DSpace at VNU: Quality management practices and competitive performance: Empirical evidence from Japanese manufacturing companies

DSpace at VNU: Quality management practices and competitive performance: Empirical evidence from Japanese manufacturing...

Quality management practices and competitive performance: Empirical

evidence from Japanese manufacturing companies

Anh Chi Phana,b,n

, Ayman Bahjat Abdallahc, Yoshiki Matsuib a

University of Economics and business, Vietnam National University, Hanoi, 307-E4, 144 Xuan Thuy, Cau Giay, Hanoi, Vietnam

b Faculty of Business Administration, Yokohama National University, 79-4 Tokiwadai, Hodogaya-Ku, Yokohama 240-8501, Japan

c

Faculty of Economics and Administrative Sciences, Applied Science Private University, Amman 11931, Jordan

a r t i c l e i n f o

Article history:

Received 6 August 2009

Accepted 29 January 2011

Available online 3 March 2011

Keywords:

Japanese quality management

Competitive performance

Manufacturing

Empirical study

a b s t r a c t

This paper presents the results of an empirical study on the relationship between quality management practices and competitive performance in Japanese manufacturing companies The data was gathered from two surveys including the common sample of twenty-seven Japanese manufacturing companies

in the 1990s and the 2000s Statistical techniques are used to compare the degree of implementation of the eleven quality management practices and their impact on different dimensions of competitive performance between two periods Findings of this study highlight the stability and consistency of the Japanese quality management, which can be used as one of the strategic weapons for maintaining competitive advantage of Japanese manufacturing companies

&2011 Elsevier B.V All rights reserved

1 Introduction

During the 1990s, the Japanese economy has suffered from a

long recession The growth rate has markedly declined Many

companies have suffered from low profits or financial losses

However, some well-managed Japanese manufacturing

compa-nies still continue to hold their strong competitive power in the

global market The survival and prosperity of Japanese

manufac-turers are achieved by their Japanese way of management such as

total quality management (TQM), just-in-time (JIT) production,

total productive maintenance (TPM), and concurrent engineering,

and their ability to create horizontal linkage structure throughout

the communication network Those are real strengths of Japanese

manufacturers, besides of their technological advantages as

demonstrated byMorita et al (2001)andMatsui (2002a) Quality

management has been recognized as single most critical success

factor in Japan’s manufacturing (Imai, 1986;Ohno, 1988) Quality

management in Japan is characterized as company-wide

partici-pation, emphasis on employees training, quality circles, quality

diagnoses, statistical methods, and national-wide campaign

Peo-ple from all levels of management and workers are involved in the

company-wide quality management or total quality management

(Schroeder and Flynn, 2001; Matsui, 2002b; Schonberger, 1986,

2007) This concept intends to not only control quality levels of

products by applying statistical methods and other analytical

techniques, but also manage all kinds of work properly centered

on quality While the emergent trends in Japanese management are studied and presented in several academic papers and articles regarding manufacturing strategy (Fujimoto, 2004), business restructuring by vertical and horizontal alliances (Kono and Clegg, 2001), supplier involvement in product development (Takeishi, 2001), and transforming individual skills to organiza-tional capability (Sako, 1999), there is a little evidence on how Japanese quality management is longitudinally maintained for enhancing the efficiency and effectiveness of manufacturing companies which are coping with fierce competition from other developed countries or emergent economies In order to address this need, this paper presents results of an empirical study on the relationship of quality management practices and competitive performance in Japanese manufacturing companies This objec-tive is accomplished by analyzing a set of data gathered from two surveys, which includes the common sample of twenty-seven Japanese manufacturing companies conducted in 1993–1994 and 2003–2004 Eleven measurement scales are utilized to measure different aspect of quality management Findings of this study highlight the robustness, stability, and consistence of Japanese quality management and its positive relationship to the competitive performance in manufacturing plants This study provides empirical evidence that Japanese manufacturing com-panies explore quality managements as a strategic weapon for improving competitive advance during the 1990s and the 2000s The remaining of this paper presents the analytical research framework, which is followed by description of data collection, measurement testing, and hypothesis testing The last three sections discuss the important findings, limitations, and final conclusions

Contents lists available atScienceDirect

journal homepage:www.elsevier.com/locate/ijpe Int J Production Economics

0925-5273/$ - see front matter & 2011 Elsevier B.V All rights reserved.

n

Corresponding author Tel.: 84 4 3754 7506; fax: + 84 4 3754 6765.

E-mail address: anhpc@vnu.edu.vn (A.C Phan).

