Can winners be losers?

The case of the Deming prize for quality and performance among large Japanese manufacturing rms
Anthony L. Iaquinto Nanzan University, Showa-Ku, Nagoya, Japan

Keywords
Japan, Quality management

Introduction
Perhaps no other trend in the last several decades has inuenced the strategic focus of managers as much as the pursuit of quality as a competitive advantage. Among other things, improvements in quality are said to lead to increases in customer satisfaction, decreases in manufacturing costs, as well as greater protability and market share (Garvin, 1984; Mann, 1989). To encourage a greater emphasis on quality among management, both private and government institutions have established quality award competitions, e.g. the Deming Prize in Japan and the Baldrige Award in the USA. Although proponents of these awards contend that winning rms are model enterprises that have gained a competitive advantage over others (cf. Chen, 1989; Gehani, 1993), criticisms of the utility of winning a quality award have been voiced (cf. Harvard Business Review, 1992). By focusing on large Japanese manufacturing rms which won the Deming Prize for quality between 1964 and 1989 this study examined the impact of winning a quality award on subsequent rm performance.

Abstract
Much literature suggests a positive relationship between winning a quality award and subsequent rm performance. However, for the vast majority of the large Japanese manufacturing rms that have won the Deming Prize results in this study indicate a negative association. Results also show that for a minority of these rms there does appear to be a positive relationship between winning and subsequent performance. Two theories, the danger of simplicity and the winner's curse, are utilized to explain these results. Firms that compete for quality awards have a signicant risk of putting undue pressure on organizational resources or focusing too narrowly on winning and neglecting other aspects of their business, thereby leading to performance shortfalls. Signicant experience in TQM/TQC prior to competing for a quality award may moderate these risks. For managers, there should be serious consideration as to whether their companies should compete for a quality award in the hope of improving performance. Instead, they may want to ask if there are any alternative methods for designing and implementing improvements in quality control.

Quality awards and rm performance

Among corporate executives, various reasons have been given as to why they would want their company to win a quality award. Some simply view winning a quality award as a useful public relations or marketing tool (Houston, 1990). Other organizations believe that by winning a quality prize they will have a superior management process in place allowing them to survive economic downturns, shifts in technology , or changes in fashion (Garvin, 1991). As one Japanese company stated:
our goal in winning the Deming Prize was to improve the corporate health and character of the company , to upgrade the quality of its products, and to raise the prot picture (Gabor, 1990, p. 95).

Academics and other contributors have also linked winning a quality award with improvements in rm performance. For example, some champions of quality awards point to the list of Deming Prize winners which includes some of the most successful rms in Japan (e.g. Hitachi, Komatsu, Matsushita, NEC, Nissan Motors, Toyota Motors, and others). Others have claimed to demonstrate an empirical relationship between Deming winners and superior performance (Mann, 1989). For example, Chen (1989) asserts that Deming Prize winners increased annual sales by an average of about 14 per cent, while Japanese industry as an average increased sales by 12 per cent. Chen also contends that the annual prot margin of Deming companies increased by almost 3 per cent, which was higher than Japanese industry average of 1 per cent. Unfortunately , prior studies linking quality awards to rm performance contain a number of limitations. For example, Chens (1989) study does not provide an adequate discussion as to the methodology employed. Therefore it is difficult to discern what controls, if any , were used in their study . Nor is it possible to ascertain whether the differences in the performance gures were statistically signicant or not. Given these limitations, further examinations of the performance implications of winning a quality award appear to be warranted.

Methodology of study
Overview
This study focused on large Japanese manufacturing rms which won the Deming Prize for quality between 1964 and 1989. Large rms, as dened by the Deming Prize Committee, include those public corporations that appear in the rst or second section of the Tokyo Stock Exchange or similarly sized privately held companies. We used 1964 as our starting point since it was the rst year that successful use of TQM/TQC became the prerequisite for capturing the Deming Prize (Business Week, 1991). A list of past Deming Prize winners was obtained from JUSE. A review of The Japan Company Handbook and the Nikkeis Corporate Annual Reports provided information on

Managerial Auditing Journal 14,1/2 [1999] 2835 MCB University Press [ISSN 0268-6902]

In short there is a perception among many practitioners that winning a quality award leads to superior performance (Houston, 1990; Mann, 1989).

