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Status of Quality Management practices in

manufacturing SMEs: a comparative study between
Australia and the UK
a b c
Maneesh Kumar , Khawaja Khurram Khurshid & Dianne Waddell
a
Logistics and Operations Management Section, Cardiff Business School, Cardiff University,
Cardiff, UK
b
Faculty of Business and Economics, Department of Management, Monash University,
Melbourne, Australia
c
School of Management & Marketing, Deakin University, Melbourne, Australia
Published online: 19 Aug 2014.
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To cite this article: Maneesh Kumar, Khawaja Khurram Khurshid & Dianne Waddell (2014) Status of Quality Management
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 International Journal of Production Research, 2014
Vol. 52, No. 21, 6482–6495, http://dx.doi.org/10.1080/00207543.2014.948574

Status of Quality Management practices in manufacturing SMEs: a comparative study

between Australia and the UK
Maneesh Kumara*, Khawaja Khurram Khurshidb and Dianne Waddellc
a
Logistics and Operations Management Section, Cardiff Business School, Cardiff University, Cardiff, UK; bFaculty of Business and
Economics, Department of Management, Monash University, Melbourne, Australia; cSchool of Management & Marketing, Deakin
University, Melbourne, Australia
(Received 10 September 2012; accepted 19 July 2014)

This study is aimed to assess and compare the status of quality management (QM) practices in the manufacturing small
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and medium-sized enterprises (SMEs) in Australia and the UK, and to develop better insights into the use of and benefits
from such QM practices. Furthermore, the intention was to identify the trends for adoption of advanced QM practices
such as Lean and Six Sigma. A similar survey instrument was designed and tested in the two countries and data were
analysed using SPSS and excel worksheet. The findings confirm that the adoption of Six Sigma is quite slow in
Australian and the UK SMEs. ISO 9000 is the most popular QM initiatives in SMEs followed by the recent trend to
implement Lean for streamlining business processes. Leadership is critical to the success of any QM practices such as
Lean and Six Sigma. Networking with government bodies and academic institutions, and fact-based decision-making
emerged as the two new critical success factors for implementing QM in SMEs. Significant improvement in performance
metrics was observed in the UK SMEs after implementation of quality initiatives, though similar result was not
replicated in the Australian sample.
Keywords: Quality Management; survey; SMEs; Australia; UK

1. Introduction
Over the last two to three decades, small, medium and large organisations have made major investments to improve
product quality and enhance customer satisfaction. In this regard, organisations initially started using simple techniques
of quality control and quality assurance then moved to major quality management (QM) practices such as Lean and Six
Sigma. Although small and medium-sized enterprises (SMEs) can benefit from adopting QM practices, they often face
major challenges in implementation. These QM practices may enable SMEs an innovative edge to provide better prod-
uct and service quality. Motivated by this research gap, this international study attempts to compare QM practices in
SMEs in Australia and the UK to develop a better understanding on the use and benefits of QM in the SME context.
The scope of QM practices extends from simpler improvement tools such as inspection, suggestion scheme, quality cir-
cles, Kaizen and so on to the advanced practices such as Lean and Six Sigma.
In this article, we briefly touch upon the use of QM practices and how it aids in the innovation process of a SME.
As indicated in the literature, vast majority of innovations are combinations of existing ideas and technology. Six Sigma
is one of the most successful innovations in the field of QM, combining existing approaches and statistical tools that are
adding significant value to the business on an ongoing basis (Box and Woodall 2012; Jensen 2012). This research
attempts to indirectly capture the link between QM practices and incremental innovation (Oke, Burke, and Myers 2007).
Perhaps adopting advanced QM practices such as Lean and Six Sigma may itself be innovative (Kim, Kumar, and
Kumar 2012) for the manufacturing SMEs.
In the UK and Europe, SMEs are firms with less than 250 employees (European Commission 2003), whereas the
Australian Bureau of Statistics (ABS) restricts the headcount to 200 to be classified as SMEs (ABS 2001). SMEs per-
form a critical role in most countries, including Australia and the UK. They are highly flexible and responsive suppliers
to large firms, customers of large firms and suppliers to end-user customers in their own right (Aoki 2008; Ergas and
Orr 2007; Kumar 2010). Any compromise in quality by SMEs could jeopardise the whole supply chain, resulting in
raising costs because of poor quality (Aoki 2008; Dora et al. 2013). It can be assumed that the rapid adoption of QM
practices by SMEs has become an important determinant of success in the global market place.

