The Use of Structural Equation Model (SEM) to Evaluate the Effectiveness of ISO 9001 Quality Management System (QMS) on the Performance of Oil and Gas Drilling Companies

Abstract

The purpose of this paper is to evaluate the effectiveness of ISO9001 through achieving its intended objectives and determine its impact on the performance dimensions of oil and gas drilling companies which are related to operations and HSE. 375 samples were obtained using a structured questionnaire from oil and gas drilling companies operating in OMAN to conduct an empirical study. A structured equation modeling (SEM) through SMART PLS was applied in order to determine the impact of ISO 9001 effectiveness on the performance dimensions of oil and gas drilling companies. The findings of this study reveal as identified in the literature, the dimensions of the ISO 9001 effectiveness which are evaluated by the degree of achievement of the standard’s objectives, namely (continuous improvement, customer focus, prevention of nonconformities, risk-based thinking, leadership & commitment and Competency framework) and reveals its significant contribution to the performance of the oil and gas drilling companies. The operational and HSE performance of the oil and gas drilling companies are directly and significantly influenced by ISO 9001 effectiveness. The findings of this study revealed that the R2 value for the first order constructs which are the six ISO objectives are all above the 0.7, implying that the six constructs significantly explain the second order construct ISO 9001 QMS effectiveness. The R2 for QMS effectiveness is 0.460 which means that, 46% of the variation in performance can be explained by effective quality management systems. The effect size f2 was calculated to assess the effect each latent construct has on Quality Management Systems. It has been revealed in this study that PNC has the highest effect on QMS followed by CI, RBT, L&C, CF and CFW respectively.  From the Q square statistic, it is inferred that QMS 9001 effectiveness has a high (strong) effect of 39% on performance. Finally, the Model fit was assessed based on the SRMR criteria by which it revealed a good fit of the model which was 0.052. These findings will support practitioners and decision makers to focus on quality related problems that might occur in their current or future projects to enhance their organization performance.