ADDISU MELKAMU: EFFECT OF TOTAL QUALITY MANAGEMENT PRACTICES ON ORGANIZATION PERFORMANCE - THE CASE OF BAHIR DAR TEXTILE SHARE

COMPANY
DOI: 10.21917/ijms.2020.0164

TQM ADOPTION EFFECTS ON AN ORGANIZATIONAL PERFORMANCE – A CASE

STUDY ON BAHIR DAR TEXTILE SHARE COMPANY
Addisu Melkamu
Logistics and Supply Chain Management, Wollega University, Ethiopia

Abstract variable not only influenced dependent variable but also

The purpose of this study is to assess the effect of total quality complement each other as well [25] [8].
management on organization performance in Bahir Dar Textile Share The conjecture of how and why TQM works is a paramount
Company. Specifically, the study examines the variables product matter for the organizations survival, competition, quality, and
quality, operational quality and customer service quality that has their
improvement. So, with the finding of this study, the managers
effect on organization performance. This study is conducted on
explanatory design of research. The study employs stratified with could easily choose the TQM dimension that would best fit their
simple random sampling technique to select the sample respondents. organizational context to bring about business excellence [11].
Findings indicate that product quality followed by customer service
quality and operational quality have a significant positive effect on 1.1 RESEARCH OBJECTIVES
organization performance.
The general objective of this study is to assess the effect of
total quality management practice on organizational performance
Keywords: in Bahir Dar Textile Share Company.
Total Quality Management, Organization Performance, Operation The specific objective of this study is:
Quality, Customer Service Quality
• To investigate the effect of product quality on organization
performance in Bahir Dar Textile Share Company;
1. INTRODUCTION
• To analyze the effect of operational quality on organization
The concept of Total quality management is about a performance in Bahir Dar Textile Share Company; and
management approach that is centered on quality, and it is based • To identify the effect of customer service quality on
on the participation of people within an organization with the organization performance in Bahir Dar Textile Share
fundamental aim at a long term success [38]. Company.
However, the literature does not seem to agree on a universal
1.2 RESEARCH QUESTIONS
framework for the implementation of TQM philosophy, some
common elements which play a vital role in the success of the This study answers mainly the following questions:
TQM program can be identified. These elements include; top
• What is the effect of product quality on organizational
management commitment, identification of customer and their
performance of Bahir Dar Textile Share Company?
requirements, process review, gap analysis, employee training
and development, monitoring of the process, measurement of the • How operational quality affect the performance of Bahir Dar
process and establishing the feedback system [33]. Textile Share Company?
Most of developing countries’ enterprises like brewery, • What is the effect of customer service quality on
textile, sugar, flour, and other agro–processing industries are very organization performance of Bahir Dar Textile Share
low in their productivity as compared to other developing and Company?
developed nations as mentioned on UNIDO, Vienna, 2004 [2].
The main rationality of this study will be to solve the problem 2. REVIEW LITERATURES
that renders a company inefficient to make organized plans that
help to identify the root cause of quality management related 2.1 HISTORY OF QUALITY MANAGEMENT
problems and provide immediate solution for them, and thereby,
During the World War II, the need to improve quality in the
improve the practice of total quality management in the
production of armaments and other items for defense, stimulated
organization [1] [3] - [5].
further development of sampling and process control. Two of
Previous research studies have focused mainly on the impact Shewart’s students, Joseph Juran and W.E. Deming, helped
of implementing total quality management on some performance develop quality from quality control into quality management.
factors such as design performance, financial performance, Juran’s Quality Control Handbook, written in 1951, provided the
operating performance, supplier relationship, etc. Research most comprehensive reference to quality, and is relevant even
conducted in Kenya focused on the part of top management today [12]. Despite this knowledge, however, few companies in
involvement, customer focus and employee involvement in the K- the USA adopted these approaches to quality [36].
rep development agency’s TQM implementation process. The
Today, new variants on quality, including quality awards and
finding of this study suggests that the independent variable which
quality certification systems are widely promoted as the new keys
include customer focus, top management involvement and
to organizational success. But, their long-term worth has yet to be
employee involvement are part of the K-rep development
proved. There are as many success stories as there are stories of
agency’s TQM implementation process. Each independent
failure [36] [13] [14].

