Quality management practices of ISO vs non-ISO

companies: a case of Indian industry

Atul Gupta
Lynchburg College, Lynchburg, Virginia, USA
The process of liberalization of The Indian
economy has opened up imports from
various countries. Indian manufacturers'
ability to compete in the domestic market
will largely depend on their ability to
compete with the imports from foreign
countries. One of the tests will be the quality
of goods produced by the domestic
manufacturers. Indian manufacturers have
just begun to realize that quality will play a
greater role in the future growth or even
survival of their business. In fact, this may be
the factor that could decide the fate of this
country in the twenty-first century. Several
studies have examined the quality
management practices of Indian
manufacturers (Motwani et al., 1994; Jordan,
1997; Raghunathan et al., 1997). All these
studies have used a general list of Indian
manufacturers. Whereas in our study we also
focus on manufacturers having ISO 9000
registration. Consideration of ISO 9000
registered companies provides us with a
more focussed analysis and insight into the
quality management practices of
organizations competing and intending to
compete internationally.
Literature review
The interest in international quality
management practices has been growing for
some time. Several studies have focussed on
assessment of quality management practices
of single or multiple countries. Sarkar (1990)
studied the status of quality control in India.
He observed that no performance evaluations
of quality control operations are done in
Indian manufacturing organizations. He
suggested that a culture for quality
improvement and cost reduction should be
infused to all employees across the functional
groups and hierarchical levels. His study was
quite general in nature and the outlook and
behavior of Indian industry has changed
quite a lot since then. Motwani et al. (1994)
studied 73 organizations to pinpoint the
degree of quality management in Indian
manufacturing firms in India. In the study,
nine critical factors for the effective
enforcement of quality management were
identified, such as quality department
visibility, employee training, quality product
design and close cooperation with vendors.
Raghunathan et al. (1997) in a comparative
study including India indicated that quality
was considered important in the country.
Leadership, strategic quality planning and
quality assurance practices were given
greater importance than the other constructs
compared in the analysis. The other
constructs considered in this study were
information and analysis, supplier
relationships, quality results, customer
orientation and human resource
development.
The measures used to determine the
quality practices in an international context
have been quite diverse. Reitsperger and
Daniel (1991) used single item variables and
differences in the answers to these questions
to determine quality practices of Japanese
and US companies. Rogers (1993) found
differences in quality practices between
Japanese and US approaches with respect to
strategic planning process, communication
and human resource management. Hull et al.
(1988) found differences between Japanese
and US companies on aspects like marketing
output, material input and manpower. A
close examination of literature reveals a lack
of analysis based on a international standard
such as ISO 9000. In this study we attempt to
determine the difference between the quality
management practices of ISO 9000 registered
companies and non-ISO 9000 registered
companies in India. The question is why ISO
9000 registered organizations. An exploratory
study conducted by Mallak et al. (1997) found
that quality improvement programs in ISO
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[ 451]
Industrial Management &
Data Systems
100/9 [2000] 451455
# MCB University Press
[ISSN 0263-5577]
Keywords
ISO 9000, Quality management,
Training, Standards
Abstract
This empirical study is a first
attempt to find the differences
between ISO and non-ISO
organizations in India. Four areas
of study include technology
management, causes of poor
quality, participation in the quality
improvement programs and quality
control techniques used. The
results of this study indicate that
statistically significant differences
do exist between ISO and non-ISO
organizations under all the four
categories specifically in training,
using quality in the strategic
planning, product design and team
building.
9000 organizations seek to achieve and
maintain product quality, assure
management that quality standards are being
achieved, and provide consistent products to
consumers. Findings of this study suggest
that ISO 9000 certification efforts are
supported by such values as team
orientation, group training, defect
prevention and attention to detail. Min (1998)
suggests that strict adherence to supplier
quality requirements, incorporation of
customer feedback for process
improvements, and employee training/
empowerment are essential components of a
world class quality improvement program. In
this study we consider quality improvement
programs such as customer orientation, QC
team building, QC circle, employee training/
empowerment, cooperation with the
suppliers, QC cost analysis and strategic
quality planning.
Companies with high quality priorities
also need essential quality tools (Horai, 1993).
Quality tools enable employees to translate
each phase of the problem solving cycle into
action. They help them to think about, see,
and reveal what otherwise would not be
apparent. A check sheet of essential quality
tools consists of pareto analysis, variable and
attribute inspection, scatter diagram, cause
and effect diagram (Channeski, 1998). For
this study we are focussing on quality control
techniques such as control limits, attribute
and variable inspection, pareto analysis and
control limits.
Garvin (1984) suggests that quality
pertains to a product's degree of
conformance to engineering and design
specifications. So a good quality will simply
mean that the product meets or exceeds
engineering and design standards and ISO
9000 standards are also based on the
conformance based criteria (Russell and
Miles, 1998). ISO companies would
emphasize more on the design criteria in
their assessment of quality. In this study we
tried to explore this issue by asking our
respondents about the main causes of poor
quality such as poor design, lack of
training, lack of monitoring, lack of
management support etc. (see Table IV for a
detailed list).
