Stakeholder Theory: Implications for Total Quality Management in Higher Education

Purpose: Stakeholder theory (ST) is a reconceptualization of the firm that seeks to change business culture from being focused solely on profit and loss to being focused on creating value for the various stakeholders that are affected by or can affect the firm. Total Quality Management (TQM) is a philosophy that focuses the firm on satisfying the customer by improving organizational processes to improve quality of products and services while meeting predetermined standards. Nearly a third of U.S. voters believe colleges and universities have a negative effect on the nation, demonstrating that current quality efforts are failing in higher education (HE). This paper explores how ST can inform the practice of TQM in HE in the U.S. context. Methodology: This paper conceptually examines ST and TQM to determine how modern TQM practice in HE can be informed by ST. Findings: A reconceptualization of TQM that is informed by ST moves the focus of HE institutions’ quality efforts from being narrow and internal process-focused to a more holistic and systems-oriented approach. This systems-oriented approach requires input on educational design and delivery from faculty, staff, parents, students, potential employers, the government, the community, and beyond. Traditional TQM includes a customer focus. This paper argues that TQM in HE context should have a stakeholder, rather than customer, focus by challenging TQM philosophy to widen its scope of customer to a whole new level. Value: By extending the parties considered when designing education beyond students and industry, HE institutions can ensure that the various HE stakeholders and society at large may benefit from their continued operation. Bringing together diverse viewpoints and perspectives when considering changes to institutional structures, policies, and programs will ensure that no stakeholders are left behind as we design our institutions for success in the emerging 21st century.