2 Analytical framework

The evidence of outstanding performance of Japanese

manu-facturers in the late 1970s and the 1980s led to the development

of world-class manufacturing (WCM) and high performance

manufacturing (HPM) perspectives (Hayes and Wheelwright,

1984; Schroeder and Flynn, 2001) These perspectives suggest

that the ability to develop simultaneously different competitive

advantages is achieved through development of an infrastructure

of practices focused on designing, controlling, and continuously

improving processes to produce high-quality product Excellent

quality is regarded as a platform for achieving other competitive

edges such as cost, delivery, cycle time, and flexibility For

successful implementation of quality management, several daily

practices should be conducted in manufacturing plants such as

process management, customer focus, supply quality

involve-ment, and small group activity (Flynn et al., 1995) Characteristics

of Japanese quality management have been analyzed in several

empirical studies.Matsui (2002b), using survey data from

forty-six manufacturing plants in the 1990s, found the similarity in

quality management practices among machinery, electrical &

electronics, and automobile in Japan and significant contribution

of customer involvement, cleanliness and organization, and

sup-plier quality involvement on performance indicators such as fast

delivery, inventory turnover, and cycle time.Schroeder and Flynn

(2001) comparatively studied quality practices in 164 plants

located in the Unites States, Japan, German, Italy, and United

Kingdom during the 1990s and found that Japanese

manufac-turers took advantage of quality management over other

coun-tries in term of shop floor activities such as process control,

information feedback, and small group activities It was also

detected that US plants more emphasized on customer

satisfac-tion and relasatisfac-tionship than Japanese plants To continue the

previous studies of Schroeder and Flynn (2001) and Matsui

(2002b), this paper empirically analyzes the relationship between

quality management and competitive performance based on the

relevant measurement scales and data collected from Japanese

manufacturing plants through extensive questionnaires The aims

of this study is to identify the stability of Japanese quality

management between the 1990s and the 2000s and to examine

whether Japanese quality management significantly impacted on the competitive performance in manufacturing plants in the new context of manufacturing environment at the beginning of the 21st century

The framework of this study is presented in Fig 1 The first component of our simple analytical framework is Japanese quality management that represents company-wide activities to improve the quality level of products and works through customer orientation, continuous quality improvement, and employee involvement to establish and sustain competitive advantage The second component includes the different aspects of compe-titive performance of manufacturing plants: quality, cost, deliv-ery, and flexibility As observed by consumers and researchers, Japanese manufacturers are routinely producing extreme high-quality products at very low cost with short production cycle time and new product development time Thanks to the foolproof process and utilization of statistical process control, the variation

of process is identified and eliminated Minimization of process variance results in a reduction of scraps and reworks; thus, reduce the production cost The reduction of defected product also leads

to a reduction of time delay for rework, inspection, and time for machine stop These allow the production run faster with shorter consuming time from material receiving to customer delivery High conformance quality product, short cycle time, and multi-skill workers allow the plant having abilities to change volume mix and product mix In summary, high product quality is associated with the low cost, on-time delivery, and high flex-ibility Then, we would like to propose the hypotheses on the consistency and stability of quality management in Japanese plants and its contribution to competitive performance as described as follows

Firstly, it is expected that Japanese manufacturing companies share the similar characteristic and structure of their quality management Quality management movement was raised in Japan during the 1950s with high commitment of top manage-ment leadership to quality, quality-based strategy developmanage-ment, strong focus on human resource management, process manage-ment, and customer and supplier relationships Between the 1990s and the 2000s, as mentioned in the cited literature, Japanese manufacturers made a lot of efforts on restructuring

Quality Management Practices

Top management leadership Formal strategic planning Training

Small group problem solving Employee’s suggestions Cross-functional product design Housekeeping

Process control Information feedback Customer involvement Supplier quality involvement

Competitive Performance

Unit cost of manufacturing Conformance to product specifications On-time delivery performance Fast delivery

Flexibility to change product mix Flexibility to change volume Inventory turnover Cycle time Speed of new product introduction Product capability and performance Customer support and service

and reengineering their business processes, searching for vertical

and horizontal alliances, changing employment system, and

anticipating new technologies to overcome their business

pro-blems (Kono and Clegg, 2001) It is expected that, during the

1990s–2000s, quality management has been well maintained and

focused through the daily activities as a weapon for competition

in Japanese manufacturing plants The first hypothesis could be

presented as follows

Hypothesis H1 There is no difference in quality management

practices in Japanese manufacturing plants between the 1990s

and the 2000s

Next is the linkage between quality management and

compe-titive performance of Japanese manufacturing plants

Manufac-turing is a central part of the Japanese economic engine for over a

hundred years It has been discussed that the excellent quality is a

success factor for global competition of Japanese manufacturers

Despite the problems after the burst of the financial bubble

during the 1990s, the Japanese manufacturing organizations

continue to maintain their competitive position with large profit,

high productivity, and the skilled artisanship that foreign firm

could not easily intimate Using the updated survey data, this

study would like to test whether the Japanese quality

manage-ment in the 2000s maintains its positive contribution to

compe-titive performance as it did in the 1990s The next hypothesis is

stated as follows:

Hypothesis H2 There is no difference in the impact of quality

management practices on competitive performance of Japanese

manufacturing plants between the 1990s and the 2000s

To test the hypotheses, a set of eleven scales is constructed to

measure the degree of implementation of different quality

man-agement practices in Japanese plants The selection of this set of

quality management practices is based on the suggestion from

recent empirical quality management studies such asAnderson

et al (1995),Flynn et al (1995),Choi and Liker (1995),Forza and

Flippini (1998), Dow et al (1999), Samson and Terziovski

(1999), Das et al (2000), Cua et al (2001), Matsui (2002b),

Kaynak (2003),Yeung et al (2005), andParast et al (2006) The

main characteristics of these studies are summarized inTable 1

The results of these studies identified the key elements of quality

management: leadership commitment, human motivation and

development, new product design, process management, quality

information, and customers and supplier relations, which

signifi-cantly impact on different dimensions of competitive

perfor-mance of manufacturing plants

Previous quality management studies demonstrated that the

establishment of leadership commitment, which consists of top

management leadership and strategic planning, is critical for

achiev-ing superior product quality because it creates the environment and

direction for continuous quality improvement (Anderson et al.,

1995; Flynn et al., 1995; Samson and Terziovski, 1999; Das et al.,

2000; Kaynak, 2003) Two measurement scales are used to evaluate

leadership commitment as follows:

 Top management leadership: This scale measures top

manage-ment commitmanage-ment and personal involvemanage-ment in pursuing

continuous improvement

 Formal strategic planning: This scale measures whether the

plants develop, review and update the strategic planning

Human resource is critical factor for producing quality

pro-ducts This study focuses on three aspects of human resource

management: skill training for employees and participation of

employees in continuous improvement activities through small

group activities and suggestion scheme.Flynn et al (1995),Choi

and Liker (1995), and Samson and Terziovski (1999)

demon-strated that implementation of these practices would develop

the labor force with quality-minded and working skills, leading to better product quality

Training: This scale determines if employees’ skill and knowl-edge are being upgraded in order to maintain workforce with cutting edge skills and knowledge

Small group problem solving: This scale evaluates how the plant uses the teamwork activities to solve quality problems

Employee suggestion: This scale measures whether the plant implement and feedback the employees’ suggestions

Flynn et al (1995)found the evidence that the cooperation between product designers and manufacturing people signifi-cantly improve product quality We adopt this approach and use one measure to evaluate cross-functional product design effort as follows

Cross-functional product design: This scale evaluates whether plant develop new product by cross-functional cooperation

Process management contributes to quality performance by the reduction in process variance, which leads to less scraps and reworks This argument has been empirically supported by the works of Flynn et al (1995), Choi and Liker (1995),Cua et al (2001),Matsui (2002b),Kaynak (2003), and Yeung et al (2005) In more detail, Flynn et al (1995),Cua et al (2001), and Matsui (2002b)suggested that process control and housekeeping should

be implemented to facilitate production flow and these practices significantly relate with quality performance To measure process management in Japanese plants, this study uses two scales to measure the implementation of 5S activities and utilization of statistical process control in order to identify and eliminate process variations

Housekeeping: This scale evaluates whether plant management has taken steps to organize and maintain the work place in order to help employees accomplish their jobs faster and instill

a sense of pride in their work place

Process control: This scale measures the use of statistical process control in production and in office support function,

in designing ways to ‘‘foolproof’’ process and self-inspection

Quality charts, graphs, and tables are widely used on the shop floor of Japanese plants They are effective tools to raise quality awareness of the employees and identify and eliminate the sources of quality problems This argument has been supported by the empirical studies of Flynn et al (1995),Choi and Liker (1995),Kaynak (2003), and Yeung et al (2005) One measurement scale related with shop floor information feedback is used in this study

Information feedback: This scale measures whether the plant provides its shop-floor personnel with the information regard-ing their performance (includregard-ing quality and productivity) in a timely and useful manner

The positive impact of relationship with customers and suppliers

on performance was reported in many empirical studies such

asFlynn et al (1995), Samson and Terziovski (1999),Cua et al (2001),Kaynak (2003),Yeung et al (2005), andParast et al (2006) These studies suggested that managers should focus on customer and supplier involvement because it would allow manufacturing plants to improve quality performance, reduce associated cost, and achieve customer satisfaction Our study adopts this approach and constructs two scales to measure the relationship of manufacturing plants and their customers and suppliers as follows:

Customer involvement: This scale assesses the level of customer contact, customer orientation, and customer responsiveness

Table 1

Summaries of studies on relationship between quality management and organizational performance.

Author Operationalisation of quality

management

Operationalisation of performance Data collection method

and analysis

Main findings

Anderson

et al.

(1995)

Multidimensional construct: Operating performance – Questionnaires

– Data collected from 41 manufacturing plants in US – Path analysis

Employee fulfillment has a significant direct effect on customer satisfaction (1) Visionary leadership (2) Internal and

external cooperation (3) Learning

(4) Process management (5) Continuous

improvement (6) Employee fulfillment

between continuous improvement and customer satisfaction.

Flynn et al.

(1995)

Multidimensional

(1) Process flow management,

(2) Product design process, (3) SPC/

feedback, (4) Customer relationship,

(5) Supplier relationship, (6) Work

attitudes, (7) Workforce management,

(8) Top management support

Operating performance: (1) Quality market outcomes, (2) Percent-passed final inspection with no rework

– Questionnaires – Data collected from 42 manufacturing plants in US – Path analysis

Process flow management and the product design process have positive effects on perceived quality market outcomes while internal measure of the percent that passed final inspection without requiring rework is impacted by the process flow management.

Competitive advantage: (1) Unit cost (2) Fast delivery (3) Volume flexibility (4) Inventory turnover (5) Cycle time

Both perceived quality market outcomes and percent-passed final inspection with no rework have significant effects on competitive advantage.

Choi and

Liker,

1995

Single TQM construct practices is

summarized from: (1) Process quality,

(2) Human resource, (3) Strategic quality

planning, (4) Information and analysis

Plant performance: (1) Quality, (2) Cost, (3) Delivery Customer satisfaction

– Questionnaire – Data collected from

339 manufacturers in US

– Structural equation modeling

TQM practices have a stronger effect

on customer satisfaction than they do

on plant performance.

Plant performance fails to show significant impact on customer satisfaction.

