International Journal of Quality & Reliability Management

Entry barriers and industry rivalry: Do they mediate the relationship between quality
management practices and performance?
Bishnu Sharma, David Gadenne,
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Reliability Management, Vol. 27 Issue: 7, pp.779-793, https://doi.org/10.1108/02656711011062381
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Entry barriers
Entry barriers and industry and industry
rivalry rivalry
Do they mediate the relationship between
quality management practices and 779
performance? Received July 2009
Revised November 2009
Bishnu Sharma and David Gadenne Accepted January 2010
Faculty of Business, University of the Sunshine Coast, Maroochydore, Australia
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Abstract
Purpose – This study aims to investigate the impact of quality management practices on
performance and the extent to which industry rivalry and entry barriers moderate the relationship
between the implementation of quality management practices and quality management performance.
Design/methodology/approach – A survey questionnaire was administered for this research
using Powell’s quality management framework. The respondents were required to indicate their
degree of implementation of quality management practices and to rate their TQM performance in
relation to overall performance, the firm’s competitive position and the nature of the impact of quality
management on the organisation. Structural equation modelling was used to test the hypotheses.
Findings – The results show that firms with high levels of executive commitment to quality
management and those that pay close attention to customer needs tend to improve their competitive
position, view quality as being positive for the organisation, and improve overall performance. The
results suggest that the degree of quality management implementation is positively associated with
entry barriers, which would mean reduced level of threat from new entrants; whereas the industry
rivalry issues were not significantly associated with either quality management or organisational
performance. The findings also show that existing firms’ ability to create entry barriers facilitates
increased opportunities to improve their organisational performance.
Research limitations/implications – The sample was relatively small, subjective measures of
organisational performance were used which may be biased due to respondents’ interpretation of their
own firm’s performances, and there is a possibility that many firms with low levels of QM
implementation may not have participated in the study, leading to self-selection bias. These factors
may limit the generalisability of the research findings to other settings. Therefore further research is
required to ascertain whether the same practices are evident across organisations of different sizes and
industry groups within a broader sampling frame.
Practical implications – The findings suggest that quality management implementation by firms
within an environment where higher levels of entry barriers exist results in higher organisational
performance due to the firms’ relative protection against new competitors.
Originality/value – This is one of the very few papers to investigate the role of Porter’s industry
analysis framework in relation to quality management implementation and firm performance.
Keywords Quality management, Competitive strategy, Organizational performance
Paper type Research paper
International Journal of Quality &
Introduction Reliability Management
Vol. 27 No. 7, 2010
Quality management has been very popular in the last two decades and half and has pp. 779-793
q Emerald Group Publishing Limited
consequently attracted much interest among researchers and academics as evidenced 0265-671X
by a large number of articles and research papers that have appeared in the literature DOI 10.1108/02656711011062381
 IJQRM (Rahman, 2002). Many of them have focused on the philosophy of quality management
27,7 and its impact on firm’s competitive success and have identified quality management
as the key driver of business performance (Arumugam et al., 2009). Even in practice, a
large number of organisations in the developed countries such as the United States,
Australia, Japan, and Singapore have adopted total quality management (TQM) or
some kind of quality management (Davis and Fisher, 1994). For example, in the United
780 States, over 90 per cent of the 500 largest firms adopted TQM in one form or another
(Powell, 1995). A successful TQM aims at improving a business as a whole and it
involves every person in every part of an organisation working to remove error and
prevent waste (Bricknell, 1996). The literature also emphasises that one of the
fundamental principles of TQM is to get things right first time by taking multiple
approaches such as continuous improvement, statistical measurement and having a
mentality of zero-defects. Although several studies have been found dealing with
quality management in the context of developing countries, some of them have
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reported barriers to effective implementation (Bhat and Rajashekhar, 2009). Some of

