Introduction

The past decade has witnessed a remarkable spread and awareness of total quality management (TQM) practices. Surveys indicate that TQM initiatives and adoption rates are increasing in the United States (Haim [1993]). However, studies by some management consultancy firms have raised concerns about whether investments in TQM programs have created economic value (see, e.g., the International Quality Study, a joint project by Ernst & Young and American Quality Foundation [1992] and Kelly [1992] that discusses the studies done by Arthur D. Little Inc., A. T. Kearney, and Rath and Strong). Although these studies report management perceptions as to whether TQM is beneficial or not, they rarely provide objective data and statistical evidence to support their claims. Nonetheless, these studies have received widespread publicity in the business press and seem to have left many firms confused about the value of TQM (see, e.g., Fuchsberg [1992a, 1992b], Mathews and Katel [1992], and Mathews [1993]). Ittner and Larcker's (1995a) survey results indicate that top management in many firms is concerned about the impact of TQM practices on financial performance, and is putting pressure on its quality departments to demonstrate whether investments in TQM have paid off.

Proponents of TQM have reacted to the negative publicity by reminding critics of the few well-publicized success stories of TQM, and have used these examples to make the case that TQM works. Others have revisited the theory of TQM to reiterate what TQM is, why there is nothing wrong with the theory of TQM, and what organizations must do to implement TQM successfully (King [1992] and Johnson [1993]).