THE EFFECTS OF TOTAL QUALITY MANAGEMENT ON CORPORATE PERFORMANCE - ANEMPIRICAL-INVESTIGATION

This article examines the impact of Total Quality Management (TQM) on the performance of 108 firms that began TQM implementation between 198 1 and 1991. The impact of TQM is measured by comparing each firm's per formance to a control benchmark designed to capture what the performan ce would have been without TQM. The findings indicate that performance , measured by both accounting variables and stock returns, is improved for the firms adopting TQM. The improvement is consistently stronger for firms with more advanced TQM systems. The possibility that downsiz ing could explain the improvement is also examined. The data do not su pport this hypothesis.