Implementation of Total Quality Management and Its Effect on Organizational Performance of Manufacturing Industries Through Organizational Culture in South Sulawesi, Indonesia

Abstract

This study aims to examine the application of Total Quality Management (TQM) in a variety of manufacturing companies located in the Industrial Area Makassar in South Sulawesi, Indonesia to see its effect on organizational performance, both directly and indirectly through the mediating variable of organizational culture of the company. Hypothesized that TQM affect organizational performance directly and indirectly through the mediating variable of organizational culture. This hypothesis was derived from nine sub-hypotheses that are constructed in Structural Equation Model and verified by using path analysis. Results from this early stage of confirmatory research revealed that there is no significant direct influence of TQM implementation in various manufacturing companies. However, TQM significantly affect organizational performance via a mediating variable of organizational culture. Thus, current research unearth four interesting findings, in which three of them point to the significance of TQM implementation on organizational culture, organizational culture on organizational performance, and TQM implementation on organizational performance through organizational culture. Finally it was found out that TQM implementation is not directly significant to organizational performance.