9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Best business practices and performance in ceramics industry in Thailand Rattana Seedee Faculty of Management Sciences Lampang Rajabhat University Lampang, Thailand Email: r_seedee@yahoo.com Tel: +60 164918589 Mohamed Sulaiman Faculty of Economics and Management Sciences International Islamic University Malaysia Gombak, Kuala Lumpur, Malaysia Email: sulaimanm@iiu.edu.my Tel: +60 124230463 Ishak Ismail School of Management Universiti Sains Malaysia Penang, Malaysia Email: iishak@usm.my Tel: +60 134332775 October 16-17, 2009 Cambridge University, UK 1 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Best business practices and performance in ceramics industry in Thailand Abstract Many businesses have applied best practice for improving performance, but with mixed success. In addition, the results of past studies on the relationship between best business practices and performance are inconclusive. The aim of this study was to examine the extent to which ceramics industry has adopted the best business practices and whether these practices contribute to performance. Data were collected from 141 ceramics firms in Thailand. The results show that most of the ceramics firms adopted best business practices with a high degree of acceptance. The best practices of leadership, customer and market focus, process management, and product innovation proved to be significant and positively related to performance. The paper also discusses the implications and limitations of the study. Keyword: Best business practices, MBNQA, performance, ceramics industry, Thailand 1. Introduction Many businesses have placed their faith in best practice, hoping that they will bring about desired improvements in business capabilities and performance. The linkages between business practices, capabilities, and performance, however, are complex and not well understood. In addition, the results of past studies on best practices have been mixed. One group found positive relationships between best practices and performance (Lau, Zhao, and Xiao, 2004; Prajogo & Sohal, 2003; Rahman & Sohal, 2001), while another found less than convincing results (Anderson and Sohal, 1999; Arumugam, 2005; Beaumont, Sohal & Terziovski, 1997; Dow, October 16-17, 2009 Cambridge University, UK 2 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 1999; Pannirselvam & Ferguson, 2001; Powell, 1995; Samson & Terziovski, 1999; Sila & Ebrahimpour, 2005). Thai ceramics industry has played a pivotal role in the economic and industrial sector of Thailand. It encompasses the manufacture of tableware, sanitary ware, ceramics tiles, ornamental and electric insulators. This industry employs more 80,000 people in Thailand, and exports more than 21billion baths worth of ceramics products per year (Bureau of Sectoral Industrial Policy 2, 2004). The industry went back to more than a thousand years in Northern Thailand. But the modern ceramics factories in Thailand were established after the Second World War (“History of Lampang Ceramics Industry,” 2002). But since then, they have rarely developed or upgraded their management and technologies. Thus, most of them are in need of augmenting their productivity and quality. Some factories are doing very well but others are facing serious problems such as lack of product design development, out-dated manufacturing process, lack of quality control, inefficient management and lack of business planning (Chiyannon, 1998; Rangkavipa, 1989; Singhagum, 1996; Bureau of Sectoral Industrial Policy 2, 2004). Therefore, there is the need for the ceramics firms to look at best practices to improve their performance. In order to enhance Thai ceramics industry, this research attempts to find out the extent to which it has adopted the best business practices and whether these practices contribute to performance. The study hopes to shed some light on best business practices by ceramics firms in Thailand and their consequences, which had not been studied before. 2. Literature review 2.1 Best business practices A significant percentage of recent literature in the areas of business and manufacturing makes reference to best practices (Davies & Kochhar, 2002). Voss and Blackmon (1996) stated that the October 16-17, 2009 Cambridge University, UK 3 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 introduction of new practices in manufacturing is normally associated with expected benefits in terms of improved performance in specified areas. Any investment of time or resources in a new practice will necessitate the provision of benefits in terms of improved performance. International Quality Study (1993) described that “the ultimate result of management practices of an organization is performance – market performance, operational performance, financial performance”. So, it can be said that best practices are the key to unlocking the secrets of global competition moving companies into higher gear to achieve rewards for higher performance. Over the last 20 years, the competitive significance of quality in the manufacturing sector has increased. This increase has been paralleled by growing investment in improved quality performance. Total Quality Management (TQM) has developed in many countries into holistic frameworks, aimed at helping organizations achieve excellent performance, particularly in customer and business results. Between 1980s until now, there have a lot of new quality practices