Open access peer-reviewed chapter - ONLINE FIRST

Exploring the Effects of Learning Capability and Innovation on Quality Management-Organizational Performance Relationship

Written By

Mohsen Modarres

Submitted: November 26th, 2021 Reviewed: January 5th, 2022 Published: March 29th, 2022

DOI: 10.5772/intechopen.102503

IntechOpen
Quality Control Edited by Leo Kounis

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Quality Control [Working Title]

Dr. Leo Dimitrios Kounis

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Abstract

Management scholars should further study the scientific area concerning the contingent effects of learning capability and organizational innovations on the relationship between quality management organizational performance. This chapter examines the interactive effects of quality management with organizational learning capability and innovations on organizational performance. Indeed, it may be argued that within quality management theory and methodology, the need to consider the contingency approach may result in an in-depth understanding of how the intersection of constituent elements associated with quality management influences organizational performance. Results revealed that the interaction of quality management and learning capability explained higher variance in organizational performance than the direct effect of quality management on performance. Similarly, interactions between quality management and innovations explained more significant variance in organizational performance than the direct effect of quality management on performance. Outcomes showed that quality management might not directly impact organizational performance. Findings underscore the importance of interactive effects of innovation and organizational learning capability with quality management in explaining the relationship between quality management and organizational performance.

Keywords

  • strategy
  • integrated quality management
  • contingency theory
  • innovation
  • learning capability

1. Introduction

Organizations competing in dynamic industries are required to be cognizant of challenges and complexity in maintaining a balance between initiating changes through innovations and maintaining stability in their existing processes. Unpredictability within dynamic competitive markets creates a paradox between replicating stable processes or re-allocating resources toward innovation [1]. Hence, organizational success tends to be contingent on organizational commitment and capability to continuously explore a new way of doing things and exploit existing competencies [2]. Markets in dynamic industries tend to exert more significant pressure on competing firms to sense and respond to cues in their environment by creating flexible and adaptable core capabilities. The recent trends toward the adoption and implementation of total quality management have been indicative of competitive challenges in dynamic industries. As competitive advantage tends to erode at an accelerated pace [1], organizations that are responsive to intra-organizational cues and shifts in elements within the immediate organizational environment may have a better chance of success and prosperity [3, 4]. A healthy competitive position in the marketplace requires managers to coordinate among various internal processes, such as continuous improvements, innovations, and efficiency, through enhanced organizational learning capability. Moreover, internal coordination among process improvement, innovation, and organizational learning may lead to equilibria between continuous changes in various constituents in quality management and maintaining stability in existing processes. Integrated total quality management strategies enable managers to explore and implement a novel way of doing things and maintain stable and standard processes by repetition and duplication of high-performing processes. A number of researchers have posited that the performance outcome of quality management strategies tends to be contingent on the managerial capability to coordinate among timely innovations, investment in human capital, enhanced learning capability, and knowledge collaboration among organizational members and subunits [5, 6, 7, 8]. Moreover, integrated quality management enables organizations to exploit the existing core capabilities and channel organizational knowledge into individual and team cognitive energy to gain competitive advantage and enhance organizational performance e.g., [8, 9] and organizational excellence [10]. Moreover, integrated quality management provides a window of opportunity for managers to detect and adapt to the external environment contingencies in a timely fashion [11]. The inconsistency in the causal linkage between desired performance outcome [12, 13] and integrated quality management strategies and practices at the operational level remain inconsistent [14, 15]. Past studies have shown inconsistent results in the relationship between performance and integrated quality management. For example, research by Powell [16] and Westphal et al. [17] revealed no statistical significance between performance and total quality management. In contrast, few researchers have reported a direct and positive association [18, 19]) or a mediated relationship between organizational performance and quality management. Previous researchers have parsed and identified various components of integrated quality management and investigated each component’s relationship with performance.

In this body of work, the financial measure of organizational success [8], human resource capability [20], research and development were explored as firm-specific capability [9]. Furthermore, integrated total quality management draws upon firm-specific resources and capabilities and coordinates a strategic balance between exploring new ideas and exploiting existing firm-specific capabilities [9, 21]. Such capabilities developed within integrated quality management tend to be non-imitable and sources of competitive advantage and higher performance [22, 23]. The causal ambiguity in the relationship between quality management and performance led to failures in the implementation of quality management [16]. Furthermore, causal ambiguity in the quality management-performance relationship has refocused research studies on the interrelationship between constituent elements of quality management and organizational performance. For instance, research by Modarres and Pezeshk indicated that the relationship between total quality management and organizational performance is mediated by organizational learning and innovation performance. Similarly, Huang et al. [6] argued that individual interactions mediate the innovation performance in the quality management method and the degree of the team learning that may result from team member interactions.

Another body of research centered on the interrelationship between investment in human capital and success in the implementation outcome of quality management [7]. Other researchers have discussed that the quality management-performance relationship tends to be contingent on creating a culture of dyadic trust among organizational members and promoting knowledge sharing among the organizational members [6]. Both dyadic trust and knowledge sharing create an internal organizational environment that generates enhanced cognitive learning. Furthermore, knowledge sharing allows accumulated knowledge by members of the organization to become the basis for diverse ideas and explorations of novel routines. Within this body of research, the relationship between quality management and performance tends to be contingent on a culture of employee empowerment within organizations [24]. Such a culture promotes an environment of learning and interaction, mutual trust, and information sharing among organizational members that may lead to the introduction of new products and services and the implementation of new codes in the organization.

Parsing quality management into its constituent parts and their synthetic roles within quality management have partially contributed to our understanding of the performance-quality management relationship. However, previous researchers have provided little information about the interactive effects of quality management with organizational learning and innovations to explain performance variations within corporations. This chapter derives from contingency theory to examine the contingency theory, neglected in recent quality management studies, to examine the interactions between quality management and two important variables, organizational learning, and innovations in explaining variations in organizational performance.

The proposed model (Figure 1) and hypotheses tested both direct and interaction effects between quality management, organizational learning, and innovation on various organizational performance levels. In contrast to parsing the constituent parts and their synthetic roles within quality management, the present research proposes that the interactions between quality management and learning capability and innovation tend to positively impact organizational performance. The present research views quality management as an integrated, gestalt, and adaptive method capable of continuously learning [25] and innovating novel routines and new core competencies. Furthermore, present research argues that integrated quality management allows for incremental modifications and radical reengineering of existing operations and enables managers to be flexible and enable the transformation and enhancement of internal capabilities.

