The Quality Orientation: An Emerging Business Philosophy?

Article excerpt

"Quality is all pervading and its use is inexhaustible! Fathomless! Like the fountainhead of all things...Yet crystal clear like water it seems to remain" (Persig [5])

"Because in America, you think a certain amount of error is normal. You expect the plane to be late. You expect the mail to be undelivered. You expect the washing machine to break down...But Japan is different. Everything works in Japan" (Crichton [8])

"Business strategies should be judged by the economic returns they generate for shareholders..." (Rappaport [52])

Corporate managers are faced with many salient issues in their attempt to increase stakeholder value within the current business environment. One of the most pressing concerns facing today's manager is how to maximize shareholder wealth in a dynamic global market where consumers demand increasingly better quality, higher value products. Buzzer and Gale [5] found that quality above all other factors "drives market share," and ultimately tends to result in superior organizational and financial performance.

Similar to the 1980s strategy of actively seeking financial leverage to improve stockholder returns, quality may have become the strategic lever for financial performance during the 1990s. Rust, Zahorik and Keiningham [54] have proposed a financial metric, conceptually similar to return on equity (ROE), that attempts to measure in a financially sound manner the return on quality (ROQ). Kotler [35] implies that quality and value are the critical components of a firm's strategic focus due to increasing levels of consumer intolerance of average-quality, low value products. Customers now typically insist on high quality products that deliver superior values.

A recent study of Malcolm Baldrige National Quality Award candidates found that there were significant financial incentives for firms adopting a quality focus [63]. Flynn, Schroeder and Sakaidbara [15] support this perspective by suggesting that "high quality, well-designed, manufacturable products" are necessary in developing successful strategic advantages. Malhotra, Steel and Grover [41] found in a recent study that quality was the most salient strategic manufacturing issue for the 1990s. Fortuna [18] calls quality "the most important strategic issue facing top management in the 1990s" and states that it is a "bottom-line issue that address the very roots of the business, requiring a change in thinking from the top of the organization to the bottom."

Further evidence of the strategic impact of quality is provided by Deming [13] in two of his famous "Fourteen Points." Deming states that Western management must "adopt a new (quality) philosophy" that "create(s) constancy of purpose toward improvement of product and service." He believed that quality should be the guiding philosophy of the business rather than simply a component of the strategic plan. He theorized that the adoption of a quality philosophy, or orientation, by the entire organization would lead to future competitive advantages for the organization.

Gummesson [24] proposes that focusing on quality as an organizational response to environmental dynamics may both integrate and supersede other orientations previously held by businesses, such as the production or marketing orientations. Grant, Shani and Krishan [23] propose that Total Quality Management (TQM), an organizational obsession with quality and customer need satisfaction, is a superior organizational model that challenges both traditional economic and behavioral based theories of the firm. Dean and Bowen [11] state that "we see TQ (total quality) as a philosophy or an approach to management." Malhotra, Steele and Gorver [411 suggest that TQM is "an all pervading issue that should be reflected in everything done by an organization." These authors suggest that quality is a unique business philosophy that simultaneously impacts strategies, tactics and outcomes. …