*Corresponding author. Email: [email protected]

© 2014 Taylor & Francis

 International Journal of Production Research 6483

As pointed out by Welsh and White (1981), SMEs are not ‘little big businesses’; thus, SMEs need to probe the
underlying principles of QM practices to determine how they can benefit within their own context. The objectives of
this study are to understand the specific QM practices implemented in the Australian and the UK SMEs, identify the
critical success factors (CSFs) and the challenges faced during implementation, and assess the impact of such practices
on organisational performance of SMEs. Innovation in the context of this research includes discussion on incremental
innovation through QM implementation that is captured in terms of operational improvement. Section 2 focuses on
background research discussion followed by research methodology in Section 3. Results of the survey are presented in
Section 4 and Section 5 presents our discussion and conclusions.

2. Background research
Among various QM practices, Lean and Six Sigma have gained wider acceptance as methodologies for operational
improvement and competitive advantage over the last two decades (Azadegan et al. 2013; Hilton and Sohal 2012;
Holweg 2007; Swink and Jacob 2012; Shah and Ward 2003). The practitioner literature reports significant cost savings
and other benefits from the implementation of Lean, Six Sigma or Lean Six Sigma as part of management strategy to
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increase market share and maximise profits (Nakhai and Neves 2009; Shafer and Moeller 2012; Shah and Ward 2003;
Timans et al. 2011). The basic principle of Lean is to reduce cost and enhance the speed of business processes by
minimising seven types of waste through everyone’s involvement, respect for people and applying tools such as just-in-
time (JIT), cellular manufacturing, Total Productive Maintenance (TPM), Kanban and Mistake Proofing, to name a few
(Hines, Holweg, and Rich 2004; Holweg 2007; Shah and Ward 2003; Womack, Jones, and Roos 1990). Six Sigma on
the other hand includes a clear focuses on customer needs and focus on reducing variation in the process performance
through the use of data-driven and highly structured problem-solving methodology – the Define–Measure–Analyse–
Improve–Control (DMAIC) methodology (Shafer and Moeller 2012; Snee 2004).
Considering the importance of SMEs, it is necessary to re-examine existing QM practices used by SMEs so that
innovative ways can be developed to ease their operational improvement pressure. This is not possible without address-
ing QM issues. Apart from the wide adoption of the ISO 9000 standard, literature suggests that for a number of reasons
SMEs are reluctant to implement other advanced QM practices such as Lean and Six Sigma (Achanga et al. 2006;
Antony, Kumar, and Labib 2008; Husband and Mandal 1999; Thomas and Webb 2003; Yusof and Aspinwall 2000).
The existence of the general notion that SMEs consider ISO 9001 as sufficient to address their quality requirements
(Antony, Kumar, and Labib 2008; Pfeifer, Reissiger, and Canales 2004) demands the need to assess the overall status of
QM implementation.
Researchers emphasised the need for more investigation in relation to the application of QM practices, in particular
Six Sigma methodology [Lean is more popular in SMEs compared to Six Sigma] in SMEs (Dora et al. 2013; Kumar
2010; Thomas, Barton, and Chuke-Okaform 2009; Timans et al. 2011). Recent research confirms that the trend of imple-
menting Six Sigma (compared to Lean) in the UK SMEs is limited and less observed (Achanga et al. 2006; Antony,
Kumar, and Labib 2008). Even Australian SMEs have shown reluctance towards different QM practices for numerous
reasons (Husband and Mandal 1999), and the survey in the Australian and the UK manufacturing SMEs, which is a part
of the current study, confirms this.
Resource constraint was stated as a major stumbling block for SMEs to embark on any QM practice (Achanga et al.
2006; Antony, Kumar, and Labib 2008; Ghobadian and Gallear 1996; Kumar 2007; Yusof and Aspinwall 2000). This often
impedes SME managers to allocate funds for training and development of employees or to send employees for external
training. QM research over the last two decades has identified several factors critical to the success of QM practices in
SMEs. Identification and understanding of CSFs of Lean and Six Sigma is pivotal for the smooth implementation/transition
of initiatives across the firms and for breaking down the stumbling blocks (discussed above) encountered during the imple-
mentation of such initiatives (Achanga et al. 2006; Antony, Kumar, and Labib 2008; Dora et al. 2012; Timans et al. 2011).
According to QM researchers, the organic elements (e.g. leadership, customer focus, coaching/training,
culture and teamwork) have greater influence on the success of the TQM/Lean/Six Sigma initiatives
(Achanga et al. 2006; McAdam et al. 2014; Prajogo 2006; Prajogo and Sohal 2004; Samson and Terziovski 1999) and can
produce competitive advantage more strongly than just focusing on the tools and techniques for process improvement.
Responding to the ‘voice of the customer’ is very important and is the top most QM principle (ISO 9000). Sohal
and Egglestone (1994), while studying the prospects of Lean in the Australian manufacturing sector, pointed out that
60% of the organisations changed their strategic objectives to become more ‘customer-focussed organisations’. These or-
ganisations attained strategic advantages in becoming more competitive through focusing on customers and making
operations efficient. More recently, Prajogo (2006), while comparing the two data-sets from 1994 to 2001 found that the
Australian organisations are becoming more customer-focused. Thus, understanding of CSFs and the barriers faced
 6484 M. Kumar et al.

