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Industrial Management & Data Systems
TQM and customer satisfaction in Malaysia's service sector

Wen-Yi Sit Keng-Boon Ooi Binshan Lin Alain Yee-Loong Chong
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Wen-Yi Sit Keng-Boon Ooi Binshan Lin Alain Yee-Loong Chong, (2009),"TQM and customer satisfaction in
Malaysia's service sector", Industrial Management & Data Systems, Vol. 109 Iss 7 pp. 957 - 975
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TQM and CS
TQM and customer satisfaction in Malaysia’s
in Malaysia’s service sector service sector
Wen-Yi Sit
Faculty of Management, Multimedia University, Cyberjaya, Malaysia 957
Keng-Boon Ooi
Faculty of Business and Finance, University Tunku Abdul Rahman, Received 4 January 2009
Revised 11 April 2009
Kampar, Malaysia Accepted 24 April 2009
Binshan Lin
College of Business Administration, Louisiana State University in Shreveport,

Shreveport, Louisiana, USA, and
Alain Yee-Loong Chong
Faculty of Computing and IT, INTI University College, Putra Nilai, Malaysia
Abstract
Purpose – The purpose of this paper is to investigate the relationship between total quality
management (TQM) practices and customer satisfaction (CS) as perceived by managers’ perspectives
in Malaysia’s service sector.
Design/methodology/approach – The data are collected from 140 managers of Malaysia’s service
firms. The structural analysis is conducted to test the hypotheses in this paper.
Findings – Results reveal that leadership, customer focus, information and analysis, and human
resource focus are found to have significant and positive association with CS as perceived by
Malaysian service sector’s managers.
Research limitations/implications – There are a few limitations for this paper. First, the time
sequence of the relationships between the variables could not be determined since cross-sectional data
are used. Second, this paper is confined only to service industry. Lastly, the paper is only focused on
managers instead of study employees at different hierarchical levels.
Practical implications – This paper serves as a valuable guideline for top management to review
their TQM programs and conduct assessments on a regular basis in order to facilitate CS within their
organizations.
Originality/value – This paper shows the importance of TQM in contributing to CS within the
service context which is not studied in many past researches. This paper only looks at TQM practices
from the Malaysian service industries. As Malaysia is a developing country which is moving towards
the service sector, this paper will help many organizations that are in other fast growing developing
nations which are moving towards the service industry.
Keywords Total quality management, Managers, Customer satisfaction, Services, Malaysia
Paper type Research paper
Introduction Industrial Management & Data

In recent decades, total quality management (TQM) has become the buzz word in the Systems
Vol. 109 No. 7, 2009
management practice. Organizations that wanted to be on the cutting edge of business pp. 957-975
optimization, process improvement, waste reduction, and operations reengineering, are q Emerald Group Publishing Limited
0263-5577
jumping on the bandwagon to grasp the beam of TQM (Dayton, 2003). Thus, numerous DOI 10.1108/02635570910982300
IMDS scholars and researchers have widely classified TQM as the source of sustainable
109,7 competitive advantage for business organizations in the effort to fortify their industry
stance (Terziovski, 2006). The ultimate contributions of successful TQM
implementation includes attaining excellence, creating a right first-time attitude,
acquiring effective and efficient business solutions, achieving zero defects, delighting
customers and suppliers, etc. (Mohanty and Behera, 1996). These improved
958 performances will undoubtedly result in higher productivity and profitability. Owing
to such significant contributions, TQM has become a world phenomenon and companies
around the globe are pervasively clamoring for the change of conventional management
practices into a new paradigm – TQM implementation (Chen, 1997).
Significant contributions towards the design, development, and application of the
TQM concept have been made by numerous researchers. Their surveys and
documented findings have indeed, led to a substantial increase in the quality
consciousness by organizations over the past decade (Lau and Idris, 2001). Such
voluminous TQM literature was mainly sought to examine the relationship between
TQM and organizational performance (Montes and Jover, 2004). However, the
relationship between TQM and customer satisfaction (CS) has been neglected in
general in Malaysia’s services industry in particular. The service sector represent
about 53.4 percent of Malaysia’s gross domestic product and is a very vital component
of its economy (Ministry of International Trade and Industry, 2007). As a consequence,
studying the linkage between TQM and CS is necessary as it provides a theoretical as
well as a practical platform to the service organizations in the efforts to gain
sustainable competitive advantage. Thus, our interest is in finding out the association
between the multidimensionality of TQM and CS in the service industry and more
precisely, the Malaysian services industry.
Literature review and hypotheses development

Customer satisfaction
CS can be defined in various ways. According to Kotler et al. (1996), satisfaction is “the
level of a person’s felt state resulting from comparing a product’s perceived
performance (or outcome) in relation to the person’s expectations.” In brief, satisfaction
level simply is a function of the difference between perceived performance and
expectation (Stahl, 1999).
In the contemporary global economy and highly competitive business environment,
it is fatal for a business organization to be non-customer oriented (Dimitriades, 2006).
In fact, only those customer-centered organizations that can deliver superior value to
their customers will survive in the cut-throat business arena. To yield highly satisfied
and loyal customers, organizations throughout the world are striving to produce
products and services of superior quality. For decades, CS is considered to be the
key success factors for every profit-oriented organization as it affects companies’
market share and customer retention. In addition, satisfied customers tend to be less
influenced by competitors, less price sensitive, and stay loyal longer
(Dimitriades, 2006).
Key practices of TQM

