International Journal of Quality & Reliability ManagementEmerald Article: Quality management in China: the effects of firm characteristics and cultural profileXingxing Zu, Huaming Zhou, Xiaowei Zhu, Dongqing Yao

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To cite this document: Xingxing Zu, Huaming Zhou, Xiaowei Zhu, Dongqing Yao, (2011),"Quality management in China: the effects of firm characteristics and cultural profile", International Journal of Quality & Reliability Management, Vol. 28 Iss: 8 pp. 800 - 821

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QUALITY PAPER

Quality management in China:the effects of firm characteristics

and cultural profileXingxing Zu

Department of Information Science and Systems,School of Business and Management, Morgan State University,

Baltimore, Maryland, USA

Huaming ZhouDepartment of Management, School of Business,

Soochow University, Suzhou, People’s Republic of China

Xiaowei ZhuDepartment of Management, College of Business and Public Affairs,

West Chester University of Pennsylvania, West Chester,Pennsylvania, USA, and

Dongqing YaoDepartment of E-Business and Technology Management,College of Business and Economics, Towson University,

Towson, Maryland, USA

Abstract

Purpose – The purpose of this study is to investigate the underlying characteristics that influencequality management implementation at manufacturing companies operating in China.

Design/methodology/approach – The data of this study were based on 199 manufacturingcompanies collected from a cross-sectional survey in China. The cultural profiles of these companieswere identified through cluster analysis. Multivariate analysis of variance was conducted to identifythe effects of operating characteristics and cultural profile on the implementation level of qualitymanagement practices.

Findings – The results show that in general, there is no significant difference in implementingquality management practices among companies of different operating characteristics in terms ofcompany size, industry, ownership, and production process. This study reveals that cultural profile isa distinguishing factor to explain the difference in quality management implementation among thecompanies.

Originality/value – As China is becoming an important supplier of products to the global market,it is necessary to understand how product quality is controlled and managed in China. This studyexamines the effects of operating and cultural characteristics of companies in China on theirimplementation of quality management practices. The results contribute to a deeper understanding ofhow to build an effective quality system at companies in China.

Keywords Quality management, Firm characteristics, Organizational culture, China

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0265-671X.htm

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Received May 2010Revised May 2010Accepted February 2011

International Journal of Quality &Reliability ManagementVol. 28 No. 8, 2011pp. 800-821q Emerald Group Publishing Limited0265-671XDOI 10.1108/02656711111162497

1. IntroductionOver the past three decades, China has gained remarkable economic growth. In 2007,China became the third-largest economy in the world behind the USA and Japan with agross domestic product (GDP) of ¥25.731 trillion (Wu, 2009). China’s economy isdistinguished not only by its magnitude but more importantly by its rapid growth. Onaverage, China has achieved about 9.8 percent annual growth in GDP during the past30 years (The People’s Daily, 2008), which accounted for 17.5 percent of the growth inthe world GDP and 29 percent of the total growth in manufacturing output, making avital contribution to the growth dynamics of the global economy (Zhao et al., 2006).As one of the largest manufacturers in the world, China has emerged from a supplier oflow-end products such as toys and textiles to a producer of almost all types of productsincluding those of higher value and technology ( Jiang et al., 2007). It is reported thatexport of China’s high-tech products is increasing fast, e.g. in the first five months of2007, new- and high-tech products had taken US$125.8 billion, representing about28.4 percent of the total export and a 24.3 percent year-on-year increase; also China’sforeign trade in machinery and electronics increased by 21.7 percent up to US$438.2billion (The People’s Daily, 2007). As a result of China’s rapid growth and integrationinto the global economy, research on business issues in China, particularly thoserelated to production and operations management, is becoming increasingly importantto the business and academic world ( Jiang et al., 2007; Zhao et al., 2007).

When China started its economic reform and open-door policy in the late 1970s,Chinese companies were faced with challenges and opportunities to compete in theglobal market. Advanced quality management methods, such as quality circles, totalquality control, total preventive maintenance, total quality management (TQM), andSix Sigma, have been increasingly adopted by the companies in China to improve theircapabilities of quality control and management for better competitiveness (Hopkins et al.,2004; Lau et al., 2004; Xu et al., 2006). While there have been numerous studies on qualitymanagement implementation in China, more research is needed to understand how tobuild an effective quality system at companies in China. In their comprehensive reviewsof operations management research in China, Zhao et al. (2006, 2007) called for researchon the underlying characteristics that may influence the implementation of qualitymanagement practices in China. Based on a sample of 199 manufacturing companies inChina, this study explored how a company’s operating characteristics and culturalenvironment affect its quality management implementation. The results will helpresearchers and practitioners understand the key factors influencing the effectiveness ofquality management implementation in China, and facilitate managers designappropriate strategies and tactics to apply advanced quality management methods intheir operating facilities or suppliers in China.

2. Literature review on quality management in ChinaManufacturing industry in China had primarily relied on using specially trainedquality inspectors to control product quality, and not until in the 1950s, some modernquality management concepts and techniques were first introduced to China (Lau et al.,2004; Liu, 1994). However, under the centralized, planned economic system at that time,only statistical quality control (SQC) was used in selected companies to control thequality of final products (Tuan and Ng, 1998). When in 1978, the Chinese Governmentinitiated its open-door policy to make strategic movement on economic development,

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China was opened to the international market and foreign investments started flowinginto the country. Chinese companies became exposed to high-quality products offoreign companies, and more importantly, their advanced quality managementmethods and international quality standards (Lee et al., 2001; Lau et al., 2004). In orderto meet the new requirements of market-driven economy, they must change the waythey had been operating. Research on quality management in China has identified theexisting quality control procedures used in Chinese companies and stressed the needfor them to adopt advanced quality management methods such as TQM to changefrom inspection to process management, in order to improve the quality of theirproducts and services (Chin et al., 2001; Liu and Willborn, 1990; Liu, 1994).