during QM implementation may facilitate in its successful deployment across the organisation and sustain benefits in the
long run.
Researchers have also conducted few cross-sectional studies to understand the relationship between Lean/Six Sigma
implementation and improvement in organisational performance of SMEs (Achanga et al. 2006; Antony, Kumar, and
Labib 2008; Dora et al. 2012; Kumar 2010; Timans et al. 2011). The results of the previous studies have shown that
many SMEs were not aware of Lean/Six Sigma nor did they have the resources to implement Lean/Six Sigma projects,
but those who have adopted it have reaped the benefits both at the strategic and at the operational levels (McAdam
et al. 2014; Prajogo 2006; Sohal and Egglestone 1994).
Given the importance of SMEs, it is necessary to re-examine the awareness and implementation of existing QM
practices in SMEs that may help them to achieve incremental innovation through process innovation. The relationship
between QM practices and innovation has received mixed viewpoints from academics and practitioners. Nonetheless,
there seems to be an emerging viewpoint when we discuss about QM promoting incremental innovation through process
innovation (Antony, Setijono, and Kumar 2012; Box and Woodall 2012). A recent qualitative study conducted by
Antony, Setijono, and Kumar (2012) in the UK manufacturing and service sector highlights the positive role played by
QM practices such as Lean Six Sigma in fostering incremental innovation and process innovation, but not product or
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radical innovation. Even the QM tools used for continuous improvement such as Pareto Analysis, Cause and Effect Dia-
gram, Quality Function Deployment, and Failure Mode and Effect Analysis support innovation management (Keathley
2012).
Researchers investigating the relationship between total quality management (TQM) and innovation in the Australian
context (Prajogo and Sohal 2001, 2004) reported similar findings – the positive role played by organic elements of
TQM (such as leadership, executive commitment, employee empowerment and organisational culture) in fostering inno-
vation performance and mechanistic elements (tools & techniques) – are supporting quality performance in an organisa-
tion. A mechanistic-TQM construct usually yields higher slope when regressed against a process-innovation construct
compared with a product-innovation construct (Lopez-Mielgo, Montes-Peon, and Vazquez-Ordas 2009; Prajogo and
Sohal 2004; Samson and Terziovski 1999; Santos-Vijande and Alvarez-Gonzales 2007).
Mellor and Gupta (2002) emphasise that although Australia and Europe are traditionally very close, their manufac-
turing strategies differ. In Europe, the UK constitutes the most developed commonwealth economy. As Australia is also
a very important commonwealth state, it would be interesting to study the impact of various QM practices in the
Australian and the UK manufacturing sectors. Thus, this study is an attempt to minimise the aforementioned research
gaps by conducting a comparative study on the implementation status of QM practices in the manufacturing SMEs of
Australia and the UK and their impact on organisational performance.

3. Research methodology
The objectives of this study are to assess the status of QM implementation in the Australian manufacturing SMEs vis-à-
vis the UK SMEs, assess the CSFs and barriers towards QM implementation and develop better insights into the use
and benefits of QM practices in SMEs. As Lean/Six Sigma research in SMEs is at its infancy, an exploratory survey
was the way forward to understand the key QM practices in SMEs and discover new facets on this topic. Researchers
have used survey as the primary research strategy to understand, assess and resolve the issues in the area of quality
management (Badri, Davis, and Donald 1995; Black and Porter 1996; Flynn, Schroeder, and Sakakibara 1994; Prajogo
2006), TQM (Ghobadian and Gallear 1996; Prajogo 2005; Prajogo and Sohal 2004; Yusof and Aspinwall 2000), Lean
(Achanga et al. 2006; Dora et al. 2012; Sohal and Egglestone 1994) and Six Sigma (Antony and Banuelas 2002;
Antony, Kumar, and Labib 2008; Kumar 2007; Timans et al. 2011). Survey is perhaps the dominant form of data
collection method in the social science, providing for efficient collection of data over a broad population, amenable to
administration in person, by telephone, or over the Internet (Easterby-Smith, Thorpe, and Lowe 2008; Fowler 2002;
Saunders, Lewis, and Thornhill 2010).
Given the complexity involved in developing a new instrument, we used a pre-tested instrument from the past
empirical studies to ensure their reliability and validity (Prajogo and Sohal 2004; Tata, Prasad, and Thorn 1999). The
survey instrument developed by Antony, Kumar, and Labib (2008) based on prior research was adapted for both the
Australian and the UK studies. As both are English speaking countries, questionnaire was administered in English.
The questionnaire for the UK survey was structured into three main sections. Section one was designed to obtain
background information and general overview of QM practices in manufacturing SMEs. The second section includes
information on 13 CSFs, rated on a five-point Likert scale, of QM practices identified from past research. This section
also included information on the barriers encountered during implementation of QM practices.
 International Journal of Production Research 6485

Table1. Methodological details of sample firms involved in the empirical research.