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2.2 THEORIES AND PRINCIPLES OF TOTAL • Quality awareness: to provide a method of raising the
QUALITY MANAGEMENT personal concern felt by all employees toward the
conformance of the product or service and the quality
2.2.1 Deming’s Theory: reputation of the company.
As cited by M. Ngambi and A. Nkemkiafu [27], in his theory • Corrective action: to provide a systematic method for
of Total Quality Management, Deming identified fourteen points resolving forever the problems which are identified through
of management. He also developed a system of “profound the previous action steps.
knowledge” which consists of the following four points: • Zero defects: to examine the various activities that must be
• System Appreciation - an understanding of the way a firm’s conducted in the preparation for formally launching zero-
processes and systems work; defects day.
• Variation Knowledge - an understanding of the variation • Employee education: to define the type of training all
occurring and the causes of the variation; employees need to actively to carry out their role in the
• Knowledge Theory - the understanding of what can be quality improvement process.
known; • Planning and zero-defects day: to create an event that will
• Psychology Knowledge - the understanding of human nature let all employees realize, through a personal experience, that
from the aforementioned points of view. there has been a change.
In order to help managers, improve the quality of their • Goal setting: to turn pledges and commitments into action
organizations, Deming has offered the following 14 management by encouraging individuals to establish improvement goals
principles [27]: Constancy of purpose, New philosophy, Cease for themselves and their groups.
dependence on inspection, End ‘lowest tender’s contracts, • Error-cause removal: to give the individual employee a
Improve every process, Institute training on the job, Institute method to inform the management on the situations which
leadership, Drive out fear, Break down barriers, Eliminate make it difficult for the employee to meet the pledge to
exhortations, Eliminate targets, Permit pride of workmanship, improve.
Encourage education, and Inculcate top management • Recognition: to appreciate those who participate.
commitment.
• Quality councils: to bring together the appropriate people to
2.2.2 Juran’s Theory: share quality management information on a regular basis.
Joseph Juran is responsible for what has become known as the • Do it all over again: to emphasize that the quality
Quality Trilogy. The quality trilogy is made up of quality planning, improvement process is continuous.
quality improvement, and quality control. If a quality improvement
2.2.4 Feigenbaum’s Approach to TQM:
project is to be successful, then all quality improvement actions
must be carefully planned out and controlled [27]. As cited in Zhang [42], TQM is defined as: An effective
system for integrating the quality development, quality-
The following are Juran’s 10 Quality improvement steps [27]:
maintenance, and quality-improvement efforts of the various
Build awareness of the need and opportunity for improvement,
groups in a firm so as to enable marketing, engineering,
Set goals for improvement, Organize to reach the goals (establish
production, and service at the most economical levels which allow
a quality council, identify problems, select projects, appoint
for full customer satisfaction. He claimed that effective quality
teams, designate facilitators), Provide training, Carry out projects
management consists of four main stages, which are as follows:
to solve problems, Report progress, Glaive recognition,
Communicate results, Keep score, Maintain momentum by • Setting quality standards;
making annual improvement a part of the regular systems and • Appraising conformance to these standards;
processes of the company [16] - [18]. • Acting when standards are not met;
2.2.3 Crosby’s Theory: • Planning for improvement in these standards.
As cited in Ngambi and Nkemkiafu [27], according to Crosby, 2.2.5 Ishikawa’s Approach to TQM:
quality is conformance to requirement and can only be measured
by the cost of non-conformance. Crosby provides four absolutes Zhang [42] argued that quality management extends beyond
and 14 steps for the quality improvement process for continuous the product and encompasses after-sales service, the quality of
increase in quality [20]. They are: management, the quality of individuals, and the firm itself. He
claimed that the success of a firm is highly dependent on treating
• Management commitment: to make it clear where quality improvement as a never-ending quest. A commitment to
management stands on quality. continuous improvement can ensure that people will never stop
• Quality improvement team: to run the quality improvement learning. He advocated employee participation as the key to the
process. successful implementation of TQM.
• Measurement: to provide a display of current and potential According to Zhang [42], Ishikawa’s concept of TQM
nonconformance problems in a manner that permits contains the following six fundamental principles;
objective. • Quality first-not short-term profits first;
• Cost of quality: to define the ingredients of the cost of • Customer orientation-not producer orientation;
quality (COQ) and explain its use as a management tool.