The idea of TQM was well accepted in China partly because the government wasdetermined to upgrade the quality management capability of Chinese companies (Tuanand Ng, 1998). Through legislation and policy regulation, governmental agenciesurged the companies to assure and improve the quality of their products and servicesand to comply with international standards, which significantly promoted andenforced the TQM implementation in industry (Tuan and Ng, 1998). There are researchstudies that evaluate the applicability of TQM to Chinese industry and propose TQMimplementation frameworks (Chin and Pun, 2002). In addition, several studiesattempted to identify the driving but mostly restraining forces for implementing TQMin China (Pun, 2001; Stephens, 1989). It is aware that successful adoption of TQM maybe subject to the management of cultural dynamics and organizational complexities inChinese companies. More than a change of technology, transformation of culture andmanagement system is critical for implementing TQM in China (Pun, 2001).

After China became a member of the World Trade Organization in 2001, Chinesecompanies are under more pressure to improve the quality of their products and servicesin order to be competitive in the global market. With the increasing implementation ofquality management methods in China, researchers have made attempts to assess thestatus of quality management implementation at companies in China (Lee, 2004; Lee andZhou, 2000; Li et al., 2003). For example, based on the MBNQA criteria, Lau et al. (2004)assessed the maturity of quality systems at companies in China. With a sample of 452companies, they found that the quality systems could be classified into three levels: thosefocusing on inspection, those focusing on SQC, and those focusing on TQM. Thecompanies that had adopted TQM had higher level of the key areas of MBNQA and betterbusiness results in quality, customer satisfaction, and profitability, however, overallthere still lacked a full understanding of strategic quality management concepts andpractices. Similarly, via the MBNQA criteria Zhao et al. (2004) developed an empiricaltaxonomy of quality systems in Chinese service industry, which included undeveloped,accommodating, strategic, and soft quality systems. Their findings showed that the typeof quality system adopted by a company was highly associated with its organizationalcontext, as environmental uncertainty determined the development of a quality system inthe early stage, while the perceived importance of quality induced the furtherdevelopment of the quality system to a strategic one, supporting the contingency theoryof quality management implementation. On the other hand, some studies that comparedthe status of quality management in China and other countries found that in general, theapplication of quality management practices in China was similar to the developingcountries such as India and Mexico, and was even comparable to the developed countriessuch as the USA and Norway, but Chinese companies had different beliefs and focus in

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their implementation (Ahmed et al., 2005; Hopkins et al., 2004; Raghunathan et al., 1997;Rao et al., 1997; Solis et al., 2001; Sun, 2000; Zhao et al., 1995). Moreover, a group of studiesthat investigated the efficacy of quality management implementation in China suggestedthat a company’s effort in improving product and service quality can help to enhance itsoperational and business performance (Lee and Zhou, 2000; Su et al., 2008; Yeung et al.,2005).

Various quality-related issues in China’s service industry have also been studied inthe literature. For example, several studies (Cui et al., 2004; Wang et al., 2003, 2004; Zhou,2004) explored the factors influencing perceived service quality and customersatisfaction in Chinese retail industries like banking and telecommunication service, andsome examined the gap of expectations and perceptions of service quality betweenproviders and customers in China’s service sector (Ellis et al., 2003; Tsang and Qu, 2000;Zhao et al., 2002). On the other hand, several studies investigated the use of qualitymanagement or related managerial practices in service companies. Xu et al. (2006)analyzed how resource management and human resource management practicesinfluence conformance quality and productivity performance of service companies inChina and how the level of customer contact moderates the relationship of these practicesto performance. The study by Zhao et al. (2004) mentioned above focused on servicecompanies to identify the development of quality systems in China and to examine thedifference in organizational context on the transformation of quality systems.

While much research has been conducted on quality management in China, someimportant issues remain unclear. As shown in previous studies (Lau et al., 2004;Zhao et al., 2004), there are substantial differences among companies in China in theirmaturity of implementing quality management practices. But little research has beendone to explain such differences. This study intends to fill this gap by examining howa company’s operating and cultural characteristics affect the implementation level ofquality management practices.

3. Underlying characteristics of quality management implementation inChinaA critical phenomenon observed in practice is that not all companies can adopt qualitymanagement methods at the same pace, nor can they all achieve the same level ofeffectiveness. A contingency view is strongly contended in the literature, whichsuggests that quality management implementation is subject to the context (Sousa andVoss, 2002). Quality management is considered as an example of administrativeinnovation since its practices are not targeted at manufacturing and service operations,rather the management and improvement of these operations, involving the policies ofrecruitment, allocation of resources, and the structuring of tasks, authority and reward,which are related to the social structure of the organization (Ahire and Ravichandran,2001; Daft, 1978; Ravichandran, 2000; Sila, 2007). This is particularly true for Chinesecompanies because modern quality management concepts and techniques represent themanagement approaches and cultural values that are new to them (Lee et al., 2001; Pun,2001). In the process of adopting and institutionalizing quality management practices inan organization, the organizational context is important in influencing theireffectiveness (Sila, 2007). Therefore, to better understand quality managementimplementation in China, it is important to consider how a company’s underlyingcharacteristics affect its adoption and application of the practices (Zhao et al., 2007).

