International Review of Management and

Marketing
ISSN: 2146-4405

available at http: www.econjournals.com

International Review of Management and Marketing, 2017, 7(1), 119-127.

Moderating Effect of Access to Finance on the Relationship

between Total Quality Management, Market Orientation and
Small and Medium Enterprises Performance: A Proposed
Framework

Halilu Bello Rogo1,2*, Mohd Noor Mohd. Shariff3, Muhammad Haroon Hafeez4
1
School of Business Management (SBM), Universiti Utara Malaysia, 06010 Sintok, Kedah Darul Aman, Malaysia, 2Department
of Economics and Management Science Kano, Nigerian Police Academy Wudil, Box 3474 Kano, Nigeria, 3School of Business
Management (SBM), Universiti Utara Malaysia, 06010 Sintok, Kedah Darul Aman, Malaysia, 4School of Business Management
(SBM), Universiti Utara Malaysia, 06010 Sintok, Kedah Darul Aman, Malaysia. *Email: bellorogoh@gmail.com

ABSTRACT
This study proposed a framework for the moderating effect of access to finance (AF) on the relationship between total quality management (TQM), market
orientation (MO) and small and medium enterprises (SMEs) performance in Nigeria. However, relatively few studies have attempted to consider the
relationship between TQM, MO and SMEs performance. The majority of the studies conducted on the relationship between the construct have presented
different findings. In order to bridge the gap, a moderating effect of AF is introduce or proposed based on the suggestions of the literature. The study
is significant to policy makers, government, regulators, and financial institutions on the need to provide AF to the real and potential entrepreneurs for
SMEs development in Nigeria. In addition, the study will serve as additional literature to few studies on SMEs performance particularly in emerging
economies like Nigeria that has not been explored.
Keywords: Access to Finance, Small and Medium Enterprises, Total Quality Management
JEL Classifications: L26, L84

1. INTRODUCTION Hence, in terms contribution, SMEs are playing a prominent

role globally in the sense that, going by an average in the
In several countries, small and medium enterprises (SMEs) industrialized nations, it has contributed 65% of employment
constitute for a great portion of the population that are productive rate and 55% of gross domestic product (GDP) (Aminu, 2015;
and also served as a prime mover (Aremu and Adeyemi, 2011; Egena et  al., 2014). For instance, the contribution of SMEs
Harash et al., 2014). Therefore, SMEs played a significant role as a with regards to economic growth and development in the
driver and at the same time, a benchmark with the regards to the issue United Kingdom (UK) amounts to 50% of GDP and 54.1%
of industrialization, modernization and urbanization, meaningful of employment (Aminu, 2015). Similarly, in Taiwan, the
and fruitful employment for our Nigerian teeming unemployed contribution stands at 55% in favour of GDP and 70% with
workforce, in order to provide equitable distribution of income, per- regards to employment. However, in countries like South Korea,
capita income, welfare and qualitative life for the whole citizenry the contribution of SMEs stand at 55% to GDP and 70% with
(Aremu and Adeyemi, 2011). According to Burli et al. (2011), regards to the employment level (Aminu and Shariff; 2015;
SMEs are also capable of providing more economic growth and SMEDAN, 2012). Likewise, in South Africa, the contribution
development as well as progress in terms of opportunities than the of SMEs in relation to employment amounts to 61% and that of
large industrial enterprises in the global economy. GDP is 52-57% respectively (Ndumanya, 2013).

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Rogo et al.: Moderating Effect of Access to Finance on the Relationship between Total Quality Management, Market Orientation and SMEs Performance: A Proposed
Framework