were introduced to the business world such as Six Sigma, ISO 9000, and the Malcolm Baldrige National Quality Award. The Malcolm Baldrige National Quality Award (MBNQA) was started in the USA. This award continues to generate great interest and provide role models throughout the world. The MBNQA criteria were and are used for self-assessments by companies, to facilitate the communication of best practices, and as a model for understanding and managing quality. The MBNQA criteria represented the next step in the evolution of the quality movement. Internationally, many quality awards in various countries, such as: Japan National Quality Award, Singapore Quality Award, Australia Quality Award, Philippines Quality Award, Malaysian Prime Minister Quality Award (Petrick & Furr, 1995) and Thailand Quality Award is mostly based on the MBNQA program. Almost two million copies of the printed criteria have been distributed since the start of the October 16-17, 2009 Cambridge University, UK 4 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 award program (Calhoun, 2002). Many companies have benefited from the award criteria by using them as self-assessment tools to provide an objective framework, set a high standard, and helps compare units that have different systems or organization (Bemowski & Stratton, 1995; Calhoun, 2002; Davis & Standing, 2005; Evans & Lindsay, 1993). Thus, this study uses MBNQA criteria as a proxy of best business practices to find out the extent to which Thai ceramics firms have adopted the best business practices and whether these practices contribute to performance. Innovation has become an absolute necessity to survive and perform well in almost every industry (Hitt, Ireland, & Hoskisson, 2005). The importance of innovation is established as a necessary ingredient for firms simply wanting to remain competitive (Walsworth & Verma, 2007) or pursue long-term advantages. Innovation is concerned with the development of a new product or process, or the improvement of an existing product or process. The innovation process can only be really successful when there is a market for this product or process (Vries, 2006). Successful organizational innovation is a multi-step process which involves development and knowledge sharing, a decision to implement, implementation, evaluation, and learning (Baldrige National Quality Program, 2005). The results of past studies have shown that innovation plays a major role in sustaining competitive advantage for industries (Aragon-Correa, Garcia-Morales, & Cordon-Pozo, 2007; Bhaskaran, 2006; Calantone, Cavusgil, & Zhao, 2002; Keller, 2004; Pearce & Carland, 1996; Sher & Yang, 2005; Thornhill, 2005; Vazquez, Santos, & Alvarez, 2001; Wright, Palmer, & Perkins, 2005; Yamin, Mavondo, Gunasekaran, & Sarros, 1997). This is supported by Juran’s (1989) argument that business practices and innovation are two complementary aspects of October 16-17, 2009 Cambridge University, UK 5 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 strategic management. Therefore, innovation has been included as an important complementary variable to the MBNQA criteria in this study. 2.2 Firm Performance How performance is measured is related to the subject of interest (Li & Simerly, 1998). Traditionally, firm’s performance is measured by financial success and profitability (Daft, Sormunen, & Parks, 1998). Previous researches seemed to conclude that firms’ performance measurement includes many variables. The financial performance variables are: return on assets (ROA), return on equity (ROE), return on sales (ROS), and return on investment (ROI) (Daft et al., 1998; Li & Simerly, 1998; Miller, 1988). For the purpose of this research profitability (ROS, ROI & ROA) and sales growth were used as measures of firm performance. 2.3 Theory The resource-based theory or resource-based view of firms is based on the concept of economic rent and the view of the company as a collective of capabilities. The firm-specific resources and capabilities largely differentiate successful firms from failing ones (Peng, 2006). Of course, not all firms’ resources and capabilities have the potential to be the basis for competitive advantage. This potentiality is realized when resources and capabilities are valuable, rare, costly to imitate, and not substitutable (Barney, 1991, 2001; Barney, Wright, & Ketchen, 2001; Hitt, et.al., 2005; Peng, 2006). Firm’s resource and capabilities can be viewed as bundles of tangible and intangible assets. Tangible resources are assets that can be seen and quantified. They can be broadly organized in four categories: (1) financial, (2) organizational, (3) physical, and (4) technological. Intangible resources include assets that typically are rooted deeply in the firm’s history and have accumulated over time. Examples of intangible assets include (1) human, (2) innovation, and (3) October 16-17, 2009 Cambridge University, UK 6 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 reputation. Wernerfelt (1984) defined firm’s resources as anything which could be notional as strengths or weaknesses of a firm and capability which can be defined as a part from firm’s resources. Capability refers to a firms’ capacity to deploy firm’s resources, usually in combination, using organizational processes, to affect a desired ending (Amit & Schoemaker, 1993). So, capability is firms’ joint resources to produce any work or activity. Based on the resource-based theory, best business practices is considered as capabilities of the firms that are used as the basis for competitive advantage which can lead firms to superior performance. Given that the resource-based view addresses the resources and capabilities of the firm as an underlying factor of performance, the resource-based theory was found to be a suitable theory to explain the research framework in the relationship between best business practices and firm performance. 