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The quality management literature has suggested that basic operatingcharacteristics of companies are contextual factors that may affect the qualitymanagement implementation. For example, Sila (2007) examined company size as acontingency factor by arguing that the fit of TQM practices as well as the structuralrelationship between the TQM practices are different between small and medium-sizedcompanies and large companies. Among the studies of quality management in China,Zhao et al. (2004) explored the effects of contextual factors, such as environmentaluncertainty, company size, international and domestic competition hostility, andperceived importance of quality, on the transformation of Chinese companies’ qualitysystems from one level to a higher, more mature level. Lee et al. (2001) also comparedISO certification across Chinese manufacturing and service companies as well asacross companies with and without a quality department.

For studying quality management, or in general any operations management issuesin China, one distinct firm characteristic that demands special attention is ownershiptype (Zhao et al., 2007). With the economic reform in China, a unique phenomenon thatoccurred in China is that companies operating in China change from primarily state- andcollective-owned enterprises to a diversified composition including businesses that aredomestic invested such as state-owned, collective-owned, and private-owned, as well asjoint ventures and foreign-invested businesses, which bears important implications forresearch on their operations and performance. Studies such as Xu and Wang (1997) havefound that ownership structure significantly affected the performance of companies inChina. It is expected that companies of different ownership types may adopt and applymodern quality management practices at different levels, considering the substantialdifferences in their history, traditions, and cultures (Zhao et al., 2006). An empiricalstudy by Li et al. (2003) showed that the state-owned companies were rated lower thanthe private-owned companies and joint ventures in the implementation of qualitymanagement practices. Joint ventures and foreign-owned companies in China may havebeen exposed to the advanced quality management methods. Thus, it may be easierfor their managers and employees to accept the philosophy of quality control andcontinuous improvement and these companies are likely to apply the qualitymanagement practices at a higher level. In comparison, Chinese domestic-ownedcompanies need to adapt their traditional management norms to the new managementprinciples and techniques. It is necessary to study how the implementation of qualitymanagement practices varies by the ownership type of companies in China.

Another indispensable organizational characteristic for studying qualitymanagement in China is culture. Owing to remarkable differences in social andcultural inheritance between China and the Western, industrialized countries,researchers pay attention to the issue of cultural influence on quality managementimplementation. For example, the study by Pun (2001) looked into how Chinese culturalvalues affect the adoption of modern quality management methods, though it did notfind significant influence of Chinese values, including paternalism, hierarchy, personalobligation, and Confucian ethics, on employee involvement or TQM adoption. Noronha(2002, 2003) found that the Chinese cultural values of abasement, adaptiveness, harmonywith people and the universe, interdependence, and respect for authority had aninfluence on the use of quality management practices. And, several studies (Chow et al.,2001; Hui et al., 2004; Lau et al., 2002; Wang and Clegg, 2002) examined how nationalcultural characteristics such as power distance and collectivism affected quality-related

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subjects such as employee empowerment, job satisfaction or work attitudes, some ofwhich are cross-cultural studies. However, as China is more and more open to the worldoutside, Chinese people’s behaviors have been influenced substantially by external,contemporary social norms and its culture has undergone drastic changes (Leung, 2008).The number of foreign-invested companies and joint ventures in China increases at afast speed and even domestic-owned enterprises, no matter state-, collective- or privatelyowned businesses, are absorbing advanced management philosophy from the Westerncompanies to modernize their management styles (Pyke et al., 2000). Recently, corporateculture in China is no longer simply represented by traditional Chinese cultural values,but instead it reflects the salient features of individual organizations. Thus, it is time tore-evaluate the impact of culture on quality management implementation via the lens oforganizational culture.

Organizational culture has been widely considered as critical for effective qualitymanagement implementation (Prajogo and McDermott, 2005). Organizational culturerepresents the pattern of values, beliefs, and assumptions shared by members in anorganization (Sigler and Pearson, 2000; Schein, 1985). Implementing qualitymanagement practices in an organization entails a radical change in the way that anorganization does its business (Rajamanoharan and Collier, 2006; Reger et al., 1994). Anorganization’s cultural values, which shape its philosophy and policies of managingbusiness and drive the way things are done in the organization (Denison and Mishra,1995; McDermott and Stock, 1999; Nahm et al., 2004), will play an important role in theprocess of adopting and institutionalizing the quality management principles andpractices (Waldman, 1993; Schroeder et al., 2008). Empirical evidence of the effect oforganizational culture on quality management implementation has been found in theWestern business context, but little research has been done in the Chinese context,though recent studies have attempted to explore the role of organizational culture indetermining the behavior and performance of various types of companies operating inChina (Li et al., 2001; Tsui et al., 2006). In this study, we examine both the basicoperating attributes of companies in China (such as industry, size, ownership, andprocess type) and their intrinsic cultural profile to provide a better understanding ofhow the underlying organizational characteristics affect the implementation of qualitymanagement practices.

