Effectiveness of quality management factors and differences in total factor productivity

Abstract

Quality management (QM) programme often is not a measure of high organisational effectiveness and business performances, so it is of interest to explore the relation between QM critical factors and total factor productivity (TFP). In this study the data were collected in the period 2004-2009 from Serbian industrial firms certified according to ISO 9000 with a total number of 176 observations. In order to determine the total factor productivity through the production function variables describing the dependence of added value and labour and capital factors of production were used. For the QM data, the results underwent factor analysis and reliability calculations so as to be used as independent variables in multiple regressions. The key result of this study is the confirmation of the hypothesis, that firms having above average score for a certain QM factor register statistically significant positive and negative differences in TFP, against average productivity of all firms in the sample.