3. Research framework The research framework shown in Figure 1 has been developed to illustrate the relationship between best business practices and firm’s performance. Figure 1: Research Framework Best Business Practices Leadership Strategic Planning Customer and Market Focus Information and Analysis Focus Human Resource Process Management Ethics Innovation October 16-17, 2009 Cambridge University, UK Firm Performance Sales growth Profitability (ROS, ROI & ROA) 7 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 This study adapts the seven best business practice elements of the Baldrige National Quality Program (2005). The studies of researches which adopted MBNQA model indicated that organizations which adopted best business practices achieve high performance (Arumugam, 2005; Lau et al., 2004; Prajogo & Sohal, 2003, 2006; Samson & Terziovski, 1999; Wilson & Collier, 2000). Innovation is added as an element in best business practices for the reason that many researches indicate that innovation is an important element leading organization to high performance (Aragon-Correa et al., 2007; Bhaskaran, 2006; Calantone et al., 2002; Sher & Yang, 2005; Thornhill, 2005; Vazquez et al., 2001; Yamin et al, 1997). To sum up, most of the studies and research indicate that adopting best business practice should lead organization to high performance. Thus, the hypothesis is as follows: There is a positive relationship between the extent of best business practices employed and firm’s performance. 3.1 Variables and measurements The eight dimensions of best business practices include leadership: strategic planning; process management; information and analysis focus; customer and market focus; human resource; ethics; and innovation. The first seven of these variables would be measured by five-point Likert-type scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Most items of the seven variables are adopted and adapted from the Malcolm Baldrige National Quality Award examination criteria. The measurements for each of seven best business practices elements are taken from a similar instrument used by National Institute of Standards and Technology, Technology Administration, U.S. Department of Commerce. However, the seventh element which is business results item are modified. Some items were dropped. The three elements on customer and marketing focus are added by modifying from Porter (1980) (two items) and Kotha and Vadlamani (1995) (one item). The assessment tool is obtained from Baldrige National October 16-17, 2009 Cambridge University, UK 8 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Quality Program (2005) and Arumugam (2005). The measurement for innovation variable is adopted and adapted from Arumugam (2005) and the OSLO Manual: The measurement of scientific and technological activities (1996). The questions are simplified to suit the needs of local environment and the study objectives. Financial performance is measured by the average annual sales growth, return on assets (ROA), return on sales (ROS), and return on investment (ROI). These measurements have been used as tools in many studies of relationship between strategies and performance (Cater & Pucko, 2005; Dess & Davis, 1984; Helms, Dibrell, & Wright, 1997; Kotha & Nair, 1995; Miller, 1988; Yamin, Gunasekaran, & Mavondo, 1999). 3.2 Control Variables To isolate the relationship between best business practices and firm performance, it is important to control other variables likely to have an important impact on firm performance and is systematically related to best business practices. They are control variables in this study, namely companies’ age, amount of equity/investment and the size of organization. The size of an organization would be determined by the number of employees. These variables have been known to provide moderating influence on firm’s performance (Dean, Brown, & Bamford, 1998; Geringer, Tallman, & Olsen, 2000; Hoskisson, Johnson, & Moesel, 1994; Lin, Chen, & Wu, 2006; Sulaiman, 1993). These variables would be controlled in the statistical analyses. 4. Methodology The unit of analysis is the organization. This study uses the list of ceramics factories registered with the Department of Industrial Works, Ministry of Industry, Thailand and published in 2006. Purposive pre-sampling or selection was used to get the sample. For the reason of having manageable size of samples, relevancy and reliability of information, cost and time spent, the October 16-17, 2009 Cambridge University, UK 9 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 factories selected for the study were limited to those employing 10 people or more. The questionnaire was used in a pre-test before being employed on the target sample. The question in each item in the questionnaire was pre-tested for validity involving pertinence and easy understandability. However, before pre-testing the questionnaire, the translation and backtranslation technique (Brislin, 1970) was utilized accordingly on the adapted instrument. Results of the study were analyzed using the Statistical Package for Social Sciences (SPSS) version 15.0 for Windows. The statistical methods used for preliminary testing are: factor analysis, reliability analysis and descriptive statistics. Correlation and hierarchical regression analysis were used for hypotheses testing. 