those barriers are employees’ resistance to change and lack of benchmarking with
other company’s practices.
Deming (1986), Juran (1986, 1992), Crosby (1979), Flynn et al. (1994 and 1995),
Saraph et al. (1989) and Powell (1995) are the leading contributors of quality
management frameworks. As noted by Powell (1995) from the work of Walton (1986),
Deming came up with 14 points for the improvement of quality and productivity. Some
of them are constancy of purpose, adopting the philosophy, driving out fear,
eliminating barriers, constant improvement, leadership and training. Juran’s trilogy
(1986) consists of quality planning, quality control and quality improvement. Crosby’s
14 steps of quality include management commitment, quality measurement, quality
awareness, cost of quality evaluation and corrective action. Flynn et al. (1994 and 1995)
identified seven dimensions of quality management as top management support,
quality information, process management, product design, workforce management,
supplier involvement and customer involvement. Saraph et al. (1989) identified eight
factors of quality management comprising the role of divisional top management and
quality policy, the role of the quality department, training, product/service design,
supplier quality management, process management/operating procedures, quality data
and reporting, and employee relations. Powell (1995) suggested that complete quality
management programs (TQM) tend to share 12 factors, which were measured using 47
items. The factors are committed leadership or executive commitment, adoption and
communication of TQM or adopting the philosophy, closer customer relationships,
closer supplier relationships, benchmarking, training, open organisation, employee
empowerment, zero-defects mentality, process improvement, flexible manufacturing
and measurement. Based on a review of different perspectives, it is noted that quality
management is driven by the constant attainment of customer satisfaction through the
continuous improvement of all organisational processes (Robbins et al., 2009; Brah and
Tee, 2002, Brah et al., 2000).

Quality management practices and business performance – their

relationship
The successful implementation of TQM is expected to lead to a number of benefits
such as lower costs, better product quality, greater efficiencies, improved market share,
 better reputation, increased motivation and satisfaction (Bricknell, 1996). This view is Entry barriers
consistent with the findings of Powell (1995) in which he suggested that certain and industry
features of TQM such as open culture, employee empowerment and executive
commitment are associated with business performance. However, the TQM elements
rivalry
such as quality training, process improvement and benchmarking did not indicate
significant correlations with performance. These findings are, however, difficult to
generalise due to the small sample size (the sample size of all firms was 54 of which 781
only 39 were TQM firms). Anderson and Sohal (1999) investigated the relationship
between quality management practices and performance using data from 62 small and
medium size businesses in Australia. Their research found a number of significant
relationships between quality management practices and subjective measures of
organisational performance.
A survey of manufacturing firms in the United States (n ¼ 290) found that the
relationship between quality management practices and performance (customer
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satisfaction, marketing and financial) is contingent on the degree of international

