Knowledge Management, Soft TQM and Hard TQM, and Organizational Performance

Abstract

Today’s customers demand high-quality products, and companies need to enhance their performance and be more innovative in order to meet customers’ needs. This study analyzed whether several management orientations combined could enhance organizational performance. The study surveyed 98 business organizations representing manufacturing, service, retailers from the Philippines (n=64), with an additional group (n=34) from Singapore, Indonesia, and the United States. Structural Equation Modeling indicated that model closely fit the sample data and that 35.4% of the variance of Organizational Performance was explained by the integration of knowledge management; soft TQM and hard TQM. The empirical evidence also indicated that knowledge management affects three basic indicators of organizational performance (sales growth, customer satisfaction, and profit growth) through soft TQM and hard TQM. No direct effect of knowledge management on organizational performance was found. These results suggest that business organizations must promote and execute more knowledge management and soft TQM initiatives in order to influence hard TQM practices, which in turn will positively influence the performance of the organization in the short and long run.