5. Data Analysis A total of 417 sets of questionnaire were mailed to the top executives of ceramics firms. The data collection process took 7 months (August 2007 – February 2008) to complete. One hundred and forty-three questionnaires were returned after two written reminders including new sets of questionnaires being sent and phone calls. Whilst 20 questionnaires were returned to the researcher with return to sender massages, indicating that the addresses were no longer valid or firms out of business. It was found that two questionnaires had to be eliminated because there were too many missing data. This made available 141 usable questionnaires. By discounting the number of return-to-sender mails, the final response rate accounted for was 35.5 percent. 5.1 Profile of respondents The demographic profiles of respondents show that a majority of the respondents were male (75.2%). The respondents’ average age was 41 years, had experience of an average of 9 years. Most of the respondents possessed a bachelor’s degree (65.2%) and master’s degree (19.1%). October 16-17, 2009 Cambridge University, UK 10 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Respondents consisted of 71.6 % having manager position, followed by 19.1% CEOs, MDs, and GMs, and a little over 9 % senior manger. The profile of firms shows that the majority (44.7%) were located in Northern part of Thailand, followed by Central part (34.8%). Thirty-eight percent of the respondents produced ceramics products of more than one type, most of them produced tableware and ornamental ware together. While 25.5% produced only tableware and 23.5% produced ornamental ware. The ages of firms were between 11 to 20 years (53.9%), 10 years and less than 10 years (30.5%) and 21- 30 years (10.6%). Most of the responding firms (85.8%) were small and medium firms (SMEs) (200 employees and less) and large firms 14.2 percent. In term of firm’s equity, 66.7% had equity of less than 10 million baht, 20.6% between 11-50 million baht and more than 50 millions baht were 12.7%. Most of them had average annual sales between 1-10 million baht (50.4%), 29.1% between 1150 million baht and 9.2% above 500 million baht (1 USD equals to 38 baht). Overall, 66% of firms exported their products to oversea markets, 48.4% of them attained over 50% of sales from overseas markets. Most of them exported to Europe and USA (52.7%). Sixty-eight percent of responding firms had contract sales, while 32% did not. The majority of respondents were aware of the Excellence Award (66.7%). On the other hand only a few were aware of the criteria used for deciding the Excellence Award (27%). It could be summarized that the sample consists of a cross-section of ceramics firms from small, medium, and large companies representing Thai ceramics industry. 5.2 Factor analysis Factor analyses were used to determine the factors of best business practices and firms’ performance. The process of factor analysis uses a principal components factor method and October 16-17, 2009 Cambridge University, UK 11 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 orthogonal rotation using a varimax method. The criteria used to identify and interpret the factors that is a cutoff point of eigenvalues of greater than 1, factor loading greater than .50 (Hair et al., 2006). Furthermore, reliability test were used with Cronbach’s alpha coefficient as indicator, which identified the internal consistency and reliability of each item. Cronbach’s alpha of above 0.70 is considered reliable (Nunnally, 1978). This level was utilized in this study. Table 1 shows results of factor analysis and the Cronbach’s alpha of each factor which indicates acceptable reliability. It should be noted that, one component of best business practices (innovation) was expanded from one to two, namely, product innovation and process innovation. The two components of firm’s performance were reduced to only one component, namely, financial performance. 5.3 Descriptive statistic and intercorrelation among the study variables As evident from Table 2, the dimension of best business practices significantly and positively correlated with one another, except product innovation and process innovation. Almost all of variables in this dimension are significantly and postively correlated to financial performance. Seven elements which are adapted from Baldrige National Quality Program (2005) have overall mean scores of 3.46 to 4.16. Strategic planning gave the highest overall mean score (4.16). This is followed by ethics (4.09), leadership (3.98), process management (3.95), Information and analysis focus (3.75), customer and market focus (3.54), and human resource (3.46) the lowest. Two elements of innovation are adapted from Arumugam (2005) and the OSLO Manual: The measurement of scientific and technological activities (1996), product innovation gave the overall mean score of 5.28, while process innovation of 1.55. These indicate that the firms’ adoption of best practices is high and especially product innovation. October 16-17, 2009 Cambridge University, UK 12 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Table 