Brah et al. (2000) identify and empirically validate critical areas of TQM based on the
perceptions and experiences of a range of total quality practitioners as the basis to
analyze the association between TQM and business performance on the Singapore’s TQM and CS
services industry. They found the critical success factors of TQM implementation were in Malaysia’s
top management support, customer focus (CF), employee involvement, employee
training, employee empowerment, supplier quality management, process improvement, service sector
service design, quality improvement rewards, benchmarking and cleanliness, and
organization.
Dayton (2003) performed an empirical study to identify the critical success factors in 959
TQM systems in US corporations. He found ten critical success factors of TQM,
namely people and customer management, supplier partnerships, communication of
improvement information, CS orientation, external interface management, strategic
quality management, teamwork structures for improvement, operational quality
planning, quality improvement measurement systems, and corporate quality culture.
These factors were derived from the Malcolm Baldrige National Quality Award
(MBNQA) and deduced from the model of Black and Porter (1996). It is not surprising
that the elements of strategic quality management (i.e. visible commitment and support
of top management) and corporate quality culture received the biggest coverage and
were ranked as the most important TQM factors in this survey literature. Motwani
(2001) further enumerated that key practices such as top management commitment,
quality measurement and benchmarking, process management (PM), product design,
employee training and empowerment, supplier quality management, and customer
involvement and satisfaction were essential factors and relevant to organizational
performance from a TQM perspective.
Through the review of the TQM literatures, six constructs of TQM practices,
namely leadership (LD), PM, human resource focus (HR), CF, information analysis and
knowledge management, and strategic planning (SP) were selected to represent the
core of TQM practices in this study for the main reason that these practices have been
well-accepted by quality award models (i.e. MBNQA and European Excellence Model
and Quality Award) as well as some renowned scholars such as Badri et al. (1995),
Saraph et al. (1989), Flynn et al. (1994), and Ahire et al. (1996).
TQM practices links with CS

Leadership
LD can be defined as the process of influencing others towards achieving some kind of
desired outcome (de Jong and den Hartog, 2007) and it is one of the essential elements
of TQM (Fečiková, 2004; Soltani et al., 2008). According to González and Guillén (2002),
the achievement of this principle depends much on the commitment of the top
management to allocate resources and encourage actions (i.e. deployment of
information-gathering devices, encourage the use of analytical tools that allow
customer expectations to be transformed into product specifications and process
standards, etc.). In an empirical study, Pannirselvam and Ferguson (2001) investigated
the relationships between the Baldrige categories in relation to TQM philosophy. The
results from this research signified that LD was significantly (either directly or
indirectly) affected CS. Brookshaw and Terziovski (1997) further illuminated that
effective LD in TQM is a requirement to earn customer trust. Thus, the following
hypothesis was proposed:
H1. LD has a significantly positive association with CS.
IMDS Strategic planning
109,7 SP can be defined as the process managers use to formulate and implement strategies
for providing the best value to the stakeholders and achieve the stipulated goals of the
organization (Bounds et al., 1994). Ideally, it involves the mapping of long- and
short-term organizational vision/mission (Tarı́, 2005).
Particularly, there is lack of empirical studies that examines the effects of
960 organization’s vision on CS. Indeed, a significant casual link is found between
organization’s vision and CS, as well as employee satisfaction (Kantabutra, 2008;
Kantabutra and Avery, 2007). Both Kantabutra (2008) and Kantabutra and Avery (2007)
also studied the effects of vision on customer and staff satisfaction, but the former was
focused on the Australian settings while the latter was applied in the context of Thai
retail stores. Generally, the results of both studies revealed a significant association
between overall customer and staff satisfaction, and stores with a vision. In the Thai
settings, the vision attributes, communication, empowerment, motivation, and employee