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• The next step is your customer-breaking down the barrier of and seller (provider). A service might be as simple as handling a
sectionalism; complaint or as complex as approving a home mortgage.
• Using facts and data to make presentations-utilization of
statistical methods;
2.4 RELATIONSHIP BETWEEN TQM PRACTICE
AND ORGANIZATION PERFORMANCE
• Respect for humanity as a management philosophy, full
participatory management; As cited in Bavarsad et al. [7], in the past decade we observed
• Cross-functional management. a considerable expansion in the use of TQM practices in
manufacturing and non-manufacturing corporations. As
2.3 THE NEED OF TQM IMPLEMENTATION IN competition increased, the firms tried to create a competitive
MANUFACTURING FIRMS margin in their processes and production operations. This
indicates that the use of TQM practices has a synergic effect on
As cited in Khalid et al. [21], the majority of successful organizational performance. In addition, the firms’ pioneering in
manufacturing companies have adopted TQM techniques and the use of TQM practices would increase their ability to improve
acknowledged its intangible contribution. However, the performance. Recent empirical evidence shows direct and indirect
importance of TQM practices as an effective pillar of corporate relationships between TQM practices adaptation and
strategy for achieving manufacturing excellence cannot be organizational performance levels [29]. Deming [22] suggests
denied. The concept of manufacturing excellence is regarded as that higher quality points to lower costs and higher productivity,
the path to become the best manufacturer. Many researchers, which in turn leads to bigger market share and elevated
while developing their frameworks have considered TQM as a competitiveness.
key element for achieving manufacturing excellence.
According to Gharakhani et al. [15], several authors have
Rapid developments in international competition have obliged claimed that an important part of ensuring that TQM leads to
textile enterprises to take new approaches in order to gain a sustained improvements in organizational profitability is that
competitive advantage. The limits of acceptable quality levels for direct quantitative measures of manufacturing are used to assess
the enterprises have fallen back down to critical points due to the the effectiveness of managers’ efforts to manage the development
effects of liberal policies in international markets. Total Quality and implementation of TQM programs.
Management (TQM) keeps vital role in improving productivity,
The principles of Total Quality Management were obtained
product quality and reduces manufacturing cost by reducing
with such a view that its establishment has significant impact on
rework and scrape [37].
the organizational performance. Research has shown that
The reason of implementing TQM practices is to improve organizations that successfully deal with the implementation of
customer satisfaction, quality of products and/or services, Total Quality Management have better and effective
productivity, capacity of the production line, employee performance [31].
performance, quality-of-work-life, market share, and competitive
position. Another reason is for reducing production development
3. MATERIALS AND METHODS
time, waste of inventory, work in process, cost, delivery times,
employee turnover, and complaints [30].
3.1 RESEARCH DESIGN
2.3.1 Product Quality:
All organizations began their quality management efforts with This study uses explanatory research design. As cited and
a focus on product quality. At the first introduction of a product, explained in Chepkech [10] and Sajjad and S. Amjad [32], an
this is necessarily a definition of product quality from the explanatory research design is one which collects data in order to
producer’s point of view. Since the product is unknown to the test hypothesis or to answer research questions concerning the
customers, the customers have little input as to the definition of current status of the subject under the study. Also, this study uses
quality. They may be surveyed for needs and wants, but in the mixed approach of research because this approach counteracts the
case of a truly new product their inputs are ambiguous and weakness in both quantitative and qualitative research approach.
somewhat vague [19]. 3.2 TARGET POPULATION OF THE STUDY
2.3.2 Operational Quality:
Bahir Dar Textile Share Company currently has a total number
As cited in Truong et al. [39], Operational quality refers to the of 1387 employees working in different departments. From those
ability of a company to reduce management costs, order cycle employees the target population for this study will be 1371
time – meet orders, and to improve the efficient use of raw employees deployed in seven different departments, namely
material and distribution capacity [23]. Operational performance General Process Administration and Legal Service, Production,
has an important meaning to firms, it improves effectiveness of Purchasing and Property Administration, Sales and Marketing,
production, creates high quality products, customers are more Finance, Human Resource Development, and Engineering.
satisfied, and leads to the increase in revenue and profit for
companies [24] [26] [28]. 3.3 SAMPLING TECHNIQUE
2.3.3 Customer Service Quality:
This study uses stratified sampling technique. According to
Service can be defined as any primary or complementary Dattalo [12], this type of sampling involves the use of groups to
activity that does not directly produce a physical product-that is, achieve representativeness, or ensures that a certain number of
the non-goods part of the transaction between buyer (customer) elements from each group are selected. In a stratified sample, the