1: Factor analysis results Dimension Customer & Market Focus (CM) Focusing on a segment of the Product line Working closely with customers Importance of customers satisfaction Attending customers’ dissatisfaction fast Focusing on particular buyer groups Monitoring market & business trends Human Resource (HR) Seeking employees’ ideas for improvement Teamwork encouragement Availability of fund for employees’ training Rewarding employees’ outstanding performance Appraising employees’ performance regularly Employees’ salaries & benefits are competitive Leadership (L) Treatment employees fairly Good relationship with stakeholders Listening to staffs’ inputs & feedback Commitment towards job responsibilities Awareness of critical success factors Ethics (E) Having high standards & ethics Obeying laws & regulations Helping employees help their community Process Management (PM) Excellence of inter-department cooperation Removing things that get in the way of progress Having an excellent logistic system Efficiency of manufacturing processes Information & Analysis Focus (IA) Monitoring manufacturing processes closely Monitoring suppliers on time-delivery Tracking all critical business performance Strategic Planning (SP) Setting business goals & objectives jointly Executing action plans with diligence Process Innovation (PcIn) Improved process 2006 Improved process 2005 Introduced new process 2006 Introduced new process 2005 Improved process 2004 Introduced new process 2004 Product Innovation (PdIn) New developed product 2006 Improved product 2004 New developed product 2005 Improved product 2005 New developed product 2004 Improved product 2006 Financial Performance (FP) ROA ROS ROI Sales growth October 16-17, 2009 Cambridge University, UK 13 Factor Loading Cronbach’s Alpha .78 .75 .73 .69 .64 .61 .88 .83 .83 .74 .71 .69 .58 .90 .85 .73 .72 .70 .66 .88 .81 .81 .77 .86 .82 .69 .65 .61 .76 .76 .70 .57 .70 .87 .69 .76 .95 .95 .95 .93 .93 .92 .97 .92 .92 .91 .90 .87 .87 .95 .87 .85 .79 .76 .83 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Table 2: Descriptive statistic and intercorrelation among the study variables Variables Control Variables 1. Firm’s Age 2. Firm’s Size 3. Firm’s Equity Predictors 4. L 5. SP 6. CM 7. IA 8. HR 9. PM 10. E 11. PdIn 12. PcIn Dependents 13. FP Mean SD. 1 2 3 4 5 6 7 8 9 10 11 1.00 .16 .17* .59** .08 .07 -.06 .03 -.02 .08 -.01 .09 -.02 .00 .04 .04 -.07 -.07 -.11 .04 .05 -.02 -.02 .08 .01 -.18* .01 -.09 .12 .15 .06 .48** .57** .36** .55** .41** .53** .19* .17 .36** .19* .39** .26** .37** .15 .16 .51** .56** .36** .39** .18* .14 .35** .31** .23** .17* -.06 .50** .47** .23** .09 .43** .15 .04 .13 .02 .32** .09 14.80 8.45 .36** 168.59 447.49 44** 2.55 1.45 .49** 3.98 0.59 .30** 4.16 0.57 .39** 3.54 0.72 .03 3.75 0.61 .40** 3.46 0.70 .31** 3.95 0.53 .41** 4.09 0.60 .30** 5.28 15.07 12 13 .19* 1.55 3.96 1.00 3.01 0.63 Note. N= 141. *p < .05, **p < .01 Table 3: The impact of the best business practices on firm performance Variables Control Variables Company’s Age Firm’s Size Firm’s Equity Predictors L SP CM IA HR PM E PdIn PcIn R2 R2 change F change Sig. F change Financial Performance Std Beta Step 1 Std Beta Step 2 Note: * p<.10, ** p<.05, ***p<.01 October 16-17, 2009 Cambridge University, UK 14 .01 .15 .35*** -.02 .19** .28*** .21 .21 12.17 .000 .31*** -.02 .15* -.20*** .09 .15** .07 .14** .04 .55 .34 10.59 .000 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 5.3 Best business practices and firm performance Table 3 displays the results of hierarchical regression analyses on the relationship between best business practices and firm’s performance. The three dimensions of control variables together were significantly related to financial performance (R2 = .21, p < .01). However, only firm’s equity was found to be positively and significantly associated with financial performance ( = .35, p < .01). The bigger firms seem to enjoy higher performance. For the relationship between best business practices and financial performance, best business practices as a construct significantly predicted financial performance and explained an additional 34% of the variance in financial performance (R2 change = .34, p < .01). Leadership practice ( = .31, p < .01), customer and market focus practice ( = .15, p < .10), process management practice ( = .15, p < .05), and product innovation practice ( = .14, p < .05) have significant and positive relationship with financial performance. The results on these best practices support the hypotheses. Whereas, information and analysis practice is significant but negatively related to financial performance ( = -.20, p < .01), which is contrary to the hypothesis. 