Corporate quality has an effect

A common feature of all definitions of quality is that quality always refers to clear requirements. In the measurement, evaluation and assessment of quality, the focus must always be on the degree of fulfilment of the requirements set. The same applies to the term "corporate quality": requirements come from all relevant stakeholders: Employees, customers, owners, suppliers/partners, society. High corporate quality thus means a comprehensive, long-term oriented fulfilment of the requirements of all interest groups in a balanced form.

TQM and Business Excellence

According to the vast majority of literature, Total Quality Management (TQM) is the origin of today's Excellence idea. The term Business Excellence represents a further development of the TQM idea or simply a renaming.

TQM and EFQM - same basis

The basic ideas (holistic approach, stakeholder orientation, active participation of management, etc.) remained the same. Unternehmensqualität is the German translation of the English term Business Excellence. The European Foundation for Quality Management (EFQM) Excellence Model can be seen here as a link or as an illustration of the development, because at the beginning (1990s) this was defined as a TQM model. In the course of time, however, it was increasingly referred to as the Business Excellence Model.

Variables influencing the "success" of the company

The aim of the dissertation on which this article is based was an intensive examination of the topic of corporate quality. The central question of this work was: Which variables are positively related to corporate success?

To this end, a meta-analysis of the strategic management literature was conducted. A meta-analysis analyzes existing studies and uses their empirical results. When searching for the terms success and company, 3455 scientific publications were found worldwide. This number of studies was reduced to 249 articles using criteria such as journal quality, empirical data, publication date. In these, 85 variables were regularly used. Of these, 25 variables were found to be highly significant in connection with corporate success (Graphic 1). On average, data from 8500 companies per variable are included in this analysis.

These 25 highly performance-relevant variables are divided into three groups (Graph 2). The first deals with the company's clarity of perspective. These success variables specify the company's target system, i.e. the guidelines and values that should guide the company's operations and processes. Ambidexterity, for example, means that a company works efficiently and innovatively at the same time, i.e. strikes a balance between these two contradictions. Strategy clarity is about how consistently a strategy is pursued.

Another group of success variables refers to the capabilities of the organization. One example is the absorptive capacity of the company, i.e. the ability to recognize the value of new, external knowledge, to process this new knowledge within the company and to derive benefits for the company from it.

The third group comprises those success variables that describe the activities of companies. These include success variables such as active personnel management, which deals with the admission or selection of employees, the incentive system and training and development measures for current and future employees.

These three groups should not be considered separately, because they interact with each other. However, there is a strong difference between the three groups both in the temporal and in the causal expression of the effect. This means that the success variable group with the highest correlation to success (clarity of perspective) is also the most long-term oriented in terms of effect. The category that has the fastest effect (activities) also has the lowest correlation to success.

Comparison with the EFQM Excellence Model

When comparing the 25 success variables identified by the meta-analysis and the contents of the EFQM Excellence Model

Variables relevant to success

(Version 2010) show astonishing overlaps. For example, 22 of these 25 success variables are explicitly addressed in the EFQM Excellence Model and 3 of them implicitly. The latter include the company's receptiveness, ambidexterity and learning capability. Scientific management literature and EFQM Excellence Model thus deal with very similar content. This is very interesting (and also a little surprising) as the EFQM Excellence Model was not designed to reflect the management literature, but is a pure practitioner model (by practitioners - for practitioners).

The economic benefit of an EFQM implementation

To investigate the economic benefits of the TQM approach or the EFQM Excellence Model, a further literature search was conducted. The search resulted in 15 studies that dealt with TQM, EFQM etc. on the one hand and corporate success on the other. None of these studies found a negative relationship (between TQM and company success) and 10 studies found a significant positive relationship. Some excerpts from the results of these articles are:

• After winning an award, the companies were able to grow more strongly in terms of operating profit and sales than the control group. There is also evidence that award winners are more successful in controlling costs (Hendricks & Singhal, 1997).
• The long-term performance of companies that have implemented TQM is clearly improved (Easton & Jarrel, 1998).
• Overall, the results show a positive relationship between TQM implementation and firm performance (Kaynak, 2003).

Furthermore, some studies show (see graph 3) also reveal quantitative performance differences. For example, a study conducted by York and Miree (2004) in the USA shows how EBIT and ROA have developed in absolute terms over five years when comparing the price winners there with a control group. In the control group, EBIT grew by 47 percent within these 5 years, but in the price winners it grew by 146 percent. The picture is similar for ROA. For the control group there was a growth of 35 percent, for the price winners by 135 percent.

A similar picture is confirmed by the results of a European study (Corredor & Goni, 2011). Graphic 3 shows the average growth per year over five years: The group of price winners performed significantly better than the control group in terms of both return and productivity indicators. For example, the price winners had a 14 percent higher annual average for cash flow on investment, a 24 percent higher average for added value per employee, and a 49 percent higher average for ROA.

Study in Austria

Since the author was not aware of any study on this topic in Austria, he conducted his own. In 2011, a questionnaire was sent out to Austrian companies in order to ascertain the respective degree of corporate quality and corporate success. A total of 218 companies returned a fully completed questionnaire. The companies had an average annual turnover of 206 million euros and an average of 814 employees.

A subjective measure of success was used to measure the company's success, i.e. the companies were asked how well their company performed compared to competitors in their industry in terms of earnings, liquidity and turnover. The degree of corporate quality was assessed by operationalizing the EFQM Excellence Model (broken down into 56 questions) and querying it with the help of a questionnaire. Graphic 4 shows the relationship between the degree of deviation and success. Result: The lower the deviation (i.e. the higher the conformance with the ideal of the EFQM Excellence Model), the higher the success of the company. This relationship is highly significant and the beta between these two variables is -0.415. This result confirms that the influence of an implementation with the EFQM Excellence Model on the company's success - statistically proven - is positive and highly significant.

Conclusion: We can assume that the effectiveness of the contents of the EFQM Excellence Model has been scientifically proven. The results regarding the economic benefit of a TQM (or EFQM Excellence Model) implementation are even clearer. Thus

Clear influence on success

10 out of 15 high-quality scientific studies come to the conclusion that there is a clear positive correlation between a TQM implementation and the success of companies. The study conducted by the author himself in Austria with data from 218 companies comes to the same conclusion. In short: the consistent design of corporate quality has a clearly positive influence on long-term success.