Abstract
The purpose of this paper is to explore the pertinent issues in the relationship between Total Quality Management (TQM) and SME performance. This paper also discusses the need for mediation in the relationship between TQM and SMEs performance, namely organization learning. The conceptual paper undertakes a thorough review of the relevant literature before developing propositions regarding practices of TQM, organization learning and performance of SMEs. The paper anticipates that TQM will support both organization learning and performance of SMEs. Future research should be conducted to carry out an empirical analysis to validate and/or modify the propositions presented in this paper.
1. Introduction
SMEs in Malaysia positively contribute to the development of the Malaysian economy and achievement of highincome nation status in year 2020. The Malaysian government has taken several steps to nurture this vision with the establishment of various programs such as the New Economic Model (NEM), Economic Transformation Programme (ETP), National Key Economic Areas (NKEAs), Strategic Reform Initiatives (SRIs), National SME Development Council (NSDC), SME Master plan 2012-2020, 10th Malaysian plan, with the objective of providing full assistance and opportunities for SMEs to develop either locally or abroad market. SME in Malaysia served an important role in the development of the Malaysian economy in 2010, contributing 99.2% of total business establishments in Malaysia, with a 32% share of GDP, 59% share of employment and 19% share of total exports (SME Masterplan 2012-2020). These figures demonstrate the importance of SMEs in shaping Malaysian economic landscape.
4. Discussion and Conclusion
The proposed framework focuses on examining the mediating effect organization learning on the relationship between TQM and SMEs performance. The competitive nature of modern-day business forces a firm to continuously improve business performance. This can be done by developing a quality culture and applied the principles of TQM. Companies large and small, in the manufacturing and service sector, multinational (Demirbag et al., 2006) and developed and developing countries (Adam et al., 1996) have applied the principle of TQM that can generate more benefits and advantages. This proposed study will deal with how SMEs gain benefits through TQM practices in enhancing the success of organization learning capability, thus having a positive impact on performance.
