Does Quality Management Support Innovation? A Resource-based View
Yong-tao Song1, Xiu-hao Ding2
1
Institute of Management Science and Engineering, Henan University, Kaifeng, 475004, China
School of Management, Huazhong University of Science and Technology, Wuhan, 430074, China
(henusyt@gmail.com)
2
Abstract - Based on the resource-based view, this paper
develops a conceptual model incorporating quality
management practice, R&D capability, innovation, and firm
performance. A questionnaire survey is conducted to
examine the hypotheses. The results indicate that quality
management practice has a significant positive influence on
innovation through the mediating effect of R&D capability.
Moreover, the positive influences of R&D and innovation on
firm performance are supported. This paper identifies the
influencing mechanism between quality management and
innovation, and contributes to the quality management
theory.
Keywords – quality management practice, innovation,
R&D capability, resource-based view
I. INTRODUCTION
With the trend of intensive competition and
shortening product life-cycle[1], firms realize the
significant importance of product/service innovation. In
such a case, innovation has been widely accepted,
researched and paid more and more attention by scholars
and practitioners as a strategic tool, and a plenty of studies
investigated how to improve innovation efficiency and to
increase innovation outputs. In parallel with the
development of quality management and the significant
role it plays in improving product quality and promoting
firm performance, scholars and firms anchored their hops
on quality management to improve innovation, and a lot
of studies began to explore the influence of quality
management on innovation. However, the research related
to the quality management in innovation/research and
development (R&D) activities is just a beginning, and
extant studies on quality management in innovation/R&D
are mainly concentrating the concept of quality in
innovation, case studies of successful quality in
innovation activities, and quality management framework
in innovation process[2], etc. The relationship between
quality management and innovation, and how to execute
quality management in innovation process is still unclear.
Anecdotal evidence suggests that the effect of quality
management looks obvious in manufacturing process, yet
proves ineffective in innovation activities. Both the senior
managers and the first-line staffs did not understand how
to execute quality management in innovation process. A
review of the studies conducted on quality management in
innovation activities reveals that there are few studies
examine the relationship between quality management
and innovation, and what is more important is that most of
these studies focus on the influence of quality
management on innovation results, e.g. product
innovation[3-5], process innovation[3-5], technological
innovation[6, 7], or administrative innovation[6], and the
influence mechanism of quality management on
innovation is neglected. Moreover, there are conflicting
conclusions in existing researches. Some scholars state
that quality management fosters innovation[3], and other
studies reveal that quality management hinders quality[4].
Therefore, it is reasonable to conclude that the ambiguous
influence mechanism of quality management on
innovation is the main reason of existing conflicting
results.
In reality, quality management is composed of
various elements and innovation is also a
multidimensional phenomenon. The impact of quality
management on innovation depends both on the specific
elements of quality management and the type of
innovation[7]. Up to now, little is known about how
quality management influence innovation and it is
difficult to estimate the influence of quality management
on innovation accurately.
Clarifying the effects of quality management on
innovation can not only guide firms’ innovation practices,
but also enrich quality management theory and innovation
theory through expanding the applying scope of quality
management. Therefore, this study aims to investigate the
mechanism that quality management influences
innovation. Specifically, this study wants to know the
paths through which quality management influences
innovation. Thus, this study introduces the term of R&D
capability based on resource-based view, and investigates
the mechanism quality management capability influencing
innovation through analyzing the relations among quality
management practice, R&D capability, and innovation.
II. THEORETICAL FRAMEWORK AND
HYPOTHESES
A. Theoretical Background
Prior empirical studies show that the implementation
of quality management in manufacturing or servicing can
improve quality performance and firm performance[8-10].
There are abundant studies on quality management
theory[11],
firm
quality
management
system
construction[12], quality management practice[8] and
relationship
between
quality
management
and
performance[8-10]. However, few studies investigate
quality management in the innovation background. Prior
scholars argue that quality management stresses rules and
standardizations and limits its application in innovation
activities[13]. However, with the development of quality
management theory, some practices and tools of quality
management have been widely applied in innovation
activities, such as new product development and R&D.