satisfaction were indirectly predicted enhanced CS. Ironically, the variables of vision
attributes, communication and motivation rendered no significant effect in Australian
retailers, only empowerment and staff personal factors were directly predicted enhanced
CS. Thus, the following hypothesis was proposed:
H2. SP has a significantly positive association with CS.
Customer focus
CF is referred as the degree to which an organization continuously satisfies customer
requirements and expectations (Zhang, 2000) and it is considered to be one of the basic
building blocks of TQM (Bank, 2000). In the highly competitive business environment,
one of the most vociferous pressures on management in all types of organization is to
focus on customer needs (Piercy, 1995). The key to quality management is maintaining a
close relationship with the customers, so that customers’ needs can be fully understood
and those needs are being met can be received (Zhang, 2000; Li et al., 2006). In the efforts
to pursuit CF, information about customers’ needs and wants, complaints, level of
satisfaction, etc. are gathered and analyzed (Lagrosen, 2001; Zhang, 2000; Phusavat et al.,
2009). According to the review results from Hackman and Wageman (1995), obtaining
information about customer is one of the most frequently used TQM implementation
practices.
In the contemporary global economy and turbulent market environment, it is vital for
organizations to achieve high levels of CS. Only those firms who are able to satisfy
customers’ needs and requirements are able to survive and compete effectively in
the cutthroat business playing field. To be successful, firms should recognize the need to
put customer first in every decision making or perhaps, adopt a customer-focus or
customer-centered culture. Thus, the following hypothesis is formulated:
H3. CF has a significantly positive association with CS.
Process management[1]
A process is a systematic approach for converting inputs into outputs; it is the way in
which all the resources of an organization are used in an effective and efficient manner
to achieve its goals (Zairi, 1997). A relatively new area of such improvements is
“business process management (BPM)” (Elzinga et al., 1995, p. 119). Since business
processes are considered to be the horizontal linkages between key activities that TQM and CS
impact the customer (Zairi, 1997), managing these “end-to-end” processes should be a in Malaysia’s
continuing effort if the companies are to meet customers’ specific needs and
requirements. Process capabilities and implementation determine critical aspects of the service sector
customer encounter such as speed, accuracy, courtesy, and, etc. which in due course,
determine CS (Maddern et al., 2007). In an empirical study, Kumar et al. (2008)
systematically investigated the linkages between BPM and CS. The researchers also 961
challenged the dominance of the customer contact perspectives on service processes
and had proposed a more systemic focus on the totality of service design. The results
revealed that the significance of BPM as a critical factor in driving CS.
Pritchard and Armistead (1999) have conducted a survey and case study research to
understand the application of BPM in European companies. The study was drawn on a
postal survey conducted with quality directors and business process managers in
organizations which are the members of the European Foundation for Quality
Management and case studies in a number of organizations regarded as being leaders
in the adoption of BPM. It is not surprising that the findings endorsed BPM as a means
to achieving business excellence (i.e. improved relationship with customers, better
cross-functional working, and a change in organizational culture). Eventually, CS is
established as well. The ultimate goal of such business excellences will undoubtedly,
result in CS. Much research has shown that effective PM, especially BPM has a positive
effect on CS. Thus, the following hypothesis was proposed:
H4. PM has a significantly positive association with CS.
Information and analysis

This TQM principle covers a wide range of subjects pertaining to information and
knowledge management, and measurement and analysis of organizational
performance (Rampersad, 2005; Ju et al., 2006). Concurrent competitive challenges
induced by globalization, liberalization, and proliferation in information technology
have forced companies to focus on managing customer relationships, and in particular
CS (Stefanou et al., 2003). Thus, fulfilling customer needs and expectations are
considered to be the baseline for any kind of businesses. When customers’ needs and
expectations are met, satisfaction is established.
Benchmarking is the process of comparing performance information, both
internally and externally and measuring an organization’s operations or its internal
processes against those of a best-in-class performer from inside or outside its industry
(Goetsch and Davis, 1997; Chang, 2006). The study of Min et al. (2002) highlighted the
usefulness of dynamic benchmarking for continuous service improvements and
establishment of CS, especially in the hospitality context (i.e. hotel industry). According
to the researchers, CS is deemed to be the most important strategic weapons of
best-practices hotel organizations. Nevertheless, without gaining the knowledge of a
hotel’s competitive position in the changing marketplace and realizing the opportunity
of continuous service improvements, hotel organizations cannot achieve total CS.
Therefore, the following hypothesis was proposed:
H5. Information and analysis (IA) has a significantly positive association with CS.
IMDS Human resource focus
109,7 Human resource management (HRM) can be defined as “the policies and practices one
needs to carry out the ‘people’ or human resource aspects of a management position
including recruiting, screening, training, rewarding and appraisals” (Dessler, 2000,
p. 678). Yang (2006) systematically studied the impact of HRM practices on the
implementation of TQM within the high-technology firms and the empirical results of
962 the study found that HRM practices can have significant effects on CS. For many years,
CS has been the ultimate goal of every business organizations as it can lead to
increased revenue and profit (Kotler et al., 1996). Thus, Yang (2006) justified that a
company must design and implement systems of managing CS, and that company
depends entirely on employees to implement and maintain such systems.
Ott and van Dijk (2005) investigated the effects of HRM on client satisfaction in
the nursing and care industry. Eight HRM activities were developed and measured in the
study, namely personal development plan, job-related training, annual performance

