A comparative case study of sustaining quality as a competitive advantage
| Author | Kevin Linderman,Hung‐Chung Su,Roger G. Schroeder,Andrew H. Van de Ven |
| Published date | 01 November 2014 |
| Date | 01 November 2014 |
| DOI | http://doi.org/10.1016/j.jom.2014.09.003 |
Journal
of
Operations
Management
32
(2014)
429–445
Contents
lists
available
at
ScienceDirect
Journal
of
Operations
Management
j
o
ur
na
l
ho
mepage:
www.elsevier.com/locate
/jom
A
comparative
case
study
of
sustaining
quality
as
a
competitive
advantage
Hung-Chung
Sua,
Kevin
Lindermanb,∗,
Roger
G.
Schroederb,
Andrew
H.
Van
de
Venc
aCollege
of
Business
and
Economics,
University
of
Wisconsin
–
Whitewater,
United
States
bCarlson
School
of
Management,
University
of
Minnesota,
United
States
cVernon
H.
Heath
Professor
of
Organizational
Innovation
and
Change,
Carlson
School
of
Management,
University
of
Minnesota,
United
States
a
r
t
i
c
l
e
i
n
f
o
Article
history:
Available
online
16
September
2014
Keywords:
Operations
strategy
Quality
Management
Red
Queen
Effect
a
b
s
t
r
a
c
t
Many
organizations
have
achieved
high
levels
of
quality
performance
only
to
lose
it
later
on.
These
firms
that
were
once
quality
leaders
can
no
longer
compete
on
the
quality
of
their
products
or
services.
This
research
develops
a
theoretical
understanding
of
how
organizations
can
sustain
a
quality
advantage.
It
offers
a
conceptual
definition
of
sustaining
a
quality
advantage
which
involves
not
only
sustaining
a
high
level
of
quality
performance,
but
also
sustaining
a
high
consistency
of
quality
performance.
A
comparative
case
study
provides
evidence
of
three
capabilities
that
distinguish
firms
with
different
lev-
els
of
sustaining
quality.
These
capabilities
include:
(1)
meta-learning,
(2)
sensing
weak
signals,
and
(3)
resilience
to
quality
disruptions.
The
case
analysis
argues
that
meta-learning
helps
sustain
a
high
level
of
quality
performance,
while
sensing
weak
signals
and
resilience
improves
the
consistency
of
qual-
ity
performance.
This
study
offers
a
dynamic
capability-based
strategy
that
explains
how
to
sustain
a
competitive
advantage
in
quality,
which
may
also
have
implications
for
sustaining
other
operational
competitive
advantages.
©
2014
Elsevier
B.V.
All
rights
reserved.
1.
Introduction
Operations
strategy
scholars
have
long
noted
the
importance
of
establishing
a
competitive
advantage
in
quality.
Previous
research
has
examined
the
link
between
quality
and
financial
performance.
Higher
quality
increases
revenue
by
making
products
more
attrac-
tive
and
creating
a
market
advantage
or
reduces
cost
by
increasing
efficiency
(Buzzell
and
Gale,
1987;
Garvin,
1988).
The
‘sand
cone’
model
argues
that
a
competitive
advantage
in
quality
is
the
foun-
dation
for
other
operational
competitive
advantages
(Ferdows
and
De
Meyer,
1990).
Empirical
evidence
further
supports
that
qual-
ity
provides
a
foundation
to
other
competitive
dimensions
in
operations
(Rosenzweig
and
Roth,
2004;
Roth
and
Miller,
1992).
Over
the
past
few
decades
scholars
have
extensively
studied
how
organizations
can
obtain
a
competitive
advantage
through
quality
performance
(Ahire,
1996;
Ahire
and
Dreyfus,
2000;
Anderson
et
al.,
1994;
Benson
et
al.,
1991;
Flynn
et
al.,
1994,
1995;
Kaynak,
2003).
Researchers
have
drawn
on
different
theoretical
perspectives
to
understand
the
relationship
between
quality
and
competitive
∗Corresponding
author.
E-mail
addresses:
suh@uww.edu
(H.-C.
Su),
linde037@umn.edu
(K.
Linderman),
rschroed@umn.edu
(R.G.
Schroeder),
avandeve@umn.edu
(A.H.
Van
de
Ven).
advantage.
For
example,
scholars
have
drawn
on
the
resource-
based
view
(RBV)
(Barney,
1991)
of
the
firm
to
explain
how
a
number
of
practices,
and
frameworks
such
as
TQM
(Flynn
et
al.,
1994,
1995;
Powell,
1995),
Baldrige
(Flynn
and
Saladin,
2001)
and
ISO
9000
(Corbett
et
al.,
2005;
Martínez-Costa
et
al.,
2009;
Naveh
and
Marcus,
2005)
lead
to
a
competitive
advantage
in
quality.