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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

each company . Along with performance data, these two books were also utilized to help determine the industry designation for each of the Deming Prize winners. More specically , The Japan Company Handbook and the Nikkeis Corporate Annual Reports listed sales information on each rm broken down by product line. Each Deming winners industry designation was determined by the product line that produced the largest share of each companys sales. We also used the two books noted above to select other large rms with documented sales in each Deming winners industry to be used as controls. For the Deming winners used in this study , the product line that indicated their industry averaged 62 per cent of each companys sales. Among the control rms, an average of 61 per cent of their sales were in the same industry as their respective Deming winner. The complete list of Deming award winners, their industry designations, and a list of each of their competitors were then distributed to two independent judges. This was done to ascertain the accuracy of the industry designations and the list of control rms. One juror was an academic with many years of experience conducting research on Japanese rms. The other judge was an analyst for a regional stock brokerage rm in Nagoya, Japan. Each of these individuals found our list to be quite accurate in terms of the industry designations and the respective competitors for each Deming winner. Minor differences of opinion that existed were discussed at length among the three parties until a consensus was reached. Research revealed that it took a Japanese rm an average of three years of formal competition to win the Deming Prize (Ikezawa, 1981; Inohara, 1990). As such, with t representing the year a particular rm won the Deming Prize, data were collected for the three years (t-2, t-1, and t) that the average Japanese company took to formally compete and win the Deming Prize. These three years will hereafter be called the competition period. We also gathered data for the three years (t+1, t+2, t+3) representing the time after a rm won the Deming Prize, henceforth called the postcompetition period. In sum, a total of six years of data was collected for each Deming Prize winner. A corresponding six years of data was also collected for each of the Deming winners competitors.

addition, a list of other rms in those industries was compiled. In total, data were gathered for 164 rms. This averages to just over ve rms per group. A list of the Deming Prize winners used in this study , the year they received the Deming Prize, and their industry designations can be seen in Table I.

Measures Firm performance

This study included two measures of rm performance. First, as a measure of protability we incorporated return on sales (ROS), dened as operating income divided by total sales. ROS is a common measure used in many studies and has been shown to be highly correlated with other performance measures (e.g. ROA, ROE, ROI). Our measure of ROS was calculated in the following manner. First, ROS was computed for each rm for each of the six years in which data were collected. Second, an industry group average (mean) was calculated for each of the 31 groups of rms for each of the six years. To get the industry adjusted performance gure for each rm for each year, the industry average was subtracted from each rms performance gure. To calculate the industry adjusted ROS for the competition and the post-competition periods we computed the three-year average of the industry adjusted gures for (t-2, t-1, and t) and (t+1, t+2, and t+3) respectively . It has been noted that Japanese rms rarely saw protability as their main strategic objective. Instead, Japanese rms have tended to be more concerned with other performance indicators, e.g. market share. Therefore (as detailed below) we included a measure of market share as another indicator of rm performance. Our measure of market share for each rm was calculated in the following manner. First, we determined the industry for each Deming winner and their competitors (see above). We then calculated an industry sales gure for each rm for each of the six years of data. This was done for each year by calculating the percentage of sales in that industry a rms total sales. Market share for each year was then calculated by dividing each rms industry sales gure by the sum of the industry sales gure for the group in which that rm was located. To calculate the market share for the competition and post-competition periods we computed the three-year average market share for (t-2, t-1, and t) and (t+1, t+2, and t+3) respectively .

Sample
A total of 43 large manufacturing corporations won the Deming Prize from 1964 to 1989. Data were unavailable for 12 of these rms, and as such, were not included in the analyses. This left us with a sample of 31 Deming Prize winners. As outlined above, these rms were assigned an industry classication. In

Deming winners
This variable was represented by a dichotomous variable (0 = non-winning rms, 1 = winning rms).

