Initiatives and outcomes of quality management
implementation across industries
Department of Shipping and Transport Logistics
The Hong Kong Polytechnic University
Hung Hom, Kowloon, Hong Kong.
Department of Management
The Hong Kong Polytechnic University
Hung Hom, Kowloon, Hong Kong.
*Corresponding author. Department of Shipping and Transport Logistics, The Hong Kong
Polytechnic University, Hung Hom, Kowloon, Hong Kong. Tel: (852) 2766 7920; Fax: (852)
2330 2704; Email: email@example.com
T h i s i s t h e P r e - P u b l i s h e d V e r s i o n .
Initiatives and outcomes of quality management implementation
Kee-hung Lai1 and T.C.E. Cheng2
This paper sets out to explore the quality initiatives of various industries and examine
the links between quality management implementation and quality outcomes. We use the
scenario in Hong Kong as a first step in addressing these research inquiries. Using Black and
Porter's instrument (1996, Decision Sciences, 27, pp. 1-21) and the various perceived
performance measures representing quality management implementation and quality
outcomes respectively, we conducted a mail survey to collect data from over 1,000
companies with operational quality management systems and received 304 valid responses
for data analysis. Analysis of variance (ANOVA) was used to analyze the data and the results
are consistent with our prediction that the differences in quality initiatives by industry types
affect the levels of quality management implementation and quality outcomes in different
industries. In particular, we found that significant contrast exists between public
utilities/service industries and manufacturing/construction industries, with the former group
having a higher level of quality management implementation and achieving better quality
outcomes. The emphases that they placed on their quality management implementation also
seem to differ. Implications of the results are discussed and suggestions for further research
on quality management and implementation are offered.
Keywords: Quality; Critical factors, Implementation; Industry comparisons; Performance
1 Department of Shipping and Transport Logistics, The Hong Kong Polytechnic University, Hung Hom,
Kowloon, Hong Kong.
2 Department of Management, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong.
One of the important decisions for a firm on the journey to quality concerns the extent
to which quality management should be implemented. There are many studies on the impact
of quality management on business performance . The benefits of quality management
such as improvements to the bottom-line, market share, and productivity are well documented
in the literature . Indeed, the improvement of product and service quality is widely
discussed in the literature as an appropriate strategy for firms to pursue in order to achieve
competitive advantage in the marketplace . Because of the strategic advantages that quality
improvement might bring, many firms have embraced the principles of quality management
in their operations. The level of quality management implementation seems to reflect the
desire of a firm to improve its performance and to prosper .
While existing studies tend to investigate the important facets of quality management
implementation , very little research has been devoted to understanding quality initiatives
in different industrial contexts and linking them with implementation efforts and quality
outcomes. Furthermore, the limited number of studies considering a comprehensive range of
quality management practices invariably concentrate on firms within a particular industry
group, rather than comparing different industry groups within the same study [e.g. 6, 7].
There are studies on quality management practices incorporating a contingency
framework of contextual variables, including size , years since quality management
adoption , country , and strategy adopted . However, these studies are confined to
a specific industrial sector, i.e., manufacturing, and their main focus is not on examining the
underlying industry initiatives in quality management implementation. To fill this gap in the
quality management literature, we set out to examine if there are differences in quality
initiatives of different industries in quality management implementation and if so, whether
there are differences in implementation efforts and quality outcomes in major industry types.
With these objectives, we used the situations in Hong Kong as a first step in
addressing these research inquiries. First, we examined the quality initiatives of companies in
four major types of industries in Hong Kong, namely manufacturing, construction, service
and public utilities. The quality initiatives across the industries enabled us to make
predictions about variations in their quality management implementation and quality
outcomes. Using a mail survey, we collected data on quality management practices and
quality outcomes in these different industries. The empirical results were used to verify our
predictions and estimate the extent of variations accounted for by the industry type.