However,
we
know
very
little
about
how
to
sustain
a
competi-
tive
advantage
in
quality.
In
the
past
few
years
product
recalls
from
the
long
time
quality
leader
Toyota
reflect
the
difficulty
of
sus-
taining
quality
performance
(Ohnsman
et
al.,
2010;
Valasic,
2010).
Reports
of
uncontrolled
acceleration
in
some
of
Toyota’s
vehicles
first
surfaced
in
2002,
yet
those
signals
were
largely
discounted.
Ultimately
Toyota’s
Consumer
Report’s
reliability
ranking
slipped
from
number
one
to
fifth
in
2007.
These
events
culminated
in
2008,
when
a
Toyota
Avalon
allegedly
caused
an
accident
that
killed
four
people.
Toyota’s
market
share
ultimately
dropped
in
the
face
of
these
recalls
(Oliver,
2014).
Other
leading
companies
such
as
Sony,
Hitachi
and
Mercedes-Benz
experienced
similar
difficulties
in
sus-
taining
a
competitive
advantage
in
quality
(Fackler,
2006;
Taylor,
2003).
For
example,
throughout
the
1990s
Mercedes
was
in
the
top
10
and
often
ranked
in
1st
place
on
the
J.D.
Power
surveys
for
vehi-
cle
quality.
Then
suddenly
they
dropped
to
26th
in
2003
and
had
more
than
300
problems
reported
per
100
vehicles
(Taylor,
2003).
Taylor
notes,
“In
an
ever
more
complicated
world
.
.
.
[Mercedes]
http://dx.doi.org/10.1016/j.jom.2014.09.003
0272-6963/©
2014
Elsevier
B.V.
All
rights
reserved.
430
H.-C.
Su
et
al.
/
Journal
of
Operations
Management
32
(2014)
429–445
once
unquestioned
position
at
the
top
of
the
automotive
pecking
order
is
under
threat
as
never
before”
(p.
145).
Although
few
would
deny
Toyota’s
and
Mercedes-Benz’s
competitive
advantage
in
qual-
ity
over
the
past
few
decades,
even
the
best
have
trouble
sustaining
it.
A
theoretical
framework
is
needed
to
guide
both
practitioners
and
academics
on
strategies
to
sustain
a
competitive
advantage
in
quality.
This
paper
fills
this
gap
by
examining
the
following
research
question:
how
do
organizations
sustain
a
competitive
advantage
in
quality?
To
investigate
this
question
we
conduct
a
comparative
case
anal-
ysis
that
iterates
between
the
literature
and
the
case
data
to
develop
a
theory
on
sustaining
a
quality
advantage.
The
analysis
draws
on
literature
from
quality
management
(Flynn
et
al.,
1994,
1995),
dynamic
capability
(Teece
et
al.,
1997;
Zollo
and
Winter,
2002),
Red
Queen
Effect
(Barnett
and
Hansen,
1996;
Barnett
and
McKendrick,
2004;
Barnett
and
Pontikes,
2005),
organizational
learning
(Argote,
2013;
Argyris
and
Schön,
1996)
and
high
reliability
organization
(HRO)
theory
(Weick
and
Sutcliffe,
2001,
2007;
Weick
et
al.,
1999).
The
results
show
that
three
important
capabilities
differentiate
organizations
that
sustain
quality
from
those
that
don’t.
The
first
capability
is
Meta-learning,
which
continually
increases
an
organi-
zation’s
ability
to
learn.
This
capability
enhances
an
organization’s
ability
to
engage
in
both
first-order
and
second-order
learning.
The
second
capability,
sensing
weak
signals,
gives
organizations
the
ability
to
detect
subtle
changes
that
could
disrupt
their
quality
per-
formance.
Sensing
weak
signals
involves
an
organization’s
vigilant
engagements
with
their
operations,
customers
and
the
environ-
ment.
The
third
capability,
resilience
to
quality
disruptions,
helps
organizations
quickly
adapt
and
recover
from
quality
disruptions
when
they
do
occur.
These
capabilities
come
together
to
form
a
dynamic
capability
that
explains
how
organizations
sustain
a
qual-
ity
advantage
by
increasing
their
ability
to
adapt
and
respond
to
changes
in
the
environment.
This
study
contributes
to
the
literature
by
identifying
capabili-
ties
that
sustain
high
quality
performance
which
prior
studies
have
not
considered.
The
comparative
case
analysis
brings
together
lit-
erature
streams
that
have
been
previously
disconnected.
It
views
sustaining
a
quality
advantage
as
an
ongoing
race,
where
orga-
nizations
need
to
evolve
and
adapt
faster
to
stay
ahead
of
the
competition.
