATION It is hereby certified that TAN BOON IN (ID No: 10ABD07324) has completed this dissertation entitled “TOTAL QUALITY MANAGEMENT ADOPTION AND PERFORMANCE: A STUDY OF FAMILY OWNED AND NON-FAMILY OWNED ENTERPRISES IN MALAYSIA” under the supervision of Dr. WONG KEE LUEN (Supervisor) from the Department of Commerce and Accountancy, Faculty of Business and Finance and Prof. Dr. CHOONG CHEE KEONG (Co-Supervisor) from the Department of Economics, Faculty of Business and Finance. I understand that the University will upload softcopy of my dissertation in PDF format into UTAR Institutional Repository, which may be made accessible to UTAR community and public. Yours truly, (TAN BOON IN) vii DECLARATION I TAN BOON IN hereby declare that the thesis is based on my original work except for the quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other degree at UTAR or other institutions. (TAN BOON IN) Date: MAY 2018 viii TABLE OF CONTENTS Page ABSTRACT iii ACKNOWLEDGEMENT v APPROVAL SHEET vi SUBMISSION SHEET vii DECLARATION viii TABLE OF CONTENTS ix LIST OF TABLES xiii LIST OF FIGURES xiv LIST OF ABBREVIATIONS xv CHAPTER 1 INTRODUCTION 1 1.1 Background of the Study 1 1.2 Problem Statement 5 1.3 Research Questions 7 1.4 Research Objectives 9 1.5 Scope of the Study 10 1.6 Significance of the Study 11 1.6.1 Theoretical Contributions 11 1.6.2 Managerial Contributions 12 1.7 Definition of Terms 13 1.8 Conclusion 14 2 REVIEW OF LITERATURE 16 2.1 Introduction 16 2.2 The Evolution of Quality Management 19 2.2.1 Quality Inspection Stage 18 2.2.2 Statistical Quality Control Stage 19 2.2.3 Quality Assurance Stage 19 2.2.3.1 Cost of Quality 20 2.2.3.2 Total Quality Control 20 2.2.3.3 Reliability Engineering 21 2.2.3.4 Zero Defects 22 2.2.4 Strategic Quality Management 22 2.2.5 Summary 23 2.3 Quality Prescriptions by Quality Gurus 23 2.3.1 W Edwards Deming (1900 – 1993) 23 2.3.1.1 The Plan-Do-Check-Act (PDCA) Cycle 26 2.3.1.2 Deming’s 14 Points 28 2.3.1.3 The Seven Deadly and Ten Dreadful Diseases 29 2.3.2 Joseph M. Juran (1904 – 2008) 31 2.3.2.1 The Early Years 31 2.3.2.2 From Western Electric to New York University 32 2.3.2.3 Pareto Principle (1937) “Vital Many” and “Trivial 32 ix Few” (80/20 Rule) 2.3.2.4 Definition of Quality – Fitness for Use 33 2.3.2.5 Contribution to Japan (First Visit 1954) 34 2.3.2.6 The Juran Trilogy 35 2.3.3 Dr. Philip Bayard Crosby (1926 – 2001) 37 2.3.3.1 Four Absolutes of Quality Management 37 2.3.3.2 14 Steps for Quality Management 39 2.3.3.3 Quality Vaccine 39 2.3.4 Kaoru Ishikawa (1915 – 1989) 40 2.3.5 Armand Vallin (1922) Feigenbaum 41 2.3.6 Comparing of Quality Guru’s Prescription 42 2.4 Quality Award Models 46 2.4.1 Malcolm Baldrige National Quality Award 46 2.4.2 European Quality Award (EQA) 50 2.4.3 Deming Prize 53 2.4.4 Comparing of the Quality Awards Models 61 2.5 Review of TQM Concept 63 2.6 Review of Key Practices of TQM 67 2.6.1 Leadership 70 2.6.2 Strategic Planning 73 2.6.3 Human Resource Management 75 2.6.4 Process Management 77 2.6.5 Customer Focus 78 2.6.6 Information and Analysis 79 2.7 Review of Organizational Performance 80 2.7.1 Employee Satisfaction 81 2.7.2 Customer Satisfaction 82 2.7.3 Product Quality 84 2.7.4 Strategic Business Performance 85 2.8 Review of Family Owned Enterprise 86 2.9 Conclusion 91 3 RESEARCH MODEL AND DEVELOPMENT OF HYPOTHESES 92 3.1 Introduction 92 3.2 Research Model 92 3.3 Relationship between TQM Practices and Organizational Performance 93 3.3.1 Leadership 96 3.3.2 Strategic Planning 100 3.3.3 Human Resource Management 103 3.3.4 Process Management 104 3.3.5 Customer Focus 106 3.3.6 Information and Analysis 109 3.3.7 Moderating Effect: Industry Size 110 3.3.8 Moderating Effect: Industry Type 112 3.3.9 Moderating Effect: Industry’s Ownership 113 3.4 Conclusion 114 4 RESEARCH METHODOLOGY 115 4.1 Introduction 115 4.2 Research Design 115 x 4.3 Development of Research Instruments 117 4.3.1 Operationalization of TQM Instruments 118 4.3.2 Operationalization of Organizational Performance 120 4.3.3 Questionnaire Pretesting 122 4.3.4 Pilot Study 123 4.3.5 Questionnaire Structure 123 4.4 Population Study 125 4.5 Data Collection Procedure 126 4.5.1 Sampling Procedure 128 4.6 Statistical Analysis 129 4.6.1 Data Screening 129 4.6.2 Refinement and Validation of Instruments 130 4.6.2.1 Reliability 130 4.6.2.1.1 Reliability Analysis 130 4.6.2.2 Validity 131 4.6.2.2.1 Content Validity 131 4.6.2.2.2 Convergent Validity 132 4.6.2.2.3 Discriminant Validity 132 4.6.2.2.4 Multicollinearity 133 4.6.3 Handling Missing Data in Survey 133 4.7 Conclusion 133
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