Forza and

Flippini

(1998)

Multidimensional construct: Two dimensions of competitive

performance:

– Questionnaire – Data collected from 43 manufacturers in Italy,

US, Germany, and France – Structural equation modeling

Process control has a significant effect

on quality conformance, and TQM links with customers has a significant effect on customer satisfaction (1) Orientation towards quality, (2) TQM

linked with customer, (3) TQM links

with supplier, (4) Process control,

(5) Human resource

Quality conformance Customer satisfaction

Samson

and

Ter-ziovski

(1999)

Multidimensional construct Operating performance – Questionnaire

– Data collected from

1024 manufacturing sites in Australia and New Zealand – Multiple regression analysis

Leadership, human resources management, and customer focus (soft factors) are significantly and positively related to operating performance.

(1) Leadership, (2) People management,

(3) Customer focus, (4) Strategic

planning, (5) Information and analysis,

(6) Process management

(1) Product quality, (2) Customer satisfaction, (3) Employee morale, (4) Productivity, (5) Delivery performance

Dow et al.

(1999)

– Data collected from

698 manufacturing sites in Australia and New Zealand – Structural equation modeling

Employee commitment, shared vision, and customer focus in combination has

a positive impact on quality outcomes (1) Workforce commitment, (2) Shared

vision, (3) Customer focus, (4) Use of

teams, (5) Personnel training, (6)

Co-operative supplier relations, (7) Use of

benchmarking, (8) Use of advanced

manufacturing systems, (9) Use of JIT

principle

(1) The percentage of defects at final assembly (2) The cost of warranty claims (3) The total cost of quality (4) An assessment of the defect rate relative to competitors

Das et al.

(2000)

Multidimensional construct: Financial performance: (1) Market share,

(2) ROA, (3) Market share increase

– Questionnaire – Data collected from

290 companies in US – Structural equation modeling

Quality practices are positively correlated with customer satisfaction Customer satisfaction is positively correlated with firm performance (1) Supply chain management practices,

(2) Quality resources and evaluation,

(3) Quality training, (4) Customer

commitment

Customer satisfaction

Cua et al.

(2001)

Multidimensional construct: Operating performance – Questionnaire

– Data collected from

163 manufacturing plants in US, UK, Italy, Germany, and Japan – Multiple discriminant analysis

The results of study indicate strong link between quality management practices and operating performance Integration of quality management, JIT, and TPM should be adopted for better performance

(1) Cross-functional product design,

(2) Process management, (3) Supplier

quality management, (4) Customer

involvement

(1) Quality (2) Cost (3) Delivery (4) Flexibility

Matsui

(2002b)

Multidimensional construct:

(1) Cleanliness and organization,

(2) Continuous improvement,

(3) Customer involvement, (4) Customer

Competitive performance: (1) Unit cost

of manufacturing, (2) Quality of product conformance, (3) Delivery performance, (4) Fast delivery, (5) Product mix

– Questionnaire – Data collected from 46 manufacturing plants

in Japan

Quality management is strongly influenced by certain organizational characteristics, human resource management, information systems,

 Supplier quality involvement: This scale assesses the amount

and type of interaction regarding quality concerns, which

occurs with vendors

Competitiveness generally refers to the ability of a business

organization to survive in a competitive marketplace by offering

products or services that attract and satisfy customers (Fujimoto,

2004) For manufacturing organizations, quality, cost, delivery,

flexibility, and time are recognized as the core of manufacturing

capabilities that leads to their competitiveness (Schroeder and

Flynn, 2001) This study uses eleven competitive performance

indicators to evaluate the competitiveness of each manufacturing

plant as: unit cost of manufacturing, conformance to product

specifications, on-time delivery performance, fast delivery, flexibility

to change product mix, flexibility to change volume, inventory

turnover, cycle time, speed of new product introduction, product

capability and performance, and customer support and service

These indicators have been widely use in HPM framework and

other quality management studies to measure whether

imple-mentation of quality management practices can simultaneously

improve different dimensions of competitive performance (Flynn

et al., 1995; Cua et al., 2001; Matsui, 2002b; Kaynak, 2003)

The first step of the analysis is to check the reliability and

validity of each measurement scale Hypotheses H1 and H2 are

tested by using analysis of variance (ANOVA) techniques,

correla-tion analysis, and regression analysis

3 Data collection and measurement analysis Data used for the subsequent analyses were gathered through the international joint research initiative called High Performance Manufacturing Project (HPM) started in the 1980s by researchers

at the University of Minnesota and Iowa State University The overall target of this project is to study ‘‘best practices’’ in manufacturing plants and their impact on plant performance in the global competition The first round of the survey was conducted in 1989 gathering information from forty-six US manufacturing plants In 1992, the project was expanded to include researchers from Germany, Italy, Japan, and the UK The second round of the survey gathered data from one hundred and forty-six manufacturing plants from those countries In 2003, the project was further expanded to include other researchers from Korea, Sweden, Finland, Austria, and Spain The total number of manufacturing plants participated in the third round of the survey is 266 Within each country, surveyed are plants with more than 100 employees belonging to one of three industries—electrical & electronics, machinery, and automobile Based on business and trade journals and financial information, the researchers identified and selected manufacturers as having either a ‘‘Class Manufacturer (WCM)’’ or a ‘‘Non World-Class Manufacturer (NWCM)’’ reputation Each manufacturing company selected one typical plant for participating in the project This selection criterion allowed for the construction of a

Table 1 (continued )

(6) Maintenance, (7) Process control,

(7) Quality in new products, (8) Rewards

for quality (9) Supplier quality

involvement, (10) Supplier quality

involvement, (11) Top management

leadership for quality, (12) TQM link

with customers

(7) Inventory turnover, (8) Cycle time, (9) Speed of new product introduction, (10) Customer support and service, (11) Product capability and performance

it plays an important role in determining the competitive performance of the manufacturing companies, partly through the impacts upon just-in-time production, information systems, and technology development.

