Direct, Indirect and Total Effect of Critical Soft Factors on Organizational Performance: Evidence from Malaysian Electrical and Electronics Firms

The principal aim of this study is to determine the direct, indirect and total effect of critical soft factors (CSF) on quality improvement (QI) and organizational performance (OP) in 255 Malaysian electrical & electronics (E&E) firms. Based on previous empirical studies and theoretical considerations, a model is proposed linking the CSF and QI to organizational performance (OP). Previous research has empirically verified and validated the underlying dimensions of CSF, QI and OP. Therefore, these dimensions were adopted in this study. ;he structural equation modeling (SEM) technique was employed to examine the direct, indirect effect and also to test the theoretical model fit. Data analysis reveals that, the CSF has a strong and positive association with the QI and OP. Similarly, a strong and positive relationship was noted between the level of QI and organizational performance. QI does mediate the relationship between most of the CSF and OP. It has also been found that the CSF has a positive and significant direct and indirect impact on organizational performance through the mediator of QI.