Accordingly, this study seeks to contribute to the literature by providing insights into
quality initiatives and identifying their association with a wide range of quality management
practices and quality outcomes for different industries within a theoretical framework. In
particular, this study aims to:
1. Explore the initiatives of quality management implementation in different industries;
2. Determine if there are differences in quality management implementation and quality
outcomes across industries and if so, how and why they differ;
3. Examine if different industries have different priorities in their quality management
4. Provide implications for further research on quality management and implementation.
2. Conceptual framework and hypothesis development
There has been little effort to develop theories in the discipline of quality management
, particularly those involving identifying the set of situations or circumstances that may
cause synergistic variations in quality management and to developing empirical
generalizations . Some previous studies, however, have made a few advances in
comparing quality management practices and quality results between the manufacturing and
service industries . In this study, we have further advanced the inquiry by examining
quality initiatives and comparing quality management practices and outcomes involving
additional industry types, i.e., public utilities and construction, in addition to comparing the
manufacturing and service industries.
In the following sections, we first briefly describe the movement for quality in Hong
Kong. Then, we review the literature and discuss industry differences and their potential
effect on quality management implementation in companies across different industries in
2.1 Quality initiatives in Hong Kong
The heightening of customer expectations and intensified competition in the global
market have led many companies in Hong Kong to place greater emphasis on quality as a
basis for competition. The awareness of the importance of quality in improving
competitiveness among Hong Kong companies, and their eagerness for quality improvement,
seem to reflect the global trend [c.f. 14]. Many of them have joined the movement for quality
and implemented various quality improvement programs with a view to gaining a competitive
position in the market. Among others, the ISO certification process is the most prominent
approach they have adopted to achieve such objectives. Some companies even look forward
to improving themselves by using the certification process to link quality assurance and
process improvement within a total quality management (TQM) framework.
A number of initiatives have triggered the desire of Hong Kong companies to improve
quality. They include the move to reduce costs, the pursuit of better business opportunities,
and the drive to improve customer satisfaction. The quality initiatives of a company can have
an impact on the ways its quality management system is implemented and they vary in
different business contexts in Hong Kong. In this study, companies were categorized into
four industry types: manufacturing, construction, services, and public utilities, which are the
pillar industries of the domestic economy of Hong Kong . The quality initiatives of
companies in these four types of industries in Hong Kong are concisely described below:
Manufacturing – Manufacturers in Hong Kong are generally small to medium in size,
with employees numbering less than 500. Many of them function as original equipment
manufacturers (OEM) or as parts assemblers for companies in more advanced nations such as
the United States and Japan. Generally, product development and quality do not seem to be
major issues for many manufacturers in Hong Kong as their products are made to
specifications set by their customers. Only a few of them develop products under their own
brand names for sale to the world market. However, quality standards requirements are
increasingly becoming a trade barrier  and a common reference in all commercial
negotiations in the international context . In order to overcome the trade barrier and to
build market confidence, Hong Kong manufacturers usually pursue quality in the form of ISO
certification. Conformance quality, via ISO-certified status, is deemed adequate for survival
by most Hong Kong manufacturers, as they consider that quality improvement exceeding this
threshold level or the customer-defined manufacturing specifications may not guarantee
further profitability. Their profitability-driven quality initiative is reflected in their lack of
investment in quality improvement, particularly in the area of computer-based technologies in
support of quality . Thus, even though many manufacturers in Hong Kong have
embarked on their quality improvement programs in the form of ISO-systems, many of them
still lack sophistication in their implementation. They are also not proactive in using quality
as a competitive weapon. Chinese manufacturing companies also seem oblivious to some
basic quality principles and to modern methods of quality management .
Construction – The need for quality improvement in Hong Kong’s construction
industry began to receive wide recognition in 1993 when the Housing Authority stipulated
that building contractors must be certified to the ISO series before being eligible to submit
tenders for public housing construction work. Since then, many construction companies in
Hong Kong have sought and obtained ISO certification to demonstrate their commitment to
high quality construction work. However, they implement quality management systems
mainly in order to meet the Housing Authority’s ISO quality standards requirement for
tendering public construction work . Conformance quality and profitability for each
project represent the most valued objectives of many construction companies in Hong Kong.