Quality management depends on commitment, coordination of decision-making, task-related training for employees, small group problem solving, multi-functional employees, distinctive competence, and anticipation of new technology, among others.

Kaynak

(2003)

Multidimensional construct (1) Financial & market performance,

(2) Competitive performance, (3) Inventory performance

– Questionnaire – Data collected from

214 manufacturers in US

– Structural equation modeling

Quality management gives positive impact on financial and market performance through operating performance Process management positively relates with quality performance Supply quality management and quality information positively relate with inventory performance

(1) Management leadership,

(2) Training, (3) Employee relation,

(4) Quality data& report, (5) Supplier

quality management, (6) Process

management, (7) Product design

Yeung

et al.

(2005)

Multidimensional construct: Operational Performance – Questionnaire

– Data collected from

225 electronics firms in Hong Kong and China mainland

– Path analysis

Study indicated the chain effects on organization performance of four quality management modules Quality constructs are context dependent In electronic industry, process management and customer focus are more important than other elements.

(1) Top management leadership,

(2) Cultural elements, (3) Operational

support systems, (4) Process control and

improvement

(1) Time-based operational efficiency, (2) Customer satisfaction, (3) Cost-related operational efficiency Business results: (1) Financial performance, (2) Marketing performance

Parast

et al.

(2006)

– Data collected from

250 companies in US and 113 companies

in Mexico – Analysis of variance Stepwise regression analysis

The study indicated the differences between critical success factors of quality management practices within the United States and Mexico In both countries social responsibility and supplier quality were found that significantly explain variability of quality results Similarities on effect of quality management practices on customer focus and satisfaction were found

(1) Quality leadership, (2) Quality

information analysis, (3) Strategic

planning, (4) Human resource,

(5) Quality assurance of product and

service, (6) Supplier quality (7) General

matters

Customer satisfaction

sample with sufficient variance to examine variables of interest

for the research agenda

Some of the significant results of studies conducted based on

this project are shown in Sakakibara et al (1993),Flynn et al

(1994) Flynn et al (1995),Schroeder and Flynn (2001), (Matsui,

2002a,b, 2007);Phan and Matsui (2009) These results concern

with some important aspects of manufacturing plants: quality, JIT

production, information systems, information technologies, and

technology development, manufacturing strategy, improvement,

and performance

In this research, we acquire the data from twenty-seven

Japanese manufacturing companies that are included in both

two surveys in 1993–1994 and 2003–2004 Those data are

extracted from the sample of forty-six companies participated

in the first survey during 1993–1994 and thirty-five companies

participated in the second survey in 2003–2004 (in each

com-pany, one typical manufacturing plant is selected to response to

the survey) Twenty-seven plants belong to three industrial fields:

electrical & electronics (9 plants), machinery (11 plants), and

automobile (7 plants) The first data gathered from survey in

1993–1994 reflects the degree of use of quality management in

Japanese plants during the 1990s The second data gathered from

the latest survey in 2003–2004 illustrates the situation of quality

management in the 2000s

In both periods, the implementation of quality management

practices is evaluated by fifteen and sixteen individuals in the same

nine positions from managers to direct labor for each period as

summarized inTable 2 The measurement scales are constructed by

four to seven question items evaluated on a seven-point Likert scale

(1¼strongly disagree, 4¼neither agree nor disagree, 7¼strongly

agree) Individual question items are shown in the appendix Finally,

eleven competitive performance indicators are judged by the

plant manager Each plant manager is asked to indicate his/her

opinion about how the plant compares to its competitors in the

same industry on a global basis on a five-point Likert scale (1¼poor

or low end of the industry, 2¼ below average, 3¼average, 4¼

equivalent to competitor, 5¼superior or top of the industry)

The first step of analytical process is the analysis of reliability

and validity which is performed to evaluate the measurement

properties of the individual scales Reliability is an estimate of

measurement consistency In this study, Cronbach’s alpha

coeffi-cient is calculated for each scale to evaluate the reliability.Table 2

shows the alpha values for all scales exceeded the minimum

acceptable alpha value of 60 for both samples collected in the 1990s and the 2000s (Nunnally, 1967; Flynn et al., 1990) Most of the scales have alpha value above 70 indicating that the scales are internally consistent

Next, the validity of measurement scales is tested against content and construct

Content validity: An extensive review of the literature on the empirical study of quality management practices, production management and organization performance is conducted to ensure content validity This study continues the works ofFlynn

et al (1995),Schroeder and Flynn (2001), andMatsui (2002b)that developed and tested a set of measurement scales of quality management in the framework of HPM Project

Construct validity: Construct validity test is tested to ensure that in a scale, all question items measure the same construct Within scale factor analysis is conducted with the three criteria as follows: (a) uni-dimensionality, (b) a minimum eigenvalue of 1, (c) item factor loadings should be greater than 40 The results show that all scales have good construct validity.Table 1show that the eigenvalue of the first factor is all more than 2.00 for each scale The factor loading for each item (shown in the appendix) is more than 40, mostly ranged between 70 and 90 indicating the high validity of the measurement scales