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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

Control variables
Organizational performance is often constrained by a variety of factors, such as past performance, organizational age, and size (Hannan and Freeman, 1977). Therefore, three control variables were included in the model for each rm: 1 past performance (the prior periods threeyear average adjusted ROS or market share), 2 age (years since founding); and 3 size (total sales). Our sample contained a variety of six-year periods stretching from 1964 to 1989, depending on the year a rm won the Deming Prize. As such, simply using age and size was somewhat problematic. For example, rms included in groups centred on winners from the 1960s would generally all be younger than those rms in groups centered on Deming winners from the 1980s. Similarly , given the growth of the Japanese economy during those 25 years, rms included in groups centered on

Deming winners from the 1960s would generally all be smaller than those rms from groups centered on winners from the 1980s even after controlling for ination. To account for this bias, we utilized relative measures of rm age and rm size. To do this we rst calculated an industry group average (mean) for rm age (year t-2 only) and rm size (years t+1, t+2, and t+3). These calculations were done on each of the 31 groups of rms. To get a relative age gure for each rm, the industry average age (year t-2) was subtracted from each rms age (year t-2). To arrive at a relative size gure for each rm, we rst subtracted each rms size gure from the industry average size for each of the three years: t+1, t+2 and t+3. We then calculated the three-year average (t+1, t+2, and t+3) to get a relative size measure.

Initial analysis
Using zero-order correlations we found a strong positive relationship between Deming winners and market share during both the competition and post-competition periods. However, we found no signicant association between winning a Deming award and ROS. In a more explicit test (multiple regression analysis) we analyzed the relationship between winning the Deming Prize and rm performance after incorporating several control variables: past performance, relative rm age, and relative rm size. The results of the multiple regression analyses using industry adjusted ROS during the post-competition period as the dependent variable indicate two signicant coefficients, those for prior ROS (0.4184, p < 0.01) and relative rm size (0.0020, p < 0.05). However, there was no signicant association between the dichotomous variable depicting Deming winners and ROS. The results of the multiple regression analyses using market share during the post-competition period as the dependent variable showed similar results. Specically , only one signicant coefficient, that for prior market share (0.9309, p < 0.01) was shown to be signicantly associated with subsequent market share. The other control variables as well as our dichotomous variable depicting Deming winners indicated no signicant relationship. The rst conclusion that we can draw from our initial ndings is that rms that previously performed well generally continued to do so. Next, the strong positive correlations found in our zero order correlational analysis initially appeared to support those who have argued that a positive relationship exists between winning a quality award and rm

Table I Sample Industry Deming winner Komatsu Toyota Motors Shinko Wire Yanmar Diesel Bridgestone Hino Motors Aisin Seiki Ricoh Pentel Dankyo Seiki Aisin Warner Tokai Rika Sekisui Chemical Kayaba Komatsu Forklift Fuji Xerox Rhythm Watch Yokogawa/Hewitt Packard Japan Steel Works Yasakawa Komatsu Zenoah Nippon Zeon Toyoda Gosei Toyoda Machine Works Nippon Carbon Toyoda Automatic Loom Daihen Aichi Steel Works Asmo Itoki Kosakusho Toto Construction equipment Motor vehicles Steel wires Diesel engines Tires Trucks Auto parts, drive train Optics Pens and pencils Electric components Transmissions Automobile electric parts Building materials Hydraulic equipment Forklifts Copiers Timepieces Measuring instruments Cast and forged steel Heavy electric manufacturing Farm and forestry equipment Synthetic rubber Automobile rubber parts Machine tools Articial graphite electrodes Industrial machinery Transformers Speciality steel Small electric motors Office furniture Ceramic bathroom xtures

Year 1964 1965T 1967 1968 1968 1971T 1972T 1975 1976 1976 1977T 1978T 1979 1980 1980 1980 1982 1982 1983 1984 1984 1985 1985T 1985T 1985 1986T 1987 1987T 1988T 1989 1989
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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

performance. However, regression analysis, controlling for past performance and other factors, failed to support that position.