They invest in quality improvement generally up to the minimal acceptable level, i.e.,
obtaining and maintaining the ISO-certified status. They consider the cost of pursuing quality
beyond this level unwarranted, given the nature of construction work (e.g., standards and
procedures), which varies from one project to another, and the risk level (e.g., delayed
completion, profit-and-loss) involved for individual construction projects. Sommerville and
Robertson  also share the view that many construction companies are predominately
quality assurance-oriented due to pressure from their clients. Many of them have in-depth
knowledge about ISO quality management systems and have attained certified status.
However, few have embraced the principles of quality management and implemented quality
management to such a high level as TQM.
On the other hand, construction work involves several parties with different
professional backgrounds such as contractors, subcontractors, and construction workers, and
these parties have to deal with different phases of a construction project including concept
development, feasibility studies, cost estimates, engineering, procurement, and construction
. Because of the complicated nature of the operations in the construction industry, and the
fact that different parties have different roles and objectives (e.g., cost, safety and speed) in a
construction project, construction companies in Hong Kong generally take conformance
quality as the path to ensuring the successful and profitable completion of a construction
project, particularly for the ISO requirements mandated by the Housing Authority .
Similar to their counterparts in the manufacturing industry, the tangible nature of
quality standards and specifications for conformance, which are generally measurable, are
taken as the target quality improvement level sufficient to satisfy their customer’s
requirements. Profitability and better business opportunities derived from conformance
quality drive quality improvement initiatives for most construction companies in Hong Kong.
Generally, they consider that quality improvement exceeding the target level does not
contribute much to profitability .
Services – After the launch of the open door policy in the People’s Republic of China
(PRC) in 1979, many Hong Kong manufacturers moved their production lines to the PRC to
take advantage of low labor costs across the border, retaining only non-production functions
such as distribution and marketing in Hong Kong. Since then, the service sector has assumed
an increasingly important role in the economy, employing over 80 per cent of the 3.4 million
workers in Hong Kong by 2002 . Being aware of the importance of quality for the
survival of a company, as well as of quality’s contribution to competitiveness in the service
industry, many service firms in Hong Kong have adopted different measures to improve the
quality of their services.
Delivering a service is different from delivering a product because of many factors,
including intangibility, simultaneous production and consumption, heterogeneity, and
perishability . Unlike the manufacturing and construction industries, which produce
tangible goods, services are intangible and no standards exist to determine the level of quality
adequate for conforming to customer specifications and requirements . Furthermore,
service companies in Hong Kong are facing increased competition, both domestic and
international, as a result of economic growth. To stay ahead of the competition, whether
domestic or foreign, service companies in Hong Kong generally aim for the highest level of
quality improvement they can afford.
As services are intangible and it can be difficult to convey the message of quality to
customers, quality management tends to be more important and prevalent in the service
industry than in the manufacturing and construction industries. It is natural that service
businesses invest more on quality management than their counterparts in the manufacturing
and construction sectors. This is reflected in the fact that the quality of service offered in
Hong Kong, notably in the hotel industry, is regarded as world class and that Hong Kong has
evolved to be one of the leading financial and import/export trade centers in the world .
All of this demonstrates the desire and effort of companies in Hong Kong’s service sector to
pursue the highest possible level of quality improvement.
Public utilities - Public utilities in Hong Kong are generally monopolistic in nature.