Data collection
A random sample of 500 manufacturing
companies in the National Capital Region of
India (New Delhi and surrounding areas) was
selected and survey instrument was mailed
to each company. The management
representative from each company was
contacted by telephone before and after
mailing the survey instrument. A total of 121
completed and usable surveys were received
with a response rate of 24.2 per cent. Validity
and reliability tests were performed. Factor
analysis provided a measure of construct
validity of the instrument. The more
variance explained by the factors resulting
from the factor analysis, the more powerful
the instrument in measuring what it is
supposed to measure ( Mallak et al., 1997).
The factor analysis for the current study
explains nearly 69 per cent of the variance
compared to 38 per cent in O' Reilly and
Chatman's study (1986) and 40 per cent in
Mallak et al. (1997) study. Given the diverse
backgrounds of respondents, first application
of the instrument to the given domain and
ambiguous nature of quality practices, this
level of variance supports the exploratory
nature of this study.
Analysis and results
Given the adequate sample size and the
relative ease of interpretation, mean
differences in rankings were tested with
parametric t-tests. The results appear in
Tables I, II, III and IV. Table I shows the
differences between ISO and non-ISO in
terms of technology management. Tables II
and III show the causes of poor quality,
participation in the quality improvement
programs and quality control techniques
respectively, between ISO and non-ISO
companies. The significance of the results
relative to each category are discussed next.
Research question no. 1: comparison of
technology management practices
Results in Table I indicate that the
differences between ISO and non-ISO are
statistically significant on four issues:
1 use of total quality management;
2 offer training with regards to quality
control;
3 use of computer integrated
manufacturing;
4 use of quality improvement as part of
strategic planning.
The percentage of respondents responding
``yes'' to the above issues was also higher for
ISO than non-ISO companies. The results of
this analysis suggest that the ISO companies
are aggressively moving ahead of non-ISO
companies in terms of technology
management. ISO organizations also
consider quality as a strategic planning
aspect.
[ 452]
Atul Gupta
Quality management
practices of ISO vs non-ISO
companies: a case of Indian
industry
Industrial Management &
Data Systems
100/9 [2000] 451455
Research question no. 2: comparisons
based on causes of poor quality
Results in Table II indicate that the
differences between ISO and non-ISO are
statistically significant on four issues:
1 poor design;
2 lack of training;
3 low commitment to QC;
4 lack of monitoring.
Research question no. 3: comparisons
based on participation in the quality
management programs
Results in Table III indicate that the
differences between ISO and non-ISO are
statistically significant on six issues:
1 customer orientation;
2 QC team building;
3 employee training/empowerment;
4 cooperation with supplier;
5 QC cost analysis;
6 strategic quality planning.
Research question no. 4: comparison
based on quality control techniques used
Results in Table IV indicate that the
differences between ISO and non-ISO are
statistically significant on four issues:
1 control limit;
2 tolerance limit;
3 pareto analysis;
4 random inspection.
Discussion of results
The results of this study indicate that ISO
and non-ISO organizations do differ on at
least four aspects: i.e. technology
management; quality management
programs; causes of poor quality; and quality
control techniques used. In terms of quality
management programs, team building and
training turned up to be significant. In this
era of total quality management,
organizations tend to resolve problems
through teams. This type of task is normally
assigned to steering committees and in ISO
organizations steering committees are
already in existence. The use of steering
committees goes beyond departmental
boundaries and several problems that are
interrelated can be resolved easily. The
significance of teams in ISO companies may
be due to the familiarity with the steering
and working committees and the group work
involved in those committees.
Companies that achieved ISO certification
advocate a corporate-wide employee
involvement strategy using training
programs. Training supports a self-
perpetuating quality environment that
promotes investment returns by advancing
education and familiarization among
employees. Characterized by a training
delivery scheme based on customer
requirements, it also addresses issues
associated with change and performance
standards. Moreover, training correlates
very well with the gathering and evaluation
of important process information associated
with ISO 9000 standards. It also initiates
control and strategic policies that let
employees analyze work processes, correct
system faults and receive acknowledgment
for changing.