4. Research methodology4.1 SampleThe data for this study were drawn from a cross-sectional survey that was designed toassess the implementation of business process improvement methods in China. Thesample consists of 199 manufacturing companies operating in China, which are mostlylocated in the regions of Beijing, Shanghai, Jiangsu, Guangdong, Dalian, etc. As shownin Table I, the sampled companies were collected from a wide spectrum ofmanufacturing industries. Among them, 76 companies are domestic owned by ChineseGovernments or private businesses, 22 companies are joint ventures whose ownershipis shared by Chinese investment and foreign investment; and 101 companies areforeign-owned companies with investment from the developed countries such as theUSA, Europe, or Japan. The sample includes companies of various sizes ranging fromthe smallest of only 28 employees to very large enterprises of over 15,000 employees.There are 28 small businesses of less than 100 employees, 82 medium-sized businesses

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of 101-500 employees, and 86 large companies of over 500 employees. With regard tothe production system, the sampled companies operate with different types ofmanufacturing processes, including eight companies of one-of-a-kind productionprocess such as boat building companies, 90 companies of small-batch large-varietyproduction process, 64 companies of large-batch few-variety production process,19 companies of repetitive, line flow process, and 18 companies being continuousprocess typically in chemical processing industry. The capacity utilization rates ofthese companies are distributed with a small portion of companies with capacity usage50 percent or lower, and a majority of capacity usage above 70 percent. The sampledcompanies represent a varying level of implementing quality management programs.The majority of the companies have formally implemented one or more programs intheir businesses, as 159 companies have joined the ISO 9001 program and most ofthem have applied this program over four years; 97 companies have formallyimplemented TQM programs; 57 companies have formally implemented Six Sigma,and 76 companies have applied lean manufacturing techniques.

4.2 Measurement of firm characteristics, culture, and quality managementIn this study, quality management implementation is operationalized through TQMand Six Sigma practices. TQM is considered as the most prominent managementphilosophy in the twentieth century, while Six Sigma is the most recent development ofquality management. Both methods have been widely adopted by companies acrossthe world. The measurement items of TQM and Six Sigma practices were adopted froma study by Zu et al. (2008), which were developed based on a comprehensive literaturereview and had been tested in the US manufacturing industry. Seven TQM practices,which are widely suggested by the literature as key elements in TQM, are included inthis study, those being top management support, customer relationship, supplierrelationship, workforce management, quality information, product/service design, andprocess management. Six Sigma is operationalized by three practices including SixSigma role structure, Six Sigma structured improvement procedure, and Six Sigmafocus on metrics. Items for measuring TQM and Six Sigma practices were seven-pointLikert scales with end points of “strongly disagree ( ¼ 1)” and “strongly agree ( ¼ 7).”

Organizational culture is operationalized through the competing values framework(CVF) of culture (Quinn, 1988; Quinn and Kimberly, 1984). The CVF model has beenshown to be theoretically sound in integrating organizational culture to otherorganizational components and it can be empirically measured as a psychometricallysound instrument (Yeung et al., 1991). The CVF model is built upon two axes to reflectdifferent value orientations: the control-flexibility axis reflecting the extent to which anorganization focuses on change and stability, and the internal-external axis refers to theorganization’s focus on the internal organization and the external environment (Denisonand Spreitzer, 1991; McDermott and Stock, 1999). The two axes combine to reflect fourcultural quadrants, each representing different values about motivation, leadership, andstrategic orientation in organizations. Group culture focuses on flexibility and internalmaintenance by emphasizing strong human relations, cohesion, and participation ofmembers. Developmental culture emphasizes flexibility but external positioningthrough growth, resource acquisition, creativity, and adaptation to the externalenvironment. Rational culture puts a focus on the external environment while stressingcontrol by encouraging competition and achievement of well-defined goals.

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Hierarchical culture emphasizes stability and internal organization and thus stressescentralization and regulations with rules and routinization (Cameron and Freeman,1991; Denison and Spreitzer, 1991; McDermott and Stock, 1999). The four quadrants ofCVF are ideals and, organizations seldom reflect only one culture type, rather eachorganization will exhibit a combination of different culture types, although it may bethat one type is more dominant than the others (McDermott and Stock, 1999; Henri, 2006;Quinn and Spreitzer, 1991). The ratings on the four cultural quadrants may varyindependently so that a high rating on one end does not exclude high rating at the otherend (McDermott and Stock, 1999; Quinn and Spreitzer, 1991). Thus, an organization’scultural profile can reflect on the four quadrants. We adopted the Likert scale instrumentdeveloped by Quinn and Spreitzer (1991) to assess the degree to which an organizationemphasizes each of the four CVF culture orientations. Seven-point Likert scales wereused with 1 for not valued at all, 4 for moderately valued, and 7 for highly valued.

As suggested by Brislin (1970) regarding translation in cross-cultural studies, theinitial survey questionnaire in English was first translated into Chinese and thenback translated into English, which then was checked against original English forconsistency. A pilot study was conducted with four Chinese quality/operationsmanagers to check for accuracy and readability of the questions. The questionnaire wasthen refined based on their feedback.

Because all the data were self-reported single response, this study is subject to thepotential threat of common method variance (CMV). We thus conducted Harman’ssingle factor test to detect the presence of CMV (Podsakoff et al., 2003). According tothis technique, when an unrotated factor analysis is performed on all the variables in astudy, if a single factor emerges from the factor analysis or one general factor accountsfor the majority of the covariance among the measures, it indicates that a significantCMV is present in the data (Podsakoff et al., 2003). Based on the unrotated factoranalysis results of all the measures studied, multiple factors are extracted and thehighest amount covariance explained by a single factor is only 25.86 percent. We alsoconducted confirmatory factor analysis (CFA) to compare the proposed model and asingle factor model and found that the proposed model shows substantially bettermodel fit. Thus, it is reasonable to conclude that there is no a substantial amount ofCMV present in the data.