6. Discussion and limitation of the study The first research question of this study is to investigate the extent to which the best business practices are adopted by ceramics industry in Thailand. The findings revealed that the seven dimensions which were adapted from Baldrige National Quality Program (2005), namely, leadership practice, strategic planning practice, customer and market focus practice, human resource practice, process management practice, and ethics practice, gave the mean scores ranging from 3.46 to 4.16. Although, it is slightly lower than the level of TQM practices by Singaporean organizations, which gave a scores of between 3.85 to 4.35, it is slightly higher than the level of TQM practices by Malaysian SMEs and Australian organizations, which gave scores October 16-17, 2009 Cambridge University, UK 15 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 between 3.82 to 3.92 and 3.39 to 3.82 respectively (Arumugam, 2005; Feng, Prajogo, Tan & Sohal., 2006). Thus, it can be argued that Thai ceramics firms adopted the best business practices with a high degree of acceptance. One observation can be derived from this study; the finding showed that the trend of development and improvement of product and process by Thai ceramics firms was on the increase from 2004 to 2006. The study by Buranajarukorn (2006) indicated that Thai manufacturing companies were confronted with moderate to aggressive competition situation. It could be implied that these firms are aware of competition in the market. Some firms have spent effort and investment on both innovation practices; however, they did not register their patents. It is possible that they doubt about privilege of registering or may not understand correctly the procedure for registering. The second question of this study is about the relationship between best business practices and firm’s performance. The finding of this study indicated that 34% of the variance of the firm’s performance could be explained by the best business practices construct. With a slight difference of its impact on firm’s performance, leadership practice was found to have the greatest impact on firm’s performance, followed by process management practice, customer and market focus practice, and lastly, product innovation practice. On the other hand, best information and analysis practice, best strategic planning practice, best human resource practice, best ethics practice, and best process innovation practice were not strongly and positively related to firm’s performance. Therefore, the relationship between best business practices as proposed by MBNQA and performance are still in argument, and offer an opportunity for in depth empirical examination. October 16-17, 2009 Cambridge University, UK 16 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 From the findings of this study, it can be said that Thai ceramics firms concentrate mostly on best leadership practice, best customer and market focus practice, best process management practice, and best product innovation practice to improve firm performance. However, this is not to say that the other five elements should be ignored but rather to note that in our cross-sectional study, these weaker elements did not powerfully distinguish the firm performance. This study is descriptive of a given sample at a given point in time, whereas all the elements of best business practices are used to measure and suggest dimensions in order to improve organizational practices, quality and performance over the long term. There may be discrepancies between the short-term view and the long-term effect of the practices. It is recommended that a longitudinal qualitative case study research be conducted to overcome the short comings of the survey method used here. The dimension of information and analysis best practices is shown to have negative relationship with performance. This is unexpected and against the hypothesis. It might be that information collection and analysis is perceived as time consuming and costly. 7. Conclusion The findings show that the extent of best business practices adoption is high. This study also found that four out of nine dimensions of best business practices, namely, best leadership practice, best customer and market focus practice, best process management practice, and best product innovation practice were positively and significantly related to firm performance. Overall, it appears that the efforts by the Thai and various governments around the world to promote the use of best practices through MBNQA-Style awards are bearing fruit. Generally, best practices do lead to higher firm performance. October 16-17, 2009 Cambridge University, UK 17 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Bibliography Amit, R. & Schoemaker, P. (1993). Strategic asset and organizational rent. Strategic Management Journal, 14(1), 33-46. Anderson, M., & Sohal, A. S. (1999). A study of relationship between quality management practices and performance in small businesses. The International Journal of Quality & reliability Management, 16(9), 859-870. Aragon-Correa, J. A., Garcia-Morales, V. J., & Cordon-Pozo, E. (2007). Leadership and organizational learning’s role on innovation and performance: Lessons from Spain. Industry marketing Management, 36(3), 349-359. Arumugam, S. (2005). The impact of business practices and innovation on performance – An empirical study of SMEs in the Malaysian manufacturing sector. Doctoral dissertation, University of South Australia, Adelaide, Australia. Baldrige National Quality Program. (2005). Criteria for Performance Excellence 2005, National Institute of Standards and technology, Technology Administration, U.S. Department of Commerce. accessed February 9, 2006, [available at http://www.baldrige.nist.gov/PDF_files/2005_Business_Criteria.pdf] Barney, J. (1991). Firm resource and sustained competitive advantage. Journal of Management, 17(1), 99-120. Barney, J. (2001). Is the resource-based view a useful perspective for strategic management research? Yes. The Academy of Management Review, 26(1), 41-56. Barney, J., Wright M., & Ketchen, D. J. (2001). The resource-based view of the firm: Ten years after 1991. Journal of Management, 27(6), 