4 Hypotheses testing

In this section, we explore the time effect (the 2000s vs the 1990s) upon quality management practices and its relationship with competitive performance in Japanese manufacturing plants The description of each quality management practice in both periods is presented inTable 3 It is observed that top management leadership and formal strategic planning are the most important aspects in both periods The less important aspects can be attributed to customer involvement (the 1990s) and process control (the 2000s)

In order to identify the similarity and difference in Japanese quality management practices between two periods (the 1990s

vs the 2000s), analysis of variance (ANOVA) technique is applied and the results are shown inTable 4 If we set the significant level

at 5% as suggested in cited literature, the results indicate that significant differences between two periods existed in four practices named as customer involvement, process control, supplier

Table 2

Measurement analysis of individual scales for Japanese sample.

DL a

(Percentage

of variance)

Alpha Eigenvalues

(Percentage

of variance)

Cross-functional product

design

DL, Direct Labor; QM, Quality Manager; PE, Process Engineer; PS, Plant Superintendent; SP, Supervisor; PD, Member of Product Development Team; HR, Human Resource Manager; IM, Inventory Manager; PM, Production Manager

a

The number of the direct labor answering the questionnaire is different between surveys in the 1990s and the 2000s The figure in parentheses shows the number of

quality involvement, and small group problem solving Among them,

only customer involvement shows higher score in the 2000s while

the last three exhibits lower scores in the 2000s comparing with

the 1990s The largest difference between two periods occurs on

process control that becomes less important in the 2000s

Custo-mer involvement, which exhibits the lowest score in the 1990s,

becomes more important in the 2000s, just behind top

manage-ment leadership, formal strategic planning, and housekeeping Other

seven practices appear similarly between two periods: training,

top management leadership, formal strategic planning, employee

suggestions, cross-functional product design, housekeeping, and

information feedback This indicates that Hypothesis H1 could

not be rejected and we could state that our analysis could not

prove any difference on practicing quality management in the

Japanese manufacturing plants

Next, we examine the linkage between Japanese quality

management practices and competitive performance As depicted

inTable 4, the competitive performance of Japanese

manufactur-ing companies is evaluated similar way between two periods

Japanese managers highly evaluate their product quality in terms

of both conformance to product specifications and product capability

and performance In contrast, manufacturing unit cost and inventory

turnover lay in the bottom Pair-sample t-test is conducted and we

could not find out any significant difference between two periods

(the significant level is 5%)

We further test primary relations between individual quality management practices and performance indicator by conducting simple correlation analysis for two samples The binary correlation coefficients between eleven practices and eleven performance indi-cators are presented inTable 4 It appears that quality practices are significantly associated with every performance measure in both periods if we set the significant level at 5% The number of significant pair could be used to evaluate the relationship between practices and performance indicators In the 1990s sample; top management leadership, training, formal strategic planning, small problem group solving, and process control are the most influential factors to performance In other side, speed of new product introduction, product capability and performance, cycle time, manufacturing unit cost, and conformance to product specifications are strongly connected to quality practices In contrast, housekeeping, employee suggestions, on-time delivery, and flexibility to change product mix have few significant pair with performance In the 2000s sample; small problem group solving, employee suggestion, information feedback, and training have strong connection to performance while flexibility

to change volume, manufacturing unit cost, speed of new product introduction, and customer support and service have strong connection

to quality practices In contrast, fast delivery, product capability and performance, and flexibility to change product mix have only few significant pairs with performance Comparing the correlation coeffi-cient between two periods, we can obtain mixed result The number

Table 3

Quality management practices in Japanese manufacturing companies between 1990s and 2000s.

(2-tailed)

difference

Std Std error mean 95% Confidence interval of the difference Lower Upper

Table 4

Competitive performance in Japanese manufacturing companies between 1990s and 2000s.

(2-tailed)

mean 95% Confidence interval of the difference Lower Upper

Conformance to product specifications 4.222 751 4.115 588 .115 952 187 .500 269 .618 542

Flexibility to change product mix 3.778 801 3.640 995 .120 1.166 233 .601 361 .514 612

Speed of new product introduction 3.481 1.087 3.577 1.137 115 1.243 244 .387 618 473 640 Product capability and performance 4.333 679 4.000 800 .346 1.056 207 .773 080 1.671 107

of significant pair in the 2000s exhibits rather higher than the

number in the 1990s (75 vs 67) Some practices like employee

suggestion, housekeeping, small problem group solving, and information

feedback become more correlated with performance indicators while

other practices such as top management leadership, formal strategic

planning, and training slightly become less correlated with

perfor-mance indicators We find the same phenomenon occurred with

performance where some indicators significantly become more

correlated with quality practices such as on-time delivery, flexibility

to change volume, and customer support and service while product

capability and performance become no longer significantly correlated

with any quality practices In summary, the correlation analysis

indicates that quality practices significantly correlate with a large

portion of competitive performance indicatorsTable 5

To test Hypothesis H2 formally, further ANOVA analysis is

conducted Japanese companies are spitted into two sub-groups

depending on their competitive performance, which is delivered

by summing-up the individual performance indicators for each

period: the high performance group (above average score) and

low performance group (under average score) The numbers of

companies classified into high performance group are 14 and 13

in the 1990s and the 2000s, respectively, while the numbers of

companies in the low performance group are 13 and 14.Table 6

presents the mean value of each quality practices by two groups

and the results of F-test In general, the high performance group

clearly exhibits higher mean value than the low performance group for every quality practices In detail, the results of F-test clearly indicate the significant difference existed in quality practices of the 1990s sample excluding employee suggestion and information feedback which own marginal difference only For the 2000s sample, the differences between two groups appear clearly

in five practices: small group problem solving, employee suggestion, cross-functional product design, housekeeping, and process control