Given that, several empirical studies (for instance, Almansour, The Nigerian economy is made up of oil and non-oil income
2012; Al-Swidi and Mahmood, 2012; Kober et al., 2012; generating sectors, as the middle income oil producing economy,
Nekoueizadeh and Esmaeili, 2013; O’Neill et al., 2016) have with about 5 million people having an income per capita of
linked various SME performance indicators, such as market about $2,200 and the majority of them are the poor, share non-
shares, profitability, and sales growth, to total quality management producing economy (World Bank, 2013). While, the Nigeria’s
(TQM). However, the findings of these studies were conflicting. foreign exchange earnings, come from oil and gas, which
Specifically, Al-Swidi and Mahmood (2012) and Talib et  al. constitutes 50% of its budget revenues, the manufacturing use
(2013) found a significant positive relationship between TQM to contribute over SMEDAN, (2012). The majority of Nigerians
and organisational performance. In contrast, Augusto et al. (2014) get their income from both agriculture and SMEs’ activities. The
examined the effects of three dimensions of TQM (organisational Statistics on the SMEs stands at 72,838 registered as at 2013 in
innovation, process innovation and product innovation) found Nigeria (SMEDAN, 2013). Furthermore, SMEs in Nigeria that
a significant relationship between product innovation and are formalized were categorized into twelve as: Agriculture,
organisational performance. building and construction, financial intermediation; health and
social works, fishing, forestry; hotel and restaurants, hunting,
Other studies considered market orientation (MO) as critical mining; poultry and quarrying; manufacturing; wholesale and
success factors in SMEs performance. However, these studies retail trade; transport, storage and communication; real estate and
reported mixed findings on the relationship. For example, Jaiyeoba renting; education; other community, social and personal activities
(2014) reported the positive significant relationship between MO respectively. Most of the SMEs, more especially, the larger ones,
and SMEs performance, while Shehu and Mahmood (2014), are centred on the densely populated centres in the federal capital
concluded with a negative relation between MO and SMEs territory Abuja, Kano, Lagos and Port Harcourt. However, many
performance. Therefore, conflicting findings regarding the TQM Micro and small enterprises are operating in the villages all over
practices, MO and SME performance relationship reported in the the country (SMEDAN, 2013). SMEs in Nigeria has its own
literature might be due to the fact that, the underlying moderating peculiarity like that of other countries discussed above. Some of
variables explaining when and how TQM practices, MO relate the indicators and other measures to be considered for the purpose
to SME performance have not been well investigated, either of classifying SMEs in the Nigerian economy consist of a number
theoretically or empirically. Accordingly, incorporating a potential of workforces, the volume of their sales, their amount of assets
moderator is likely to weaken or strengthen the relationship invested or the combinations of indicators and measures or even
between TQM practices, MO and SME performance. Thus, all as stated. In many economies, SMEs occupied the large portion
the present study suggests access to finance (AF) as a potential of the country’s workforce.
moderator between TQM practices, MO and SME performance.
Additionally, incorporating AF as a moderator is consistent with Thus, thereby SMEs gained a tremendous increase of attention
pecking order perspective, which postulates that the strength of globally. This is the fact that, SMEs played a very vital role in
the influence of TQM practice, MO on SME performance depends relation to economic growth and development of many national
upon SMEs’ financial resources because TQM implementation economies (Kadir et al., 2014). Therefore, in relation to economic
requires a huge amount of resources (Chen and Chen, 2011). growth and development, SMEs importance can never be over
emphasised. Thus, SMEs have a multiplier effect on economic
To address this gap, the present study examined AF as a moderator growth as the sector serves as a means generating employment,
between TQM practices, MO on SME performance in Nigerian poster initiatives which eventually may lead to build the capacity
context. of their employees (Shehu and Mahmood, 2014).

2. REVIEW 2.2. SMEs Performance

Several numbers of definitions were given by various management
2.1. Overview of SMEs in Nigeria scholars in relation to, what performance of an organisation is
Nigeria as a developing country is the second largest in Africa meant for. The word performance can be viewed as the outcome
and also geographically located in the western part of Africa. The of an activity of business organisations that can be measured
country is officially called as the Federal Republic of Nigeria. It is with its limited resources. The performance measure can only be
subdivided into six geopolitical zones which comprise 36 States understood, when an organization will allow its top management
with Abuja being her Federal Capital. According to World Bank to focus their attention on organizational units that need proper
(2013), it has a population of 173.6 million. Similarly, the total enhancement through evaluating their work in progress in terms
numbers of SMEs in Nigeria is about 72, 838 and are categorised; of quality, time and cost of production when compared with other
into two groups in which, some figures as 68,168 represent small variables as well as their maintenance in an areas with higher level
enterprises and 4,670 are the only medium enterprises (SMEDAN, of productivity (Shehu and Mahmood, 2014; Tomlinson, 2011).
2013). This depicts that, 93.59% constitutes the small enterprises Hence, for the purpose of performance assessments of both short
and 6.41 represent the medium enterprises. In the same vein, term and long term objectives or goals, an organisation is required
GDP of about $43.4 billion 2004 (World Bank, 2013). However, to look at globalisation and competition critically. The factors that
SMEDAN (2012) states that about 70% of the Nigeria’s population determine organizational performance measures may include:
lives within the average $300 income per capita, which is below Human resource management, liquidity, productivity, innovation,
the poverty line. quality of their product and services, profitability as well as their

