Effect of Total Quality Management Implementation on Business Performance of East Java Small and Medium Scale Manufacturing Companies

Lena Ellitan, Dominicus Wahyu Perdana

TQM approach has long been known and applied to various organizations, but in Indonesia there is a lack of empirical studies that examine the relationship between TQM practices and the impact on the business, operational and human resource performance. This study aims to examine the relationship between TQM practices on the firms’ performance.  Samples were selected randomly from East Java Manufacturing Company directory. Total questionnaires of 400 questionnaires sent to manufacturing companies in the area of East Java. Of the 400 questionnaires have been sent through post, 6 companies are not willing to participate, 17 questionnaires were returned to the researchers with some of the reasons the company closed, change the address, and the address is not known. Researchers also sent a follow up letter after 2 weeks questionnaire submitted. The results of data analysis in this study showed that:  management practices (i.e. leadership, management of supplier quality, vision and planning, evaluation, process control improvement, product design, quality system design, participation, rewards and recognition, education and training, and customer focus) have a significant influence on financial performance, operational performance, and the performance of human resources. The result of partial analysis concluded that: (1). Leadership, supplier quality management, quality system design, education and training, and customer focus have significant influence on financial performance. (2). Leadership, supplier quality management, rewards and recognition, education and training, and customer focus have a significant influence on the operational performance. (3). Leadership and customer focus have a significant influence on the HR performance.