In addition, the marginal difference between two groups exhibit

in other four practices: top management leadership, training, information feedback, and customer involvement There is no significant difference between two groups for formal strategic planning and supplier quality involvement even though the mean value of the high performance group is higher than the lower performance group The results of correlation analysis and ANOVA analysis indicate Hypothesis H2 could not be rejected and we could state that our analysis could not prove any difference in the relationship of quality management practices and competitive performance in Japanese manufacturing plants

5 Implications and discussions

The previous sections presented the results of an empirical analysis on relationship between quality management and

Table 5

Correlation analysis of quality management and competitive performance in Japanese manufacturing companies.

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Top management

leadership

.242 488 224 339 443 370 335 337 433 490 437 394 360 159  070 169 428 594 410 637 229 299 Formal strategic

planning

.323 204 323 501 171 038 482 505 516 357 149 273 098 311 134 479 464 338 246 285  071 405 Training 444 441 334 146 322 209 504 595 719 552 353 593 381 182 045 213 504 365 404 589 140 399 Small group problem

solving

.592 346 283 211 237 354 480 684 583 327 150 508 415 360 243 464 616 573 601 653 277 574 Employee suggestions 287 142 012  054 217 116 216 393 497 283  033 456 371 457 418 235 599 192 339 419 113 513 Cross-functional

product design

.375 340 214 278 015 083 372 395 507 434 235 441 216 093  008 360 470 340 391 623 163 381 Housekeeping 236 206 161  059  007 123 146 304 653 483 378 445 452 381 265 390 589 157 133 525 012 510 Process control 438 401 284 268 257 451 201 468 719 526 411 538 551 439 293 210 587 376 299 490 075 467 Information feedback 467 136 138 371 034 260 283 438 457 334 023 494 483 479 206 108 600 447 308 576  008 382 Customer involvement 373 486 106 153 258 429 120 176 720 514 531 346 360 363 235 085 610 237 195 454 197 474 Supplier quality

involvement

.390 652 288 162 259 291 287 293 756 621 377 429 254 350 117 065 619 298 176 333  084 298

(1) Unit cost of manufacturing; (2) conformance to product specifications; (3) on-time delivery performance; (4) fast delivery; (5) flexibility to change product mix (6) Flexibility to change volume; (7) inventory turnover; (8) cycle time; (9) speed of new product introduction; (10) product capability and performance; (11) customer support and service.

Table 6

Japanese quality management practices classified by high and low performance.

competitive performance in Japanese manufacturing plants The

main findings and implications derived from a series of statistical

analyses are summarized as below

During the 1990s and the 2000s Japanese manufacturing

com-panies explore quality management as a strategic weapon for

improving their competitive advance Along with other factors such

as information technology and manufacturing technology, quality

management can considerably explain the high performance in

terms of conformance quality, manufacturing cost, dependability,

flexibility, time, and customer service During the 1990s and the

2000s Japanese manufacturers maintain a consistent structure of

quality management system which characterized by top

manage-ment leadership for quality, close customer relationship; sharp focus

on process management, employees’ training and participation, and

information feedback This allows the Japanese manufacturing

maintain the competitive position in the global market as illustrated

in Fig 2, where we can observe that the level of competitive

performance appears in similar pattern in both periods Quality

performance (both conformance and design quality), delivery,

flexibility are rated in high in both periods while the bottoms are

two indicators concerning with manufacturing cost and inventory

which can be evaluated internally only These indicate the confident

of Japanese managers about their quality performance while

man-ufacturing cost and inventory remain as serious concerns for

them The stability of Japanese quality management practices and

quality performance over the time can be explained by the fact

that quality management concepts are deeply instilled into people

in most Japanese manufacturing companies regardless of their

products and processes The superior performance is achieved

by long-term efforts involving several strategic and human factors:

company-wide participation, emphasis on employees training,

quality circles, quality diagnoses, statistical methods, and

national-wide campaign which could not be easily graded down in a

decade

So, what have been considerably changed between the 1990s

and the 2000s? A few practices become more or less important

over the time For example, Japanese plants turn to more focused

on how to satisfy the customer by managing closed relationship

with customers and improving the responsiveness to customer’s

requirements Japanese market is uniquely characterized by the

strong demand of Japanese consumers on quality and refinement

The concept of ‘‘economical defective rate’’ is not allowed in

Japanese plants This explains the reason why the Japanese

manufacturers have increased their attention on involving the

customers in their product quality improvement programs in the

2000s to produce extreme high-quality product with consumer-friendly features

We further find the evidence of the shift in how the Japanese manufacturing companies specifically utilize quality management practices to improve specific performance indicators It is identi-fied that the determinants for high performance is moderately changed in the 2000s The influence of small group problem solving, employee suggestion, information feedback, and training is significantly increased This indicates that quality management information became more critical for achieving high competitive performance during 2000s than before Other important finding is the change of determinants for design quality By the time, product capability and performance become less dependent on quality management practices at plant level It indicates that Japanese high design quality may be defined by other factors than common quality management practices used in this study They might be high technology, advanced manufacturing methods, or Six Sigma-oriented techniques