625-641. Beaumont, N. B., Sohal, A. S., & Terziovski, M. (1997). Comparing quality management practices in the Australian service and manufacturing industries. The International Journal of Quality & Reliability Management, 14(8), 814-832. Bemowski, K., & Stratton, B. (1995). How do people use the Baldrige Award criteria?. Quality Progress, 28(5), 43-47. Bhaskaran, S. (2006). Incremental innovation and business performance: small and medium-size food enterprises in a concentrated industry environment. Journal of Small Business Management, 44(1), 64-80. Brislin, R. W. (1970). Back-translation for cross-cultural research. Journal of Cross Cultural Psychology, 1(3), 185-216. October 16-17, 2009 Cambridge University, UK 18 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Buranajarukorn, P. (2006). Human aspects of quality management in developing countries: A case study and model development for Thai manufacturing SMEs. Doctoral dissertation, University of Wollongong, New South Wales, Australia. Bureau of Sectoral Industrial Policy 2. (2004). Thai industry status: Ceramics industry. The Office of Industrial Economics, Ministry of Industry, Thailand, accessed February 7, 2006, [available at http://www.oie.go.th/industrystatus2/96.doc]. Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515-524. Calhoun, M. J. (2002). Using the Baldrige criteria to manage and assess the performance of your organization. The Journal for Quality and Participation, 25(2), 45-53. Cater, T., & Pucko, D. (2005). How competitive advantage influences firm performance: The case of Slovenian firms. Economic and Business Review for Central and South-Eastern Europe, 7(2), 119-135. Chaiyannon, N. (1998). The comparative advantage of the ceramic industry in Thailand. Master dissertation, Chiangmai University. Chiangmai, Thailand. Daft, R. L., Sormunen, J., & Parks, D. (1998). Chief executive scanning, environmental characteristics and company performance: an empirical study. Strategic Management Journal, 9(2), 123-139. Davies, A. J., & Kochhar, A. K. (2002). Manufacturing best practice and performance studies: a critique. International Journal of Operation & Production Management, 22(3), 289-305. Davis, R. A., & Stading, G. L. (2005). Linking firm performance to the Malcolm Baldrige National Quality Award implementation effort using multiattribute utility theory. Managerial Finance, 31(3), 19-34. Dean, T. J., Brown, R. L., & Bamford, C. E. (1998). Differences in large and small firm responses to environmental context: strategic implications from a comparative analysis of business formations. Strategic Management Journal, 19(8), 709-728. Dess, G. G., & Davis, P. S. (1984). Porter’s (1980) generic strategies as determinants of strategic group membership and organizational performance. Academy of Management Journal, 27(3), 467-488. Dow, D. (1999). Exploding the myth: Do all quality management practice contribute to superior quality performance?. Production and Operations Management, 8(1), 1-27. Evans, J. R., & Lindsay, M. W. (1993). The management and control of quality. The United States of America: West publishing company. October 16-17, 2009 Cambridge University, UK 19 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Feng, J., Prajogo, D. I., Tan, K. C., & Sohal, A. S. (2006), The impact of TQM practices on performance, a comparative study between Australian and Singaporean organizations. European Journal of Innovation Management, 9(3), 269-278. Geringer, J. M., Tallman, S., & Olsen, D. M. (2000). Product and international diversification among Japanese multinational firms. Strategic Management Journal, 21(1), 51-80. Hair, J. F., Black, W. C., Babin, B. J. Anderson, R. E., & Tatham, R. L. (2006). Multivariate data analysis(6 th ed.). New Jersey, NJ: Prentice Hall. Helms, M. M., Dibrell, C., & Wright, P. (1997). Competitive strategies and business performance: evidence from the adhesives and sealants industry. Management Decision, 35(9), 689-703). History of Lampang Ceramics Industry (2002). Lampang Ceramics Association, Lampang, Thailand. Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2005). Strategic Management, South-Western, The United States of America: part of the Thomson Corporation. Hoskisson, R. E., Johnson, R. A., & Moesel, D. D. (1994). Corporate divestiture intensity in restructuring firms: effects of governance, strategy, and performance. Academy of Management Journal, 37(5), 1207-1251. International Quality Study (1993), Best Practices Report – an Analysis of Management Practices That Impact Performance, New York, NY: American Quality Foundation and Ernst & Young Juran, J. M. (1989). Juran on leadership for quality, an executive handbook, New York, NY: Free Press. Keller, R. T. (2004). A resource-based study of new product development: predicting five-year later commercial success and speed to market. International Journal of Innovation Management, 8(3), 243-260. Kotha, S., & Nair, A. (1995). Strategy and environment as determinants of performance: evidence from the Japanese machine tool industry. Strategic Management Journal, 16(7), 497-518. Kotha, S., & Vadlamani, B. L. (1995). Research notes and communications, assessing generic strategies: an empirical investigation of two competing typologies in discrete manufacturing industries. Strategic Management Journal, 16(1), 75-83. Lau, M. S. R., Zhao, X., & Xiao, M. (2004). Assessing quality management in China with MBNQA criteria. International Journal of Quality & Reliability Management, 