Many of them, such as railway transportation and electricity, are the sole providers of the
services/products they offer. They are highly profitable because their monopoly status
guarantees high profit margins. To foster competition for the benefit of customers and other
investors, the Hong Kong Government has recently deregulated such markets as
telecommunications and public transportation, and accelerated the pace of introducing
competition to other markets of the public utilities sector. On the other hand, the heightening
of customer expectations and the comparisons which are often made between the quality
levels of the private and public sectors have prompted many public utilities in Hong Kong to
improve the quality of their offerings. In response to rising customer expectations and
potential competition resulting from market deregulation by the Government, public utilities
companies are known to employ quality improvement as a weapon to deter new entrants into
the market. Importantly, many of them have embarked on quality improvement efforts with a
focus on value-for-money, continuously improving their operations through elimination of
waste and delivery of better customer service. Many of them seek to achieve the highest
possible level of quality, in the hope that they can consolidate their competitive advantages
before the gradual loss of their monopolistic status. As a consequence, the management of
quality has emerged as a cornerstone of the overall strategic effort in many public utilities in
Hong Kong. Indeed, many past winners of the Hong Kong Management Association's
(HKMA) quality management award, the local version of the Malcolm Baldrige National
Quality Award (MBNQA) in the United States, are in the public utilities sector, for example,
the Kowloon-Canton Railway, the Mass Transit Railway, and Town Gas.
The above discussions highlight the quality initiatives of companies in different types
of industries in Hong Kong. Manufacturing and construction companies tend to be oriented
towards conformance quality as compared to service companies and public utilities, which
strive for the highest possible levels of quality improvement as a means to yield
competitiveness. The differences in their initiatives for quality improvement lead us to
Hypothesis 1. Levels of quality management implementation are higher in public utilities
and service companies than in manufacturing and construction companies.
As the literature generally supports the link between quality management implementation and
company performance , it is natural to hypothesize that:
Hypothesis 2. Companies in an industry type with a higher level of quality management
implementation achieve higher quality outcomes.
Results from the test of these hypotheses not only shed light on how sophistication
levels in quality management implementation differ among companies in different industry
types, but also give insights into the strengths and weaknesses of quality management efforts
in different industrial contexts. The following section discusses the methodology adopted for
addressing these issues.
3. Research methodology
To evaluate quality management implementation and quality outcomes, it is important
that the target sample companies demonstrate a certain level of quality management
implementation. This is essential simply because companies without any operational quality
management practices do not have the necessary knowledge and experience to meaningfully
respond to the research questions. In line with previous studies on establishing the links
between quality management and performance , we sampled firms that practised quality
management. The population sampled in this study consisted of all the companies in Hong
Kong practising quality management. We acknowledge that the sampling frame may result in
positively biased return because of the respondent companies’ experience in quality
management implementation. However, such a sampling frame with companies employing
quality management at a certain level of sophistication and maturity helps ensure validity in
A sampling frame that covered all the business units/ organizations in Hong Kong
known to have a quality management system was used as the sampling population. This
sampling frame includes the HKMA's quality award winners and finalists (N = 10), and
companies/business units certified to ISO 9000 series in Hong Kong (N = 1,082). The
HKMA’s quality award is modeled on the MBNQA, whose criteria are widely accepted as
the blueprint of excellence in quality management implementation. We also consider that
companies having an ISO-certified status are likely to have implemented quality management
systems in the workplace .
To evaluate a company's efforts in quality management implementation, it is important
that the measures reflect the theory and concept that underlie quality management and cover
all the domains of its implementation. In this regard, we employed the instrument developed
by Black and Porter , which measures the critical criteria of quality management
implementation. They developed this instrument using the criteria of the MBNQA, which are
the assessment frameworks for identifying leaders in quality management in the United States.
They extracted a series of items from the MBNQA criteria, excluding the business results
categories, and combined them with the items identified in the literature that are considered
critical components of quality management, but which were not adequately covered in the
MBNQA criteria, to evaluate organizational efforts in quality management implementation
on a five-point Likert type scale. They then tested the instrument with over 200 managers and
found that the instrument is reliable and valid for measuring the critical components of
quality management. The empirical analysis conducted by Black and Porter  resulted in a
10-factor, 32-item instrument. The ten critical factors of quality management generated by
their study include:
1) people and customer management (QM1),
2) supplier partnerships (QM2),
3) communication of improvement information (QM3),
4) customer satisfaction orientation (QM4),
5) external interface management (QM5),
6) strategic quality management (QM6),
7) teamwork structures for improvement (QM7),
8) operational quality planning (QM8),
9) quality improvement measurement systems (QM9), and
10) corporate quality culture (QM10).
