Implications of Total Quality Management for Agency Theory

Abstract

Total quality management (TQM) has received considerable attention as a way to increase both the effectiveness and the efficiency of corporations (Bounds et. al., 1994; Grant, Shani and Krisnan 1994; Olian and Rynes 1991; Powell 1995; Ross 1993). Concerned primarily with the delivery of customer satisfaction, the proponents of quality and/or TQM (Deming 1986; Juran 1992; and Crosby 1979) have developed principles and procedures for achieving total quality and meeting multiple corporate goals. Empirical evidence regarding outcomes is mixed; success and failure case studies abound, statistical methodologies are questioned, and more rigorous empirical studies present some positive findings (Powell 1995). Some maintain that the reasons for the failure of TQM systems is incompatibility between existing Western management thought which is grounded in economic models, and the TQM paradigm, which evolved from statistical theory, and has its own set of assumptions (Grant, Shani and Krisnan 1994). Despite such mixed empirical results, TQM continues to be promoted and implemented. This is the beginning point for our examination of TQM. The TQ management paradigm is practiced in economically and culturally diverse environments, including those which embrace an economic perspective, complete with maximisation of shareholder wealth, self‐interest, rational decision makers, separation of ownership, and agency costs (Grant, Shani and Krishnan 1994).

Citation

Luxmore, S.R. and Stendardi, E.J. (1997), "Implications of Total Quality Management for Agency Theory", Management Research News, Vol. 20 No. 7, pp. 18-27. https://doi.org/10.1108/eb028571