4.3 Evaluation of reliability and validityThe instrument was evaluated for construct reliability and validity. The content validitywas assured by an extensive review of relevant literature on quality management and byusing researchers and practitioners of quality management and operations managementto evaluate measures (Churchill, 1979). The scales of TQM and Six Sigma practices weredrawn from the existing literature, and each of them consist of six to 13 questions, whichprovide extensive coverage of the relevant concepts involved in the theoreticalconstructs. The scales of organizational culture were initially designed by Quinn andSpreitzer (1991) to assess the degree to which an organization values the relevantcultural characteristics. Quinn and Spreitzer (1991) have demonstrated the satisfactorypsychometric property of this instrument using multitrait-multimethod analysis andmultidimensional scaling. And, a study by Kalliath et al. (1999), using CFA, furtherverified that this instrument has excellent validity and reliability estimates. A number ofempirical studies have adopted the CVF to explore the effect of organizational culture

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on various operations management practices such as advanced manufacturingtechnology (McDermott and Stock, 1999; Zammuto and O’Connor, 1992), performancemeasurement (Henri, 2006); and in particular quality management implementation(Prajogo and McDermott, 2005; Stock et al., 2007).

Reliability of the measurement items was assessed using Cronbach’s a. As shown inTables II and III, the a-values of the TQM and Six Sigma scales and culture scales rangefrom 0.76 to 0.99, which are above the threshold level of 0.70 and indicate acceptablereliability (Nunnally and Bernstein, 1994). After the reliability of measurement scaleswas established, unidimensionality was examined by evaluating a CFA model for eachfactor. The CFA models of the TQM and Six Sigma scales and culture scalesshow satisfactory model fit with the comparative fit index (CFI) of 0.90 or higher(Tables II and III).

Convergent validity and discriminant validity of the scales were assessed throughCFA (Anderson and Gerbing, 1988). We built the measurement models for TQM andSix Sigma practices and culture factors, respectively. These models were evaluated bymultiple goodness-of-fit indices including the ratio of x 2 to degree of freedom, CFI,non-normed fit index (NNFI), standardized root mean square residual (SRMR), and rootmean square error of approximation (RMSEA) (Kline, 2004). As shown in Table IV,a comparison of the fit indices for the two measurement models to the recommendedvalues revealed satisfactory model fit.

Based on the measurement models, each scale’s convergent validity was evaluated byexamining the factor loadings of the items to the factor that they are intended to measure.A significant factor loading is considered to have demonstrated convergent validity(Hair et al., 2005). In this study, all the items have significant standardized factorloadings (i.e. t-values are greater than 1.96 at p , 0.05), and most of them are greaterthan 0.70, suggesting adequate convergent validity of the scales used in this study.

Then, discriminant validity was assessed by performing x 2 difference tests betweenthe constrained model and the unconstrained model (Anderson and Gerbing, 1988). In theconstrained model, the correlation of each pair of factors is set to 1.0, whereas in theunconstrained model, the correlation between factors is freely estimated. Discriminantvalidity can be established if a significant x 2 difference exits between the two modelswith lower x 2 for the unconstrained model. We adjusted the p-value of the x 2 differencetests by the number of tests performed (Kaynak and Hartley, 2006). As shown inTables II and III, the x 2 differences between the constrained and unconstrained modelsare all statistically significant (with a significantly lower value for the unconstrainedmodel), indicating satisfactory discriminant validity of the scales (Hair et al., 2005).

5. Tests of the effects of underlying characteristicsIn order to examine the effect of a company’s operating characteristics on the level ofapplying the TQM and Six Sigma practices, multivariate analysis of variance(MANOVA) was performed. The results of MANOVA reported in Table V were basedon the statistic of Pillai’s trace, which is most robust among the MANOVA test statistics(Olson, 1976). Overall, the results did not show significant differences in the level ofimplementing TQM and Six Sigma practices among companies of different operatingcharacteristics including industry, size, ownership, and process type. In terms of overallimplementation of all TQM and Six Sigma practices, we found statistically significantmain effect of industry ( p-value , 0.05), significant two-way interaction effects

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8.64

6.P

rod

uct

/ser

vic

ed

esig

n5.

471.

460.

910.

950.

410.

330.

270.

520.

61–

159.

2233

2.50

308.

4317

5.01

7.P

roce

ssm

anag

emen

t5.

271.

300.

900.

930.

450.

430.

400.

600.

690.

51–

351.

9333

7.00

169.

888.

Six

Sig

ma

role

stru

ctu

re1.

702.

430.

970.

980.

1023

0.18

0.19

0.23

0.16

0.21

–52

4.39

354.

729.

Six

Sig

ma

stru

ctu

red

pro

ced

ure

2.28

2.81

0.98

0.99

0.18

0.24

0.10

0.22

0.23

0.20

0.21

0.81

–23

7.79

10.

Six

Sig

ma

focu

son

met

rics

2.62

2.84

0.99

0.99

0.14

0.22

0.12

0.19

0.22

0.20

0.20

0.77

0.87

–

Notes:

aV

alu

esre

pre

sen

tx

2d

iffe

ren

ces

bet

wee

nea

chu

nco

nst

rain

edm

odel

and

con

stra

ined

mod

el;b

val

ues

rep

rese

nt

biv

aria

teco

rrel

atio

nof

the

fact

ors

Table II.Descriptive statisticsand reliability,unidimensionality,and discriminant validitytests of TQM andSix Sigma practices

IJQRM28,8

810

of industry by ownership and ownership by process type ( p-value , 0.05), andsignificant four-way interaction ( p-value , 0.05). But, for the application of individualpractice, the differential effects of these operating characteristics were sporadic.Companies from different industries showed differences in the level of top managementsupport and customer relationship, but neither company size nor ownership nor processtype could, by itself, distinguish companies in implementing the TQM and Six Sigmapractices. The post hoc comparisons suggested that the chemical processing industry fellbehind other industries like electronic products, textile, machinery, or transportationequipments in these two TQM practices. And, the post hoc comparisons of two-wayinteraction effects showed that joint venture and foreign-owned companies in electronicsand machinery industries, in general, had a slightly higher level of implementing theTQM and Six Sigma practices, and the joint ventures with process types of large batchesor line flow production had implemented TQM and Six Sigma practices to a higher level.However, overall no substantial differences in quality management implementationwere found between companies of different industries, sizes, ownership, or processtypes.