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sampling frame is divided into non-overlapping groups or strata. (SPSS version 20) is used to process data because the researchers
In this study the researcher divides the employees based on their has know-how to apply this version and subsequently the data is
departments. Then a random sample is drawn from each stratum. presented using graphs, charts, and tables.

3.4 SAMPLE SIZE DETERMINATION 3.7 MODEL SPECIFICATION

As per [34] [35], which is revised on April 2009 and again on The multiple regression model that is used in this study is;
June 2012, a simplified formula is derived to calculate sample y = α + β1x1 + β2x2 + β3x3 + ε
size. So, from those several methods for determining sample size,
where, y - organization performance, α - constant of
Yamane formula is used in this study because this formula can be
proportionality, β - coefficient term of independent variables, x1 -
used to determine the minimal sample size for a given population
product quality, x2 - operational quality, x3-customer service
size.
quality and ε - error term [39] - [42]
The formula from Yamane is:
n = N/(1+N(e)2 ) 4. DATA ANALYSIS PRESENTATION AND
where, n = sample size, N = total population, e = level of precision INTERPRETATION
at 95% confidence level,
So, the sample size will be The statistical package for social sciences (SPSS) has been
n = 1371/(1+1371(0.05)2) used to analyze the data.
n = 309.655 4.1 RELIABILITY TEST
≈310
So, based on their proportion the sample was drawn as below Table.2. Reliability Statistics
(Table.1).
Cronbach’s Alpha N of Items
Table.1. Sample Size Determination 0.794 4
The Cronbach’s alpha value of factors is found to be 0.794
No. of Samples which is greater than the acceptable value of 0.7. The alpha value
Department
employees Taken clearly shows that the measurement variables of the study are
General process administration reliable enough to measure the factor they are supposed to.
7 2
and legal service
production department 1153 261 4.2 DEMOGRAPHIC CHARACTERISTICS OF THE
RESPONDENT
Purchasing and property
13 3
administration The obtained data shows that 66.3% (187) of the total number
Sales and marketing 18 4 of respondents (282) are male, while the remaining 33.7% (95)
Finance 21 5 are female. This shows that the majority of the respondents were
males. Coming to the age factor, 25.9% (73) of the respondents
Human Resource Development 95 21 are under the age of 25, while 68.4% (193) respondents are
Engineering 64 4 between the age of 26 and 35, and the remaining 5.7% (16) are
Total 1371 310 between the age group 36 and 45. This shows that majority of the
respondents are under the age limit of 26-35. The data on
3.5 DATA SOURCE AND COLLECTION educational background shows that 29.8% (38) of the respondents
TECHNIQUE have completed secondary school, 62.1% (175) have college level
diploma, and the other 8.2% (23) are first degree holders. So, we
In this study both primary and secondary sources of data are can conclude that majority of the respondents are college diploma
used to get an in-depth data. A primary data source was collected holders. Concerning the work experience from the total
by using self-administered questionnaire in a form of a Likert respondents 56% (158) are in the service of the company for 1 to
scale. And a secondary data source was collected by viewing the 5 years, 39.7% (112) have served between 6 and 10 years, and the
organization annual reports and documents. remaining 4.3% (12) are with the company for about 11 to 15
years. This data shows that majority of the respondents have
3.6 DATA ANALYSIS AND PRESENTATION experience between 1 and 5 years, which is considerably long
period to provide significant information about the company.
The collected data is analyzed using Regression Method of
Analysis. The Pearson correlation analysis is also applied in the 4.3 DESCRIPTIVE STATISTICS OF THE STUDY
study to assess the strength of relationship between dependent and VARIABLES
independent variables.
Multiple regression analysis is also applied to test the The mean statistical value approaching were based on the
association of variables with each other and the extent of variance following assumptions; if the mean value is between (0 to 1.5) this
in the independent variable as a result of unit change in the implies the respondents strongly disagreed, if the mean value is
independent variables. Statistical package for social science between (1.50 to 2.50) it indicates the respondents disagreed, the