The relationship between quality practices and performance is illustrated in more detail inFig 3that shows the level of eleven quality management practices for two groups based on their overall competitive performance As shown in this figure, a similar pattern occurs in both groups in each period with parallel distance between the groups in term of implementation level of the practices This indicates the positive inter-relationship between quality management practices where the higher level

of implementation of one practice is achieved through mutual supportive relationship among practices Naming this as ‘‘levered linkage’’, Morita et al (2001) discusses that one of the most important characteristics of successful Japanese manufactures is their ability to create a ‘‘levered linkage structure’’ through the communication network The ‘‘communication and action’’ pro-cess is viewed as an underlying force that made Japanese quality management so successful An empirical evidence to support this argument is found in our study Our finding is that competitive performance becomes more dependent on the shop-floor com-munication and information sharing (employee suggestion, small group problem solving, and information feedback) in the 2000s, while Japanese manufacturing companies maintain their focus on the cross-functional communication and information sharing (cross-functional design, customer involvement, and supplier quality involvement) The effective communication and information shar-ing improve the effectiveness of statistical process control, allow people to share and capture necessary information, and lead to the behaviors that continuously improve the competitiveness of

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Competitive Performance in 1990's Competitive Performance in 2000's

Fig 2 Competitive performance in Japanese manufacturing companies between the 1990s and 2000s 1: Unit cost of manufacturing 2: Conformance to product specifications 3: On time delivery performance 4: Fast delivery 5: Flexibility to change product mix 6: Flexibility to change volume 7: Inventory turnover 8: Cycle time 9: Speed of new product introduction 10: Product capability and performance 11: Customer support and service Note: Vertical axis shows the level of competitive performance on a five-point Likert scale (1¼ Poor or low end of the industry, 2¼ Below average, 3 ¼Average, 4¼ Equivalent to competitor, 5 ¼Superior or top of the

manufacturing companies From this analysis, researchers and

practitioners can recognize the toughness of competition in

Japanese market where the manufacturing organizations must

compete in every aspect of manufacturing management in order

to survive competitively Beside the long term emphasizing on

process management, Japanese manager also seek for other

breakthrough solutions (to achieve superior design quality, for

example) and sometime to return to the basic techniques (good

housekeeping, for example)

6 Limitations and further research

It is important to view this study in the context of its limitations

Methodologically, this study is based on the cross-sectional survey

data gathered via self-reported questionnaires, and individual bias in

reporting may exist Although we addressed the issue of common

method bias through the use of multiple respondents in the same

positions at the companies in both surveys, the study still heavily

relies on the use of perceptual data The other issue is small sample

size Because of time and resources constraints, it is impossible to

involve more manufacturing companies into the survey In addition,

the sample is limited to three industries These restricted the scope

of the studies and the utilization of some data analysis techniques

For example, we could not use the path analysis technique to

examine interrelations among quality management and competitive

performance with industry effect

To overcome these limitations, a future research should be

conducted with larger size which allows the researchers to use

more comprehensive techniques for investigating the relationship

among quality management practices and competitive

perfor-mance for specific industries, such as path analysis or structural

equation modeling The researchers should explore both objective

and subjective performance measures in their studies, particularly

when studying a specific industry This study indicates several

questions for future research on Japanese quality management

For example, is there any trade-off between quality performance

and cost performance? What are determinants for Japanese high design quality? Future study should develop new measurement construct to capture current situations and new trends of Japanese quality management beside the existing eleven scales used in this study

7 Conclusions The Japanese economy has encountered several crises during the 1990s and the 2000s Japanese companies still face with the problems caused by the burst of the bubble economy and the fierce competition from other developed countries or emergent econo-mies But it is believed that they overcome these problems success-fully because the manufacturing sector still remains competitive As

a core of Japanese production system, quality management is now almost half-of-century old and seems built to endure This study suggests the stability of most quality management practices, which have been still utilized to maintain the competitive advantage

of Japanese manufacturing companies Focusing on a set of eleven quality management practices, this study reveals their general contribution to competitive performance in Japanese manufacturing companies in both periods In addition, the evidence of evolution on Japanese quality management is detected By the time, the Japanese manufacturing plants become more focused on the interaction with customers and involving customers in quality improvement activ-ities The influence of shop floor communication and information sharing on the competitive performance of the plants has been also increased We observe that the high performance manufacturing plants give strong focuses on implementation of small group problem solving, employee suggestions, and information feedback The results of analysis indicate the linkage between quality manage-ment practices and competitive performance in terms of on-time delivery and volume flexibility in the 2000s The findings of this study suggest that such components of quality management as leadership commitment, process management, and communication and information sharing should be explored to achieve high com-petitive performance

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High Performance in 1990's Low Performance in 1990's

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Fig 3 Quality management practices in Japanese manufacturing companies between the 1990s and 2000s classified by high and low performance 1: Top management leadership 2: Formal strategic planning 3: Training 4: Small group problem solving 5: Employee’s suggestions 6: Cross-functional product design 7: Housekeeping 8: Process control 9: Information feedback 10: Customer involvement 11: Supplier quality involvement Note: Vertical axis shows the degree of implementation of quality management practices on a seven-point Likert scale (1¼ Strongly disagree, 4¼ Neither agree nor disagree, 7 ¼Strongly agree).