Next, we analyzed whether there is difference in quality managementimplementation among companies with different cultural profiles. Cluster analysiswas first used to map cultural profiles presented within the sampled manufacturingcompanies operating in China. As recommended, a two-step analysis procedure wasemployed, with hierarchical cluster analysis first and non-hierarchical cluster analysisnext (Hair et al., 2005). These analyses indicated that a classification of four clusters bestrepresented the cultural profiles of sampled companies. Cluster 1, one of the two largestcluster (73 out of 199 companies), had a strong emphasis on all four cultural quadrants;

Factor Mean SD Cronbach’s a CFI 1 2 3 4

1. Group culture 4.71 1.46 0.92 0.97 – 61.10a 135.54 294.672. Developmental culture 4.66 1.44 0.91 0.98 0.82b – 92.03 258.373. Hierarchical culture 5.14 1.24 0.82 0.99 0.58 0.63 – 20.144. Rational culture 5.43 1.47 0.93 0.97 0.65 0.67 0.77 –

Notes: aValues represent x 2 differences between each unconstrained model and constrained model;bvalues represent bivariate correlation of the factors

Table III.Descriptive statistics

and reliability,unidimensionality,

and discriminant validitytests of culture factors

Fit indicesMeasurement model for TQM and

Six Sigma practicesMeasurement model for

culture factorsRecommended value for

fit indicesa

x 2/df 1.37 2.22 3.0CFI 0.95 0.92 0.90NNFI 0.94 0.90 0.90SRMR 0.061 0.062 0.10RMSEA 0.043 0.078 0.08

Note: aBased on the criteria for evaluation of model fit suggested by the literatureSources: Byrne (1998); Hu and Bentler (1999)

Table IV.Test results of the

measurement models

Qualitymanagement

in China

811

QM

pra

ctic

es

Ov

eral

l*T

opm

gt

sup

por

tC

ust

omer

rela

tion

ship

Su

pp

lier

rela

tion

ship

Wor

kfo

rce

mg

tQ

ual

ity

info

rmat

ion

Pro

du

ct/

serv

ice

des

ign

Pro

cess

mg

tS

ixS

igm

aro

lest

ruct

ure

Six

Sig

ma

stru

ctu

red

pro

ced

ure

Six

Sig

ma

focu

son

met

rics

Ind

ust

ry2.

312a

6.73

6c3.

241

2.07

71.

060

1.12

31.

287

1.96

11.

758

0.98

80.

794

0.00

0b*

**

0.00

0*

**

0.00

9*

*0.

073

0.38

60.

352

0.27

40.

090

0.12

70.

428

0.55

6S

ize

1.36

50.

821

0.17

90.

211

1.43

62.

304

2.30

42.

892

0.03

20.

012

0.33

50.

142

0.44

30.

836

0.81

00.

242

0.10

40.

104

0.06

00.

969

0.98

80.

716

Ow

ner

ship

0.74

42.

837

2.85

00.

161

2.34

52.

570

1.18

82.

010

0.07

10.

109

0.22

70.

778

0.06

30.

062

0.85

20.

100

0.08

10.

309

0.13

90.

935

0.89

70.

802

Pro

cess

typ

e1.

039

0.26

41.

058

0.06

40.

471

0.62

70.

721

1.37

00.

565

0.35

90.

340

0.41

00.

901

0.38

10.

992

0.75

70.

644

0.58

00.

249

0.68

90.

837

0.85

1In

du

stry

by

size

0.97

10.

940

0.54

70.

304

0.84

40.

906

1.00

81.

035

0.53

00.

490

0.39

50.

561

0.50

00.

853

0.97

90.

588

0.53

00.

441

0.41

90.

866

0.89

30.

946

Ind

ust

ryb

yow

ner

ship

1.44

94.

086

2.66

61.

476

1.86

11.

674

0.73

71.

058

1.10

80.

513

0.75

10.

012

*0.

000

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*0.

014

*0.

182

0.08

20.

122

0.64

10.

395

0.36

30.

823

0.62

9In

du

stry

by

pro

cess

1.13

01.

500

1.69

10.

669

1.05

30.

403

0.46

51.

371

1.18

21.

199

1.01

90.

189

0.14

80.

091

0.75

10.

404

0.94

30.

910

0.20

20.

310

0.29

90.

432

Siz

eb

yow

ner

ship

1.38

10.

290

1.30

30.

027

0.44

90.

492

0.02

92.

657

1.43

71.

909

0.39

10.

093

0.83

30.

277

0.99

40.

718

0.68

90.

993

0.05

20.

236

0.13

20.

760

Siz

eb

yp

roce

ssty

pe

0.85

20.

862

0.37

40.

712

0.94

40.

711

0.83

00.

427

0.77

20.

193

0.26

10.

755

0.50

90.

866

0.61

60.

456

0.61

60.

531

0.82

90.

572

0.96

40.

933

Ow

ner

ship

by

pro

cess

typ

e

1.55

83.

366

0.80

91.

239

1.10

90.

878

0.63

32.

426

0.81

30.

688

0.97

70.

019

*0.

012

*0.

522

0.29

80.

356

0.48

00.

640

0.05

20.

