Volume 5, Issue 11, November – 2020 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

An Analysis of the Effect of Quality Management

System Implementation on Corporate Performance
through Competitive Advantage
(A Study at PT. Persada Engineering & Contracting)
Mukhlis *Dudi Permana
MercuBuana University Universitas MercuBuana
Jakarta, Indonesia Jakarta, Indonesia

Abstract:- The globalization paradigm has entered all Keywords:- Customer Focus, Process Management,
aspects of life. The current increased competition is very Quality Assurance, Supplier Focus, Competitive Advantage,
intense, along with changing consumer tastes, socio- and corporate performance.
economic changes and technological advances creating
various business opportunities and challenges. PT I. INTRODUCTION
Persada Engineering & Contracting has not met the
quality performance target as set or has become the The globalization paradigm has entered all aspects of
company standard. The consistent deterioration of the life. The current increased competition is very intense, along
product quality from 2017-2019 shows that the quality with changing consumer tastes, socioeconomic changes, and
management system implementation has not been optimal technological advances, creating various business
in the company. opportunities and challenges. This competition has forced the
company to become the best from other competitors in order
This study aims to examine the effect of customer to survive in the era of globalization. Companies are facing
focus, supplier focus, process management, quality the current phenomenon of not achieving the quality
assurance, competitive advantage on corporate performance targets as established or become the company
performance. As well as to assess the customer focus, standard. The figure below shows the condition for achieving
supplier focus, process management, quality assurance on the quality targets of PT. Persada Engineering & Contracting
corporate performance through competitive advantage. in 2017-2019.
This study adopts a quantitative approach with the type
of explanatory research. The population of this study is the Companies are forced to become the best among other
employees of PT. Persada Engineering & Contracting competitors in order to survive in the era of globalization and
totaling 53 employees. The sample method used an era of intense competition. The company can take ways to
(probability sampling) and the sampling techniques was be the most superior by implementing a good corporate
simple random sampling.Through the Structural strategy, thus it gains competitive advantage. One form of
Equation Model (SEM) approach with measurement strategy that can encourage companies to survive is by
model using the Smart PLS program version 3.2.8. applying an advantage in competition. Gradually, this
competitive advantage is the corporate strategy in obtaining
The results showed that Customer focus has a the final goal efficiently, namely performance that
positive effect on the corporate performance, Supplier createsmaximum profit.
focus has a positive and insignificant effect on the
corporate performance, Process management has a According to Prayhoego and Devie (2018), "So that the
positive effect on the corporateperformance, Quality company to be able to compete and perform well, it can be
assurance has a positive effect on the corporate supported by implementing Total Quality Management
performance, Competitive advantage has a positive effect (TQM), meaning through an integrated approach to obtain
on the corporateperformance, Consumer focus has a and maintain high quality output, focus on maintenance,
positive and insignificant effect on the continuous improvement and failure prevention at all levels
corporateperformance through competitive advantage, and functions of the company, in order to meet or exceed
Supplier focus has a positive and insignificant effect on the consumer expectations." Pt. Persada Engineering &
corporate performance hroughcompetitive advantage, Contracting has not met the quality performance target as set
Process management has a positive and insignificant effect or become the company standard. This is reflected in some
on the corporateperformance through competitive complaints from clients over the results of the service work
advantage, Quality assurance has a positive effect on given and some work that was not completed on time
corporateperformance through competitive advantage.

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Volume 5, Issue 11, November – 2020 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Figure 1:- Achievement of Quality Targets in 2017 – 2019 B. Competitive Advantage
According to Munizu (2013) "Competitive advantage is
the extent to find out the organization which is able to create
Achievement of Quality Targets
a defensive position over its competitors which includes the
(%)
organization's ability to differentiateitself from its
competitors and is the result of critical management
decisions." The competitive advantage of an organization can
determine the corporate performance. Therefore, the
competitive advantage created by TQM practices should be
able to improve the corporate performance.

C. Quality Management System Implementation

Based on figure 1, the company experienced a Quality Concept

consistent deterioration in product quality from 2017-2019, According to Sahir et.al. (2020:23) "Quality is the level
this indicates that the quality management system of good level or bad of products produced or services
implementation has not been optimal in the company. provided to customers. The highest quality by itself, then this
Furthermore, in connection with the customer complaints, in quality needs to be managed properly." The Quality
picture 2 presented customer complaints of PT. Persada management systems are called total quality management
Engineering & Contracting, as follows: (TQM).