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Rogo et al.: Moderating Effect of Access to Finance on the Relationship between Total Quality Management, Market Orientation and SMEs Performance: A Proposed
Framework

market share (Aliyu et al., 2015; Jabeen et al., 2014; Shehu and management practitioners. However, despite this, TQM is said to
Mahmood, 2014). have inconclusive acceptance among some scholars, practitioners
as well as the pioneer of management. This makes its application
Also, performance can be termed as the level of organisational widely favoured among some managers while, others do not
worthiness in relation to finance which may consist of investment regard it but believes the concept as a management style (Keli,
level, profit margin and sales growth (Kamyabi and Davi, 2012). 2015). Furthermore, to meet up with the global competition
Thus, performance can be referred to the measurement of the challenges, several SMEs had spent a huge amount of financial
financial ability of the SMEs in relation to factors such as the level resources for the purpose of TQM adoption and implementation.
of investment, profit level with both growths in sales and profit. Accordingly, TQM as a management strategy and also being a
Similarly, Olusola (2011), defined, organisational performance critical determinant factor to the success and survival of SMEs
or performance of SMEs as an entrepreneurial ability to evaluate businesses in today’s competitive environment, has been viewed
business opportunities so as to take advantage of gaining some as a source of competitive advantage (Gitangu, 2015), innovation
financial benefits for the amount of business resources committed. (Miranda Silva et al., 2014), dynamic and new organizational
Thus, a business can achieve success regardless of its size (big or culture (Sinha et al., 2016).
small), once managed efficiently. Therefore, the performance of
SMEs can also be viewed inform of its organisational objective Despite the discrepancies in the concept of TQM acceptance, the
or goals perspectives more especially, in relation to return on theory has being applied in the different human endeavour. For
assets, return on equity and volume of sales growth (Shehu and example, in the hospitality, Al-Shdaifat (2015) concludes that after
Mahmood, 2014). proper implementation of TQM practices in investigated Jordanian
hospitals, there’s 70% variation in process operation. However,
Contrary to the previous opinions of the above scholars, it was mentioned that not all the dimensions were concentrated
performance can be viewed from two perspectives: Financial and on. The hospital chooses the issue of focusing more on customers
non-financial point of views respectively (Minai and Lucky, 2011). least focus in relation to continuous improvement and the intended
According to Zand et al. (2015), prior studies had a preference on outcomes were achieved, public offices (Suwandej, 2015) it was
the financial performance over the non-financial performance for concluded that successful public leaders possess the 7 dimensions
the purpose of measuring overall organisational success. Hence, of TQM. Not only was that but the concept of TQM tested in
this study will be based on financial performance of SMEs in schools as regards information systems. As reported by (Srima
Nigeria. et al., 2015), posit that of the 7 dimensions of TQM 4 out of it are
implemented in schools as regards school information system,
2.3. TQM concluding that the overall process is appreciated.
The term, TQM is a holistic management approach targeting
at continuous improvement in quality with regards the overall Hence, most of the researchers are in concord that, the most
functions of SMEs to produce and deliver products or services in important dimensions of TQM are customer focus, continuous
line with customers’ needs and wants at a better, cheaper, faster, improvement, employee involvement and top management support
safer, easier processing cost, more than that of its competitors (Mahmood et al., 2015). The current study will use these four
by involving the entire employees of that organisation under most influential dimensions of TQM in order to investigate their
the effective leadership of the organisational top management relationship with organisational performance.
(Agus and Hassan, 2011; Al Dhaafri et al., 2013; Leavengood
et al., 2014). Similarly, TQM as a management strategy meant 2.4. MO
to satisfy customer’s needs that serve as a combination of Many studies have been undertaken in relation to the concept of
various systems, processes, effective communication, devoted MO. Therefore, MO can be defined as the degree of intensity to
and committed people and a proper supporting culture (Kumar which SMEs have adopted the marketing concept (Kilenthong
et al., 2011). In addition, according to Maletič et al. (2014), TQM et al., 2016; Lamore et al., 2013; Pérez-Luño and Cambra, 2013;
focuses primarily on the concept of continuous improvement in a Sheth et al., 2015). Similarly, previous studies indicated the vital
consistent, integrated and systematic way by involving everyone role played by MO in influencing SMEs’ performance (Baker et al.,
and everything in the organisation to achieve satisfaction for both 2014; Beneke et al., 2016; Urde et al., 2013; Song et al., 2015).
internal and external customers.
Additionally, according to Bueno et al. (2016), MO served as
Similarly, Fu et  al. (2015), posited TQM as an organisational a source of competitive advantage, despite the fact that, most
culture, dedicated for the purpose of satisfying both internal and of the studies undertaken in relation to MO and performance
at the same time external needs of the customers and their wants are in developed nations, particularly, Europe and the United
through continuous improvement in quality of the organisational States. However, little research has been conducted in the less
products or services by involving all the stakeholders including developed nations. Similarly, previous literature has shown that
employees of the various departments, sections or even units of there is no significant positive relationship between MO and
that organisation. SMEs’ performance in the less developed nations (Dubihlela
and Dhurup, 2013). Hence, most of the factors that become
In this case, TQM as a concept in management practices over the attributable to the SMEs’ performance between developed and
years gained more recognition among scholars, managers, and less developed nations are associated with differences in relations