As the instrument of Black and Porter  represents literature-based, empirically tested
elements of quality management, it was used with some refinements to measure quality
management implementation in our study. In our refinements, seven potentially confusing
items in their instrument, each asking two questions, were split into two. This resulted in a
10-factor, 39-item instrument to measure quality management implementation in this study.
To facilitate the respondents’ understanding, most of the questionnaire items measuring
different aspects of quality management implementation were provided with illustrative
The implementation of quality management emphasizes the importance of satisfying
multiple stakeholders . In order to extend beyond finance-based measures and to consider
the interests of multiple stakeholder groups, the 15-item multi-model performance framework
(MMPF) of Weerakoon  was adopted in this study to operationalize quality outcomes.
The MMPF model consists of four dimensions, including:
1. employee motivation (QO1),
2. market performance (QO2),
3. productivity (QO3), and
4. impact on society (QO4).
The multi-dimensional nature of these outcome measures covers the satisfaction of
various stakeholders such as customers, investors, employees, suppliers, and society.
Considering that the influence of a firm’s strategy (e.g., quality management implementation)
usually only becomes apparent over a period of years, these quality outcomes were measured
over a three-year period with an anchor on the degree to which they improved with respect to
motivation performance, market performance, productivity performance and societal impact.
Perceptual measures on a five-point interval scale were used to capture information about
quality management implementation and quality outcomes in this study. The perceptual
measures are in the form of attitude statements with 1 = strongly disagree, 2 = disagree, 3 =
neutral, 4 = agree, and 5 = strongly agree. Respondents were invited to indicate the extent to
which they agreed or disagreed with each statement. They were also asked to indicate the
type of industry they belonged to, their length of quality management implementation, and to
provide other relevant company information. The measurement items, the codings of quality
management implementation and quality outcomes used, and the items for collecting general
information are presented at Appendix A.
3.3 Data collection and demographics
A sample of 1,092 companies was drawn from the buyer's guide of the Hong Kong
Quality Assurance Agency (HKQAA), the ISO 9000 directory published by the Hong Kong
Trade Development Council (HKTDC), and the list of winners and finalists of the HKMA’s
quality management award. This sample represented companies in Hong Kong known to
have implemented a quality management system. The sample companies were cross-checked
to avoid double mailing. The survey questionnaire was sent out twice.
We chose the study respondents based on a key-informant methodology . We
acknowledge that bias in data collection may stem from the use of a single respondent in this
study. However, a key-informant may be a more reliable source of information and help to
ensure that the respondent has the necessary knowledge to respond . In line with other
quality management researchers [e.g. 30], we targeted a single well-informed respondent
from each sampled company.
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For each sample company, we solicited only one response. The respondent included
the quality manager or the personnel responsible for quality management in the company.
Because a quality management system requires a company-wide focus, we assume that these
informants had a good understanding of the quality management implementation and quality
outcomes in their companies.
The two mailings of the survey questionnaire yielded 342 returns; 304 of which were
valid for data analysis, representing a usable response rate of 28.6%. Of these, 69 were
manufacturing companies, 107 service companies, 114 construction companies, and 14
public utilities companies. We evaluated non-response bias using the t-test, with the
respondents in the first and the second mailings as the proxy ‘respondents’ and ‘non-
respondents’ respectively to determine if there were significant differences in the mean
values of quality management implementation and quality outcomes (see Section 4 for
calculation of the mean values) between the two groups . The results showed that no
differences between the groups at the p > 0.05 level (quality management implementation, t =
-0.32; quality outcomes, t = -0.36), suggesting that non-response was not a problem in this
study. The profiles of the respondent companies embraced in this study and their
characteristics are displayed in Table 1.
<< Insert Table 1 about here >>
Descriptive statistics, alpha coefficients, item-total correlation were used to initially
analyze the survey data. A high percentage of the respondents were “service” and
“construction” companies. Confirmatory factor analysis (CFA) was used to further evaluate
the measurement properties of the quality management implementation and quality outcomes