TQM PERSPECTIVES UNDER THE COMPETITIVE STRATEGIES AND THE ORGANIZATION PERFORMANCE IN KENYAN MANUFACTURING SECTOR.

Author:Simani, Wamalwa Lucy
Position:Total quality management - Report
 
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INTRODUCTION

The Kenyan manufacturing sector is faced with a number of challenges one of which is competition (Chege, Ngui & Kimuyu, 2014). The manufacturing industry must compete locally with imports from well-established multinational firms while at the same time try to have a competitive edge in the world (World Bank, 2016). The competitiveness of Kenya manufacturing exports has been slowly declining; traditionally Kenya was the largest exporter of various manufactured goods to the EAC currently its market share has declined from 9% in 2009 to 7% in 2013; Globally its market share has also been on the decline from 0.18% in 1980 down to 0.06% in 1994 and 0.02% in 2013 (World Bank, 2014). (Acar & Zehir 2010) emphasized on the need for an organization to implement a viable business strategy in order to improve its competitiveness. Porter's (1980) Generic strategy model positive linkage to organization performance has been widely documented over the past three decades (Parnell, 2011; Luoma, 2015; Salavou, 2015). The model stipulates that an organization can attain superior performance over others by either establishing cost leadership position or differentiating its offering from those of its rivals, either of these approaches may be accompanied by focusing efforts on a given market niche. Faezi (2014) envisaged that generic strategies need to be complemented with TQM implementation in order to provide sustenance and achieve high performance.

TQM has become an irrepressible, globally pervasive strategic force in today's business environment (Asif, Bruijin, Douglas & Fisscher, 2009). Organizations that have implemented TQM practices consistently outperform organizations that have not implemented TQM practices (Akgun, Ince, Imamoglu, Kekskin & Kocoglu, 2014). Studies have shown that TQM is positively associated with performance outcome such as; Financial performance and profitability (Chaudary, Zafar & Salman, 2015; Talib, Rahman, & Quresh, 2013); customer satisfaction (Mehra & Ranganathan, 2008) and knowledge management (Ooi, Cheah, Lin & Teh, 2012; Aboyassi, Alnsour & Alkloub, 2011).

The impact of TQM on strategic management research practices still remains unclear and under examined (Nouri, 2013). Scholars (Nouri, 2013; Asif 2009) posit that TQM literature is pretty much divorced from the field of strategic management. A number of researchers (Yunis, Jung & Chen,2013; Escrig-Tena, Bou-Liusar, Beltr'an-Mart'in & Roga-Puig, 2011) have studied the impact of TQM on business strategies performance in different perspective chiefly as a driver to strategic choices; Jung, Wang and Wu (2009) examined the relationship between TQM and business strategies in international projects in USA; Zatzick, Moliterno and Fang (2012) explored how fit organization strategic orientation relates to TQM implementation in USA; Prajogo and Sohal (2006) studied the relationship between organization strategy, TQM and organization performance in Australian firms; Revuelto-Taboada, Canet-Giner and Balbastre-Benavent (2011) investigated the relationship between Quality tools and techniques, EFQM experience and strategy formulation in Spanish service firms. The primary focus of these studies has been on advanced economies. In Kenya, related studies have been carried out by Awino, Muchara, Ogutu and Oeba (2012) to find out the effect of Total Quality implementation on Horticulture Industry Competitive advantage. Other studies (Karani & Okibo, 2012; Kibe & Wanjau, 2014) have focused on the effect of TQM on organization performance. The study examined the Mediating effect of TQM on the relationship between competitive strategies and organization performance in Kenyan manufacturing sector.

Research Hypothesis

H01: TQM practice has no significant Mediating effect on the relationship between differentiation strategy and Organization Performance.

H02: TQM practice has no significant Mediating effect on the relationship between cost leadership strategy and Organization Performance.