competition present in the business environment (Das et al., 2000). Sterman et al. (1997)
found that programs like TQM can present firms with a trade-off between short and
long run effects. In the long run, TQM can lead to quality and productivity
improvement. However, in the short term it can interfere with prevailing organisational
processes such as accounting and management practices. Such interference may create
operational and financial tension, which might lead to loss of management
commitment to TQM practices (Sterman et al., 1997; Brah et al., 2000). Therefore, in
spite of the popularity of TQM, some studies reveal that some organisations are
struggling with the problems of implementation and have mixed success (Samson and
Terziovski, 1999; Terziovski and Samson, 2000; Preston and Hingorani, 1998). Limited
success of TQM over a period of time can be attributed to several factors including a
lack of attention to the human aspect arising from inconsistent senior management
support and a lack of involvement of supervisors and middle managers in the planning
process (Edwards and Sohal, 2003).
Although TQM has become a part of business thinking and a popular strategy in
many organisations in the developed countries (Powell, 1995), a number of empirical
studies that examined the relationship between quality management practices and
performance have only focused on larger organisations (Anderson and Sohal, 1999).
However, the literature suggests that TQM should not be branded as a competitive
strategy only for large firms; even small firms can and do implement TQM elements as
effectively as large firms, and in turn, achieve high product/service quality (Ahire and
Golhar, 1996). It is also argued that implementation of TQM in a small firm may be
easier than in a large firm because of less complexities in the process (Haksever, 1996).
It is also interesting to note that TQM is mostly implemented in the
manufacturing/operations function with little progress in other functional areas
(Sohal and Terziovski, 2000).
Organisational performance can be measured using subjective measures of
performance that tap into managements’ perceptions of the effects of quality
management on overall performance, the firm’s competitive position and the nature of
the impact of quality management on the organisation.
 IJQRM Industry analysis framework and profitability
27,7 Porter (1980) put forward an industry analysis framework, which consists of five forces
that drive industry competition. Those forces are threat of new entrants, industry
rivalry, bargaining power of buyers and suppliers, and the threat of substitutes.
Analysis of each of these forces provides a powerful diagnosis of the nature of
competition in a given market. The analysis determines whether these forces are
782 strong, moderate or weak. If these forces are strong, industry members find it harder to
earn attractive profits as the opportunities for increasing the price will be non-existent
but if the forces are weak, then the firms in the industry will have an opportunity to
increase the price of their products and services and improve their profitability. Powell
(1995) incorporated entry barriers and industry rivalry in his research and found a
significant correlation of firm performance with entry barriers (r ¼ 0:29; p , 0:05) and
industry rivalry (r ¼ 20:32; p , 0:05). These results indicate the higher the entry
barriers, the lower the threat of new entrants and the better the opportunities for
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improved performance; and similarly, the higher the industry rivalry, the tougher the
industry competition which would mean the lower the firm performance. A recent
study using data from OECD countries also reported that markup ratios are higher in
industries with high entry barrier (Wu, 2009).
The new entrants to an industry bring new capacity with a possibility of creating
excess capacity, which might result in price reduction leading to reduced profitability
(Porter, 1980). However, the threat of new entrants depends on the level of barriers to
entry. Economies of scale, brand image/identity, level of capital requirements,
switching costs, and absolute cost advantages are some of the entry barriers. If the
entry barriers are low or can easily be hurdled by the likely candidates the threat of
new entrants becomes stronger. Other factors that can increase the threat of new
entrants include a large pool of entry candidates with sufficient resources, the
possibility of market proliferation by the existing firms, high expectations of new
entrants for making profits, an increase in buyers’ demand, and an inability of the
existing firms to strongly contest the newcomers’ entry (Thompson et al., 2008).
“Rivalry among existing competitors takes the familiar form of jockeying for position
– using tactics like price competition, advertising battles, product introductions, and
increased customer service or warranties” (Porter, 1980, p. 17). Rivalry becomes
stronger if demand growth is slow, industry capacity is in excess of demand, number
of rivals increases and they are of roughly equal size and competitive ability, switching
costs to buyers are low, fixed costs are high, there is a lack of differentiation, the exit
barriers are high and one or two rivals have powerful strategies (Thompson et al.,
2008).

Aims of this research

Although some studies have discussed the possibility of implementing quality
management concepts in small businesses, most research has focused on quality
management in large organisations. Furthermore, in the quality management literature
there is very little research on the use of entry barriers and industry rivalry concepts
(the forces that determine the nature of competition and a very powerful industry
analysis tool). Therefore, this study aims to investigate the role of entry barriers and
industry rivalry in relation to quality management implementation and firm
 performance. In conducting this study, the data was collected from Queensland Entry barriers
businesses where a majority of businesses are small. and industry
Theoretical framework rivalry
This study is based on the framework developed by Powell (1995) which included
quality management practices such as executive commitment, adopting the
philosophy, closer to customers, closer to suppliers, benchmarking, training, open 783
organisation, employee empowerment, zero-defects mentality, flexible manufacturing,
process improvement, and measurement. Powell (1995) developed a 47-item instrument
to measure these different quality management practices.

Hypotheses
As indicated earlier, the literature shows that there are inconsistent results regarding
the relationship between the implementation of quality management systems and
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organisational performance. In some cases a positive relationship was found between

