Volume 7, Issue 5, May – 2022 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

Total Quality Management and its Impact on

Organizational Performance:
The Case of Ethiotelecom
Temesgen Ayenew Birhan*
*Department of Accounting and Finance,
College of Business and Economics, Bahir Dar University

Abstract:- Total Quality Management refers to a order to fill a gap in the literature and understanding about
management concept which many companies widely total quality management practice and its impact on
employed. Total quality management used by organizational performance in Ethiopia Telecom. Many
organization to acquire competitive edge in terms of researchers pointed out that quality management principles
quality, productivity, customer happiness, and might be implemented in any company and sector of the
profitability. The study's exact objectives were economy, including industry, service, education, and
determined by the researcher. The descriptive and government.Top management commitment, employee
explanatory study design, as well as the stratified sample involvement, process management, employee
approach, was used to attain the goals. It was believed empowerment, and customer focus are the most typical total
that both quantitative and qualitative research would be quality management dimensions used by firms (Jaafreh,
used. Structural equation model was used for analyzing 2008)
primary data, and secondary data was used to establish
relevant literature and make the hypothesis more II. STATEMENT OF THE PROBLEM AND
objective and sensible. The researcher comes to a RESEARCH GAP
conclusion after gathering data from ethiotelecom
employees and evaluating it in the Amos software tool. Empirical studies have shown that successful TQM
Customer focus, top management commitment, and adoption benefits organizations in a variety of ways,
employee management were the major factors for including service quality, customer satisfaction, financial
organizational performance improvement. performance, and operational performance (Irfan & Kee,
2013). As a society develops economically, culturally
Keywords:- Total quality management, structural equation matures, and educates itself, it needs higher-quality services.
model, organizational performance. As a result, a huge number of service businesses are
implementing TQM as a reaction to these difficulties today
I. INTRODUCTION (Lekhe & Mohanty, 1995).As a result, successful TQM
implementation in ethiotelecom is predicted to result in
Total Quality Management gains importance in enhanced organizational performance, which will lead to
increasing organizational efficacy and performance. Where increased customer satisfaction and productivity. However,
the business is continuously improving in each phase of no study has been undertaken on the influence of TQM on
every process, every level and every activity for the organizational performance at ethiotelecom, according to
maximizing profit at large (Chang & sun, 2007). The change researcher information from TQM websites, and the topic is
is a continuous and steady process for every organization. still unexplored. Furthermore, despite the fact that the
There are various practices, such as Quality circles, kaizen, service sector has increasingly dominated the global
TQM, etc. in developed and developing countries. Industrial economy in recent decades, the majority of research has
companies need to ensure their success and competitiveness focused on the manufacturing sector.There were still few
by using appropriate quality management practices. An TQM studies in the service sector (Al-Sabi & Samat, N,
organization's quality practices are defined as the actions 2016), indicating that additional TQM research is needed in
and procedures taken by a company or organization to the service industry.
ensure the delivery of a high-quality service or product.
The lack of literature also contributes to a lack of
Managers strive to improve organizational understanding of TQM's impact on organizational
performance through practices that are visible components performance. As a result, this study will undoubtedly
of quality management improvements (Ahmed & Hassan, contribute to the field of service quality management.Many
2003).Because there is evidence that successful studies only measure performance in financial terms, such as
implementation of TQM benefits organizations by market share value, return on investment, and profit (e.g.
improving organizational performance, it is critical to Nicolau and Sellers, 2010; Corderand Goni, 201; Easton and
investigate the impact of total quality management on Jarrel, 1998). Non-financial outcomes such as customer
ethiotelecom organizational performance in order to satisfaction, process improvement, and employee
incorporate TQM as a method for improving service satisfaction are not taken into account. Empirical studies
failures. As a result, the purpose of this study was to yield contradictory results. Significant research, for
investigate the impact of TQM on corporate performance in example, provides empirical evidence that there is a positive

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Volume 7, Issue 5, May – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
relationship between TQM implementation and IV. RESEARCH HYPOTHESES
organizational performance (Bou-Llusar et al. 2009; Tari,
Molina and Castejon 2007; Kaynak, 2003; Douglas and The following hypothesis was developed for
Judge, 2001; Easton and Jarrel, 1998). Many studies, on the investigation in accordance with the broad purpose
other hand, show a weak or no relationship between TQM statement. The study's hypothesis is based on a theoretical
practices and organizationalperformance in ethiotelecom. concept concerning the total quality management and its
impact on organizational performance in Ethiotelecom. As a
III. RESEARCH OBJECTIVES result, four hypotheses were proposed as follows.
 Ha: There was a significant effect of Top Management
The specific objectives of the study included: Commitment on organizational performance in
 To determine the impact of customer focus practice on Ethiotelecom.
organizational performance in Ethiotelecom.  Hb: There was a significant effect of Customer Focus
 To determine the impact of top management commitment practice on organizational performance in Ethiotelecom.
on organizational performance in Ethiotelecom.  Hc: There was a significant effect of Continuous
 To assess the effect of continuous improvement on Improvement on organizational performance in
organizational performance in Ethiotelecom. Ethiotelecom.
 To examine the effect of employee management on  Hd: There was a significant effect of employee’s
organizational performance in Ethiotelecom. management on organizational performance in
Ethiotelecom.
V. CONCEPTUAL FRAMEWORK

Taking into account the many characteristics of quality management methods and organizational performance measurement
offered by a number of researchers. Customer Focus, Top Management Commitment, Continuous Improvements, and Employee
Management were the four elements of quality management methods that the researcher used in his research.