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Rogo et al.: Moderating Effect of Access to Finance on the Relationship between Total Quality Management, Market Orientation and SMEs Performance: A Proposed
Framework

to the external environmental factors such as the structure of the a serious concern, to the extent that, small companies tend to
economy, government regulations, competition, social and cultural possibly have much job growth rate at higher level but at same
diversities and so on, which have peculiarities from one nation time, the businesses are more likely to be stunted or even to go out
to another. of business, for reason, not more than that of either institutional or
financial constraints. Accordingly, Kelley et al. (2012), were of the
Therefore, MO investigation needs arises in the less developed view that, access to financial capital are one of the major critical
nations due to inadequate thorough studies. Therefore, according resources that facilitate SMEs business activities in many nations.
to Hussin et al. (2014), even though, MO has delivered a
significant positive performance in the economy of the West, Furthermore, financing could be better once, it can improve
therefore, its implementation on the other economies becomes SMEs’ performance, and ultimately lead to a private and social
important, more especially looking at these critical constructs of as well as economic benefits for the nation’s economy (Roy,
MO, entrepreneurial orientation (EO) and SMEs performance in 2012). As such, access to valuable SMEs resources like financial
Nigeria. resources is among the significant and crucial factors that burst
SMEs’ entrepreneurial activities in any economy (Aminu, 2015;
Furthermore, marketing concept is one of the core concepts that Kuntchev et al., 2012). The performance of SMEs can either be
have evolved in the field of marketing over the years (Singh affected positively or negatively by the availability of financial
et al., 2015). Therefore, existing literature has acknowledged resources. Superior SME’s performance is used to be influenced
its relationship with greater organisational performance (Line by the high level of leverage (Klonowski, 2012). Furthermore,
and Runyan, 2014). However, despite its acknowledgement as Acharya et al. (2013) opined that high indebtedness can lead to
an important aspect of business management practices which under performance of the product’s market. However, AF measures
ensures superlative organisational performance by focusing and can be seen from two notions, either from the financial providers
embarking on market-oriented activities, assessing the extent of or the users of financial resources notion. Likewise, Honig et al.
its application by business organisations has been a difficult task (2013) stated that access to social and financial capital will likely
to many marketing scholars and practitioners. (Pascucci et al., enable the new SMEs to compete in a much similar manner than
2016) It is in a bid to overcome this difficulty that MO evolved. that of their counterparts that are already in the business operations.