Departing
somewhat
from
previous
research,
we
sug-
gest
that
sustaining
a
quality
advantage
is
not
about
developing
an
imitable
resource
that
cannot
be
replicated,
but
instead
it’s
about
constantly
evolving
and
improving
faster
than
the
competition.
We
offer
an
evolutionary
dynamic
perspective
of
sustaining
a
quality
advantage
which
has
not
been
fully
considered
in
the
past.
The
rest
of
the
paper
has
the
following
organization.
Section
2
defines
the
concept
of
sustaining
a
competitive
advantage
in
qual-
ity.
Section
3
gives
the
conceptual
background
for
the
literature
streams
related
to
this
research.
Section
4
describes
the
case
study
research
methodology,
Section
5
presents
the
findings
and
propo-
sitions,
and
Section
6
summarizes
the
conceptual
model.
Finally,
Section
7
discusses
the
implications
and
conclusions.
2.
Defining
sustaining
a
competitive
advantage
in
quality
Operations
strategy
scholars
often
use
high
quality
performance
relative
to
competition
as
an
indicator
of
a
competitive
advantage
in
quality
(Ward
and
Duray,
2000).
However,
previous
studies
in
qual-
ity
management
often
did
not
differentiate
achieving
high
quality
performance
from
sustaining
a
competitive
advantage
in
quality.
Organizations
that
meet
or
exceed
customer
expectations
achieve
high
quality
performance
(Evans
and
Lindsay,
2008).
Yet,
while
achieving
high
quality
performance
at
one
point
in
time
indicates
a
high
level
of
performance,
it
does
not
indicate
high
consistency
of
performance.
Previous
studies
have
not
fully
considered
the
Sustaining (AMD, GPF)
Lost and
Regained (BLP, GFI)
Los
t (A
PC, BA
T)
Industry average
High level
quality po
sition
Fig.
1.
Patterns
of
sustaining
a
quality
advantage.
consistency
dimension
of
performance.1In
management
literature,
a
high
consistency
of
performance
has
been
defined
as
achiev-
ing
“collective
outcomes
of
a
certain
minimum
level
repeatedly”
(Hannan
and
Freeman,
1984,
p.
153).
High
consistency
of
quality
performance
therefore
indicates
lower
variance
in
quality
per-
formance.
Organizations
that
sustain
a
competitive
advantage
in
quality
should
not
only
achieve
a
high
level
of
quality
performance
at
a
point
in
time
but
also
do
it
consistently
over
time.
Fig.
1
illustrates
the
meaning
of
sustaining
a
competitive
advan-
tage
in
quality.
It
is
important
to
note
that
this
study
investigates
how
organizations
sustain
a
quality
advantage,
not
about
how
they
achieve
it.
Fig.
1
shows
three
different
patterns
that
illustrate
varying
degrees
of
sustaining.
The
first
pattern
(solid
line)
shows
organizations
that
sustain
a
competitive
advantage
in
quality.
They
not
only
have
a
high
level
of
performance
but
also
have
high
consis-
tency
(lower
variance)
in
performance.
The
second
pattern
(dotted
line)
shows
organizations
that
lost
and
regained
their
quality
per-
formance.
These
organizations
still
meet
or
exceed
customers’
expectations
(i.e.
have
high
level
of
quality
performance)
but
are
less
consistent.
The
third
pattern
(dashed
line)
shows
organiza-
tions
that
lost
their
high
quality
performance.
These
organizations
have
lost
their
high
level
of
quality
performance
and
also
have
low
consistency;
they
have
the
least
consistency
when
compared
with
the
other
two
cases.
By
distinguishing
between
the
level
and
consistency
dimensions
of
quality
performance,
this
study
defines
sustaining
a
competitive
advantage
in
quality
as
having
a
high
level
and
high
consistency
of
quality
performance
over
time.
These
basic
patterns
were
developed
from
the
case
analysis,
which
we
describe
later
in
the
research
methods
section
of
the
paper.
3.
Conceptual
background
Concepts
from
several
different
theories
help
inform
the
analy-
sis
of
the
case
data.
Each
theory
comes
from
a
different
literature
stream
and
offers
a
unique
perspective
on
how
to
sustain
a
quality
advantage.
In
addition,
prior
research
has
not
integrated
these
the-
ories.
The
case
data
helped
identify
concepts
from
these
theories
to
explain
how
organizations
sustain
a
competitive
advantage
in
quality.
The
following
sections
give
an
overview
of
each
theoretical
perspective
that
emerged
from
the
comparative
case
analysis.
1Note
that
consistency
refers
to
the
organization
performance
on
quality,
such
as
Mercedes
JD
Power
Quality
Rating.
This
is
different
from
SPC
which
controls
process
variation.
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