The difference in strategic quality
management between ISO and non-ISO
organizations is significant because it
requires a strong future orientation and a
willingness to make long-term commitments
to customers, employees, stockholders,
suppliers and the community. ISO
organizations' quality goals as well as the
strategic and operational plans do reflect
Table I
Technology management
Non-ISO ISO
(n = 51)
(yes) (%)
(n = 48)
(yes) (%) Significance
a
Utilize group technology 38.23 41.17 0.2153
Utilize total quality management 22.05 38.23 0.0267**
Offer training with regards to quality
control 20.58 41.17 0.0043***
Use computer integrated
manufacturing 11.76 32.35 0.0191**
Use just in time inventory control 29.41 36.76 0.1794
Quality improvement as part of
strategic planning 39.70 78.40 0.0012***
Notes:
a
Significance level is based on the ANOVA comparison of the two sample
distributions; *p 5 0.10; **p 5 0.05; ***p 5 0.01
Table II
Causes of poor quality
ISO
Mean
b
Non-ISO
Mean
b
Significance
a
Poor design 3.7 2.9 0.008***
Lack of training 2.8 2.5 0.0967*
Lack of QC program 4.4 4.2 0.3252
Material standards 3.8 3.8 0.9172
Low commitment to QC 3.7 3.3 0.0832*
Concerns about cost 1.4 1.6 0.5268
Lack of monitoring 4.2 3.1 0.0910*
Lack of management support 1.5 1.4 0.6094
Lack of QC knowledge 4.1 4.0 0.3251
Notes:
a
Significance level is based on the ANOVA comparison of the two sample
distributions;
b
1 = very often and 5 = rarely; *p 5 0.10; **p 5 0.05; ***p 5 0.01
[ 453]
Atul Gupta
Quality management
practices of ISO vs non-ISO
companies: a case of Indian
industry
Industrial Management &
Data Systems
100/9 [2000] 451455
these commitments. They are developed in
concrete terms and are highly focussed. Also,
they address training, employee
development, supplier development,
technology evolution and other relevant
factors that bear on quality. They
incorporate the short-term and long-term
needs. In addition, the goals are integrated
into the overall corporate business strategies
(Tumala and Tang, 1996).
Managerial implications
This study has several managerial
implications: first, it provides in-depth
analysis of the key indicators for ISO
registration such as quality improvement
programs, team building and technology
management. The identification of these
provide opportunity to firms in terms of
increasing the benefits of registration. The
positive impact of ISO 9000 registration on
service/product quality, cost savings, access
to markets and overall efficiency will provide
them competitive edge. ISO is increasingly
required to do business overseas and it is
therefore very important that organization
leaders know about ISO 9000 and are able to
assess its fit into their organization
(Simpson, 1994). Second, this study provides
an empirical base in understanding ISO 9000.
While most senior executives have a passing
awareness of the name of ISO 9000, many do
not appear to be clear about the purpose of it.
This lack of understanding is addressed in
this paper by providing an empirical analysis
of broad differences between ISO and non-
ISO organizations. Third, the common
understanding is that implementation of ISO
9000 does require resources such as better
training facilities. But, it is difficult for the
managers to provide quantitative data to
justify this proposition. This study provides
them the politically safe and quantitatively
sound justification. Lastly, we feel that this
study will stimulate discussion in
management circles about the core
competencies for a successful registration.
Conclusion and future directions
Two major conclusions emerged from this
study. First, ISO and non-ISO organizations
do differ in their quality management
practices. ISO 9000 registered manufacturing
organizations in this study appear to have
formal commitment to quality management.
These organizations have a singular unifying
goal of quality. Second, this study does find
differences between ISO and non-ISO
organizations in regards to training. Mean
scores indicate that ISO organizations
emphasize more on training. Effective
training with employee involvement is the
most efficient means of initiating quality
improvement programs (Geisler and Justus,
1998). Training of employees allows them to
understand:
.
the gap between what is being done and
what needs to be done;
.
opportunity to learn the benchmarks and
make the necessary changes to meet those
quality benchmarks.
This study laid the ground work for future
research in the following areas:
.
further exploration of the reasons for the
differences between ISO and non-ISO
organizations;
.
further fine tuning and extension of this
study to other countries and
multinational firms;
.
to study the effects of ISO registration on
financial performance of an organization;
.
to study the differences between quality
management practices of technology
driven firms.
Table III
Participation in the quality improvement programs
ISO
Mean
b
Non-ISO
Mean
b
Significance
a
Customer orientation 3.7 3.0 0.0171*
QC team building 3.7 3.3 0.0642*
QC circle 4.0 3.8 0.1182
Employee training/empowerment 4.4 4.0 0.0491*
Cooperation with supplier 3.9 3.2 0.0098***
QC cost analysis 3.8 1.6 0.0003***
Strategic quality planning 4.6 2.3 0.0008***
Notes:
a
Significance level is based on the ANOVA comparison of the two sample
distributions;
b
1 = not important and 5 = extremely important; *p 5 0.10; **p 5 0.05;
***p 5 0.01
Table IV
Quality control techniques used
ISO
(yes) (%)
Non-ISO
(yes) (%) Significance
a
Sample size 97.4 72.4 0.1234
Control limit 84.6 48.2 0.0013***
Tolerance limit 79.4 31.3 0.0010***
Pareto analysis 58.9 34.4 0.0156**
Number of samples 71.8 68.6 0.6815
Attribute inspection 67.0 55.1 0.2145
Variable inspection 79.5 62.0 0.2234
Random inspection 97.4 79.3 0.0039***
Notes:
a
Significance level is based on the ANOVA comparison of the two sample
distributions; *p 5 0.10; **p 5 0.05; ***p 5 0.01
[ 454]
Atul Gupta
Quality management
practices of ISO vs non-ISO
companies: a case of Indian
industry
Industrial Management &
Data Systems
100/9 [2000] 451455
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[ 455]
Atul Gupta
Quality management
practices of ISO vs non-ISO
companies: a case of Indian
industry
Industrial Management &
Data Systems
100/9 [2000] 451455