Additional analysis
A review of our sample revealed that ten out of 31 (32 per cent) of Deming winners in our sample were members of the Toyota keiretsu (industry group). Cusumano (1985) argues that the concept of quality control has had a long history in the Toyota keiretsu going back as far as 1937. He describes Toyota Motors in particular as an innovator in the quality movement, being one of the rst companies to adopt the principle that in-process self-inspection by line workers was the best way to insure against manufacturing defects (Cusumano, 1985). Further, after winning the Deming award in 1965, and unlike other Deming winners such as Nissan, Toyota Motors embarked on a new quality program which attempted to promote similar quality assurance measures for the entire Toyota group (Cusumano, 1985, p. 366). This, and other measures taken by Toyota Motors, encouraged rms within the Toyota group to maintain active quality control programs throughout the 1970s and 1980s (Cusumano, 1985). Their experience and commitment to TQM/TQC may explain the fact that nearly a third of all large manufacturing rms that won the Deming Prize between 1964 and 1990 were members of the Toyota group of companies. Interestingly , secondary sources, as well as on-site interviews, revealed that the other Deming winners in our sample rarely attempted to integrate a TQM/TQC program prior to competing for the Deming Prize. Instead, such companies as Komatsu, Pental, and Fuji Photo, used the Deming Prize criteria as a guide and the award itself as a carrot for implementing a TQM/TQC program (Inohara, 1990). Therefore, we suggest that Deming winning rms from the Toyota group represented companies with signicantly more experience in TQM/TQC on average prior to competing for the Deming Prize than the rest of our sample. Further, based on the assumption that the degree of experience differs in these two subsamples (Deming winners which are part of the Toyota keiretsu and Deming winners which are not) we proceeded to determine whether the relationship between winning a quality award and rm performance differs between these two groups. The results of additional analyses using ROS as the dependent variable and after including the interaction term (Toyota Deming winners) indicated three signicant coefficients, those for prior ROS (0.4186, p < 0.01)

and rm size (0.0020, p < 0.05), as well as Deming winners who were not a member of the Toyota keiretsu (0.0113, p < 0.05). As for market share as the dependent variable, results of additional analyses after including an interaction term (Toyota Deming winners) revealed three signicant coefficients, those for prior market share (0.9393, p < 0.01), as well as those Deming winners who were not a member of the Toyota keiretsu (0.0135, p < 0.05) and Deming winners who were a member of the Toyota keiretsu (0.0241, p < 0.05). In sum, using market share as the dependent variable, our results suggest that among Deming winning companies that were not members of the Toyota group there is a negative relationship between winning and performance. Yet, among winners that belonged to the Toyota group, there is a strong positive association between winning and performance. Our results using ROS as the dependent variable are less conclusive. However, there appears to be a strong negative association between winning and subsequent performance among those rms that were not members of the Toyota keiretsu. A discussion of our results follows.

Winners that were losers

The danger of simplicity
Success has been seen as a function of an organizations ability to identify, cultivate, and exploit distinctive or core competences (Prahalad and Hamel, 1990) that are not easily matched or imitated by their competitors (Hill and Jones, 1992). Often used examples of core or distinctive competences are marketing at Procter & Gamble, manufacturing at Toyota (Cusumano, 1985), and Sonys ability to miniaturize (Prahalad and Hamel, 1990). Therefore, organizational decline is said to be the direct result of rms failure to maintain these competences. Recently , Miller (1993) proposed that the threat to successful organizations is not always due to their failure to sustain their competences. Instead, he argues that another danger to successful rms is in becoming too narrowly focused on one or a few competences at the exclusion of other activities of the organization. Miller points out that most outstanding organizations lapse into decline precisely because they have developed too sharp an edge. They amplify and extend a single strength or function while neglecting most others (Miller, 1993, p. 116). Similarly , critics have complained that the distraction of winning a quality award may cause key executives to lose sight of the marketplace and other activities of their organization that need their

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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

attention (cf. Harvard Business Review, 1992). For example, Florida Power & Light assigned one of two executive vice-presidents to run its Deming campaign full-time (Main, 1991, p. 65). When Corning decided to compete for the Baldrige award, it picked a team of 16 people who worked full time on the application process (Houston, 1990). Managers from FujiXerox, a 1980 Deming winner, described to this author how intensely involved management was in the process of winning the award. During the last six months of the competition period many managers spent the majority of their time devoted almost exclusively to the process of winning. In short, the goal of winning a quality award may become an obsession for a rm and a threat to distract corporate attention away from other critical activities (Miller, 1993). At its worst, the goal of winning may even displace the goal of achieving real quality (Main, 1991).