For example, the involvement of people and teamwork of
quality management are consistent with the crossfunctional team in NPD and/or R&D, and customer focus
of quality management is consistent with customer
participation in NPD, and quality function deployment is
applied widely in customer need survey in innovation
activities.
Nowadays, innovation has changed from technologydriven to multifactor-driven (including technology and
market) behaviors, and just relying advanced technology
can not guarantee that the innovation fruits meet the
requirements of customers/market. In addition,
technology advancement and diffusion makes it is almost
impossible for firms to form core capabilities relying one
technology. As a result, it is necessary for firms to
integrate innovation, which is supported by technology,
and quality management, which is based on
customer/market and production, to ensure innovation
going smoothly. Although there are growing calls to apply
quality management to NPD, and scholars have made
great efforts to do this, it is unpractical to apply
manufacturing-based quality management theory,
practices, and technologies to NPD process directly. First,
quality management and innovation have different
theoretical bases, which make them conflict sometimes.
Second, the relationship between quality management and
performance in traditional manufacturing process will
change in innovation environments. Quality management
improves performance through quality or efficiency
improvement in manufacturing process, while it will
affect performance through R&D capability improvement
in innovation environments. Therefore, it is necessary to
clarify the mechanism that quality management influences
firm performance with the purpose of applying quality
management in innovation activities effectively.
Meanwhile, although quality management has
developed for almost 100 years since 1920s, it has not
formed a widely accepted, formal and integrated theory.
Academy of Management Review discussed quality
management in 1990s, and scholars such as Sitkin et al. [11]
explored how to develop quality management theory in
virtue of existing management theories. On this basis,
Sousa and Voss[14] and Schroeder et al.[15] put forward that
existing management theories (for example, contingency
theory and institution-based theory) can be employed to
improve quality management theory.
This study introduces the term of R&D capability
based on resource-based view and takes quality
management as inimitable resources forming dynamic
capability. According to capability-based theory, firms’
capabilities are not endowed when born and can not be
bought in market, and they are created through
environment adaption and resource acquisition and
configuration. Quality management is a method to gain
competitive advantage, and creates conditions for firms to
adapt environment and acquire and configure resources.
Introducing R&D capability, this study can explain how
quality
management
influence
innovation
and
consummate quality management theory.
B. Hypotheses
On the basis of literature review, this study puts
forward the conceptual model in Figure 1, which links
quality management practice, R&D capability, innovation
and firm performance. We attempt to analyze the
relationships among these variables to clarify the paths
that quality management influencing innovation and how
quality management contributes to firm performance in
the innovation environments.
Innovation
Quality
management
practice
Firm
performance
R&D
capability
Fig. 1. Conceptual model
The focus of innovation is improvement of processes
. Thus, quality management, whose principle is
continuous improvement of processes, will promote
innovations. Existing studies also suggest that quality
management has a positive effect on innovation[3, 7],
because some elements of quality management, especially
basic quality management practice and software quality
management, can promote innovation. Santos-Vijande
and Álvarez-González[6] find that Total Quality
Management (TQM) has significant positive effects on
innovation culture and management innovation. Although
the effects of TQM on innovation may change in different
conditions or environments, TQM is always the resources
supporting and cultivating innovation. Therefore, this
study proposes:
H1: Quality management practice has a positive
effect on firm innovation.
Existing studies argue that quality management
promotes innovation, but they do not explore the paths
and mechanisms that quality management influences
innovation. This study introduces the term of R&D
capability based on resource-based view to clarify the
effect of quality management on innovation. There is not
a widely accepted definition of R&D capability, and
scholars also use different terms. Su et al.[17] use R&D
capability, and Ettlie and Reza[18] use new product
dynamic capability, and Huang and Chu[19] use product
development capability. If firms want to succeed in
innovations, they should have R&D capabilities. Quality
[16]
management practice, which is valuable and inimitable,
pushes firms to construct their R&D capabilities. R&D
capability affects product and process innovation directly.
