Abstract Purpose of this paper is to review the literature on the relationship between total quality management TQM and innovation in services organization, and to develop a research conceptual framework on this relationship. The most recent studies investigated the TQMinnovation relationship and involved service industries in its scope have been reviewed. A discussion on the TQM practices in service organization is presented and conceptual framework and model are proposed.
1. Introduction Importance of services industry is significantly increasing in local and international economics. During the last two decades contribution of the service industry to the Gross Domestic Product GDP has been a significantly increasing. According to Directorate for Science, Technology and Industry (STI, 2008) of the Organization for Economic Co-operation and Development (OECD), by 2008 service industry allocated in some countries more than 70 percent of GDP (e.g. Luxembourg 82%, Greece 78%, and USA 77%) (STI, 2008), see figure 1.