The winners curse

Besides the danger of simplicity, the winners curse is another theory that could explain why the vast majority of winning rms in our sample show a negative relationship between winning a quality award and rm performance. Much of the work done on the concept of a winners curse can be found in economic theory (cf. Kagel and Levin, 1986). A winners curse occurs when winning rms systematically bid above the actual value of objects and thereby incur losses (Lind and Plott, 1991). The winners curse has been observed in a variety of settings and has been applied to the strategic behavior of successful corporations (Davidson, 1990). As Lind and Plott (1991) concluded in their study , the winners curse is a general phenomenon exhibited by most agents (p. 336). Given that managers are agents (Fama, 1980) it would seem reasonable that the winners curse could be applied to those rms which are bidding to win a quality award. Indeed, an often-stated concern of critics of quality awards is that the enormous costs (nancial, human, etc.) associated with winning outweigh any potential benets (Houston, 1990; Main, 1991). For example, the monetary costs of winning a quality award can be staggering. Florida Power & Light estimated that its costs included $399,000 of direct expenses, $885,000 in fees to Japanese consultants, and $721,000 for trips to Japan in one year alone (Houston, 1990). Perhaps more important, winning a quality award can be overly demanding on a rms human resources. For instance, to complete an application that can reach 1,000 pages, Japanese employees of Deming winning companies complained of the harsh hours, seven-day

work weeks and lack of vacation time during the competition period. In the case of NEC Tohoku, a 1989 Deming winner, the directives, plans, and reports that were needed to satisfy the evaluation committee totalled 244,000 pages (Business Week, 1991). Often, the stress and pressure of competing requires employees to become workaholics and forgo their personal lives which, in turn, has led to some drinking problems, failing health and even suicides (Houston, 1990; Main, 1991). These human costs can have a direct impact on how successful rms are in maintaining TQM/TQC programs after winning a quality award. At Nissan, for example, quality (as well as overall rm performance) declined soon after winning the Deming award in 1960 (Cusumano, 1985). As a former Nissan Executive Vice-President Kanao Kaiichi claims there was internal resistance to continuing the (QC) program; top executives and other employees simply became tired after nearly two years of preparations for the examination They did not make quality control a top priority after 1960 (Cusumano, 1985, p. 371). Besides those above, there are other possible explanations for why a quality award may have an adverse impact on performance. For example, several complaints are heard that both the Deming and Baldrige awards represent a creeping bureaucracy . For example, to win the Deming Prize, most companies must put a huge quality bureaucracy in place (Business Week, 1991). To critics, this quality bureaucracy prevents a rm from being creative and spontaneous, which is often needed in order to generate a healthy amount of innovations. For example, Florida Power & Light ended up with a massive quality bureaucracy and had to dismantle its quality program because of workers complaints of excessive paperwork. In other words, the quality control procedures needed to win a quality award are often seen as too limiting because they are too inexible. These concerns have inuenced a number of companies to forgo competing for the Deming Prize. For example, Canon refuses to enter the competition for the Deming because of its fear that the rigid requirements of the prize would sap the companys creativity . Instead, the rm pieced together its own quality strategy (Main, 1991). This study found a signicant negative relationship between winning a quality award and improvements in rm performance among 70 percent of the winners in our sample. The danger of simplicity and the winners curse are two possible theories that could explain those results. But how does being a member of the Toyota keiretsu moderate the relationship between winning a quality award and rm performance?