Figure 2:- Customer Complaints Data 2017 – 2019 Research Framework

Costumer Complaints Data Table 1 Research Framework

Customer Focus
(X1)

Supplier Focus
(X2)

Competitive
Advantage (Z) CorporatePerforman
ce

Process
Management
(X3)
It is known that customer complaints graph in 2018 has
increased (8%) from the previous year. It shows that the high
number of customer complaints reflects the quality of service Quality
and support for management has not been implemented Assurance (X4)

effectively and perfectly. From the explanation, the

researchers are interested in conducting research to analyze
the causal relationship between the quality management Hypothesis:
systems implementation, corporate performance and H1 : Consumer focus has a positive effect on corporate
competitive advantage. Thus, the researchers formulated the performance.
title of the study regarding: "An Analysis of the Effect of H2 : Supplier focus has a positive effect on corporate
Quality Management System Implementation on Corporate performance.
Performance through Competitive Advantage (A Study at PT. H3 : Process management has a positive effect on corporate
Persada Engineering & Contracting). performance.
H4 : Quality Assurance has a positive effect on corporate
II. REVIEW OF LITERATURE performance.
H5 : Competitive advantage has a positive effect on
A. Corporate performance corporate performance.
According to Jahanshahi, et al. (2012) "The company's H6 : Consumer focus has a positive effect on corporate
performance is the actual result or output produced by a performance through competitive advantage.
company which is then measured and compared to the H7 : Supplier focus has a positive effect on corporate
expected results or output." Furthermore Aprizal (2018:87) performance through competitive advantage.
states "the purpose of measuring the corporate performance is H8 : Process management has a positive effect on corporate
to find out what the company has successfully achieved in a performance through competitive advantage.
certain period." H9 : Quality assurance has a positive effect on corporate
performance through competitive advantage.

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Volume 5, Issue 11, November – 2020 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
III. RESEARCH METHOD through numbers or questionnaires to be filled in by
respondents, then secondary data is a data collection
The research approach used quantitative with the type technique by collecting literature used to support the primary
of explanatory research which the function is to explain the data. Data analysis used structural equation modeling (SEM)
causal relationship between variables by testing the using the Smart PLS version 3.2.9 program.
hypothesis. The population of this study was the employees
of PT. Persada Engineering & Contracting totaling 53 IV. RESULTS AND DISCUSSION
employees. The sampling method used non-probability
sampling; the samples taken were 53 people. The data in this Validity Test
study are primary and secondary. Obtaining primary data

Table 2 Loading factor Values

Variable Indicator Outer Loading Limit Result
Customer Focus (X1) CF1 0,838 > 0,7 Valid
CF2 0,807 > 0,7 Valid
CF3 0,874 > 0,7 Valid
CF4 0,817 > 0,7 Valid
CF5 0,884 > 0,7 Valid
CF6 0,735 > 0,7 Valid
CF7 0,740 > 0,7 Valid
Supplier Focus (X2) SF1 0,862 > 0,7 Valid
SF2 0,874 > 0,7 Valid
SF3 0,863 > 0,7 Valid
SF4 0,849 > 0,7 Valid
SF5 0,818 > 0,7 Valid
PM1 0,824 > 0,7 Valid
Process Management (X3) PM2 0,842 > 0,7 Valid
PM3 0,847 > 0,7 Valid
PM4 0,816 > 0,7 Valid
Quality Assurance (X4) QA1 0,948 > 0,7 Valid
QA2 0,918 > 0,7 Valid
QA3 0,924 > 0,7 Valid
QA4 0,879 > 0,7 Valid
Corporate Performance (Y) KP1 0,816 > 0,7 Valid
KP2 0,788 > 0,7 Valid
KP3 0,775 > 0,7 Valid
KP4 0,749 > 0,7 Valid
KP5 0,919 > 0,7 Valid
KP6 0,911 > 0,7 Valid
Competitive Advantage (Z) CA1 0,874 > 0,7 Valid
CA2 0,888 > 0,7 Valid
CA3 0,851 > 0,7 Valid
CA4 0,792 > 0,7 Valid
CA5 0,860 > 0,7 Valid
Source: Results of Data Processing with SmartPLS3.2.9 (2020)

The AVE value of the research model for each variable The second stage of validity testing is discriminant
is> 0.5, meaning that the AVE value in the discriminant validity. The following are the results of the discriminant
validity test has been met in the next test. validity of the value of cross-loading between the indicators
and their respective constructs.