Therefore, from the marketing concept, meanings and definitions 2.6. TQM and Performance
are given by many scholars in marketing, yet they have described Regarding issue related to TQM and SMEs performance several
the construct of MO as an application of marketing concept (Hilal studies have been conducted among which are: In the study
and Mubarak, 2014; Ramayah et al., 2011; Singh et al., 2015). of Musa and Alawad (2011), they inspected that, the impact
Thus, MO is defined as a business philosophy or an organisational of TQM implementation on plant productivity. Meanwhile,
culture of delivering superior values for customers, which, in a sample of three poultry processing was chosen out of eight
turn, leads to superior organisational performance (Lettice et al., using purposive sampling. TQM found to have a positive impact
2014). Consequently, it is believed that, for an organisation to be on poultry processing plant productivity. Hence, this is in line
market-oriented, its marketing activities must be supported by with the findings of Naser et al. (2011) which also established a
relevant organisational cultures. positive association between TQM and company performance.
Similarly, Saleem et al. (2011) measure the impact of ISO 9000
Although, the conceptualization and operationalization of MO certification on organisational performance. A  questionnaire
gained wide acceptance from two popular perspectives (Keelson, survey employed with a sample of 300 SMEs from the cities
2014; Lichtenthaler, 2016; Truong, 2014). Moreover, Truong of Lahore, Sialket and Multan in Pakistan. A convenient non-
(2014), was of the view that, one group that conceptualised probability sampling used with multiple regression methods for
and operationalized MO was Narver and Slater in 1990. Thus, the purpose of analysing the data. Thus, findings of the study
Narver and Slater described the MO concept as an organisational depicted that there is a positive significant relationship between
culture that serves as a base for providing better values for ISO 9000 and organisational performance. Valmohammadi
customers (Fang et al., 2014). Therefore, Narver and Slater (1990) (2011) surveyed sixty five quality managers with 81.5 response
operationalized the concept of MO as a unidimensional construct rate, and found TQM to organisational performance to be
with three components namely: Customer orientation, competitor supportive, but a weak correlation established. Likewise, Saeed
orientation, and inter-functional coordination (Narver and Slater, and Hasnu (2011) in a quantitative survey conducted using a
1990; Shia et al., 2015). questionnaire and a sample of ninety SMEs with descriptive
statistics and correlation for the data analysis. The finding
2.5. AF shows that SMEs are found to have a medium level of TQM
The concept of AF has recently came into noticed in the eyes of implementation.”
some researchers which indicated that 75.7% out of the survey
they conducted in their studies that, most of the respondents However, the study of Raja et al. (2011) evaluated the effects
solely relied upon their own funds in financing the operations of TQM practices on business performance of manufacturing
of their businesses (Evbuomwan et al., 2012; Onakoya et al., SMEs’ in Pakistan. A sample of sixty five managers working in
2013). Similarly, Harash et al. (2014), were of the view that, AF the quality assurance department was employed with a descriptive
in relation to SMEs performance is a particular predicament of statistics for the data analysis. The finding shows that TQM

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Rogo et al.: Moderating Effect of Access to Finance on the Relationship between Total Quality Management, Market Orientation and SMEs Performance: A Proposed
Framework

