Quality improvement practices and the effect on manufacturing firm performance: Evidence from Mexico and the USA

Abstract

A comparison of organizations in Mexico and the USA demonstrates that, for these two countries, different quality improvement approaches are related to actual quality and financial performance. For 345 firms multiple quality improvement variables are correlated with seven quality measures, four financial measures, and one operating performance measure. Results suggest that in both countries an increase in employee involvement leads to improved quality-a decrease in internal failure costs, the percentage of items defective, and costs of quality. In Mexico an increase in employee knowledge about quality improvement and customer focus also leads to improved quality (as measured above). In the USA, but not in Mexico, the quality improvement approach relates to financial performance. An increase in senior executive leadership and an increased emphasis upon both design and conformance in the USA leads to an improved return on assets and increased net profit. In each country similar distributions from respondents regarding individual items that improve quality can be found, yet statistical modelling demonstrates country-specific models best explain quality improvement/performance relationships. This suggests culture-specific quality improvement models are necessary to better understand how quality may be improved globally.