the use of quality management practices and organisational performance (e.g. Powell,
1995; Sharma and Gadenne, 2002; Sohal, 2003; Fening et al., 2008; Sharma and
Gadenne, 2008), but in other cases there was very little evidence of any association
between quality management practices and performance (e.g. Preston and Hingorani,
1998; Samson and Terziovski, 1999; Terziovski and Samson, 2000). While many
plausible arguments have been put forward as to the reasons for these discrepancies
such as cultural and behavioural factors (Montes et al., 2003), buyer-supplier
relationships (Fynes and Voss, 2002), degree of international competition (Das et al.,
2000), short term versus long term focus (Sterman et al., 1997; Brah et al., 2000), and
lack of attention to the human aspect (Edwards and Sohal, 2003), very few (if any)
studies have considered the relationship between quality management implementation
and performance within the context of Porter’s (1980) competitive forces model[1],
particularly in relation to entry barriers and intensity of industry rivalry.
In relation to entry barriers, if a firm uses quality management concepts in its
operation and has been able to develop competencies which are distinctive in the sense
that they cannot be imitated by it’s rivals, the firm is creating barriers to entry in its
industry. Thus the relationship between quality management implementation and
entry barriers should be positive. This suggests the following hypothesis:
H1. The degree of quality management implementation is positively associated
with the level of entry barriers.
In relation to industry rivalry, it has long been recognised that firms with higher levels
of quality management implementation are more likely to engage in innovative
behaviour (e.g. Sim, 2001; Young et al., 2001; Knights and McCabe, 2002; Hamson and
Holder, 2002; Bayo-Moriones and Merino-Diaz de Cerio, 2003) and consequently
experience fewer perceived problems in innovation, research and development
compared to their rivals. If the firm engages in innovation using quality management
concepts, it is likely that the firm is in a position to differentiate its products or services
and still be able to maintain its position in the market reasonably well. This suggests
the following hypothesis:
H2. The degree of quality management implementation is negatively associated
with the level of industry rivalry.
 IJQRM The two mediating variables of entry barriers and industry rivalry are then expected to
27,7 influence organisational performance. The higher level of entry barriers is predicted to
have a positive association with organisational performance due to the fact that the
higher the level of entry barriers, the more difficult for new entrants to enter the
industry and therefore the more protection afforded to existing firms in the industry.
On the other hand, the more intense the rivalry in innovation, research and
784 development; the more firms are likely to reduce profit margins to maintain a
competitive edge. This suggests the following hypotheses:
H3. The higher the level of entry barriers, the more likely it is that firms will
experience higher organisational performance due to their relative protection
against new competitors.
H4. The higher the level of industry rivalry, the more likely it is that firms will
experience decreased organisational performance due to the pressure of
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maintaining a competitive edge.

Furthermore, as indicated earlier many studies have shown a direct link between the
level of quality management implementation and performance, the final hypothesis
suggested is:
H5. The higher the degree of quality management implementation, the more likely
it is that firms will experience higher organisational performance.
These hypothesised relationships are reproduced in Figure 1, which contains the
hypothesised path model predicting organisational performance from quality
management factors with the mediating variables of entry barriers and industry
rivalry.

Method
A questionnaire based on Powell’s (1995) 47-item survey instrument was administered
with the omission of seven questions or items related to the flexible manufacturing
component. Based on preliminary interviews with quality management consultants
and business managers in South East Queensland, some modifications were made to
the survey instrument but the forty items of quality management practices and the
scales used for entry barriers, industry rivalry, and quality management performance
were based on Powell’s approach. Some of the items for overall performance were
changed. The items in the questionnaire were put in a random order to ensure internal
validity of the respondents’ answers. Major modifications were made in the company
demographics. Information was also sought for subjective measures of performance
including managements’ perceptions of quality management program performance in
terms of overall performance, improvements to competitive position and whether the
quality program had been a positive development for the organisation. These were
measured using a five-point scale (1 ¼ strongly disagree, 2 ¼ tend to disagree,
3 ¼ neither agree nor disagree, 4 ¼ tend to agree, 5 ¼ strongly agree). In the industry
category, food, beverage, textile, wood and paper, printing/publishing, petroleum/
chemical/rubber/plastic, metal product, machinery and equipment, retail, banking and
insurance, hotel, tourism, hospital, law firm, repair shops and other category were
 Entry barriers
and industry
rivalry