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Volume 5, Issue 11, November – 2020 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Table 4 Cross Loading Value of Each Variable and Research Model Constructions
Supplier Corporate Competitive
Customer Focus Proces Management Quality Assurance
Focus performance Advantage
CA1 0.845 0.845 0.795 0.838 0.853 0.874
CA2 0.816 0.825 0.754 0.858 0.844 0.888
CA3 0.822 0.894 0.823 0.852 0.857 0.851
CA4 0.686 0.711 0.793 0.716 0.785 0.792
CA5 0.766 0.788 0.815 0.785 0.832 0.860
CF1 0.838 0.750 0.791 0.798 0.814 0.789
CF2 0.807 0.675 0.691 0.706 0.728 0.711
CF3 0.874 0.775 0.766 0.834 0.833 0.807
CF4 0.817 0.706 0.772 0.718 0.764 0.726
CF5 0.884 0.862 0.785 0.817 0.838 0.821
CF6 0.735 0.736 0.606 0.692 0.688 0.658
CF7 0.740 0.773 0.670 0.767 0.755 0.743
KP1 0.822 0.798 0.786 0.746 0.816 0.783
KP2 0.748 0.771 0.760 0.793 0.788 0.806
KP3 0.687 0.725 0.815 0.716 0.775 0.799
KP4 0.754 0.763 0.760 0.713 0.749 0.686
KP5 0.853 0.869 0.822 0.897 0.919 0.890
KP6 0.862 0.860 0.807 0.902 0.911 0.884
PM1 0.707 0.706 0.824 0.674 0.764 0.735
PM2 0.832 0.828 0.842 0.769 0.834 0.794
PM3 0.760 0.766 0.847 0.762 0.818 0.841
PM4 0.668 0.818 0.816 0.727 0.758 0.727
QA1 0.879 0.868 0.828 0.948 0.906 0.904
QA2 0.846 0.877 0.806 0.918 0.883 0.858
QA3 0.870 0.878 0.828 0.924 0.888 0.889
QA4 0.843 0.829 0.774 0.879 0.855 0.837
SF1 0.884 0.862 0.785 0.817 0.838 0.821
SF2 0.795 0.874 0.819 0.809 0.839 0.875
SF3 0.766 0.863 0.813 0.794 0.829 0.818
SF4 0.830 0.849 0.767 0.862 0.846 0.822
SF5 0.668 0.818 0.816 0.727 0.758 0.727
Source: Results of Data Processing with SmartPLS 3.2.9 (2020)

Therefore, the conclusion is that all latent constructs Based on the PLS method, the reliability of the
shows the good discriminant validity because they can predict indicators of this study is in accordance with the composite
their block indicators better than other block indicators. reliability and Cronbach's alpha values for each indicator
block. The rule of thumb for alpha or composite reliability
Reliability Test values must be> 0.7 although a value of 0.6 is still acceptable.

Table 5 The Composite Reliability Value of the Research Model

Variable Composite Reliability Limit Result
Customer Focus 0,932 > 0.7 Reliable
Supplier Focus 0,931 > 0.7 Reliable
Process Management 0,900 > 0.7 Reliable
Quality Assurance 0,955 > 0.7 Reliable
Corporate Performance 0,929 > 0.7 Reliable
Competitive Advantage 0,931 > 0.7 Reliable
Source: The Anaysis is usingSmartPLS 3.2.9 (2020)

The composite reliability value of the research model The next reliability test is Cronbach's alpha value test.
shows that each variable already has a composite reliability The construct is declared reliable if it has a Cronbach's alpha
value of> 0.7, meaning that the research model has met the value> 0.60 (Ghozali, 2012).
composite reliability value.

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Volume 5, Issue 11, November – 2020 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Table 6 Cronbach’s Alpha Value of Research Model
Cronbach’s
Variable Limit Result
Alpha
Customer Focus 0,915 > 0.6 Reliable
Supplier Focus 0,907 > 0.6 Reliable
Process Management 0,852 > 0.6 Reliable
Quality Assurance 0,937 > 0.6 Reliable
Corporate Performance 0,907 > 0.6 Reliable
Competitive Advantage 0,906 > 0.6 Reliable
Source: Results of Data Processing using SmartPLS 3.2.7 (2020)

The Cronbach’s alpha value of the research model Inner model evaluation through the coefficient of
shows that each variable has a Cronbach’s alpha value >0.6 determination is to measure the model capability to explain
which means this model has met the Cronbach’s alpha value. the variance of the dependent variable. The value of the
So, it can be concluded that the model has met the composite coefficient of determination is between 0 and 1. The score of
reliability criteria and Cronbach’s alpha value, meaning that R² is close to 1, meaning how much the hypothesized
this research model has met reliability criteria and reliable independent variable in the equation can relate to the
measuring instrument. dependent variable. The test results are shown in table 7
below:
Determination Test Coefficient / R Square (R2)

Table 7 Scpre R Square (R²) Value of the Research Models

Variable R-Square
Corporate Performance 0,986
Competitive Advantage 0,947
Source: The analysis is using SmartPLS3.2.8 (2020)

The R-square value on the corporate performance (Y) is management, and quality assurance, while the remaining
0,986, which means 98,6% of corporate performance are 5,3% is influenced by other variables.
influenced by customer focus, supplier focus, process
management, quality assurance and competitive advantage. Hypothesis testing
The R-square value on variable competitive advantage (Z) is Hypothesis testing inter-constructs through the
0,947, which means 94,7% of competitive advantage is bootstrap resampling method. By using tools SmartPls 3.2.8
influenced by customer focus, supplier focus, process we can see the value of Path Coefficient, that is the t-statistic
value and the relationship between research variables.