review, employee involvement, protocol for labor-shortage, predictable work schedules,
transparent management style, and supportive management style. Conversely,
employee satisfaction was correlated primarily with the management style of the unit
manager, and to a lesser degree affected by performance reviews and predictable work
schedules. In the empirical study of the relationship between employee attitudes, CS, and
departmental performance, Adsit et al. (1996) found that the dimensions of employee
attitudes, namely team participation and attention to performance evaluation were
positively related to CS. Based on the above comprehensive review of the association
between HRM and CS, the following hypothesis was proposed:
H6. HR has a significantly positive association with CS.
Research framework
The relationship between the six practices of TQM and CS is shown in Figure 1. This
research framework was formulated and derived from the hypothesis discussed above.
Referring to the research framework, the six TQM practices are independent variables
and the construct of CS is the dependent variable. This study will focus on the
relationship of each TQM practices to CS.
TQM constructs
H1
Leadership
H2
Human resource focus
H3 Customer
Process management satisfaction
H4
Customer focus
H5
Strategic planning
H6
Information & analysis
Figure 1.
Research framework
Research methodology TQM and CS
In this section, we discuss sample and data collection procedures and operational in Malaysia’s
measures of variables used in the study as well as the statistical tests used to evaluate
the multidimensionality of TQM practices and its relationship with CS. service sector
Sampling procedures
The target population of this study was managers from the service organizations that 963
practice TQM in their operations. These TQM implementation firms were drawn from
the list of Federation of Malaysian Manufacturers (FMM) Directory (2007). From this
directory, it was determined which service firms had implemented TQM. FMM is the
largest economic organization in Malaysia, representing over 2000 manufacturing and
industrial service companies of different sizes (FMM Directory, 2007). Given the
stringent rules that govern the full membership of FMM, a total of 47 percent of the 2,135
member organizations have been granted ISO certification (i.e. a certification that can
certified the adoption of TQM) (FMM Directory, 2007). Therefore, the selected sample is
considered to be a valid representation of the population because FMM is a
well-established and renowned representative of the manufacturing and service
industries for over 38 years. In this study, the banking and finance companies, higher
learning institutions, insurance companies, consulting service companies, hotels,
private, and public utility service organizations, courier service companies and other
related organizations were purposively targeted.
The unit of analysis for this study was the managers who possessed adequate
knowledge of their organizational practices pertaining to quality management while had
great understanding about the level of CS in their organizations. In fact, a number of
researchers also had selected this sample group (i.e. managers) as their target population
in relation to the empirical study of TQM (Samat et al., 2006; Terziovski, 2006;
Tavana et al., 2003; Vermeulen, 1996). Tavana et al. (2003) postulated that a commitment
to quality management was primarily initiated by the top management, and
departmental managers were usually more familiar with the basic principles and
terminology of quality management as compared to other levels of employees
(i.e. low-level management). Thus, this group of population was chosen as the target for
this study.
The empirical data were collected using a questionnaire survey. A random sample
of 450 managers was selected from the service organizations which have been ISO
9001:2000 certified. Only one site per organization was included in the sample. Of the
450 questionnaires originally distributed, 150 were returned with answers. This
constituted an overall response rate of 33.33 percent. Nevertheless, ten of the returned
questionnaires were not usable. This reduced the sample size by < 2 percent, leaving
an actual total sample size of 140.
Variable measurements
Independent variables: TQM practices
This measure is based on the six dimensions of TQM developed by Zhang (2000), Lau
and Idris (2001). The six dimensions namely LD, CF, SP, information sharing, PM, and
HR. Each of these TQM categories consists of five statements or items. Thus, a total of
30 statements were developed. Sample items include “Top management strongly
encourages employee involvement in quality management and improvement
IMDS activities” (LD), “Our organization has a written statement of strategy covering all
109,7 business operations which is clearly articulated and agreed by our senior manager”
(SP), “Our organization collects extensive complaint information from customers” (CF),
“Employees are encouraged to develop new and innovative ways for better
performance” (PM), and “Availability of key performance figures for analysis and
decision making” (information sharing). Respondents to these items were on a
964 five-point Likert format ranged from 1, strongly disagree to 5, strongly agree was used
to measure all the statements.
Dependent variable: CS
Similar to TQM, the measures of CS were derived and adapted from numerous existing
studies (Dimitriades, 2006; Høst and Knie-Andersen, 2004; Levesque and McDougall,
1996). Five statements were developed under this construct. Respondents
(i.e. managers) were asked to indicate their opinions about the CS level in their
organizations based on five-point Likert scale (1, strongly disagree; 2, disagree; 3,
neutral; 4, agree; 5, strongly agree). Some of the examples of the statements that
measured CS are as follows: “Customer satisfaction is an everyday priority in my
organization,” “Customers are satisfied with my organization’s products/services,” and
“My organization’s customers feel that we strive to satisfy.”
Statistical analysis
The research framework shown in Figure 1 was analyzed by using structural equation
modeling (SEM), supported by analysis of moment structures 16.0, software. Many
scholars as well as researchers have proposed a two-stage model-building process for
conducting structure equation modeling (Lin and Lee, 2004, 2005; Hair et al., 1998), in
which the confirmatory factor models were tested before testing the structural model.
The confirmatory factor models identify how hypothetical factors are measured in
terms of the observed variables such as LD, SP, IA, CF, PM, and human resource.
Moreover, the structural models identify causal associations among the latent
variables (Lin and Lee, 2004, 2005). Hair et al., (1992, p. 10) as cited by Forza and
Filippini (1998) state that in order to use this method, “an adequate sample is between
100 and 200 observations; however samples with a number of observations between 50
and 400 are also acceptable.” Thus, the sample size of the existing study (n ¼ 140)
meets the minimum requirement that 100 or more observations are desirable to
examine a SEM. This study is engaged to illustrate the causal effects and amount of
unexplained variance (Lin and Lee, 2004).
Analyses of data and results