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mean value between (3.50 to 4.50) implies the respondents agreed with a mean value of 4.49 strongly agreed, whereas the remaining
and a mean value which is 4.50 and above shows that the 47.9% and 1.8% is regarded as agreed and neutral, respectively.
respondents strongly agree. Therefore, the descriptive statistics is This implies that the ability to repair a product quickly and easily
analyzed based on these assumptions. The percent and average has effect on the organization performance.
mean results with respect to all the components of the independent 4.3.2 Descriptive Statistics of Operational Quality:
variables and the dependent variables are presented, analyzed, and
interpreted as follows: Table.4. Descriptive statistics of Operational quality
4.3.1 Descriptive Statistics of Product Quality:
Percentage
Table.3. Descriptive statistics of product quality Items N Strongly Mean
Disagree Neutral Agree
agree
Percentage
Company’s
Items N Strongly Mean waste reduction
Neutral Agree
agree has an effect on 282 - 0.4 50.4 49.5 4.49
Performance of the organization
company’s product has performance
282 2.1 47.2 50.7 4.49
effect on organization Reduced
performance management
Probability of a product’s cost has an
282 1.1 6.7 51.4 40.8 4.32
surviving over a specified effect on
period of time under organization
282 0.4 50.4 49.3 4.49
stated condition of use has performance
effect on organization Efficient use of
performance raw material has
Amount of use one gets effect on 282 - 0.4 51.1 48.6 4.48
from a product before it organization
physically deteriorates has 282 2.1 47.5 50.4 4.48 performance
effect on organization Distribution
performance capacity of the
The ability to repair a company has
282 1.1 6.7 51.8 40.4 4.32
product quickly and easily effect on
282 1.8 47.9 50.4 4.49
has effect on organization organization
performance performance
Source: Survey Data 2017 Source: Survey Data 2017
Based on the data 50.7% of the respondents with a mean value From the total respondents 50.4% agreed with a mean value
of (4.49) ‘strongly agree’, it is inferred that the performance the of 4.49 on company’s waste reduction has effect on organization
company’s product has effect on organization performance. performance. The other 49.5% of the respondents strongly agreed
47.2% of the respondents agree, and the remaining 2.1% remain and the remaining 0.4% remained neutral.
neutral. From this it can be concluded that the performance of the This data shows that majority of the respondents agreed on
company’s product has effect on the organization performance. company’s waste reduction has effect on organization
The respondents agreed on the probability of a product’s performance.
survival over a specified period under stated conditions of use has The respondent also agreed on reduced management cost has
effect on organization performance which is 50.4% with a mean an effect on organization performance which is 51.4% with a
value of (4.49). The other 49.3% and 0.4% was strongly agreed mean value of (4.32). The other 40.8% was strongly agreed, 6.7%
and neutral on the given statement. Standing from this it is remain neutral and 1.1% of the respondents were disagreed. From
possible to conclude that the probability of a product’s surviving this it is possible to say that reducing management cost has an
over a specified period under stated conditions has effect on the effect on the performance of the organization.
organization’s performance.
A 51.1% of the respondents with a mean value of (4.48)
A 50.4% of respondents with a mean of 4.48 strongly agree on agreed on the efficient use of raw material has effect on
the durability of a product before it physically deteriorates has organization performance. 48.6% was strongly agreed and the
effect on organization performance. Other 47.3% and 2.1% of the other 0.4% of the respondents remains neutral. This implies that
respondents agreed and remained neutral respectively. From this, most of the respondents agreed on the efficient use of raw material
we can conclude that amount of use one gets from a product have effect on organization performance.
before it physically deteriorates has an effect on organization
Most of the respondents agreed that distribution capacity of
performance.
the company has effect on the organization’s performance by
On the other hand, on the illustration ability to repair a product 51.8% with a mean value of (4.32). The other respondents
quickly and easily has effect on organization performance, 50.4% strongly agreed (40.4%), neutral (6.7%), and disagree (1.1%).