785
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Figure 1.
Hypothesised path model
predicting organisational
performance from quality
management factors with
mediating variables of
entry barriers and rivalry
 IJQRM included. However, because of the small sample size, these industry types were
27,7 reclassified into three categories for analysis: manufacturing, service, and construction.
In determining the type of quality management program used, the respondents were
provided with the following options: TQM, ISO 9000, TQM and ISO 9000, and other.
The categorical variables such as industry category, type of quality program used
were measured using a nominal scale. The degree of implementation of quality
786 variables was measured using a six-point scale (0 ¼ do not intend to implement,
1 ¼ have not begun implementation but intend to, 2 ¼ have just begun
implementation, 3 ¼ have made some progress, 4 ¼ have made substantial progress
and 5 ¼ highly advanced in implementation) as used by Powell (1995).
The questionnaire also contained some five-point Likert scale questions (ranging
from strongly agree to strongly disagree) to determine the extent of entry barriers
(e.g. “it is very difficult for new firms to enter our industry successfully”) and industry
rivalry (e.g. “compared to other industries, rivalry in our industry is extremely
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intense”).
The sample (approximately 1,100) was selected from businesses in Queensland
employing more than 16 people (with a range between 16 and over 500 employees, and
a median of 30 employees) using the Dun & Bradstreet database. These businesses had
assets ranging from $200,000 to over $100 million (with a median asset value of
$2,500,000). The survey was addressed to the chief executive officers (CEOs) of the
company as they have a good knowledge of the firm’s plans and strategies including
quality management practices. As a means of checking for information accuracy,
validating the outcome of the analysis and getting a feel of quality management
practices used in a business, face to face interviews were carried out with some of the
senior managers or the CEOs of businesses in South East Queensland.
The first 100 questionnaires that were received without any follow-up were
considered as early respondents and the remaining 40 as late respondents. To check for
non-response-bias, early respondents were compared with the late respondents (using
a two-tailed t-test) in relation to demographic information, and measures of quality
management, entry barriers, industry rivalry and organisational performance. No
significant difference was noted in these attributes between the early and late
respondents. Similarly, a Chi-square test was carried out to see whether there is a
difference in the proportion of early and late respondents in terms of firm size (small,
medium and large), industry category and the type of quality management program
used (TQM, ISO 9000, TQM and ISO 9000 and other). The analysis revealed no
significant difference in these attributes between the early and late respondents. These
results do not suggest any evidence of non-response bias.

Results and discussion

Confirmatory factor analysis
As discussed earlier, 40 items from Powell’s original survey instrument were used to
measure the degree to which quality management practices had been implemented in
the organisation. To achieve parsimony the responses to these items were then factor
analysed through principal components analysis using varimax rotation. The use of
the scree test with a cut off point of three for eigen values, and recognising factor
loadings greater than 45 percent resulted in the following four principal components or
major factors being extracted[2]:
 (1) Top management philosophy – comprising a top executive decision to commit Entry barriers
fully to a quality program, top executives actively championing quality and industry
programs, measurement of quality performance in all areas, executives actively
communicating a quality commitment to employees, management training in rivalry
quality principles, quality principles included in the mission statement, and
employee training in quality principles.
(2) Measurement and open organisation – comprising the use of statistical 787
methods to measure and monitor quality, an active competitive benchmarking
program, use of charts and graphs to measure and monitor quality, employee
training in statistical methods for measuring quality, use of empowered
(responsible) teams, and an announced goal of zero defects.
(3) Process improvement – comprising a program for continuous reduction in
defects, a program to find wasted time and cost in all internal processes, a plan
to reduce rework drastically, and less bureaucracy.
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(4) Closeness to customers – comprising involvement of customers in product or

service design, increasing the firm’s direct personal contacts with customers,
increased employee interactions with customers and suppliers, and actively
seeking customer inputs to determine their requirements.
Alpha reliability coefficients using Cronbach’s alpha computed for the TQM factors
revealed the following values – top management philosophy (0.89); measurement and
open organisation (0.85); process improvement (0.72); and closeness to customers (0.77).
According to Robinson et al. (1991), an alpha value of 0.80 or higher is considered as
exemplary; values between 0.70 and 0.79 are considered as extensive; values between
0.60 and 0.69 as moderate, and values less than 0.60 as minimal. Based on these
categories, strong evidence of reliability is noted in the constructs of the four TQM
factors. This is also consistent with the contentions of Hair et al. (1998).

Testing for size effects

To assess whether there were any size effects, both the number of employees and asset
size were compared with the level of quality management (QM) implementation. The
correlation between employee size and level of QM implementation was insignificant
(r ¼ 0:08, p ¼ 0:38) as was the correlation between asset size and level of QM
implementation (r ¼ 20:05, p ¼ 0:62). This clearly indicates that there were no size
effects in terms of QM implementation. Furthermore, it was found that approximately
82 per cent of overall firms in the sample, and approximately 80 per cent of the smaller
firms (with less than 30 employees) were at an advanced level of QM implementation,
which indicates that all firms in the sample were highly committed to quality
management implementation.