Results of the survey
Profiles of respondents. From the age profile of the respondents, 1.4 percent of them
were between 21 and 25 years old, 2.9 percent were between 26 and 30 years old,
17.9 percent were between 31 and 35 years old and the remaining 77.6 percent were
aged over 36 years old. From the age group results, the population of managers in these
service organizations was considered middle-aged or older. A total of 54,134 (about
90 percent) had diploma level qualification and above, with 86 (61.4 percent) of them
were degree holders. The position held by the respondents who represented these
service organizations (over 80 percent) held positions either in the marketing, human
resources, finance or administration. Only 11.4 percent of the respondents were senior TQM and CS
managers (i.e. general managers or managing directors). Out of all the respondents, in Malaysia’s
52.5 percent have worked more than five years in their current organizations.
With regard to the size of the organizations, 50.8 percent of the respondents claimed service sector
that their companies were medium-to-large sized enterprises, employing 500 employees
or more. The results of profiles of the survey respondents are summarized in Table I.
Measurement model. To evaluate the reliability of the collected data, the 965
confirmatory factor analysis was performed to both TQM and CS constructs. In this
study, the measurement model includes 35 items explaining seven constructs: LD, SP,
HR, PM, IA, CF, and CS. Before performing the main analysis, we examined the
Number of
Profile respondents Category Count Percentage
Gender 140 Female 51 36.4