Figure 1.

Macro model.

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2. Interaction effects of quality management with learning capability

Integrated quality management practices promote cross-functional communication and frequent exchanges of complex information among individuals and teams. Interaction between quality management and learning capability across subunits is likely to result in a novel way of doing things. Such knowledge creation commits top executives to allocate resources to employees’ education, expression of new ideas, and team learning.

Furthermore, the managerial challenge in establishing a stable and reliable process tends to be contingent on creating an organizational culture. Such culture focuses on creating new knowledge and continuous organizational learning and the existing experience curve accumulated through information flow across subunits [6]. Such a seamless flow of information across subunits allows organizational members and managers to explore novel routines and exploit existing knowledge. Integrated quality management enables top managers to invest in continuous education and learning through employees’ interactions. Over time, the accumulated education and learning become the basis for organizational learning capability [25, 26] and the flexibility to explore new routines and continuous process improvement [27]. According to Jerez-Gomez et al. [28], the interactions between top management commitment to employees’ education and employee involvement in strategic directions of the organization enhance learning as one of the organization’s core competencies. Moreover, higher levels of learning and education tend to lead to better implementation of quality management, greater innovation, higher quality of products and services, and higher organizational performance [26].

Moreover, high levels of learning capability within quality management enhance organizational awareness and ability to absorb new knowledge and transform the collective organizational know-how into new products and competitive advantage [9]. In contrast, low adaptive learning and low organizational performance tend to be attributed to parochial organizational practices and the inability to absorb new knowledge [29]. Similarly, the interaction between quality management and organizational innovations is likely to allow exploration for the opportunity to develop new products and services. Innovation tends to be among the success factors that contribute to high corporate performance [9, 22]. Previous researchers have argued that a positive association between innovation and organizational performance tends to be contingent on the flexible structural design that facilitates subunits innovations and interconnectedness, decentralized decision-making, and accumulated organizational learning [13, 30, 31, 32]. According to Singh and Smith [33], quality management practices promote an organic environment within organizations that is conducive to innovation and high levels of learning. Such organic structural design promotes employee interactions and cross-functional links and interactions. Furthermore, the organic structural design creates greater flexibility [34], that facilitates the speed and extent of innovations, and timely adaptation to changes in the firm’s industry environment.

Moreover, quality management practices that promote the timely introduction of products and services to the marketplace can lead to competitive advantage and high organizational performance [8]. Similarly, entrepreneurial mindset within organizations tends to be a key factor in technological and product innovations. Furthermore, entrepreneurial mindset enables managers to respond to environmental changes by reallocating valued resources within the organization toward new products and services and enhancing corporate performance [22, 30, 35, 36]. Finally, quality management creates a culture of collaborations and exchanges of new ideas as employees interact within each function and cross-functionally. Researchers must identify the interrelationship among quality management, learning capability, and innovations to realize a deeper understanding of how employee interaction may lead to higher organizational learning capability and innovations. Furthermore, research studies should explore the interactive effects of quality management, learning capability, and innovation on organizational performance. Given the above, this study hypothesizes the main and intersection effects between integrated quality management, organizational learning, and innovations in the following manner:

H1: There will be a positive and significant relationship between quality management, organizational and organizational performance.

H1a: There will be a positive relationship between quality management, organizational learning.

H1b: There will be a positive relationship between quality management, organizational, and innovation.

H2: There will be a positive relationship between organizational learning and organizational performance.

H3: There will be a positive relationship between innovation and organizational performance.

H4: The interactions between quality management and organizational learning positively influence the relationship between quality management and organizational performance.

H5: The interactions between quality management and innovation positively influence the relationship between quality management and organizational performance.

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3. Methodology

3.1 Sample and data

Data.The data used in this study were collected by the survey method. The survey was carried out during the year 2015 and provided information on Iran’s food business environment, quality management, organizational learning, innovation performance, and organizational performance. Top executives and senior managers represent the most appropriate sources of information for this study. The population of top executives and managers was determined to be 400. A questionnaire and cover letter were mailed to the managing director or chief executive officer of each company from the Food Industry in Iran. A total of 37% of the 400 mailed surveys was completed and returned, a sample of 148. All 148 completed surveys were used in this investigation. Given the population of N = 400, the Cochran sample size formula indicated a sample of n = 148 allows the study to draw correct inferences from the population.

3.2 Measurement of variables

A survey method was used for all the variables in the present study. Respondents were asked to indicate their levels of agreement with descriptive statements using a 5-point Likert scale (range, 1 = strongly disagree to 5 = strongly agree).

Quality management. To measure the effectiveness of integrated quality management, following the study by Vanichchinchai and Igel [37] and Coyle-Shapiro [38], the present research employed the following seven variables:

  • top management support

  • employee involvement

  • continuous improvement

  • customer focus

  • education and training

  • supply management

Organizational learning capability. Based on the study by [28] learning capability was operationalized as top executive commitment, system perspectives, organizational experimentations, and knowledge transfer initiatives.

Organizational Innovations.Exploring new ways of things in the organization requires managerial decisions on innovations and reallocation of valued resources toward new processes, products, and services [9, 35]. Following the study by Parjogo et al., innovation performance was operationalized as product/service innovation, performance innovation, and overall organizational innovations.

Organizational Performance.Organizational performance can be defined as the desired outcome within organizations. Performance is multi-dimensional and may be measured as such. Following the study by Santos and Brito [39], the present research operationalized performance as employee satisfaction, response to environmental changes, sustainability, customer satisfaction, and projected revenue from new products/services.

3.3 Procedures and design

Congruent with the previous research in contingency theory [8], the present research considers quality management as an integrated organizational strategy. As such, the study used structural equation modeling to explore the independent and interaction effects of integrated quality management, innovations, and organizational learning on organizational performance. For parsimony, and to reduce the number of relationships, a hierarchical component model was created. Model I (Table 1, Figure 1) shows the results of the structural equation modeling analysis of the high component model, and standardized regression weights showing integrated quality management association with organizational learning capability, products and services innovations, and organizational performance. The hierarchical analysis of Model I also shows the relationship between each of the four constructs in this study with their sub-constructs.