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ISSN No:-2456-2165
It can be seen more clearly in table table8 :

Table 8 Value of Path Coefficient, t-Statistic, and P-Values

Standard
Original Sample Sample T Statistics P
Dev.
(O) Mean (M) (|O/STDEV|) Value
(STDEV)
Customer Focus -> Corporate
0.164 0.164 0.057 2.872 0.004
Perfomance
Supplier Focus -> Corporate Perfomance 0.022 0.029 0.075 0.295 0.768
Process Management -> Corporate
0.287 0.285 0.082 3.486 0.001
Perfomance
Quality Assurance -> Corporate
0.250 0.248 0.076 3.296 0.001
Perfomance
Competitive Advantage -> Corporate
0.301 0.298 0.103 2.907 0.004
Perfomance
Customer Focus -> Competitive
0.006 0.014 0.033 0.187 0.852
Advantage -> Corporate Perfomance
Supplier Focus -> Competitive Advantage
0.067 0.062 0.056 1.188 0.235
-> Corporate Perfomance
Process Management -> Competitive
0.093 0.096 0.054 1.731 0.084
Advantage -> Corporate Perfomance
Quality Assurance -> Competitive
0.135 0.127 0.062 2.181 0.030
Advantage -> Corporate Perfomance

Source: The Anaysis is using SmartPLS3.2.8 (2020)

The results of the hypothesis by using Smart PLS 3.2.8 Sixth Hypothesis (H6)
can be seen below: The value of t-statistics is 0.187 <the value of t table =
2,012, P-Values = 0.852 > α = 0,05. The coefficient value is
First Hypothesis (H1) 0.006 (positive) it means that consumer focus has a positive
The value of t-statistics is 2.872 > the value of t table = effect for corporate performance 6%.
2,012, P-Values = 0.004 < from α = 0,05. The coefficient
value is 0.164 (positive) it means that customer focus variable Seventh Hypothesis (H7)
has a positive effect for corporate performance 16,4%. The value of t-statistics is 1.188 <the value of t table =
2,012, P-Values = 0.235 > α = 0,05. The coefficient value is
Second Hypothesis (H2) 0.067 (positive) it means that supplier focus has a positive
The value of t-statistics is 0.295 >the value of t table = effect for corporate performance through competitive
2,012, P-Values = 0.768 > α = 0,05. The coefficient value is advantage that is 6,7%.
0.022 (positive) it means that variable supplier focus has a
positive effect for corporate performance 2.2%. Eighth Hypothesis (H8)
The value of t-statistics is 1.731 <the value of t table =
Third Hypothesis (H3) 2,012, P-Values = 0.084 > α = 0,05. The coefficient value is
The value of t-statistics is 3.486 >the value of t table = 0.093 (positive) it means that process management has a
2,012, P-Values = 0.001 < α = 0,05. The coefficient value is positive effect for corporate performance through competitive
0.287 (positive) it means that process management has a advantage that is 9,3%.
positive effect for corporate performance 28,7%.
Ninth Hypothesis (H9)
Fourth Hypothesis (H4) The value of t-statistics is 2.181 >the value of t table =
The value of t-statistics is 3.296 >the value of t table = 2,012, P-Values = 0.030 < α = 0,05. The coefficient value is
2,012, P-Values = 0.001 < α = 0,05. The coefficient value is 0.135 (positive) it means that quality assurance has a positive
0.250 (positive) it means that quality assurance has a positive effect for corporate performance through competitive
effect for corporate performance 25%. advantage that is 13,5%.

Fifth Hypothesis (H5)

The value of t-statistics is 2.907 ><the value of t table =
2,012, P-Values = 0.004 < α = 0,05. The coefficient value is
0.301 (positive) it means that competitive advantage has a
positive effect for corporate performance 30,1%.

V. CONCLUSION

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Volume 5, Issue 11, November – 2020 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
A. Conclusion [4]. Al-Qudah, Kamal A. M. (2012). The Impact Of Total
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