Male 89 63.6
Age 140 Below 21 years old 0 0.0
21-25 years old 2 1.4
26-30 years old 4 2.9
31-35 years old 25 17.9
36-40 years old 76 54.3
Above 41 years old 33 23.3
Marital status 140 Single 76 54.3
Married 64 45.7
Qualification 140 No college degree 6 4.3
Diploma 17 12.1
Bachelor degree/professional 86 61.4
qualification
Postgraduate degree 31 22.2
Number of employees in the
organization 140 Less than 30 24 17.1
30-50 14 10.0
51-100 15 10.7
101-200 6 4.3
201-500 10 7.1
500-1,000 18 12.9
1,001-1,500 19 13.6
Above 1,500 34 24.3
Length of services 140 Less than one year 21 15.0
1-2 years 24 17.1
3-5 years 18 12.9
6-10 years 35 25.0
11-20 years 31 22.1
Above 20 years 11 7.9
Primary job scope 140 Marketing 29 20.7
Human resource 41 30.7
Finance 32 22.9
Administration 30 21.4
Other 8 5.7
Job position 140 Departmental managers 124 88.6 Table I.
Senior managers/directors 16 11.4 Profiles of respondents
IMDS descriptive, univariate and multivariate statistics of the variables and discovered no
109,7 apparent outlier (Jun et al., 2006). The skewness and kurtosis of all variables do not
exceed the absolute value of ^ 1 emerged to fulfill the prerequisite of normality and
thus analyses for the assumptions of the multivariate model implied that there are no
statistically significant violations (Zhang, 2000; Jun et al., 2006; Kaynak, 2003).
Internal consistency reliability to examine unidimensionality was assessed by
966 Cronbach’s alpha (Lin and Lee, 2005). During this validation process, several items in
the TQM and CS constructs that did not contribute to the Cronbach’s alpha values of
the scales were dropped, namely, the fifth (SP5) item of (SP) measures; the second
(CF2), and forth (CF4) items of (CF) measures; the second (PM2) and forth items of (PM)
measures; the third (IA3) item of (IA), the fifth (HR5) item of (HR) measures and the
first (CS1), and fifth (CS5) items of (CS) measures were deleted due to unacceptable poor
factor loadings less than 0.5 on their respective latent variables (Hoang et al., 2006).
After excluding these nine items, the resulting Cronbach’s a values ranged from 0.809
to 0.916, which were above the acceptable threshold 0.70 suggested by Nunnally and
Bernstein (1994) and all factor loadings, are statistically significant at p , 0.001.
However, Fornell and Larcker (1981) assert that the composite reliability is more
apposite indicator, since it takes into consideration the actual factor loadings rather than
assuming that each item is equally weighted in the composite load determining (Lin and
Lee, 2004; Molina et al., 2007). Chau (2001, p. 709) state that the construct reliability can
be computed based on the following formula: “(Square of the summation of the factor
loadings)/{(Square of the summation of the factor loadings) þ (Summation of error
variances)}.” The minimum suggested value is 0.7 (Molina et al., 2007). This analysis
was completed by computing the average variance extracted, whose minimum
recommended value is 0.5 (Molina et al., 2007, p. 691). As Table III shows, in all cases the
scales are within the accepted limits and the composite reliability of all latent constructs
exceeded the benchmark of 0.7 recommended by Nunnally (1978), indicating that the
measurement model is good. Table II shows the results of convergent validity and
internal reliability for constructs.
Moreover, Hair et al. (1998) proposed that the r-value between each pair of
independent variables in the correlation should not exceed 0.90. If there is a case that
the correlation value exceeds 0.90, it may be suspected to exhibit multicollinearity
(Hair et al., 1998). As seen in Table III, the highest value of coefficient is 0.773 (IA and
SP) which is smaller than 0.90. Therefore, it is confirming that multicolinearity is not
significantly exists among the various constructs in the measurement model (Lin and
Lee, 2004; Jun et al., 2006).
The goodness of fit of the measurement model was assessed in terms of eight
common measures: using the ratio of x 2 statistics to the degrees of freedom (df),
comparative fit index (CFI), goodness-of-fit index (GFI), adjusted goodness-of-fit index
(AGFI), normed fit index (NFI), parsimony goodness-of-fit index (PGFI), parsimony
normed fit index (PNFI), and root mean square error of approximation (RMSEA)
(Segars and Grover, 1998; Kaynak, 2003). According to Jun et al. (2006, p. 803), the ratio
of x 2 to the df should be less than three for an acceptable model fit. Browne and
Cudeck as cited by Jun et al. (2006, p. 803) suggest that an RMSEA value of less than
0.05 implies a “close-fit” and less than 0.08 indicates a “reasonable fit”. The results
indicated that the measurement model fitted the data as listed in Table IV. All the
model-fit (i.e. x 2/df, 1.038; p-value, 0.345; RMSEA, 0.017; NFI, 0.926; GFI, 0.904; AGFI,
TQM and CS
Standardize Average variance Cronbach’s Composite
Construct Indicator loading extrated a reliability in Malaysia’s
LD LD2 0.843 0.627 0.891 0.893
service sector
LD1 0.814
LD3 0.813
LD5 0.777 967
LD4 0.704
SP SP1 0.806 0.610 0.857 0.862
SP4 0.785
SP3 0.779
SP2 0.750
CF CF3 0.825 0.604 0.809 0.821
CF1 0.769
CF5 0.737
PM PM3 0.863 0.623 0.817 0.832
PM1 0.752
PM5 0.750
IA IA1 0.815 0.748 0.881 0.882
IA2 0.787
IA4 0.774
IA5 0.770
IA6 0.720
HR HR4 0.849 0.644 0.878 0.875
HR3 0.822
HR2 0.794
HR1 0.748
CS CS3 0.878 0.701 0.916 0.903
CS4 0.848 Table II.
CS6 0.823 Instrument reliability
CS2 0.797 and validity
SEM correlationsa
HR CF LD IA PM SP
HR 1.000
CF 0.527 1.000
LD 0.502 0.385 1.000
IA 0.649 0.564 0.667 1.000
PM 0.652 0.612 0.473 0.672 1.000
SP 0.674 0.574 0.696 0.773 0.673 1.000 Table III.
Latent construct
Notes: n ¼ 140; aall correlations are significant at p , 0.01 correlation
0.8047; CFI, 0.997; PGFI, 0.569; PNFI, 0.634) indices exceed the respective common
acceptance levels indicated by previous research (Kaynak, 2003; Forza and Filippini,
1998; Jun et al., 2006; Lin and Lee, 2004, 2005), indicating that the measurement model
appears to represent a fairly good fit with the data collected.
IMDS
Model-fit index Recommended value Measurement model Structural model
109,7
x 2-test statistics/df #3.00a 1.038 1.169
GFI $0.80a,b 0.904 0.867
AGFI $0.80b 0.847 0.804
NFI $0.80b 0.926 0.900
968 CFI $0.90a 0.997 0.984
RMSEA #0.08a 0.017 0.035
PGFI . 0.5c 0.569 0.586
PNFI . 0.5c 0.634 0.651
Table IV.
Measures of the model fit Sources: aJun et al. (2006, p. 803); bForza and Filippini (1998, p. 14); cKaynak (2003, p. 422)
Structural model. The overall results of structural model analysis are shown in
Figure 2. The structural model analysis has a very good fit as determined from the
goodness-of-fit indices (GFI) (x 2/df, 1.169; p-value, 0.024; RMSEA, 0.035; NFI, 0.9900;
GFI, 0.867; AGFI, 0.804; CFI, 0.984; PGFI, 0.586; PNFI, 0.651) as listed in Table IV. All
the model-fit indices exceeded their respective common acceptance levels, suggesting
that the structural model displayed to represent an acceptable model fit to the data
(Kaynak, 2003; Forza and Filippini, 1998; Jun et al., 2006; Lin and Lee, 2004, 2005).
Hypothesis testing. The statistical significance of all the structural parameter values
was examined to ascertain the validity of the hypothesized paths. The analytical results
indicated that HR (path coefficient, 0.085; p , 0.01), LD (path coefficient, 0.786;
p , 0.01), IA (path coefficient, 0.096; p , 0.01), and CF (path coefficient, 0.066; p , 0.01)
were found to have a significant and positive relationship with CS. Therefore, the
hypotheses H1, H2, H4, and H6 were supported. Meanwhile SP (path coefficient, 2 0.013;
r . 0.10) and PM (path coefficient ¼ 2 0.009, r . 0.10) had no significant relationship
with CS. Hence, H3 and H5 were not supported. Table V shows the hypotheses results.
TQM constructs
0.786*
Leadership
0.085*
– 0.009 Customer
satisfaction
Process management
0.066*
Customer focus – 0.013
Strategic planning
Information & analysis 0.096*