Standardized regression weightStandardized biast-value
Quality management ➔ Organizational learning0.950.0813.41*
Quality management ➔ Innovation performance0.910.0812.41*
Quality management ➔ Organizational performance0.430.081.13
Quality management ➔ Education and training0.900.0814.20*
Quality management ➔ Total management support0.720.0810.41*
Quality management ➔ Continuous improvement0.610.088.60*
Quality management ➔ Supply chain mgt0.550.087.67*
Quality management ➔ Customer focus0.450.086.29*
Quality management ➔ Employee involvement0.410.086.21*
Organizational learning ➔ Management commitment0.84
Organizational learning ➔ System perspective0.710.0810.34*
Organizational learning ➔ Organizational experiment0.660.089.31*
Organizational learning ➔ knowledge transfer0.830.088.21*
Organizational learning ➔ Organizational performance0.580.086.89*
Innovation performance ➔ Product/service0.92
Innovation performance ➔ Process innovation0.780.0812.24*
Innovation performance ➔ Overall organizational innovation0.790.0812.57*
Innovation performance ➔ Organizational performance0.620.089.17*
Innovation performance ➔ Product/service0.92
Innovation performance ➔ Process innovation0.780.0812.24*
Innovation performance ➔ Overall organizational innovation0.790.0812.57*
Innovation performance ➔ Organizational performance0.620.089.17*
Organization Performance ➔ Post TQM financial expectation0.65
Organization Performance ➔ Employee participation0.63
Organization Performance ➔ Customer satisfaction0.590.087.79*
Organizational performance ➔ Employee satisfaction0.750.088.57*
Organizational performance ➔ Sustainability0.920.0813.16*

Table 1.

Results of structural equation modeling-model I.

p < .05.


Chi-square = 247.24; df = 114; GFI = 0.92; AGFI = 0.86; RMSEA = 0.08.

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4. Analysis

4.1 Main constructs, sub-constructs, and variables

Integrated quality management.According to the results shown in Model 1 (shown in Table 1), integrated quality management is positively and significantly associated with continuous education and employee training (B = 0.90), and continuous long-term employee support after the implementation of quality management (B = 0.72). Furthermore, continuous improvement programs (B = 0.61), managing the supplier relationship (B= 0.55), customer relations and satisfaction (B = 0.45), and employee involvement in the decision-making processes (B = 0.41) were positively and significantly associated with quality management.

Organizational learning capability.As shown in Model I (shown in Table 1), the organizational learning capability construct has a positive and significant relationship with long-term management commitment to involve employees in decision-making processes (B = 0.84). Results also indicated that within and inter-subunit knowledge transfer significantly influenced and enhanced organizational learning capability (B = 0.83). Furthermore, organizational learning capability is positively and significantly associated with the exploration of new ideas, and exploitation of the existing process to enhance further process improvements (B = 0.66). Results also indicated that subunits independently set divisional strategies and goals, and were responsible for co-align their strategies and goals with overall organizational strategies, goals, and mission (B = 0.71).

Innovation.Results (shown in Table 1) revealed that top managers encouraged and permitted exploration of new products and services (B = 0.92) and process innovation (B = 0.78). Furthermore, overall organizational innovations were significantly related to operational cost reductions and revenue generations (B = 0.79).

Organizational Performance.The results (shown in Table 1) indicated that the implementation of integrated quality management instituted organizational performance assessments were associated with continuous monitoring of the competitive dynamics in the marketplace (B = 0.63). Furthermore, results also indicated that the performance construct has a significant relationship with employee work satisfaction (B = 0.75), employee participation in decision-making processes (B = 0.63), customer expectations and satisfaction (B = 0.59), projected financial post-integrated quality management implementation (B = 0.65), and implementation of environmental sustainability programs (B = 0.92).

For the accuracy of the constructed model and to make sure the data is presenting accurate and reliable drawing from the population under study the Kolmogrov-Smrinov (KS) test was performed [40, 41]. Table 2 shows that all four variables’ data are normally distributed.

TQMOLCINPOP
149149149149
Normal ParametesaMean3.623.373.343.38
Std. Deviation0.600.650.670.66
Most Extreme DifferenceAbsolute0.0590.0590.0760.057
Positive0.0590.0510.0750.039
Negative−0.054−0.059−0.079−0.057
Kolmogrov-Smrinov Z0.7510.7210.9260.691
Asymp. Sig (2-tailed)0.6870.6760.3580.726

Table 2.

One-sample Kolmogrov-Smrinov biased analysis.

Test distribution is normal


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5. Explanation of latent constructs

In this section of the chapter, complex hierarchical constructs, sub-constructs, and related subset variables are disentangled and discussed.

5.1 Integrated quality management

Table 3 presents the result of an orthogonal (VARIMAX) rotation of the factor matrix underlying the quality management items. Based on the six-independent factor solution suggested by the eigenvalue pattern (i.e., greater than 1.0), 25 items were identified so that each of which loaded at least cleanly on only one of the six factors. A cut-off of 0.50 was used for item-scale selection. These factors accounted for over 78% of the variance in the quality management scale items. Following an inspection of the factor loadings, the six factors were subsequently labeled:

  • Total management support

  • customer focus

  • education and training

  • continuous improvement and innovation

  • supply chain management

  • employee participation

Derived factorsc
Quality managementbEENb1TMSb2SMb3CIIb4CFb5EDTb6
TMS10.2190.8500.2010.0770.0570.188
TMS20.1400.7940.2000.3100.2450.074
TMS30.2170.8480.1940.1150.1130.176
TMS40.2510.8220.1470.1940.1990.141
CF50.0370.1410.1960.0510.8590.136
CF60.1470.2710.1160.1130.821−0.002
CF70.1870.0720.0690.0990.8870.141
EDT80.1100.4130.3590.3470.2970.568
EDT90.0570.1310.2220.2870.0650.791
EDT100.1760.3630.3840.4040.2070.526
EDT110.2310.3340.3210.1690.1650.670
CII120.1090.1080.2090.8280.2060.188
CII130.0020.1930.1560.8180.150.158
CII140.0630.2070.2270.8450.0960.177
SM150.0210.2100.8670.1440.1110.072
SM160.0100.3030.7930.2040.0040.146
SM170.0160.0310.8360.1480.1590.130
SM180.0840.1650.8200.1510.1530.267
EEN190.6740.1030.0620.2230.0030.021
EEN200.8990.1990.0350.0200.1350.009
EEN210.9080.1500.0540.0330.0610.037
EEN220.7190.0150.0500.0420.0510.349
EEN230.7850.0250.1260.1990.1540.018
EEN240.7800.1090.0380.0930.0290.197
EEN250.8060.2760.0640.0150.0990.027
Eigenvalue9.733.991.841.601.561.09
Variance explained19.3514.7814.0911.4010.618.67

A VARIMAX orthogonal rotation is performed on the initial factor matrix.


Factors derived from quality management.


Loadings above 0.50 are in boldface.


FactorsCronbach’s alphasScales included
b1 Employee involvement0
b2 Total Management Support0
b3 Supply Management0
b4 Continuous improvements0
b5 Customer Focus0
b6 Education Training0

Table 3.

Factor analysis of quality management scales.a

Table 4 shows an examination of the Kaiser-Meyer Olkin measure of sampling adequacy suggested that the sample was factorable. The results reasonably describe each set of items as being indicative of an underlying factor for quality management.

Kaiser-Meyer-Olkin Measure of Sampling Adequacy0.833
Bartlett’s Test of SphericityApprox. Chi-Square3485
DF300
Sig0.000

Table 4.

KMO and Bartlett’s test of quality management variable.

(KMO = 0.833); χ2 = 3485, df, 300, sig 0.000).

Results of second-order confirmatory factor analysis (Table 3) present the scale reliability on quality management dimensions that reached statistical significance. This indicates that criteria had a significant correlation with appropriate dimensions and scales had convergent validity [42].

Association of the latent constructs and quality management.

Findings (shown in Table 5) also indicated that integrated quality management is positively and significantly associated with human resource development through continuous education and training (B = 0.94). Findings also indicted executives’ commitment to coordinate and support continuous improvements, post quality management implementation (B = 0.73), and employee involvements in implementation decision making (B = 0.33). Furthermore, findings indicated that top managers encouraged exploring new ideas and innovation (B = 0.70). Results revealed that managers were cognizant about immediate factors in the organization industry environment by managing supplier relationships (B = 0.70), focusing on customer relations (B = 0.54).

ItemsFirst-ordert-valueSecond-ordert-value
StandardizedStandardized
loadingloading
Total Quality Management-QM
Education and Training
1. Top managers’ commitment to training employees in quality management0.96/a0.94
2. Top managers training in best conduct with employees and customers0.6710.36*13.32*
3. Employees knowledge about food industry0.9515.66*
4. Managers’ commitment to providing employees essential needs at work0.7613.27*
Top management support
1. Top managers’ commitment to post-implementation of quality management0.86/a0.738.64*
2. Top managers’ commitment to long-term investment in quality management0.9115.65*
3. Top managers’ support of employee involvement in quality management implementation0.8814.51*
4. Top managers’ strategic co-alignment of quality management with changes in market0.9816.49*
Continuous improvement and innovation
1. Employees are encouraged to make suggestions about work condition improvements0.88/a0.708.23*
2. Employees are encouraged to research to improve products and services0.7511.21*
3. Manager’s consideration of suggestions for product/services improvement0.9415.44*
Supply Management
1. Coordination with the critical supplier through information sharing0.88/a0.708.27*
2. Enhance the quality of suppliers post quality management implementation0.8613.84*
3. Establish a win-win relation with suppliers0.7811.76*
4. Strategic view on managing supply-chain0.8613.83*
Customer Focus
1. Center firm activities based on customer satisfaction0.84/a.546.02*
2. Customer satisfaction and expectation as a top goal0.8311.52*
3. Importance of customers in top managers’ decisions0.8812.25*
Employee Involvement
1. Employee training and encouragement to participate in company programs0.57/a0.333.50*
2. Creation of work improvement teams0.967.09*
3. Employees suggestions about improving supply-chain0.967.99*
4. Employees responsibility to inspect work outcome0.666.47*
5. Creation of quality circles to assist staff in problem-solving0.706.71*
6. Employee participation in management quality programs0.757.00*
7. Establishing a reward program for novel suggestions by employees0.827.36*

Table 5.

Results of the first-order and second-order confirmatory factor analysis of integrated quality management.

Fixed parameter.


p < 0.001.


Chi-square = 670.02 (p < 0.001); df = 269; GFI = 0.93; AGFI = 0.88; RMSEA = 0.100.

Analysis of subset variables and their relationship with quality management.

Education and training.Further analysis of the subset variables shows that long-term quality management training programs (B = 0.96) and employee know-how about the developments and changes in the industry (B = 0.95) as the most important variables. Work conditions and environment (B = 0.76) and customer relations (B = 0.67) were important factors in the implementation of quality management.

Top management support.As shown in Table 5 top managers strategy, post quality management implementation focuses on continued investment in quality management programs (B = 0.91), coalignment of quality management strategies with changes in the industry (B = 0.98), and employee involvement in the implementation process (B = 0.88).

Continuous improvements.Top managers encouraged the employee for both input for new products and existing product improvements (B = 0.94), and research and development activities focusing on products and services improvements (B = 0.75). Furthermore, employees were encouraged to participate and suggest work environment improvements (B = 0.88).

Managing supplier relations.Results revealed top managers included supplier relations in their strategic plans for the long term (B = 0.86). Such a strategic plan was based on information sharing with the suppliers (B = 0.88), and assessment of the supply chain based on the long-term trend in the quality of the services and products the organization received (B = 0.86).

Customer focus.Top managers’ decision-making process prioritized customer expectation (B = 0.83), contentedness with the quality of the product (B = 0.84), and importance to the organization (B = 0.88).

Employee involvement in decision-making processes.According to the results, employees were encouraged to form improvement circles and teams (B = 0.96) and provide input about the supplier selection based on the quality of services and products (B = 0.96).