Hypothesis testing using path analysis – structural equation modelling

The path analysis technique known as structural equation modelling was performed to
examine the influence of quality management practices, as mediated by entry barriers
and industry rivalry, on organisational performance. The resulting path model (as
shown in Figure 2) was found to fit the data particularly well with x2 (25,
n ¼ 140Þ ¼ 34:37, p . 0:05 and a Chi square/df ratio of 1.37 which is acceptably well
below the threshold of 2.0 as prescribed by Wheaton et al. (1977). The goodness-of-fit
 IJQRM
27,7

788
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Figure 2.
Identified path model
predicting organisational
performance from quality
management factors with
mediating variables of
entry barriers and rivalry
 summary for the full model also shows that all of the fit indices are acceptable with the Entry barriers
Normed Fit Index (NFI) equal to 0.85; the Incremental Fit Index (IFI) equal to 0.95; the and industry
Tucker-Lewis Index (TLI) equal to 0.93; and the Comparative Fit Index (CFI) equal to
0.95. These relative fit indices indicate that the model provided a relatively good fit rivalry
compared to the null or baseline model. Furthermore, the root mean square error of
approximation (RMSEA) of 0.052 is also well below the 0.1 upper bound for acceptable
model fit as specified by Fogerty et al. (2000). 789
As illustrated in Figure 2, most of the estimated path coefficients exceed the
minimum t cut off value of 1.96 (p , 0:05) with the exception of two of the quality
management factors, and the paths between quality management and industry rivalry,
and between industry rivalry and organisational performance. This means that only
two of the four factors or principal components – top management philosophy and
closeness to customers were the only satisfactory measures of the latent construct of
quality management. Nevertheless, the path coefficient for management philosophy is
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highly significant (p , 0:001). Moreover it will be recalled that this factor generally
captures a broad overview of the quality management construct as it includes items
indicating top level full commitment to a quality program, top executives actively
championing quality programs, measurement of quality performance in all areas,
executives actively communicating a quality commitment to employees, management
training in quality principles, quality principles included in the mission statement, and
employee training in quality principles. The path coefficient for closeness to customers
was also significant at p , 0:05, and this indicates that paying close attention to
customer needs is also a very important aspect of quality management.
Figure 2 also shows that the degree of quality management implementation is
positively associated with the level of entry barriers as perceived by the respondents of
existing firms, and the higher levels of entry barriers are associated with higher
organisational performance due to their relative protection against new competitors.
The direct path coefficient between the two latent constructs of quality management
and organisational performance is also highly significant (b ¼ 0:81, p , 0:001) which
supports the hypothesis that the higher the level of quality management
implementation the more likely the firm will experience higher organisational
performance. This is reinforced by the high level of explained variance in
organisational performance – 66 per cent (squared multiple correlation) as
attributed to quality management mediated by entry barriers and industry rivalry.
However, contrary to the other relationships hypothesised, there was no significant
association between degree of quality management implementation and level of
industry rivalry, and level of industry rivalry and organisational performance.