Figure 2.
Results of structural
model
Note: *p < 0.01
Discussions TQM and CS
The main objective of this study was to examine the nature of TQM practices and its in Malaysia’s
relationship with CS as perceived by the managers within the context of Malaysia’s
service organizations that practice TQM in their operations. Generally, the results of the service sector
structural analysis implied that TQM has a significantly positive relationship with CS.
Leadership 969
Optimistically, statistical result revealed that LD is found to be significant to enhance
the level of CS. The result is consistent with the findings of Pannirselvam and Ferguson
(2001) revealed an association between LD and CS. According to González and Guillén
(2002), customers’ needs are not always explicit and the profitability of necessary actions
to satisfy them is not guaranteed. In fact, pleasing the customers involve making the
right management decisions. Thus, fulfilling this principle requires a mutual vision and
a strong commitment on the part of all organization members; this is especially true
within the services context. In view of that, this can be achieved through effective LD
that committed to quality program implementation.
Strategic planning
It was discovered that SP is insignificant to CS. This implied that SP in the service
organizations in Malaysia failed to induce CS. The result was found to be two facets. On
one side of the coin, the result was concurred with the findings of González and Guillén
(2002) in which the researchers revealed that there were no direct or indirect effects of
strategic quality planning on CS. In contrast, the findings of Terziovski (2006) were
contradicted with the results of this study. He determined that SP was significantly
associated with CS. Kantabutra and Avery (2007) clarified that those stores without
clear mission and vision statements tend to performed significantly worse in terms of
overall customer and staff satisfaction than those with mutual visions. From the TQM
perspective, a quality policy is usually communicated via a “quality vision statement.”
Customer focus
Favorably, the result in this study demonstrated that CF is found to be significant and
contribute to the enhancement of CS within the Malaysian service organizations. This
result provides supporting evidence to the findings of Zhang (2000) where his studies
indicated that becoming CF is very important to induce CS in any organizations. The
finding of this study is also in line with the empirical results of Terziovski (2006)
where the researcher discovered that CF is an important element in companies that are
essential in promoting CS, especially when customer complaints were well rectified via
Hypothesis Path Path coefficient Standard error p-value Remarks
H1 LD ! CS 0.786 0.026 0.000 * Not supported

H2 HR ! CS 0.085 0.023 0.000 * Not supported
H3 PM ! CS 2 0.009 0.030 0.763 Supported
H4 CF ! CS 0.066 0.021 0.002 * Supported
H5 SP ! CS 2 0.013 0.039 0.738 Not supported
H6 IA ! CS 0.096 0.032 0.002 * Supported Table V.
Hypothesis testing
Note: *p , 0.01 results
IMDS effective process and customer’s requirements were effectively disseminated and
109,7 understood. Therefore, being a customer-oriented organization is crucial to the success
of TQM implementation. This principle should be considered as the focal point of the
decision making process.
Process management
970 The dimension of PM was found to be insignificant to CS. This result is inconsistent
with the findings of Kumar et al. (2008) in which they highlighted that BPM is a critical
driving force of CS. In addition, the result of this study is also in contrast with the
findings of Pritchard and Armistead (1999) and Tarı́ (2005) where their studies
stipulated that proper PM executed by organizations is significant towards CS. As
suggested by Maddern et al. (2007), customers perceive companies to be “only as good
as their processes,” thus a far greater understanding of the nature of PM (i.e. BPM) and
its relationship with CS is required.
Information and analysis

It was discovered from the results of the analysis that IA is positively associated with
CS. Therefore, this dimension is appears to be another useful predictor of CS. IA mainly
involves the practices of knowledge management and benchmarking, within the
organizations. In fact, numerous researchers have validated the association between
these practices (i.e. knowledge management and benchmarking) with CS via their
empirical findings (Ching et al., 2001; Min et al., 2002; Andaleeb, 1998). Since IA is
essential in this study, organizations should establish a platform that supports
information acquisition, dissemination, and sharing.