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This means that the distribution capacity has effect on organization performance. 48.9% respondents were strongly
organization performance. agreed on the issue and the remaining 0.4% was neutral. This
indicated almost all respondents support the issue that
4.4 DESCRIPTIVE STATISTICS OF CUSTOMER responsiveness of service providing has effect on the performance
SERVICE QUALITY of the organization.
The respondents also agreed 63.1% with mean value (4.25) on
Table.5. Descriptive Statistics of Customer Service Quality the completeness of the service has effect on organization
Percentage performance. 30.9% of the respondents were strongly agreed and
the other 6% was neutral. Standing from this it is possible to
Items N Strongly Mean
Disagree Neutral Agree conclude that completeness of the service has effect on
agree organization performance.
How much Most of the respondents 51.8% (mean=4.47) agreed on the
reliable the issue consistency of the service has effect on organization
service performance. 47.5% of the respondents were strongly agreed and
provider has 282 0.4 3.2 57.1 39.4 4.35 the remaining 0.7% was neutral. This indicates consistency of the
effect on service has effect on organization performance.
organization
performance 4.5 DESCRIPTIVE ANALYSIS OF
Accessibility ORGANIZATION PERFORMANCE
and
convenience of Table.6. Descriptive analysis of organization performance
the service
282 0.7 2.5 56.7 40.1 4.36 Percentage
providing has
an effect on Items N Strongly Mean
Disagree Neutral Agree
organization Agree
performance Product quality
Responsiveness has effect on
282 - - 47.5 52.5 4.52
of service profit
providing has maximization
282 - 0.4 50.7 48.9 4.49
effect on Product quality
organization has effect on 282 1.1 4.3 50.7 44 4.38
performance competitiveness
Completeness Operational
of the service quality has
has effect on 282 - 6 63.1 30.9 4.25 282 - 2.1 47.5 50.4 4.48
effect on profit
organization maximization
performance
Operational
Consistency of quality has
the service has 282 1.1 6.7 51.8 40.4 4.32
effect on
an effect on 282 - 0.7 51.8 47.5 4.47 competitiveness
organization
Customer
performance
service quality
Source: Survey Data, 2017 has effect on 282 - 0.4 50.7 48.9 4.49
The data shows that the respondent agreed that the reliability profit
of the service provider has effect on organization performance maximization
which is 57.1% with a mean value of (4.35). The other 39.4%, Customer
3.2% and 0.4% strongly agree, remained neutral, and disagree service quality
respectively. This shows the reliability of the service provider has 282 1.1 5.0 55.3 38.7 4.32
has effect on
effect on organization performance. competitiveness
The respondents also agreed on the accessibility and Source: Survey Data 2017
convenience of the service providing effect on organization
As illustrated in the above table 52.5% of respondents with a
performance which is 56.7% with a mean of (4.36). The
mean value of (4.52) strongly agreed on product quality has effect
remaining was strongly agreed, neutral and disagree with 40.1%,
on profit maximization. The remaining 47.5% was agreed. So,
2.5%, and 0.7% respectively. From this it is possible to conclude
generally all the respondents agreed on the effect of product
that accessibility convenience of the service providing has an
quality on profit maximization. The respondents agreed 50.7%
effect on organization performance.
with a mean of (4.38) on the product quality has effect on
A 50.7% of the respondents agreed with a mean of (4.49) on competitiveness. 44% of the respondents strongly agreed, 4.1%
the responsiveness of service providing have effect on

