ITS - WP - 02 - 10 Relationships Between Soft TQM , Hard TQM , and Organisational Performance

Many empirical studies have demonstrated that only a handful of soft total quality management (TQM) elements contribute to organisational performance while elements of hard TQM have no relationship with performance. Despite these findings, a review of literature suggests that the elements of hard TQM in fact have a profound impact on organisational performance. The empirical studies which have investigated the relationship between hard TQM and performance have investigated the impact of each dimension of TQM on performance separately. We argue that it is more appropriate to investigate the direct impact of soft TQM on the diffusion of hard TQM in organisations and then assess the direct impact of hard TQM on performance. Besides direct effects, it is also important to investigate the indirect effect of soft TQM on performance through its effect on hard TQM elements. Analysis of 260 Australian manufacturing companies revealed that both soft TQM and hard TQM contribute directly to organisational performance. The results also indicate that there are significant positive relationships between the elements of soft TQM and those of hard TQM. Moreover, in addition to its direct affect, the elements of soft TQM also indirectly affects an organisation’s performance through its effect on hard TQM elements.