LITERATURE REVIEW AND CONCEPTUAL FRAME WORK

Theoretical Review

This study was based on knowledge based theory; dynamic capability theory; resource based view theory and systems theory. Knowledge Based Theory of the Firm considers knowledge as the most strategically significant resource of the firm. A firm's competitive advantage depends upon what it knows and how it uses what it knows and how fast it can create something new (Duran, Contender & Saehan, 2014). The capability to learn or the ability to create and apply new knowledge is considered a source of sustainable competitive advantage and superior corporate performance (Islam, Low, Kim & Hasan, 2011). TQM and knowledge management constitute and interact in area of continuous improvement and workforce empowerment. Therefore enterprises that have implemented TQM practices are better in the fields of obtaining knowledge from customers and employees participation in dissemination of knowledge. According to Hung, Lien, Fang and McLean (2010) one of TQM greatest benefits is its emphasis on continuous improvement of business processes so that it can improve organizations competitiveness, effectiveness and flexibility. To achieve continuous improvement firms must promote organization learning to create knowledge that can be utilized in future to improve business processes (Islam, et al., 2011). (Hung, et al., 2010) posited that Knowledge Management initiatives have an indirect effect on innovation performance through TQM practice; by focusing on meeting customers' needs and encouraging organizations to continually identify new customer's needs and expectations. Thereby inducing organizations to develop new products.

The resource-based theory builds its assumptions on the basis that strategic resources are heterogeneously distributed across firms and immobile. A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors and when these competitors are unable to duplicate the benefits of this strategy (Barney, 1991). According to Addae-Korankye (2013) TQM provides resources that are invisible intangible and extremely difficult for a competitor to copy for example; a company unique culture, transformational leaders, superior customer service hence it has a long lasting competitive advantage. Silva, Gomes, Lages, and Pereira (2014), conceptualized TQM as a set of integrated organizational resources that contribute to achieving and sustaining competitive advantage. Based on the fact that TQM is a unique strategic value creating resource that is inimitable and gives the firm a sustainable competitive advantage. This theory Instigate the following research hypothesis; TQM practice has a significant Mediating effect on the relationship between differentiation strategy and organization performance.

Yusr, Othman and Mokhtar (2012) define dynamic capabilities theory as the total competences/capabilities enabling a firm to come up with new products and processes and to respond to the changing market environment. Dynamic capabilities refer to the organizations ability to constantly integrate, reconfigure, renew and recreate its resources in response to the changing environment to attain and sustain competitive advantage. Dynamic capabilities theory posits that the most significant and enduring source of competitive advantage is constituted by the capability of firm to acquire, integrate and deploy resources in ways that match each firm's environment (Eisenhardt & Martin, 2000). According to Kuei and Lu (2013) business enterprises of all sizes are expected to build capabilities and capacities to offer better and cheaper products, shorter response times and higher service levels to meet customers demand. Dynamic capabilities stresses on management capability and the unique combination of resources throughout the functions such as research and development, product and process development, manufacturing, human resource and organization learning. Applying TQM in the organization provides a good environment and conditions that lead to generate distinctive capabilities in different aspects of the organization (Santos-vijande & Lez, 2007). Successful TQM Implementation requires several practices transformational leadership, customer focus, employee empowerment, team work, process management, supplier management, and quality data reporting. Implementing these practices lead to generate several capabilities within the organization (Yusr, Othman & Mokhtar, 2012). For example Leadership commitment, employee empowerment and teamwork to achieve quality performance provides an environment that encourages the trust and cooperation among employees which in turn, lead to knowledge flow across the organization as a result the organization develops innovation capabilities (Ju, Lin, Lin & Kuo, 2006); Customer focus orientation enables the organization with the necessary feedback regarding the customers' attitudes, preferences and complaints, these information aid the organization to improve marketing capabilities (Ooi, Teh, Arumugam & Chong, 2009); and the ability to constantly improve current processes and learn new ones is termed continuous improvement capability (Anand, Ward, Mohan & Schilling, 2009). Continuous process improvement Capabilities are valuable because they give firm a lower cost structure or basis of differentiation (Porter, 1980). TQM practices enable the organization to build marketing capabilities (Yusr, et al., 2012), innovation capabilities (Yusr, Mokhtar & Othman, 2014) and process improvement capabilities (Silva, Gomes, Lages & Pereira, 2014). These capabilities enhance the performance of competitive strategies. Conceptualizing TQM as a strategic resource, that enable an organization to acquire and share knowledge within the organization, also as a resource that enables an organization to build different...

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