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and 1.1% was neutral and disagreed respectively. This implies As cited by Bacha [6], according to (Burns and Burns, 2008)
that product quality has effect on competitiveness. correlation Values between 0 and 0.3 (0 and -0.3) indicate a weak
A 50.4% of the respondents with a mean value of (4.48) positive (negative) linear relationship via a shaky linear rule,
strongly agreed on the operational quality has effect on profit Values between 0.3 and 0.7 (0.3 and -0.7) indicate a moderate
maximization. The other 47.5% and 2.1% was agreed and neutral positive (negative) linear relationship and values between 0.7 and
respectively. From this we can conclude that operational quality 1.0 (-0.7 and -1.0) indicate a strong positive (negative) linear
has effect on profit maximization. Majority of the respondents relationship via a firm linear rule. Therefore, in this study all
which is 51.8 with a mean value of 4.32 agreed on operational correlation results are interpreted in light of this rule.
quality effect on competitiveness. 40.4% was strongly agreed and The data shows the relationship between product quality and
the other 6.7% and 1.1% was neutral and disagreed respectively. operational quality. The value of correlation is 0.328. The
This indicates that operational quality has effect on correlation is significant at 0.01. This shows that there is a
competitiveness. moderate positive relationship between product quality and
The respondents also agreed 50.7% with a mean of (4.49) on operational quality.
the issue of customer service quality has effect on profit In product quality and customer service quality the value of
maximization. The other 48.9% and 0.4% was strongly agreed correlation is 0.480 and significant at 0.01. This indicates there is
and neutral respectively. This shows that customer service quality moderate positive relationship between two variables.
has effect on company’s profit maximization. 55.3% with a mean The data also shows the relationship between product quality
of (4.32) agreed on customer service quality has effect on and organization performance. The value of correlation is 0.750
competitiveness. 38.7% of the respondents strongly agreed and which is significant at 0.01. This shows that there is strong
the other 5% and 1.1% was neutral and disagreed respectively. positive relationship between product quality and organization
From this it is possible to say that customer service quality has performance.
effect on competitiveness.
The value of correlation between operational quality and
4.6 CORRELATION ANALYSIS customer service quality is 0.159 and significant at 0.01. This
shows that there is weak positive relationship between these two
Table.7. Correlation Matrix variables.
The relationship between operational quality and
Customer organizational performance as the correlation value indicates
Product Operational Organization
service
quality quality
quality
performance 0.436 and significant at 0.01. This means the relation between
operational quality and organization performance is moderate
Pearson
1 .328** .480** .750** positive.
Correlation
product In the data we can see the relationship between customer
Sig. (2-
quality .000 .000 .000
tailed) service quality and organization performance. The correlation
N 282 282 282 282 value is 0.578 and significant at 0.01. This indicates there is
Pearson moderate positive relationship between customer service quality
.328** 1 .159** .436** and organization performance.
Correlation
operational
Sig. (2-
quality
tailed)
.000 .007 .000 4.7 REGRESSION ANALYSIS OF STUDY
N 282 282 282 282
VARIABLES
Pearson
.480** .159** 1 .578** Table.8. Model summary of organization performance
customer Correlation
service Sig. (2- Std. Error of the
.000 .007 .000 Model R R2 Adjusted R2
quality tailed)
Estimate
N 282 282 282 282 a
1 .815 .665 .661 .25609
Pearson
.750** .436** .578** 1 a. Predictors: (Constant), customer service quality,
Correlation
organization operational quality, product quality
Sig. (2-
performance .000 .000 .000
tailed) Source: Survey Data 2017
N 282 282 282 282
A standard multiple regression was performed between
**. Correlation is significant at the 0.01 level (2-tailed). organization performance as the dependent variable and product
Source: Survey Data 2017 quality, operational quality and customer service quality as
independent variables.
A set of Pearson correlations were computed to determine if
there were any significant relationships between the variables. The result of multiple regressions displayed in the model
The main focus of this section being on the overall relationship summary shows that the regression model of organization
between the dependent and independent variables below in the performance coefficients of determination R2 was 0.665 and R is
table Correlation coefficient of Pearson was applied to study the 0.815. The coefficient of determination R2 indicates that 66.5% of
relation between constructs. the variation on organization performance can be explained by the
set of independent variables product quality, operational quality