5.2 Organizational Learning capability

Results of an orthogonal (VARIMAX) rotation of the factor matrix (Table 6) indicate underlying organizational learning capability items. Based on the four-independent factor solution suggested by the eigenvalue pattern (i.e., greater than 1.0), 15 items were identified so that each of which loaded at least cleanly on only one of the four factors. A cut-off of 0.50 was used for item-scale selection. These factors accounted for over 75% of the variance in the organizational learning capability scale items. Following an inspection of the factor loadings, four factors were subsequently labeled “management commitment,” “system perspectives,” “organizational experiment,” and “knowledge transfer initiative.” After the initial component analysis number of items was reduced to 15 which explained the highest variation in organizational learning.

Derived Factorsc
Organizational Learning CapabilitybMCb1SPb2OEXb3KTIb4
MC10.6670.2860.3350.132
MC20.7340.1740.3170.152
MC30.7140.3510.1350.222
MC40.8520.0590.1540.098
MC50.7710.2950.2690.080
SP60.2370.8500.1620.035
SP70.2550.7970.2470.168
SP80.1990.8670.2260.199
OEX90.2300.2900.8450.053
OEX100.1860.3740.7890.087
OEX110.3440.0520.8000.246
OEX120.5020.0860.6340.211
KTI130.1660.2960.1620.765
KTI140.2960.1640.0100.838
KTI15-0.079-0.1190.2210.726
Eigenvalue9.731.761.501.24
Variance explained19.3518.5718.2615.89

Table 6.

Factor analysis of organizational learning Scales.a

A VARIMAX orthogonal rotation is performed on the initial factor matrix.


Factors derived from organizational learning capability


MC                   0


SP                    0


OEX                   0


KTI                   0


Loadings above 0.50 are in boldface


Factors          Cronbach’s alphas      Scales included

Table 7 shows the Kiser-Meyer-Olkin, and Bartlett test of sphericity utilized to measure four organizational learning dimensions, with each of the dimensions being measured by responses to several items. The results reasonably describe each set of items as being indicative of an underlying factor for learning capability (KMO > 0.818; χ2 = 1843, df, 120, sig 0.000).

Kaiser-Meyer-Olkin Measure of Sampling Adequacy0.818
Bartlett’s Test of SphericityApprox. Chi-Square1843
Df120
Sig0.000

Table 7.

KMO and Bartlett’s test of organizational learning variable.

Results of second-order confirmatory factor analysis (Table 6) present the scale reliability on organizational learning dimensions that reached statistical significance. This indicates that criteria had a significant correlation with dimensions and scales had convergent validity [42].

Furthermore, results (shown in Table 8) indicated that organizational learning capability positive and significant relationship with management commitment to long-term investment in human resources development and organizational learning (B = 0.88). Moreover, to enhance learning capability at all levels within organizations, top managers promoted a culture of information sharing and knowledge transfer at all levels (B = 0.63). Results showed that top managers encouraged individuals and teams to explore new ideas through open experimentation (B = 0.80). Findings also indicated that subunits were encouraged to adopt a system perspective notion, as it relates to the understanding of organizational goals and strategic orientation (B = 0.72).

ItemsFirst-ordert-valueSecond-ordert-value
StandardizedStandardized
loadingloading
Organizational Learning Capability
Management commitment
1. Employee participation in management decision making0.81/a0.880.930*
2. Invest in employee learning0.7810.36*
3. Embracing change to adapt to changing business environment0.739.66*
4. Employee learning as a key success factor in company0.7710.33*
5. Rewarding novel ideas0.8611.89*
Open experimentation
1. Job expansion through creativity and experimentation0.85/a0.809.0*
2. Adopting best practices in competitive field.8412.60*
3. Considering expert views outside company to improve learning0.8512.64*
4. Creating a culture of accepting ideas generated by employees0.7610.84*
System perspective
1. Employee knowledge about the strategic direction of company0.83/a0.727.96*
2. Divisional participation in company goals0.8813.19*
3. Communication among company divisions/departments0.9414.30*
Knowledge Transfer Initiative
1. Discussion about shortcomings and mistakes at all levels0.82/a0.636.66*
2. Discussions about ideas, programs, and activities among employees0.8310.43*
3. Culture of teamwork0.445.14*
4. Maintenance of work process documentation0.789.90*

Table 8.

Results of the first-order and second-order confirmatory factor analysis of organization learning.

Fixed parameter


p < 0.001.


Chi-square = 235.64 (p < 0.001); df = 100; GFI = 0.95; AGFI = 0.86; RMSEA = 0.095

Analysis of subset variables and their relationship with quality management.

Management commitment.Results shown in Table 8 revealed that investment in human capital through learning programs (B = 0.78) will be considered a key success factor in the organization (B = 0.77). Furthermore, the analysis indicated that employees participating in the management decision-making process will be important (B = 0.81) and can contribute to decisions on how to adapt to changing industry environment (B = 0.73). Management also implemented a program to reward novel ideas by individuals and teams (B0.86).

Knowledge sharing and cross-functional transfer.Knowledge sharing within a subunit and among various subunits contributes to the generation of new ideas among employees (B = 0.83), proper documentation of work processes (B = 0.78), creates a culture of teamwork (B=0.44), also generates productive discussions about the subunits and top management shortcomings (B = 0.82).

System perspective.Establishing a system perspective requires a lateral and flexible organizational structure. Results of the data analysis showed that top executives implemented integrated quality management by designing a lateral organizational structure which enabled departments and divisions to participate in the strategic goals setting process of the organization.

(B = 0.88). Furthermore, lateral structural design facilitated a more effective communicate cross-functionally to co-align division objects and goals (B = 0.94), and from conferences to educate employees about organizational strategic direction (B = 0.83).

Exploration and open experimentation.According to March [2], organizations engage in exploration to find a new way of doing things, creating products and services. The data analysis in the present research indicated that organizations pursued both internal strategy and external monitoring to explore and experiment with novel ideas. Data analysis showed that the organization created a culture of welcoming and accepting new ideas by employees (B = 0.76), also, employee job expansion employees were enabled to explore and experiment with new ideas (B = 0.85). Within business environment, results indicated that organizations monitored and adopted best practices (B = 0.84) and consulted with experts in the field outside the organization to improve learning capability (B = 0.85).