519

0.60

20.

423

Ind

ust

ryb

ysi

zeb

yow

ner

ship

1.29

92.

520

1.22

10.

505

1.77

20.

894

3.07

22.

491

1.48

31.

071

1.33

80.

088

0.03

3*

0.30

40.

772

0.12

40.

487

0.01

2*

0.03

5*

0.20

10.

380

0.25

3

Ind

ust

ryb

ysi

zeb

yp

roce

ssty

pe

0.83

91.

182

1.47

10.

839

1.53

02.

547

2.43

70.

597

1.07

61.

343

1.49

10.

712

0.32

00.

226

0.47

50.

211

0.05

90.

068

0.61

80.

362

0.26

40.

221

(con

tinued

)

Table V.Tests of the effects ofoperating characteristicson the implementationlevel of TQM and SixSigma practices

IJQRM28,8

812

QM

pra

ctic

es

Ov

eral

l*T

opm

gt

sup

por

tC

ust

omer

rela

tion

ship

Su

pp

lier

rela

tion

ship

Wor

kfo

rce

mg

tQ

ual

ity

info

rmat

ion

Pro

du

ct/

serv

ice

des

ign

Pro

cess

mg

tS

ixS

igm

aro

lest

ruct

ure

Six

Sig

ma

stru

ctu

red

pro

ced

ure

Six

Sig

ma

focu

son

met

rics

Ind

ust

ryb

yO

wn

ersh

ipb

yP

roce

ssty

pe

1.31

40.

802

2.68

20.

871

1.66

40.

575

1.29

13.

800

1.39

11.

261

1.27

20.

101

0.52

60.

035

*0.

484

0.16

30.

682

0.27

80.

006

**

*0.

241

0.28

90.

285

Siz

eb

yO

wn

ersh

ipb

yP

roce

ssty

pe

1.13

80.

003

0.47

40.

092

0.75

90.

172

2.56

80.

150

0.12

41.

388

1.50

20.

288

1.00

00.

701

0.96

40.

519

0.91

50.

058

0.92

90.

946

0.25

00.

218

Ind

ust

ryb

yS

ize

by

Ow

ner

ship

by

Pro

cess

typ

e

2.12

80.

006

1.90

20.

526

1.84

46.

673

0.45

10.

093

2.25

20.

613

0.39

30.

028

*0.

937

0.17

10.

470

0.17

70.

011

*0.

503

0.76

10.

136

0.43

50.

532

Notes:

Sig

nifi

can

tat

:* 0

.05,

** 0

.01,

and

**

* 0.0

01le

vel

s;ath

isv

alu

eis

the

F-t

est

stat

isti

cb

ased

onP

illa

i’str

ace;

bth

isv

alu

eis

the

p-v

alu

eof

F-t

est

bas

edon

Pil

lai’s

trac

e;c th

isv

alu

eis

the

F-t

est

ofb

etw

een

-su

bje

ctd

iffe

ren

ces

Table V.

Qualitymanagement

in China

813

cluster 2, another largest cluster of 73 companies, had a strong emphasis on rational andhierarchical cultures and a moderate emphasis on group and developmental cultures;cluster 3 of 49 companies had a moderate emphasis on the four cultural quadrants; andcluster 4 consists of only four companies that had a low emphasis on the four culturalquadrants. The centroids of the four clusters are presented in Table VI. One-wayANOVA indicated that the four clusters were significantly different in their centroids ofthe four cultural value orientations ( p-value , 0.05).

Subsequently, MANOVA was employed to explore whether companies of differentcultural profiles differ in implementing the TQM and Six Sigma practices. The results(Table VII) showed that companies with different emphases on cultural valuesexhibited significant variation in their level of applying these practices. Based on thepost hoc comparisons, the companies of cluster 1 (i.e. having a comprehensive strongemphasis on all four cultures) had significantly higher levels of implementing all

MANOVA Cluster 1 Cluster 2 Cluster 3 Cluster 4

Top mgt support 11.340a 6.37b 5.98 5.49 4.830.000c * * * 0.003 * * 0.026 * 0.192 –

Customer relationship 14.514 6.16 5.79 5.11 4.920.000 * * * 0.016 * 0.094 0.701 –

Supplier relationship 5.872 5.44 4.76 4.74 3.550.001 * * * 0.005 * * 0.074 0.076 –

Workforce management 30.401 6.23 5.30 5.01 3.000.000 * * * 0.000 * * * 0.000 * * * 0.000 * * * –

Quality information 13.102 6.30 5.73 5.24 4.460.000 * * * 0.001 * * * 0.029 * 0.172 –

Product/service design 10.633 6.08 5.51 4.91 4.000.000 * * * 0.003 * * 0.034 * 0.196 –

Process management 12.887 5.88 5.25 4.77 3.690.000 * * * 0.000 * * * 0.012 * 0.078 –

Six Sigma role structure 2.863 2.29 1.53 1.31 0.000.038 * 0.065 0.222 0.291 –

Six Sigma structured procedure 6.137 3.31 1.88 1.66 0.000.001 * * * 0.018 * 0.183 0.234 –

Six Sigma focus on metrics 5.133 3.58 2.33 1.94 0.940.002 * * 0.064 0.334 0.483 –

Notes: Significant at: *0.05, * *0.01, and * * *0.001 levels; athis value is F-test statistic based on Pillai’strace; bmean implementation level of the TQM and Six Sigma practices within each cluster; cp-value ofpost hoc comparison with cluster 4 as reference

Table VII.Tests of TQM andSix Sigmaimplementationin companies of differentcultural profiles

Cluster 1 Cluster 2 Cluster 3 Cluster 4 F Sig.