is implemented only in quality control, quality assurance and economic growth. Likewise, AF is one of the most important issues
continuous improvement and that top management commitment responsible in terms of gross low performance of the Nigerian
is the most variable affecting TQM implementation which then SMEs (SMEDAN, 2012).
directly affects business performance.
Consequently, several prior studies conducted had ignored to
2.7. MO and Performance undertake a study titled as ‘Moderating effect of AF on the
Another important construct studied in relation to the performance relationship between TQM, MO and SMEs’ performance in
of SMEs is that of the, MO. In that several studies conducted Nigeria’.
with regards to MO as a construct in its relationship related to the
performance of SMEs and the outcomes in some of the related 3. PROPOSED RESEARCH FRAMEWORK
studies are: Beverly et al. (2012) in their study examined customer
orientation performance relationship among 180 US SMEs, This current study is after taken into cognisance with the literature
with the moderating influence of risk taking, innovativeness and reviewed from a prior study and several suggestions given by
opportunities focus on the relationship with performance. Survey different authors. Though the findings from those studies have
questionnaire is used together with regression model as a method been mixed. Therefore this study developed a proposed research
for the purpose of running the analysis of the study. The study framework for future study to determine the relationships between
findings have indicated that there is a strong positive relationship the constructs. Thus, to determine the relationship between
between the constructs. the moderating effect of AF on the relationship between TQM
and strategic orientation which comprised of MO and EO the
Similarly, Deniz Eris et al. (2012), in their empirical study on the performance of Nigerian SMEs is proposed.
effect of MO, learning orientation and innovativeness on SMEs’
performance: A research from Turkish logistics sector, used survey The research framework in this study has three independent
questionnaire and structural equation modeling (SEM) for data variables which will serve as representatives of the SMEs’ valuable
analysis. Arshad and Su (2015) examined the effect of corporate resources, namely TQM, MO and EO. The SMEs’ performance
social responsibility and MO on SMEs’ performance as well as will serve as the dependent variable, while the intervening variable
the mediating effects of CSR on the relationship between MO of AF is to serve as the moderating variable (Figure 1).
to performance, using content analysis of 242 Malaysian SMEs.
This study focuses on SMEs’ performance, rooted from the
Therefore the finding with regards to this very study indicated contribution of interaction among their own micro-level
that there is a positive relationship between MO and performance. behavioural attributes, which may eventually be leading to
Hence, CSR did not mediate the relationship between MO to SMEs’ competitiveness and success. The resource based view
SMEs’ performance. Similarly, Oyedijo et  al. (2012) equally as an individual foundation of SMEs’ resources that, resources
conducted a study on the marketing practices impact with regards are valuable, rare, inimitable and non-substitutable is to also
to the SMEs’ performance in Nigeria. They used a sample of 545 underscore the significant role of the key actors like owners or
business/senior staff in Lagos-Nigeria, through the use of survey managers alongside their behavioural attributes such as TQM,
questionnaire and also used analysis of variance as a method of MO and entrepreneurial orientation (EO) as individual-foundation
their analysis. Therefore, the finding of their study reported that inputs in influencing their performance outcomes (Barney and
there is a significant positive relationship between marketing Felin, 2013; Foss, 2011; Khan, 2013; Ployhart and Moliterno,
practices and overall business performance. 2011). Therefore, these individual inputs may potentially exert
a significant impact on the success of the SMEs’ employees and
2.8. AF as a Moderator other stakeholders and ultimately to the firms they are working
The moderating effect of AF can be seen in the study replicated with (Chan, 2015; Dollinger, 2003; Gisip and Harun, 2013; Lin
by Frank et al. (2010), which confirmed that there is a positive et al., 2008; Yang, 2008).
relationship between EO and business performance as studied
by Wiklund and Shepherd (2005). According to Wiklund and Figure 1: Research model
Shepherd (2005) access to financial capital is very crucial to the
performance of SMEs.

In another development, the studies of Akingunola (2011) reported

that SMEs funding and economic growth are positively significant
or related to the Nigerian SMEs’ performance. Similarly, Mazanai
and Fatoki (2011) showed that there has been a direct positively
significant relationship that exists between AF and the performance
of SMEs. However, the work of Jabeen (2014) found that due
to low access to financial services EO became insignificant to
the performance of SMEs in Pakistan. Hence, this signifies that
lack of financial accessibility can lead to disruption, for the
purpose of realising the full SMEs potentialities as the driver of

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Rogo et al.: Moderating Effect of Access to Finance on the Relationship between Total Quality Management, Market Orientation and SMEs Performance: A Proposed
Framework

Consequently, on the bases of the above reviewed literature, a This model can be validated and future studies should look into
newly conceptual model (frame work) has been proposed so as the moderating effect of AF on the relationship between TQM,
to propose the following research prepositions. EO and SMEs’ performance in Nigeria empirically.
• RP1: There is a significant relationship amid TQM and SMEs’
performance REFERENCES
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