5.3 Organizational innovation

Table 9 presents the result of an orthogonal (VARIMAX) rotation of the factor matrix underlying organizational innovation items. Based on the three-independent factor solution suggested by the eigenvalue pattern (i.e., greater than 1.0), 17 items were identified so that each of which loaded at least cleanly on only one of three factors. A cut-off of 0.50 was used for item-scale selection. These factors accounted for over 74% of the variance in the organizational innovation scale items. Following the factor loadings, the three factors were subsequently labeled “product/services initiatives,” “product innovation,” and “overall organizational innovation.”

Derived Factorsc
Organizational InnovationbPSb1PRb2OOIb3
PS10.7600.2290.303
PS20.7950.2190.346
PS30.8180.4130.180
PS40.5500.3390.447
PS50.7810.4000.218
PS60.6590.2460.439
PR70.4590.7180.155
PR80.2770.7300.381
PR90.1410.8050.121
PR100.1700.7570.358
PR110.3370.7380.253
PR120.4300.7570.169
OOI130.3980.1690.736
OOI140.2990.2610.784
OOI150.4150.2980.687
OOI160.1030.2490.855
OOI170.2410.1620.797
Eigenvalue9.841.661.18
Variance explained25.5725.0924.01

Table 9.

Factor analysis of organizational innovation Scalesa.

A VARIMAX orthogonal rotation is performed on the initial factor matrix


Factors derived from organizational innovation


PS                    0


PR                    0


OOI                   0


Loadings above 0.50 are in boldface


Factors          Cronbach’s alphas      Scales included

Table 10 shows the Kiser-Meyer-Olkin and Bartlett test of sphericity. Results reasonably describe each set of items as being indicative of underlying factors for organizational innovation (KMO > 0.891; χ2 = 2.418E3, df, 136, Sig, 0.000). Furthermore, results are indicative of a relationship among the innovation components, “product innovation,” “process innovation,” and “organizational innovation.”

Kaiser-Meyer-Olkin Measure of Sampling Adequacy0.891
Bartlett’s Test of SphericityApprox. Chi-Square2.418E3
Df136
Sig0.000

Table 10.

KMO and Bartlett’s test of innovation variable.

Table 9 shows the results of second-order confirmatory factor analysis and the scale reliability on organizational innovation dimensions that reached statistical significance. This indicates that criteria had a significant correlation with dimensions and that the scales had convergent validity [42]. Results (Shown in Table 8) were also indicative of a significant and positive correlation between innovation and the introduction of new products and services (B = 0.92). Moreover, top managers allocated resources for continuous process innovation (B = 0.78). Findings also revealed that top managers coordinated subunits efforts to enhance overall organizational innovations (B = 0.77).

Analysis of subset variables and their relationship with quality management.

Products and services innovation.Results for the subset variables of the innovation dimension (Table 11) reveal that executives place strategic importance on the first-mover advantage and faster generation of new products and services compare to other rivals (B = 0.94). Furthermore, the first-mover advantage enabled the organization to present customers with products and services that best served their needs compared to other rivals in the marketplace (B = 0.92), at a higher rate of market presentation of innovative products compared to other rivals (B = 0.79). Results also indicated that as a first-mover strategy, top managers placed strategic emphasis on R&D and allocated greater resources toward research and development (B = 0.72). Congruent with results presented in the learning capability segment, flexible and lateral structural design and greater cross-functional communication and knowledge sharing, reduced process costs associated with the higher production improvements and efficiency, compared to other competitors (B = 0.82), and generating new products and services for customers (B = 0.75).

ItemsFirst-ordert-valueSecond-ordert-value
StandardizedStandardized
loadingloading
Overall Organizational Innovation
Product and service innovation
1. Higher rate of innovation in comparison to competitors0.79/a0.929.88*
2. Higher production improvement in comparison to competitors0.8211.32*
3. Faster acquisition of innovative ideas compare to competitors0.9413.55*
4. Knowledge and skill improvement through R&D0.729.56*
5. Production of products that better fit customer needs0.9213.21*
6. Introduction of new products to customers faster than competitors0.9510.10*
Performance innovation
1. Utilizing novel ideas to improve the product quality and speed of deliver0.88/a0.7810.25*
2. Utilizing quality resources in the production process0.8012.61*
3. Flexibility in resources allocation0.689.72*
4. Cost reduction through efficient resource allocation0.7811.86*
5. Adoption of human resources management0.8112.86*
6. Flexibility in org-structure compare to competitors that allows innovation0.8915.42*
Overall organization innovation
1. Best use of organizational resources to implement quality management0.77/a0.778.28*
2. Unit cost reduction after implementation of quality management0.8411.08*
3. Financial improvement after quality management improvement0.8110.61*
4. Increased employee productivity after quality management implementation0.7910.18*

Table 11.

Results of the first-order and second-order confirmatory factor analysis of organization innovation.

Fixed parameter.


p < 0.001.


Chi-square = 244.89 (p < 0.001); df = 116; GFI = 0.91; AGFI = 0.81; RMSEA = 0.086.

Innovation performance.Findings reveal that designing a lateral flexible organizational structure was highly correlated with innovations in the organization (B = 0.89). enabled subunits to transform the novel ideas into products and services and present them to the marketplace in a timely fashion (B = 0.88). Moreover, resources are to be allocated and reallocated cross-functionally (B = 0.68), with lower costs and more efficiency (B = 0.78). Findings also indicated that top managers focused on human resource development and management (B = 0.81) and acquire high-quality resources in the production processes (B = 0.80).

Organizational innovation.The results of the analysis of innovation showed that there are two important aspects of organizational innovation. The financial aspect indicated that innovation leads to a reduction in costs per unit (B = 0.84). Moreover, innovation enhances the employee productivity (B = 0.79), efficient resources allocation cross-functionally (B = 0.77), and prospects of healthier finances (B = 0.79).