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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

Winners that were winners

We suggested above that Deming winning rms from the Toyota group represented companies with signicantly more experience in TQM/TQC on average prior to competing for the Deming Prize than the rest of our sample. Further, we suggested that the degree of experience in TQM could play a moderating role in the relationship between winning a quality award and rm performance as discussed above. For example, researchers have found that while the phenomenon of the winners curse rarely dissipates, it can diminish in size (Lind and Plott, 1991). In one study , Hanson and Lott (1991) found that reducing the uncertainty over an items value can decrease the average price paid by the winners. Therefore, the reduction of uncertainty appears to have a moderating effect on the size of the winners curse. Further, Lind and Plott (1991) found that in winners curse situations, experience is related to the degree of uncertainty reduction. Specically , the more experience a rm has with the item that it is bidding for, the more efficient and effective those rms are in providing the winning bid. It would seem reasonable to suggest that the degree of experience a rm has with TQM/TQC, the more efficient and effective they could be in bidding for a quality award. Further, it is also reasonable to argue that rms with more experience in TQM/TQC prior to competing for a quality award will not have to focus as exclusively on winning to the degree that an inexperienced rm would. Therefore, experience would also have a moderating effect on the dangers of simplicity . In sum, by moderating the effects of both the dangers of simplicity and the winners curse, experience would have a moderating inuence on the relationship between winning a quality award and rm performance. More specically , the more experience the rm in TQM/TQC prior to competing for a quality award, the less likely they will be adversely affected by the dangers of simplicity and the winners curse and thus the more likely they will experience improvements in performance after winning a quality award. Conversely , the less experience the rm in TQM/TQC has prior to competing for a quality award the more likely is it that they will be adversely affected by the dangers of simplicity and the winners curse and thus the more likely that these rms will experience performance shortfalls after winning a quality award.

Limitations of study
Proponents of quality awards have argued that implementing TQM/TQC programs should be seen as investments rather than costs and should be evaluated over the long term. As such, any analysis of the performance implications of winning a quality award must also utilize a long-term perspective, any study focussing on short- or medium-term implications of winning a quality award are not justied. Yet, however intuitively appealing those arguments are, there is no empirical analysis that can support their claim. Further, there is anecdotal information to suggest that the benets, if any , gained by winning a quality award would be of a shortterm nature. For example, it is possible that Deming winners may become complacent and slacken the pace of continuous improvement after the incentive to win is over. As stated earlier, the preparations needed to win a quality award can exact a heavy toll on a rms human capital. It has been suggested that at least for some rms, this burden causes managers and employees to lose their enthusiasm for quality control once they have won an award (Cusumano, 1985). JUSE, itself, was concerned about the potential that winning rms would lose their enthusiasm for quality and not make it a top priority after winning. Therefore, JUSE established the QC award. Open only to prior winners of the Deming Prize, it was seen as a tool to keep those rms from slackening on their quality initiatives.

Implications for managers

For managers the question is simple does meeting the standards of a quality award improve rm performance? The results of the present study seem to indicate that for the average rm, the answer is no. Therefore, a CEO must seriously consider whether he or she should put their company under the stress and strains of competing for a quality award in the hope of improving performance. Instead, they may want to ask if there are any alternative methods for designing and implementing improvements in quality control. Interestingly , many companies have pushed quality award competitions as a means to improve overall corporate performance. For example, after winning a Baldrige Award in 1988, Motorola told 3,600 of its largest suppliers that they too must be prepared to win or risk losing a customer (Main, 1990). At one time, the president of Westinghouse informed all 90 corporate divisions to compete for the George Westinghouse Total Quality Award, an internal prize modeled on the Baldrige, or

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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

explain to him in person why they cannot (Main, 1990). There is growing fear among critics of quality awards that executives mistake winning an award for a cure-all, and that the award does not guarantee anything except the intense pressure that companies put themselves through to successfully compete for it (Main, 1990). Deming himself had been critical of the Baldrige award guidelines: some of the recommendations...will do incalculable damage to American industry . No one could measure nor imagine the destruction to our economy that will come from such misguided efforts (Deming, 1991).