Finally, the findings of this study determined that HR is significant towards CS.
A strong positive association between these two construct was observed. This results
stress on the need of effective HRM and stimulation of better TQM practices in order to
ensure some degree of CS. This result concurs with Yang (2006) where he revealed
there is a significant impact of HRM on CS in relation to TQM. In addition, this current
finding is in line with the theory and empirical evidences of researchers such as Ott and
van Dijk (2005) and Adsit et al. (1996) where they all agreed that HR (i.e. HRM) is an
important building block of CS within the companies. Thus, to ensure the success of
TQM practices in contributing to the fortification of CS, effective and appropriate
management of human resources within the organizations should not be overlooked.
Research implications
In this study, a contemporary research in the domain of TQM has been rejuvenated
and it has implications in both theoretical and managerial perspectives. These
implications will be discussed as follows.
Theoretical implications
From the theoretical perspectives, this study highlights the importance of TQM in
contributing to CS within the service context. The exploration of the association
between TQM practices and CS in the service industry fills the current disparity and
consequent gap in knowledge. The proposed theoretical model in this study
emphasizes those TQM elements that are particularly important in determining a high TQM and CS
level of CS towards the service providers or the service firms. In addition, there are in Malaysia’s
very limited empirical studies that investigate the multidimensionality of TQM
components which facilitate the level of CS within a service setting. Thus, this service sector
empirical study may obtain the attention from other researchers with its relatively new
concept as it identifies the circumstances that are most conducive to the establishment
of CS, particularly in the domain of TQM. 971
Managerial implications
This study provides some insight into the true worth of TQM implementation in which
it reinforces the widely held belief that LD, CF, IA, and HR are positively associated
with CS. In addition, this research study provides constructive information that helps
the practitioners to precisely identify areas of concerns and take corrective measures.
In fact, two elements as identified in this study (i.e. SP and PM) should be revised
prudently by the organizations to enhance their level of CS. A clear vision and mission
statements that asserts the future direction of the organization should be established
and articulated throughout the company. Apart from SP, management may need to
determine whether effective PM exists in their companies. If not, management should
perhaps re-engineer or revitalize its business processes in order to improve its overall
business performance while enhance the CS simultaneously.
This study pinpoints the importance of the impact of various TQM dimensions on
CS. Knowledge in this area will allow managers of the service organizations to direct
their resources adequately in improving the more important contributors of CS. For
instance, management may need to devote more resources in managing their human
resources and analyses of information since these two TQM areas are found to be the
most important predictors of CS.
In addition, the findings of this study also serve as a valuable guideline or yardstick
for top management to review their TQM programs and conduct it on a regular basis in
order to facilitate CS within their organizations. Consequently, management should
always considers customer’s feedback and complaints into quality improvement plans
where CS will be enhanced when these information are well attended. Also, being
customer-oriented should be treated as a continuous managerial activity. Apart from
that, top management should ensure that the information of the organization is widely
communicated and shared among all the employees. Sharing of information among
employees or leaders could form a competitive advantage to the organization. Finally,
it is imperative for organizations to have effective HRM.
Research limitations and future research

Several limitations of this study should be noted in order to determine possible future
research opportunities. First, the time sequence of the relationships between the
variables could not be determined since cross-sectional data were used. In view of that,
it is suggested that longitudinal research designs should be adopted to present the
evidence of causation which could not be obtained via cross-sectional designs.
Second, this study was confined only to service industry. It is suggested that future
research should cover not only service but manufacturing industries as well.
Third, a limited number of settings and managerial level were examined. Since
TQM is an organization-wide process and it involves the total participation of all levels
IMDS of employees (Mohanty and Behera, 1996), future research might study employees at
109,7 different hierarchical levels that consist of top executives, middle and lower
management employees. Questionnaire survey alone may suffer response bias and
lack of respondent awareness. Therefore, this analysis needs to be supported by field
observations and interviews of managers from the sample.
972 Conclusion
In conclusion, the main purpose of this research study was to investigate the
relationships between TQM practices and CS as perceived by managers from the TQM
certified service organizations in Malaysia. The findings provided empirical evidence
that TQM have significant and positive association with CS. Finally, the findings
revealed that the dimensions of LD, CF, IA as well as HR were positively associated
with CS. Predominantly, it was found that HR as well as IA were perceived as the
dominant TQM practices as they have strong association with CS within the
Malaysia’s service organizations.
Note
1. PM is sometimes called process control and improvement (Zhang, 2000). The two terms are
interchangeable.
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Corresponding author
Binshan Lin can be contacted at: binshan.lin@lsus.edu
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Industrial Management & Data Systems

TQM and customer satisfaction in Malaysia's service sector

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College of Business Administration, Louisiana State University in Shreveport,

Introduction Industrial Management & Data

Literature review and hypotheses development

Key practices of TQM

TQM practices links with CS

settings, the vision attributes, communication, empowerment, motivation, and employee

Information and analysis

study, namely personal development plan, job-related training, annual performance

Analyses of data and results

Gender 140 Female 51 36.4

Information & analysis 0.096*

Hypothesis Path Path coefficient Standard error p-value Remarks

H1 LD ! CS 0.786 0.026 0.000 * Not supported

its relationship with CS is required.

Information and analysis

Human resource focus

Research limitations and future research

understanding”, The TQM Magazine, Vol. 13 No. 5, pp. 348-54.

News, Vol. 29 No. 11, pp. 713-28.

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