5.4 Organizational performance

Table 12 presents the result of an orthogonal (VARIMAX) rotation of the factor matrix underlying organizational performance items. Based on the four-independent factor solution suggested by the eigenvalue pattern (i.e., greater than 1.0), 16 items were identified so that each of which loaded at least cleanly on only one of four factors. A cut-off of 0.50 was used for item-scale selection. These factors accounted for over 77% of the variance in the organizational performance scale items. Following an inspection of the factor loadings, the four factors were subsequently labeled “customer satisfaction,” “employee satisfaction,” “environmental performance,” and “environmental sustainability.”

Derived Factorsc
Organizational PerformancebCUSb1EMSb2SORb3ENPb4
EMS10.3060.7310.2880.279
EMS20.2110.8100.2970.210
EMS30.3010.8440.1950.120
EMS40.4000.6890.0890.319
CUS50.6680.4360.285−0.016
CUS60.8190.1330.1980.226
CUS70.6800.0900.5420.095
CUS80.7970.3370.088−0.038
CUS90.8760.2190.1390.138
ENP100.1630.1570.2020.836
ENP110.0780.5430.1580.680
ENP120.0240.1840.3060.784
SOR130.3100.3620.7240.203
SOR140.2180.0140.7380.307
SOR150.0150.4700.6890.173
SOR160.2700.2670.7560.196
Eigenvalue8.201.901.301.05
Variance explained22.6222.0618.3214.36

Table 12.

Factor analysis of organizational performance Scalesa.

VARIMAX orthogonal rotation is performed on the initial factor matrix


Factors derived from organizational performance


CUS                    0


EMS                    0


SOR                    0


ENP


Loadings above 0.50 are in boldface


Factors          Cronbach’s alphas      Scales included

Kaiser-Meyer-Olkin and Bartlett test of sphericity (shown in Table 13) was utilized to measure four organizational performance dimensions, with each of the dimensions being measured by responses to several items. Results (shown in Table E) reasonably describe each set of items as being indicative of an underlying factor for organizational performance (KMO > 0.862; χ2 = 1.971E3, df, 120, Bartlett’s Test of sphericity with significant of 0.000 (less than 0.05).

Kaiser-Meyer-Olkin Measure of Sampling Adequacy0.862
Bartlett’s Test of SphericityApprox. Chi-Square1.971E3
Df120
Sig0.000

Table 13.

KMO and Bartlett’s test of organizational performance variable.

Table 12 shows the results of second-order confirmatory factor analysis and the scale reliability on organizational performance dimensions that reached statistical significance. This indicates that criteria had a significant correlation with dimensions and that the scale had convergent validity [42].

Results of path analysis indicated top echelon focus on reduced turnover rate by instituting a high remuneration policy and employee satisfaction (B = 0.75). Moreover, the data analysis indicated that customer contentment with products and services was high with little or no defect returns (B = 0.59). Findings also indicated that top managers monitored the industry environment and continuously selected best practices (B = 0.63). Furthermore, top managers were cognizant of the organization’s impact on the environment and negative externalities and pursued a sustainability strategy as a priority post integrated quality management implementation (B = 0.93).

Analysis of subset variables and their relationship with quality management.

Human resource management. Analysis of the subset variables (shown in Table 14) revealed that executives place strategic importance on employee retention (B = 0.88) and reducing absenteeism (B = 0.83) by offering employees competitive remunerations (B = 0.87), and overall employee satisfaction of their jobs (B = 0.86).

ItemsFirst-ordert-valueSecond-ordert-value
StandardizedStandardized
loadingloading
Organizational Performance
Employee satisfaction
1. Employee satisfaction0.86/a0.7510.88*
2. Ample remuneration for employees0.8714.12*
3. Reducing turnover after quality management implementation0.8814.37*
4. Reduction of absenteeism after quality management implementation0.8312.97*
Customer satisfaction
1. Customer satisfaction0.86/a0.7510.88*
2. Introduction of new product and services0.8010.91*
3. Reduction of product defect returns after quality management implementation0.7510.03*
4. Strategies to maintain customer base0.8211.41*
5. Higher profitability after quality management implementation0.8811.74*
6. Reducing customer complaints after quality management implementation0.8912.65*
Sustainability and Environmental
1. Consideration of environmental projects after implementation of quality management0.74/a0.637.41*
2. Sustainability/Reducing production pollution0.859.31*
3. Reducing complains about environmental pollution0.758.56*
Social responsibility performance
1. Sustainability0.89/a0.9310.04*

Table 14.

Results of the first-order and second-order confirmatory factor analysis of organizational performance.

Fixed parameter.


p < 0.001.


Chi-square = 232.06 (p < 0.001); df = 100; GFI = 0.93; AGFI = 0.84; RMSEA = 0.094.a Fixed parameter.

Customer contentment.Results of data analysis indicated that investment in the introduction of new and high-quality products and services (B = 0.80) tend to reduce the rate of defected products (B = 0.75), consumer complaints (B = 0.89), maintain the market share (B = 0.82), and assure consumers are contented with the products and services (B = 0.81).

Monitoring environmental conditions and sustainability strategy.The analysis outcome also revealed that top executives were cognizant about the company’s reputation by maintaining sustainability by considering environmental renewable energy projects (B = 0.74), reducing the negative externalities caused by production pollution (B = 0.85). Integrating the sustainability strategy with quality management enhanced the company’s legitimacy and reputation for social responsibility by planning for environmentally friendly projects and sustainability (B = 0.89).

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6. Results and discussion

Macro model.As shown in Table 1 (Figure 1), the standard regression weight for the overall model indicated a positive and significant relationship between main variables, quality management, organizational learning, and innovations. According to the results, organizational integrated quality management is positively and significantly associated with organizational learning capability (B = 0.95, p < 0.05). Similarly, results showed a positive and significant relationship between innovation performance and integrated quality management.

(B = 0.91, p < 0.05). Results indicated that when parsing the main effects of learning capability and innovation performance, the association between quality management and organizational performance remains positive but statistically nonsignificant (B = 0.43, n.s.) and does not explain significant variance (R2 = 0.18) in organizational performance. A detailed analysis revealed that organizational learning capability is positively and significantly associated with organizational performance (B = 0.58, p < 0.05). Furthermore, innovation performance, according to findings, is also positively and significantly associated with organizational performance (B = 0.62, p < 0.05). Findings are congruent with hypotheses H1a and H1b. Findings, however, being partially congruent with hypothesis a, H1.