Conclusions
It should be noted that this study is not an assessment of TQM or TQC. Rather, it sought to determine if by winning the Deming Prize, these rms have developed, at least by inference, a competitive advantage over other rms within their industry . The results of the present study indicate that for many rms, there is a negative relationship between winning a quality award and rm performance and that this negative relationship may be the result of the dangers of simplicity and the winners curse. We have also argued that these two forces could be moderated by experience in TQM/TQC. More specically , the more experience a rm has in TQM/TQC prior to competing for a quality award the less likely that they will suffer from the adverse effects of the dangers of simplicity and the winners curse and as such, suffer from poor performance. From the results in this study an executive should ask two questions prior to committing their organization to the arduous task of competing for a quality award. First, does our organization have sufficient experience in TQM/TQC to compete successfully for a quality award without putting undue pressure on organizational resources or risking the chance that we will focus too narrowly on winning and neglect other aspects of our business? Second, is there an alternative to competing for a quality award that a company could use to develop and maintain a sound quality management strategy?

References
Business Week (1991), Going for the glory, pp. 60-61. Chen, M. (1989), Japans protable prize, Incentive, September, pp. 82-6. Cusumano, M. (1985), The Japanese Automobile Industry, The Harvard University Press, Cambridge, MA. Davidson, K.M. (1990), The winners curse: a caution for top rms, The Journal of Business Strategy, May/June, pp. 43-7.

Deming, W .E. (1991), Comments on the 1991 application guidelines Malcolm Baldrige National Quality Award, Personal letter. Fama, E.F. (1980), Agency problems and the theory of the rm, Journal of Political Economy, pp. 288-307. Gabor, A. (1990), The Man Who Discovered Quality: How W. Edward Deming Brought the Quality Revolution to America, Random House, New York, NY. Garvin, D.A. (1984), What does product quality really mean? Sloan Management Review, Vol. 26, p. 37. Garvin, D.A. (1991), How the Baldrige award really works, Harvard Business Review, November-December, pp. 80-93. Gehani, R.R. (1993), Quality value-chain: a metasynthesis of frontiers of quality movement, Academy of Management Executive, Vol. 7 No. 2, pp. 29-42. Hannan, M. and Freeman, J. (1977), The population ecology of organizations, American Journal of Sociology, Vol. 82, pp. 929-64. Hanson, R.G. and Lott, J.R. Jr. (1991), The winners curse and public information in common value auctions: comment, American Economic Review, Vol. 81, pp. 347-61. Harvard Business Review (1992), January-February . Hill, C.W .L. and Jones, G. (1992), Strategic Management: An Integrated Approach, HoughtonMifflin, Boston, MA. Houston, P . (1990), Dubious achievement, Business Month, July , pp. 40-44. Ikezawa, T. (1981), Eigyo-man no QC no Susumekata (How to promote QC in the sales department), JUSE, Tokyo. Inohara, H. (1990), Human Resource Development in Japanese Companies, Asian Productivity Organization, Tokyo. Kagel, J.H. and Levin, D. (1986), The winners curse and public information in common value actions, American Economic Review, Vol. 76, pp. 894-920. Lind, B. and Plott, C.R. (1991), The winners curse: experiments with buyers and with sellers, The American Economic Review, Vol. 81 No. 1, pp. 335-46. Main, J. (1990), How to win the Baldrige award, Fortune, April 23, pp. 101-16. Main, J. (1991), Is the Baldrige overblown?, Fortune, July 1, pp. 62-5. Mann, N. (1989), The Keys to Success, Prestwick Press, New York, NY. Miller, D. (1993), The architecture of simplicity, The Academy of Management Review, Vol. 18 No. 1, pp. 116-38. Prahalad, C.K. and Hamel, G. (1990), The core competence of the corporation, Harvard Business Review, May-June, pp. 79-91.

Further reading
Barrier, M. (1992), Small rms put quality rst, Nations Business, pp. 22-32. Blackburn, R. and Rosen, B. (1993), Total quality and human resources management: lessons

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Anthony L. Iaquinto Can winners be losers? The case of the Deming Prize for quality and performance among large Japanese manufacturing rms Managerial Auditing Journal 14,1/2 [1999] 2835

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