Group culture 6.16 4.19 3.83 0.69 136.92 0.000 * * *

Developmental culture 6.02 4.29 3.78 0.50 121.24 0.000 * * *

Hierarchical culture 5.97 5.54 4.27 0.69 113.32 0.000 * * *

Rational culture 6.46 6.22 4.12 1.06 172.04 0.000 * * *

Note: Significant at: *0.05, * *0.01, and * * *0.001 levelsTable VI.Cultural clusters

IJQRM28,8

814

the TQM and Six Sigma practices than the companies of other cultural profiles.The companies that had a high emphasis on rational and hierarchical cultures but amoderate emphasis on group and developmental cultures (cluster 2) had implementedthe TQM practices at a higher level but not the Six Sigma practices. There was nosignificant difference in quality management implementation between the companieswith a moderate emphasis on the four cultures (cluster 3) and those of a low emphasison every type of cultures (cluster 4).

6. Discussion and conclusionThis study examined several key operating characteristics as well as culturalenvironment to explain the difference of implementing TQM and Six Sigma practicesat companies in China. The results did not find significant differences in the level ofimplementing these practices among companies of different operating characteristicsin terms of company size, industry, ownership, and process type. The results showedthat a company’s cultural profile is a distinguishing factor for TQM and Six Sigmaimplementation. The details of these results and their implications are discussed below.

Firm characteristics such as company size, industry type, or process type are oftenconsidered as important contextual factors that may affect whether and how qualitymanagement practices are applied in organizations. In prior studies, there are mixedfindings about the effects of these firm characteristics. For example, Terziovski andSamson (1999, 2000) found that company size impeded the implementation of TQM aslarger companies gained more benefits from implementing TQM than smallercompanies, but Sila (2007) found that the implementation of TQM practices was similaracross small, medium, and large companies. Study by Martinez-Lorente et al. (2004)found out that company size affected the TQM implementation level but the type ofproduction process had no significant effect on TQM implementation. The currentstudy found that, in general, there was no significance difference among companies inChina in applying the TQM and Six Sigma practices regarding their operatingcharacteristics.

In particular, this study investigated the role of ownership in determining the levelof implementing the TQM and Six Sigma practices at companies in China. While acompany’s ownership has been widely suggested as critical in determining the extentto which advanced management techniques are applied in China, this study did notfind significant differences in quality management implementation among companiesof different ownership structures. It may be speculated that along with China’seconomic growth and development, Chinese companies has made substantial efforts inupgrading their quality systems with advanced techniques. Modern managementpractices now have been widely adopted by the domestic-owned enterprises.

This study found that companies with different cultural profiles exhibitedsignificantly different levels of quality management implementation. The companiesthat put a strong emphasis on all the four cultural quadrants – group, developmental,rational, and hierarchical cultures – led in implementing TQM and Six Sigma. On thecontrary, there was a significantly lower level of applying the TQM and Six Sigmapractices in the companies which had only a moderate or low emphasis on thosecultural values. Prior studies based on Western businesses found that the CVF culturalvalues can support the application of the TQM and Six Sigma practices inorganizations (Noar et al., 2008; Prajogo and McDermott, 2005; Zu et al., 2010).

Qualitymanagement

in China

815

The findings in this study suggested the importance of a supportive culture for qualitymanagement in China. Without developing a strong quality culture, it would bedifficult to establish continuous improvement in an organization. Particularly, all fourculture types are applicable and important in the quality management implementationprocess of companies in China. A strong balanced emphasis on all four CVF culturalquadrants is critical for achieving organizational effectiveness (Cameron and Freeman,1991; Quinn and Spreitzer, 1991; Yeung et al., 1991). For companies in China, it iscritical to develop a culture that is capable to support the use of all the TQM andSix Sigma practices in order to build a fully functional quality system.

In addition, the high level of using TQM practices at companies with a strongemphasis on rational and hierarchical cultures highlights the importance of havingrules and disciplines established for promoting TQM implementation in China.We suspect that the lack of significance in using Six Sigma for this group may be dueto the relatively small sample size of companies practicing Six Sigma in the sample ofthis study. Chinese society is characterized by large power distance and Confucianethical values of harmony and respect, which result in paternalistic and dictatorialmanagement approaches (Pun, 2001). Chinese managers tend to use rulesand regulations to closely control their subordinates’ behaviors. Chinese employeesare likely to accept orders from their managers and are willing to perform as themanagers expect. Therefore, it is advisable to companies in China to set up explicitimplementation plans and improvement strategies as well as rules and policies toregulate employees’ behaviors toward the organization’s quality improvement mission.

Overall, this study suggests that the internal environment, like whether a companyhas a culture favorable for quality improvement, is influential in the process of qualitymanagement implementation in China. Thus, when initiating quality managementprograms at companies in China, managers need to address the issue of organizationalculture. It is beneficial that the managers assess the existing cultural environment intheir organization, identify the gap between the existing culture and the desired qualityculture, and then make plans to adapt employees’ beliefs and values and to develop aculture for quality improvement. Especially for the Western companies which haveoperation facilities in China or work with their Chinese suppliers around the issues ofquality control and improvement, understanding the traditional Chinese culturalvalues and seeking the congruency of Chinese culture and modern quality culture areparticularly critical.

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Further reading

Jiang, B. (2002), “How international firms are coping with supply chain issues in China”,Supply Chain Management: An International Journal, Vol. 7 No. 4, pp. 184-8.

Corresponding authorXingxing Zu can be contacted at: xingxing.zu@morgan.edu

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