Furthermore, because R&D capability reflects firms’
capabilities to produce science discoveries and
technological breakthrough, it determines firm innovation
performance in a large part. Therefore, we have the
following hypothesis:
H2: Quality management practice positively affects
firm innovation through R&D capability.
R&D capability can not only promote firm
innovation but also influence firm performance positively.
As innovation is becoming more and more import in the
economy, firms’ successes are more and more dependent
on innovation performance, which is determined by R&D
capability. Existing studies also confirm that R&D
capability has significant effect on firm performance. For
example, Zaheer and Bell[20] find that innovation
capability improves firm performance based on Canadian
security companies, and the empirical results of Ettlie and
Pavlou[21] also suggest that new product development
capability positively affects new product performance and
firm performance. Thus, we have the following
hypothesis:
H3: R&D capability has a positive effect on firm
performance.
In the literature about innovation, the influence of
innovation on firm performance receives a lot of attention.
Some studies explore the relationship between innovation
and firm performance from the perspective of innovation
motivation, and argue that innovation has significant
positive effect on firm performance. The reason is that
unique innovative products, services and processes
contribute to firms’ differentiation strategies, and provide
firms sustainable competitive advantages. Then, firms can
surpass competitors and increase sales and profits.
Therefore, this study puts forward:
H4: Firm innovation positively influences firm
performance directly.
III. ETHODOLOGY
A. Research Setting
This study sends the copies of questionnaires to
firms that have obtained quality management system
certification with the help of China National Institute of
Standardization, which have well-developed management
bases and abundant management experiences. We sent
questionnaires to directors of R&D or quality
management department of 300 firms using mail or email.
The data collection process lasted about 2 months. In
order to increase the recovery rate of questionnaire, we
promised that we would provide the research findings to
the survey firms. Meanwhile, we maintained full
anonymity for all informants throughout the survey
process, and informed the respondents that the survey was
designed for research only and there were no wrong or right
answers to our questions in our cover guide[22].
One month after sending the questionnaires, we
reminded the respondents that had not completed the
questionnaires using mail or telephone. When the survey
finished, a total of 198 usable questionnaires were
achieved after we removed the incomplete questionnaires
with missing data or doubt answers, constituting a 66
percent response rate.
B. Analysis and Findings
A confirmatory factor (CFA) approach is used to test
the common method bias. A model positing that a single
factor underlies the study variables is assessed by linking
all items of the dependent and independent variables to a
single factor. The results show that one-factor model is
not acceptable and common method bias did not pose a
serious threat to interpretation of the subsequent analyses
in this study[22].
Reliability is assessed using the internal consistency
method via Cronbach’s alpha. All of the four latent
constructs, with the exception of R&D capability (0.698),
have Cronbach alphas of more than 0.7. These results
indicate that all scales demonstrated good reliability[23].
Convergent validity was assessed from the
measurement model by determining whether each
indicator’s estimated pattern coefficient on its
hypothesized underlying construct factor is significant
(greater than twice of its standard error), and discriminant
validity was assessed from the measurement model by
determining whether all confidence intervals ( ± two
standard errors) around the correlation estimate between
two factors did not include 1.0. The result provides strong
evidence of convergent validity and discriminant validity
(as shown in Table I).
TABLE I
CORRELATIVE COEFFICIENT AND STANDARD ERROR
1
2
Quality management practice
1.00
Innovation capability
0.77(0.04)
1.00
Innovation
0.72(0.04)
0.80(0.04)
Firm performance
0.63(0.05)
0.65(0.05)
Notes: the numbers in the brackets are the standard errors.