Discussion and conclusion

This study investigated the relationship between quality management and performance
both directly and using entry barriers and industry rivalry as mediating factors. Threat of
new entrants and industry rivalry are among Porter’s (1980) five forces that determine the
nature of competition and are widely used for industry analysis. Powell’s (1995) study
reported a positive association between organisational performance and entry barriers,
and a negative association between organisational performance and industry rivalry, as
could be expected. Logically, with increased quality management implementation, one
could argue that the firm is able to make continuous improvement in its products or
 IJQRM processes and create entry barriers in its industry for the potential new entrants. With
27,7 regard to industry rivalry, it is logical that with increased rivalry the opportunities for
increasing profits through price rises or increasing market share would be reduced, as
firms would struggle without differentiating their offerings relative to their competitors.
Therefore, Powell’s (1995) findings particularly in relation to the association between
quality management and entry barriers raised some questions, and this study was
790 initiated to test the validity of some of the Powell’s (1995) findings in the context of small
businesses using data from Queensland firms. Accordingly, most of the results of this
study are consistent with conventional logic and Powell’s findings. For example, the
association between increased quality management implementation and entry barriers
was found to be positive, which supports the theoretical logic; and quality management
implementation is positively associated with organisational performance, both directly
and indirectly via the mediating variable of entry barriers. The positive association
between quality management implementation and entry barriers, which in turn is
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associated with higher levels of organisational performance suggests that the firms
which are at a more advanced stage of quality management implementation are already
enjoying the benefits of entry barriers. On the other hand, no significant association was
found between quality management implementation and industry rivalry, and between
industry rivalry and organisational performance. Overall these findings show that
Porter’s (1980) framework of industry analysis may apply in relation to level of entry
barriers for small and medium businesses to explain the relationship between quality
management implementation and organisational performance; but no conclusive
evidence was found in relation to industry rivalry within the context of the association
between quality management implementation and organisational performance, which
indicates that this will be a legitimate topic for future research.
However, it must also be acknowledged that there are a number of limitations
including a relatively small sample; subjective measures of organisational
performance, entry barriers and industry rivalry which may be biased due to
respondents’ interpretation of their own firm’s performances and experiences; non
response bias (though an attempt was made to minimise this as discussed earlier); and
the possibility that many firms with low levels of QM implementation may not have
participated in the study leading to self selection bias. These factors may limit the
generalisability of the research findings to other settings. Nevertheless, the study seeks
to make a contribution to the literature by illustrating the importance of considering
competitive forces as mediating factors in measuring the association between quality
management practices and organisational performance.

Notes
1. Although Powell (1995) considered some of Porter’s competitive forces, this was within the
context of an overall industry specific effect; not in terms of their mediating effects as in the
current study.
2. While the full principal component analysis revealed a total of nine factors, the additional
five factors are not reported here as they either had significantly lower eigen values than the
first four factors or had insufficient numbers of items loading on the relevant factor. Given
that the purpose of this study was to identify the main path coefficients between quality
management and performance (with entry barriers and rivalry as mediating variables) the
remaining weaker five factors have been omitted from the analysis.
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About the authors

Bishnu Sharma is Senior Lecturer in Management at the University of the Sunshine Coast in
Australia. He received his PhD in management from the University of Technology, Sydney. He
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holds a Master’s degree in Industrial Engineering & Production Management from Cranfield
Institute of Technology, UK and postgraduate diploma from RVB, Holland. His undergraduate
degree was in Chemical Engineering from India. He has published several research papers in the
UK, USA, Canada, New Zealand, Thailand, India and Australia. His research interest is in the
areas of strategy, total quality management, organisational culture and learning, and business
performance. He has received an Emerald international citation of excellence award for
international recognition of his outstanding contribution to the literature and body of knowledge.
He has also won the best paper awards in the small business/entrepreneurship streams of the
ANZAM Conference in 2004, 2009 and also in the sustainable and social marketing stream of
ANZMAC Conference in 2009. Before taking up his teaching and research position at the
University of the Sunshine Coast, he was Executive Director of the Town Development Board of
Nepal. He has also worked for several years in Nepal as a strategic planning and development
consultant. He has presented in national and international conferences in Australia, France,
Japan, New Zealand, the Philippines, Malaysia, India, and Hong Kong.
David Gadenne is Associate Dean of Business at the University of the Sunshine Coast in
Australia. He received his PhD in business from Griffith University in Brisbane. He holds a
Master’s in Financial Management degree from the University of Queensland, and a
post-graduate diploma of education from Victoria. His undergraduate degree was in business
from the Queensland University of Technology. He has published several research papers in the
UK, Canada, New Zealand, and Australia. His research interest is in the areas of total quality
management, balanced scorecard, business ethics and business performance. He has received a
best paper award at the Small Enterprise Association of Australia and New Zealand Conference
and two Emerald international citation of excellence awards for the Highest Quality Rating for
international recognition of an outstanding contribution to the literature and body of knowledge.
Before taking up his teaching and research position at University of the Sunshine Coast, he
worked for several years in industry as a management accountant with BHP Billiton. He has
presented in national and international conferences in Australia, Europe, New Zealand, and
Hong Kong. David Gadenne is the corresponding author and can be contacted at:
dgadenne@usc.edu.au

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