21(7), 699713. October 16-17, 2009 Cambridge University, UK 20 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Li, M., & Simerly, R. Y. (1998). The moderating effect of environmental dynamism on the ownership and performance relationship. Strategic Management Journal, 19(2), 169-179. Lin, B., Chen, C., & Wu, H. (2006). Patent portfolio diversity, technology strategy, and firm value. IEEE Transactions on engineering Management, 53(1), 17-26. Miller, D. (1988). Relating Porter’s business strategies to environment and structure: analysis and performance implications. Academy of Management Journal, 31(2), 280-308. nd Nunnally, J. C. (1978). Psychometric theory (2 ed.). New York, NY: McGraw-Hill. OSLO Manual: The measurement of scientific and technological activities. (1996). Organization for Economic Co-operation and Development, European Commission, accessed February 9, 2006, [available at http://www.org/dataoecd/35/61/2367580.pdf] Pannirselvam, P. G., & Ferguson, A. L. (2001). A study of the relationships between the Baldrige categories. The International Journal of Quality & Reliability Management, 18(1), 14-34. Pearce, J. W. & Carland, J. W. (1996). Intrapreneurship and innovation in manufacturing firms: An empirical study of performance implications. Academy of Entrepreneurship Journal, 1(2), 87-96. Peng, M. W. (2006). Global Strategy, South-Western, The United States of America: part of the Thomson Corporation. Petrick, J. A., & Furr, D. S. (1995). Total quality in managing human resources: St. Lucie Press. Porter, M. E. (1980). Competitive strategy, New York, NY: Free Press. Powell, T. C. (1995). Total quality management as competitive advantage: A review and empirical study. Strategic Management Journal, 16(1), 15-37. Prajogo, D. I., & Sohal, A. S. (2003). The relationship between TQM practices, quality performance, and innovation performance. The International Journal of Quality & Reliability Management, 20(8/9), 901-918. Prajogo, D. I., & Sohal, A. S. (2006). The relationship between organization strategy, total quality management (TQM), and organization performance-the mediating role of TQM. European Journal of Operational Research, 168(1), 35-50. Rahman, S. & Sohal, A. S. (2001). Total quality management practices and business outcome: evidence from small and medium enterprises in Western Australia. Total Quality Management, 12(2), 201-210. October 16-17, 2009 Cambridge University, UK 21 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Rangkavipa, C. (1989). A way to put the investment of ceramic industry in Northern, Thailand. Master dissertation, Chiangmai University. Chiangmai, Thailand. Samson, D., & Terziovski, M. (1999). The relationship between total quality management practices and operational performance. Journal of Operations Management, 17, 393-409. Sher, P. J., & Yang, P. Y. (2005). The effects of innovative capabilities and R&D clustering on firm performance: the evidence of Taiwan’s semiconductor industry. Technovation, 25, 33-43. Sila, I. & Ebrahimpour, M. (2005). Critical linkages among TQM factors and business results. International Journal of Operations & Production Management, 25(11), 1123-1155. Singhagum, J. (1996). The problem of the ceramic industry development in Lampang province, Thailand, Master dissertation, Yonok College, Lampang, Thailand. Sulaiman, M. (1993). Corporate strategy and structure of high performing manufacturing firms. Malaysian Management Review, 28, 1-8. Thornhill, S. (2005). Knowledge, innovation and firm performance in high- and low-technology regimes. Journal of Business Venturing, 21(5), 687-703. Vazquez, R., Santos, M. L., & Alvarez, L. I. (2001). Market orientation, innovation and competitive strategies in industrial firms. Journal of Strategic Marketing, 9(1), 69-90. Voss, C., & Blackmon, K. (1996). The impact of national and parent company origin on worldclass manufacturing Findings from Britain and Germany. International Journal of Operations & Production, 16(11), 98-109. Vries, H. J. de (2006). Best practice in company standardization. International Journal of IT Standards & Standardization Research, 4(1), 62-85. Walsworth, S., Verma, A. (2007), Globalization, Workplace Practices and Innovation: Recent Evidence from the Canadian Workplace and Employee Survey. Industrial Relations: A Journal of Economy and Society, 46(2), 222-240. Wernerfelt, B. (1984). A resources based view of the firm. Strategic Management Journal, 5, 171-180. Wilson, D. D., & Collier, A. D. (2000), An empirical investigation of the Malcolm Baldrige National Quality Award causal model. Decision Sciences, 31(2), 361-390. Wright R. E.; Palmer, J. C.; & Perkins, D. (2005). Types of product innovations and small business performance in hostile and begin environments. Journal of Small Business and Small Business Strategy, 15(2), 33-44. October 16-17, 2009 Cambridge University, UK 22 9th Global Conference on Business & Economics ISBN : 978-0-9742114-2-7 Yamin, S., Gunasekaran, A., & Mavondo, F. t. (1999). Relationship between generic strategies, competitive advantage and organizational performance: an empirical analysis. Technovation, 19(8), 507-518. Yamin, S., Mavondo, F., Gunasekaran, A., & Sarros, J. C. (1997). A study of competitive strategy, organizational innovation and organizational performance among Australian manufacturing companies. International Journal of Production Economics, 52(1,2), 161172. October 16-17, 2009 Cambridge University, UK 23