Achieving Sustainable Performance Through TQM and Market Orientation: A Proposed Framework for Empirical Investigations - Page 2

TQM and Market Orientation Routes to Sustainable Performance: A framework for an empirical investigation

Background literature on TQM, market orientation and performance

In coping with the environmental challenges and to sustain performance, firms practice a different relative emphasis on business orientation during the last three decades. The traditional business orientations evolve from production to sales, to marketing to entrepreneurial (Kotler, 1977; Webster, 1988). A different form of orientations is dominant in different industrial eras thus classifying relative emphasis between internal focus and customer focus behaviour of the firm (Ansoff, 1979; Webster, 1988, 1994; Treacy and Wiersema, 1993). Quality orientation evolves from conformance quality to customer satisfaction to competitive market perceived quality and value to customer value management (Gale, 1994, Garvin, 1988). The earlier two stages are internally focused while the latter forms are more externally oriented.

The recent decades have observed the rising of TQM and market orientation approaches to strategic movement. Whereas market orientation off shoots from marketing concept and is rooted in resource-based theory to competitive advantage (e.g. Webster, 1994; Kohli and Jaworski, 1990). TQM discipline originated in statistical theory, but first developed within manufacturing and operations management before its adoption into services, health care, publics, education and not for profit organisations (e.g. Haris, 1995; Hackman and Wageman, 1995).

Recent descriptive literatures pointed to the convergence of the these two business orientations into an integrated management discipline and practices based on a common objective that is to achieve customer satisfaction through quality (e.g. Webster 1988, 1994; Day 1994; Kotler 1977; Gummesson, 1994, 1998; Mohr-Jackson, 1998). Many other authors implied this integration in their writing. For example, Spencer (1994), and Dean and Bowen (1994) found substantial overlapping between TQM and management theory. As Grant et al. (1994) propose that TQM orientation is a superior model to classical management theory but incompatible hence challenges the traditional economic and behavioural theory of the firm.

Mohr-Jackson (1998) states that total quality orientation and market orientation are complementary philosophies with potential benefits for improving business results. Such congruence benefits marketing function from taking greater responsibilities in quality management. He echoed O’Neil and LaFiet (1992) to suggest that the adoption of TQM is critical for successful application of the marketing concept within a firm. Additionally, TQM provides vehicle for increasing communication and co-operation between marketing and other functions, including operations and production.

Gummesson (1992) proposes a quality-focused orientation as an organisational response to environmental dynamics, which integrate and may supersede production and marketing orientation. Production orientation argues Gummesson (1998) is consistent with internally driven quality management while marketing orientation is closely tied to external quality management. Strategic success is the trade-off between those two. Moreover, he argues that quality management has fortified the relationship between operations management and marketing management and has united production orientation with marketing orientation. All these trends hint the potential viability of a ‘market-based quality orientation’ as advocated in this research.

From strategic viewpoint, both quality and market orientations represent the demand-side strategy, where obsession with customer satisfaction through quality as the source of competitive advantage and predecessor to business performance (e.g. Webster, 1994; Wayland and Cole, 1996). Deming (1982) calls for transformation of management style based on company-wide quality orientation would lead to future competitive advantage and survival for the organisation. In discussing the paradigm for implementing marketing, Gummesson (1998) stresses that quality management can be approached externally from the market, or internally from the organisation. He asserts that the former is market driven quality management extended from “fitness for use” in Juran’s (1992) terms, whereas the latter is driven by technology, organisational structure, systems, and internal goals and values.

Since the literature pointed to the existence of multiple orientations, it appears that firm might employ several orientations simultaneously. However, as Kotler (1977) suggested firms normally adopt only one of the many mutually exclusive orientations as their core philosophy. Moreover, since orientation as part of the corporate culture (Desphande et al.,1993; Webster, 1994), resource-consuming to implement, and lapse in producing results, therefore, implementing them require investment in resources and commitment by top managers and employees. As such, firms nurturing a specific orientation require appropriate strategic focus in their value chain activities. This, demands a balanced approach in implementing strategic contents (effectiveness factors) and processes (efficiency factors) of the chosen orientation (Hofer and Schendel, 1978; Reed et al.,1996), which suit the firm’s goals (Sitkin et al., 1994).

A firm’s orientation as a business strategy could be studied from “process-content” perspective. In particular to quality orientation, Reed et al. (1996) pointed out the process elements and content elements of TQM, in the context of firm strategy, and identify four strategic TQM contents as market advantage, design optimisation, process optimisation and product reliability. The first two contents are associated with the consequences of being external or customer-focused, while internal or operation-focused leads to firms strive to optimise operational processes and product reliability. They see the contents as the substantive elements that actually cause the changes in performance outcome. The strategic contents are therefore the core activities of the business orientation, which influence performance either singly or in synergy with other supporting practices. Those elements by themselves are necessary for superior performance but might not be sufficient to hold a sustainable outcome. TQM and market orientation supporting practices form the infrastructure that supports the value creation for the external customer.

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