Top management Customer focus

commitment

Organizational
performance Continuous
Employee’s management improvement

Fig. 1

VI. RESEARCH METHODOLOGY Because in stratified sampling no significant groups is left

unrepresented and it saves cost and time of data collection
A. Research approach since the sample is less (Schutt, 2011).
The study's goal is to determine the impact of total
quality management approaches on Ethiotelecom C. Data inquiry
organizational performance. Because the researcher uses Both primary and secondary data used for collected data.
both descriptive and explanatory research designs, the Primary data is information gathered through techniques
mixed method would have been suggested for this study. such as interviews, questionnaires, and others. Secondary
This strategy was based on rational values, truths, and data, on the other hand, refers to previously organized
validity, with a sole focus on facts as measured empirically documents. However, in this study, the researcher gathered
on variables by quantitative methods such as surveys and data by creating questionnaires on major variables.
statistical analysis of the data (Thorpe & Jackson, 2008).
D. Method of data analysis
B. Target population and sampling Data analysis may be classified as descriptive or
This study's target population consists of Ethiotelecom inferential analysis. Even if this research uses some portion
employees. The number of employees was observable, and of descriptive analysis, inferential analysis can be widely
it included officials from the regional office.By used to make data analysis and infer from collected data. For
usingSolvin’s formula 252 samples had taken from total studied the impact of total quality management on
population.The study used stratified sampling techniques. organizational performance, the structural equation model

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Volume 7, Issue 5, May – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
would be used (SEM). SEM has recently emerged as a variables. The latent variables cannot be directly measured.
prominent statistical method due to its ability to account for To be represented, the latent variable must be defined in
multiple variables. Variables that are observed are also terms of observed variables. The latent variables defined by
known as indicator variables or manifest variables. other observed variable were organizational performance.
Unobserved variables or factors are also referred to as latent

VII. DATA RELIABILITY

For the four independent variablesconstructs, a total of 33 items and dependent variables with four items are tested.

 Reliability test

Variables No. of items Cronbach alpha Status

Independent variables
Top management commitment 7 0.777 Good
Customer focus 7 0.793 Good
Continuous Improvement 7 0.837 Great
Employees management 8 0.883 Great
Dependent Variables
Organizational performance 4 0.762 Good
Table 1

VIII. DATA VALIDITY

Hair et al. (2010)it is validitywhich indicates the degree measures of constructs should converge or share a high proportion
of variance. Composite Reliability (CR), Average Variance Extracted (AVE), and factor loading were used to assess this validity.

Convergent validity TMC CF CIM EM OP FP

AVE=∑(Xi2/N) 0.52 0.56 0.64 0.58 0.51 0.53
CR= ∑(Xi2 /(∑(Xi2 +∑δ) 0.87 0.75 0.83 0.79 0.73 0.77
Validity, AVE>0.5 and CR>0.7 Maintained Established Maintained Established Established Established
Table 2

Discriminant Validity is maintained when average variance extracted is greater than squared correlation estimates between
constructs. Significant level of discriminant validity was established as AVE > than the squared correlation estimate for all the
constructs. Show the following table.

Discriminant validity Factor correlation(r) Correlation Squared(r2) AVE>r2 Discriminant validity

TMC↔CF -0.030 0.0009 0.63 Established
TMC↔CI -0.023 0.003 0.63 Established
TMC↔EM -0.085 0.007 0.63 Established
CF↔CI 0.011 0.0001 0.63 Established
CF↔EM -0.319 0.102 0.63 Established
CI↔EM 0.12 0.0144 0.63 Established
Table 3

IX. CONFIRMATORY FACTOR ANALYSIS following table, basic indices meet the minimum criteria for
confirmatory analysis.
When the initial hypothesized model was determined
not to be the best fitting model, the model needed to be re-
specified (Kline, 2005; Meyer et al., 2006). Modification
indices were examined to re-specify the model in terms of
either trimming or building the model empirically and
theoretically. Once the model was modified, the alternative
hypothesized model would be tested using the same CFA
procedures as the above described to determine the best
fitting model to the observed dataset.

After confirming the validity of the CFA, it is time to

test the structural model, which will empirically identify the
relationships between the factors. As shown from the

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Volume 7, Issue 5, May – 2022 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Indices Default model Suggested criteria
RMSEA 0.074 <0.08
PCLOSE 0.000 <0.05
X2 /df 2.99 Between 1 and 5
P value 0.000 <=0.001
CFI 0.875 Approach to 0.9
IFI 0.922 Close to 0.9
TLI 0.894 Near to 0.9
Table 4

X. HYPOTHESIS TESTING USING STRUCTURAL EQUATION MODEL

Following that, this study considered analyzing the path significant of each relationship, where it examined the standardized
estimate (S.E), critical ratios (C.R), and p-value for each proposed relationship. A relationship is considered significant if the t-
value is greater than 1.96 and the p-value is less than.05).

Hypotheses Variables Estimates S.E. C.R P Status Outcome

Ha OP --TM 0.128 0.065 1.969 0.030 Significant Accept
Hb OP--CUF 0.139 0.064 2.194 0.028 Significant Accept
Hc OP--CIM 0.16 0.072 2.212 0.022 Significant Accept
Hd OP--EPM 0.005 0.048 0.113 0.910 Insignificant Reject
Table 5

XI. RESEARCH CONCLUSION should mainly focus upon designing an organizational

culture that supports TQM implementation.
The research tried to show ethiotelecom employees
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