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and customer service quality. The remaining 33.5% of variation beta coefficient shows that product quality had a coefficient of
of the dependent variable can be explained by other variables not 0.650 which is greater than zero. The t statistics is 13.161 which
included in the model. This shows the model has goodness of fit. have a p value of .000 which is less than 0.05. This implies that
On the other hand, adjusted R square provides an adjustment to product quality has a significant positive effect on organization
the R2 statistics such that an independent variable that has a performance.
correlation to dependent variable increases adjusted R2 and any And also operational quality has a coefficient of 0.320 which
variable without a strong correlation will make adjusted R2 is greater than zero. The t statistics is 5.772 with a p value of .000
decrease. According to the adjusted R2, the variation explained by which is less than 0.05. This shows operational quality coefficient
the regression of dependent variable on the combined effect of all is significant at 0.05 significance level. From this we can
the predictor variables is 66.1%. understand that operational quality has a significant positive
effect on organization performance.
4.8 ANOVA RESULT
Likely customer service quality also has coefficient of 0.459
Table 4.9. ANOVA result which is greater than zero. And the t statistics is 7.149 with p value
of .000 which is less than 0.05. This implies that customer service
Sum of Mean quality also has a significant positive effect on organization
Model df F Sig.
Squares Square performance.
Regression 36.115 3 12.038 183.555 .000b These significance levels tell us that variables uniquely
1 Residual 18.232 278 .066 contribute to the regression equation there by making a significant
contribution to the prediction. So, all variables in this study have
Total 54.347 281 a significant contribution positive effect on the dependent
a. Dependent Variable: organization performance variable.
b. Predictors: (Constant), customer service quality, operational According to Burns [9] high correlations of 0.90 and above
quality, product quality implies the two variables are measuring the same variance and
Source: Survey Data 2017 will over-inflate R. Therefore, only one of the two is needed. The
Variance Inflation Factor (VIF) measures the impact of co-
In the ANOVA results the F value is 183.555 which is linearity among the dependent variables in a multiple regression
significant with P>.001. This informs us the independent model on the precision of estimation. Typically, a VIF value
variables taken together as a set are significantly related to the greater than 10.0 is of concern. Since, the maximum value of VIF
independent variable. The F critical at 5% level of significance is is 1.419 and the minimum one is 1.120, multi-co-linearity is not
0.066. Since F calculated 183.555 is greater thus shows that the the problem of this model and inter correlations are not
model is significant. The value of F is large enough to conclude sufficiently high to cause concern. On the other hand, tolerance
that the set coefficients of the independent variable are not equal below 0.1 indicates a serious problem and below 0.2 indicates a
to zero. This implies that at least one of the independent variables potential problem. The tolerances of the variables are ranges
has an effect on the dependent variable. between 0.705 and 0.892. The data satisfied the assumptions of
4.9 COEFFICIENT OF DEPENDENT VARIABLE multi-co-linearity, normality of residuals, and homoscedasticity
while no outliers were identified.
Table.10. Coefficient of dependent variable The constant term was -1.915 and insignificant. The constant
term is the value of the dependent variable when all the
Standardiz 95.0% independent variables are equal to zero. The objective of the
Unstandardiz
ed Confidence Collinearity
ed
Coefficient Interval for Statistics regression in this study is to find such an equation that could be
Coefficients used to find the effect of predictors on dependent variable. The
s Sig B
Model t specified regression takes the following form.
. Lowe Uppe
Std. r r Toleran y = -1.915+0.650x1+0.32x2+0.459x3+ε (1)
B Beta VIF
Error Boun Boun ce
d d where, y = organization performance, x1 = product quality, x2 =
- operational quality, x3 = customer service quality and ε = error
(Constan - .00 - -
t)
1.91 .315
6.086 0 2.535 1.296
term.
5
The regression equation in Eq.(1) shows that by taking all
product 13.16 .00 1.41
quality
.650 .049 .545
1 0
.552 .747 .705
9
factors into account constant at zero, organization performance
1 will have a value of -1.915. And the findings presented also shows
operation .00 1.12
al quality
.320 .055 .212 5.772
0
.211 .429 .892
0 that taking all other independent variable at zero, a unit increase
customer
in product quality would lead to o.650 or 65% increase in
.00 1.29 organization performance, a unit increase in operational
service .459 .064 .283 7.149 .332 .585 .770
0 9
quality performance would increase 0.32 or 32% increase in organization
a. Dependent Variable: organization performance performance and a unit increase in customer service quality would
Source: Survey Data 2017 increase 0.459 or 45.9% increase in organization performance.
The result shows that the coefficient of dependent variable,
organization performance, and all the independent variables. As

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ADDISU MELKAMU: EFFECT OF TOTAL QUALITY MANAGEMENT PRACTICES ON ORGANIZATION PERFORMANCE - THE CASE OF BAHIR DAR TEXTILE SHARE COMPANY

5. CONCLUSION Companies should organize quality improvement teams to

investigate and initiate possible improvements to realize increased
In this study three basic research questions are developed and employee value, informed employees, technical training, quality
addressed and the major factors affecting the performance of an training, and employee participation.
organization are identified. The factors considered to be affecting
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