The following fit statistics were obtained for the
structural model: chi-square (x2) =638.90, degrees of
3
4
1.00
0.67(0.04)
1.00
freedom (df) =270, Root Mean Square Error of
Approximation (RMSEA) =0.083, Comparative Fit Index
(CFI) =0.97, Non-Normed Fit Index (NNFI) =0.97,
Goodness-of-Fit Index (GFI) =0.79, and Root Mean
Square Residual (RMR) = 0.058. The standardized
loadings (γ), standardized errors, and t-values are shown
in Table Ⅱ. All of the standardized loadings were high
(γ>0.20) and significant (t>1.96). The results thus
provided empirical support for Hypothesis 2, Hypothesis
3, and Hypothesis 4.
TABLE Ⅱ
RESULTS OF STRUCTURAL MODEL
Standardized loading
Hypotheses
Path
T value
Result
H1
Quality management practice→ Innovation
H2
Quality management practice→ R&D capability
R&D capability→ Innovation
0.22
1.90
Reject
0.79
0.64
8.78
4.84
Supported
H3
R&D capability→ Innovation
0.40
3.05
Supported
H4
Innovation→ Firm performance
0.35
2.81
Supported
IV.DISCUSSION AND IMPLICATIONS
A. Main Finding
Several interesting findings can be drawn form this
study. First, this study finds that quality management
practices do not significantly influence firm innovation
directly, but indirectly through the mediating effect of
R&D capability. Second, this study finds that R&D
capability and firm innovation positively influence firm
performance, which is consistent with early empirical
studies.
B. Managerial Implications
The first managerial implication to be drawn from
the results is that innovation is influenced by many
factors, but is mostly determined by R&D capability.
Quality management can not guarantee innovation
performance solely, and some elements of quality
management even restrain innovation. For example,
quality management emphasizes the reduction of
variances to enhance process stability. However, because
of the nonrepeatability and uncertainty of innovation, it is
no use to improve the reliability and stability of the
process through reduction of process variation. Moreover,
innovative ideas of product emerge when there is
variation in organizational process, when something
different and untried is pursued[24]. Thus, the reduction of
variations will limit the sources of new product ideas.
The second managerial implication is about the
relationship between quality management and R&D
capability. Although quality management is widely
diffused and applied in the world, a lot of contents of
quality management are difficult to imitate[8], especially
the soft elements such as leadership, quality strategy, and
quality culture. Firms can use these inimitable quality
management elements to construct firms’ core capabilities
and competitive advantages. Therefore, quality
management capability can promote firm innovation
through R&D capability. This finding clarifies the
mechanism that quality management influences firm
innovation, and can explain the inconsistency in existing
studies. More recently, some studies have realized that the
relationship between quality management and innovation
is complex. They suggest that quality management and
innovation are dynamic capabilities based on learning,
improvement and revolution[25], and these two capabilities
complement each other. Although quality management
influences R&D capability positively, we should
recognize that the effect is limited. Benner and
Tushman[26] have found that TQM contributes to
exploitation capability but do not to exploration
capability. Thus, when firms create their R&D capability,
they should make full use of all kinds of resources[25].
Third, prior studies have confirm that firms’ specific
and inimitable elements can strengthen their R&D
capability, which will contribute to firm performance[20].
Moreover, studies on innovation have also confirmed the
direct and indirect influences of innovation on firm
performance. Therefore, firm can integrate quality
management practice and other practices to construct
R&D capability, and use R&D capability to promote
innovation and improve firm performance.
V. LIMITATIONS AND FUTURE RESEARCH
This study discusses the relationships among quality
management practice, R&D capability, firm innovation
and firm performance, and clarifies the mechanism that
quality management influences firm innovation, which
can explain the inconsistency in existing studies.
However, quality management practice consists of many
elements and is a multi-dimension variable, and there are
different types of innovations (for example, incremental
and radical innovation, and/or product innovation, process
innovation, and management innovation, but this study
does not explore the effects of quality management
elements on different types of innovations. Thus, it is
valuable to investigate how quality management elements
influence different types of innovations.
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