H1: There will be a positive and significant relationship between quality management, organizational and organizational performance.

H1a: There will be a positive relationship between quality management, organizational learning.

H1b: There will be a positive relationship between quality management, organizational, and innovation.

A detailed analysis revealed that organizational learning capability is positively and significantly associated with organizational performance (B = 0.58, p < 0.05). Furthermore, innovation performance, according to findings, is also positively and significantly associated with organizational performance (B = 0.62, p < 0.05).

Findings also supported hypotheses H2 and H3.

H2: There will be a positive relationship between organizational learning and organizational performance.

H3: There will be a positive relationship between innovation and organizational performance.

6.1 Interaction effects

As managers attempt to identify factors that influence organizations’ performance, this research argued that it is important to gain a deeper understanding as to how interaction effects of quality management, learning capability, and innovations matter in influencing organizational performance. The hypothesis H4 specified that organizational performance would be affected by an interactive effect of quality management and organizational learning capability. The hypothesis H5 specified that organizational performance would be affected by an interactive effect of quality management and innovation. To test these hypotheses, I employed structural equation modeling analysis to reduce the number of variables and to capture the interrelations of measured variables and latent constructs, as suggested by Tarka [43]. Results indicated that compared to the effects of quality management and organizational performance (B = 0.43, n.s., R2 = 0.18), the multiplicative interaction term for quality management and organizational learning capability increased explanatory variance in organizational performance (R2 = 0.34, p < 0.05), significantly (0.95 × 0.58) = (0.55, p < 0.05). Similarly, the multiplicative term between quality management and increased the variance (R2 = 0.38, p < 0.05) significantly (0.91 × 0.62) = (0.56, P < 0.05). Results of the analysis were congruent with H4 and H5.

H4: The interactions between quality management and organizational learning positively influence the relationship between quality management and organizational performance.

H5: The interactions between quality management and innovation positively influence the relationship between quality management and organizational performance.

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7. Discussion

There are several important theoretical and practical implications that emerge from this research. Findings underscore the importance of the interaction of quality management elements. Over the past decade, researchers have systematically underplayed the interaction effects of quality management elements. The present research showed that the dominant impact on organizational performance, beyond external resource considerations, is the intersection of forces associated with quality management, organizational learning capability, and innovations within these organizations. It was argued earlier that within quality management theory and methodology, the need to consider the contingency approach might result in an in-depth understanding of the strategic allocation of resources and managing and coordinating among the interrelated constituent elements within quality management. Results suggested that organizational performance is positively influenced by the interaction of quality management and innovation and learning capability at organizational levels. It is also clear that there are distinct differences between parsed and integrated constituents within quality management with respect to explaining variations in organizational performance. This finding is of some theoretical significance.

As a strategy, quality management appears to have coordination challenges associated with learning capability and application of such learning to innovations of new products and services. This study found that organizational performance is significantly impacted by the interaction between quality management and learning capability. Similarly, findings indicated that interaction between innovation and quality management positively and significantly influences organizational performance. The strength of these findings, particularly in light of incorporating external environmental factors such as sustainability considerations, points to the potential importance of revitalizing the contingency theory perspective pertaining to integrated quality management. Such a revival would not necessarily imply that researchers “pit” internal elements influencing performance against external forces. Instead, more direct integration of contingency variables within quality management is suggested to better balance internal and external perspectives on organizational performance. Nevertheless, any resurrection of this perspective within quality management theory and methodology may require changes in how contingency theory may be employed (e.g., Pfeffer 1997). This study did not limit its focus to examining the main effects of organizational learning capability, innovations, and quality management on performance. As I argued in theoretical development, one cannot easily specify the nature of these main effects. Instead, what may be as, if not more, important to consider is the interaction of these variables as previous organizational researchers have argued that internal and external characteristics of organizations and their members may cluster together in predictable patterns to explain a variety of micro to macro-level organizational processes and relationships [44]. Congruent with Meyer et al.’s findings on organizational learning capability showed top managerial commitment to implement a complex set of policies on the development of human resources. Such policies included learning based on system perspectives, learning associated with experimentation and exploration of a novel way of doing things, and knowledge transfer at various levels of individuals, teams, and organizational subunits. Furthermore, findings revealed managerial efforts to coordinate and co-align subunits’ strategies with the organization at the macro level. Similarly, findings on innovations showed managerial commitment to implementing flexible resource allocation strategies for subunits to explore novel processes and ideas. Findings were congruent with the notion that integrating interrelated constituents of quality management at the micro and macro level require greater structural flexibility and high levels of coordination among organizational activities. While the explicit consideration of interactive variables in quality management theory adds complexity to the understanding and application of contingency theory, this type of complexity is what managers must face. Rarely, is there the luxury of focusing exclusively on one aspect of quality management, as has been the themes of previous research, in isolation from others? For the contingency theory to develop as a theoretical perspective and be relevant to the practical concerns of managers and executives, researchers may need to provide further attention to how constructs in quality management and their subset variables interact to influence organizational performance over time.

Employing contingency theory to conduct future research in the quality management field will also require making more direct connections between the results of studies and the organizational design concerns of managers. One important vehicle for doing this is by considering how quality management research findings can be connected to process considerations at various levels of organization. It is often organizational processes that are of most direct concern to managers adopting quality management practice. Perhaps, the most direct implication relates to the enhanced importance of managing and integrating complex processes within and between each constituent of quality management.

Therefore, it is critical for an organization adopting quality management to develop an organizational capability or competence for managing internal complex and interrelated process models. Without this capability, managerial policies and efforts can become misguided and create greater conflict, thereby undermining the effectiveness of coordination efforts among complex processes to achieve timely policy and strategy adjustments. Successful corporations such as Boeing and car manufacturers recognized the need to employ quality management and, as the corporation evolves, developed organizational capabilities to manage complex processes.

Future researchers may wish to create a matrix that examines the contingent effects of long-term variations in learning capability on innovations and assess variations in long-term innovations on organizational performance.

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Written By

Mohsen Modarres

Submitted: November 26th, 2021 Reviewed: January 5th, 2022 Published: March 29th, 2022