Criteria Australia UK

Study period 2010 2008

Database used for sample selection Joint Accreditation System Australia & New Zealand (JAS-ANZ) FAME, Dunn & Bradstreet
Selection criteria Sample satisfy the definition of SMEs in the UK/Australia; & belong to manufacturing sector
only
Survey sample (random) 800 500
Response rate (%) 92 (11.5%) 64 (12.4%)

The final section of the questionnaire enquired about the benefits participating firms have experienced following the
implementation of QM. The metrics identified from the literature review process were the most commonly cited/used
metrics within a SME environment. A Likert scale of 1–5 ratings was used to measure the performance of participating
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firms, where 1 stands for negative benefit/improvement and 5 being crucial benefit/improvement, after the implementa-
tion of QM. The scores of participating firms were used to compare the differences, if they exist, in the performance of
SMEs implementing Lean/Six Sigma and other QM practices such as ISO 9000 certification.
The survey instrument designed for the UK study was pilot-tested to ensure content validity and the revised ques-
tionnaire (based on comments from academics and practitioners) was sent via postal mail, accompanied with the self-
addressed return envelope to ensure the maximum return of the survey along with the covering letter. Three weeks were
allowed to return the completed questionnaire. The covering letter was addressed to Managing Directors, Operations
Directors, Quality Managers and Production Managers of the sampled SMEs, which elaborated in detail the aims and
objectives of the study as well as its expected outcomes. The data analyses were conducted in SPSS 17.0 and excel
worksheet and the results were based on descriptive and inferential statistics.
Pre-tested questionnaire launched in the UK was re-designed to suit the Australian environment with slight modifica-
tions (e.g. two new CSFs were introduced namely: ‘fact based decision-making’ and ‘networking with government
bodies and academic institution’; and two additional performance metrics were added – ‘reduction of defects’ and
‘reduced work in progress’) to address the current situation. A similar process to the UK study was followed to conduct
the survey in Australian SMEs, as discussed in the above paragraph. Other important details related to research method-
ology is presented in Table 1.
A very low response rate for both the Australian (11.5%) and the UK (12.4%) studies was observed, which is also
one of the limitations of this study. However, similar response rate were reported in the literature when conducting QM
research globally within the SME sector (Ahmed, Hassan, and Taha 2004; Anderson and Sohal 1999; Co, Patuwo, and
Hu 1998; Sousa, Aspinwall, and Rodrigues, 2006; Spencer, Roger, and Daugherty 1994). The findings from the survey
are presented in the next section.

4. Findings from the survey

The result presented in this section is a comparative analysis of the key findings from the Australian and the UK studies
on implementation of the QM practices in the manufacturing SMEs of the two countries. As discussed earlier, the pur-
pose of this survey was to assess the status of QM practices in the SMEs and critically analyse the similarities and dif-
ferences in their QM practices when implementing practices such as Lean, Six Sigma and the ISO 9000 quality
standard.

4.1 Demographic statistics and quality management practices

Out of 92 participating firms in the Australian study, 27% are small firms and 73% are medium-sized enterprises.
Similar representation was also identified in the UK study – out of 64 participating firms, 25% are small firms and 75%
are medium-sized firms. In the UK study, 49 firms (76.56%) were independent local firms, 14 (21.88%) firms were part
of MNCs and one being a joint venture company. However, in the Australian survey, 68 were local firms (73.9%), three
firms were joint-ventures (3.3%) and 21 firms were subsidiary of MNCs (22.8%). The distribution of the manufacturing
SMEs with respect to the industrial sectors in the two countries are presented in Table 2. More than half of the respon-
dents were either CEOs/Directors/GM, Departmental Head or Quality Managers, as depicted in Figure 1.
 6486 M. Kumar et al.

Table 2. Industry Specialisation of sample firms in Australia and the UK.

Industry sector Australia (Count) UK (Count)

Automotive 8 3
Textiles 1 3
Chemical 3 5
Aerospace 2 3
Electrical 2 7
Pharmaceuticals 7 3
Printing/paper 2 5
Mechanical 26 6
Food 9 7
Electronics & Semiconductor 5 8
Others 27 14
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60
53
50
40
Count

33
30
20 16 16 12 10
11
10 5 Australia
0 UK

Position of respondents

Figure 1. Current position of the respondents.

The respondents were asked to identify the QM practices implemented in the past or currently being implemented in
their organisation. As depicted in Table 3, ISO 9000 is the most common practice implemented by SMEs in the two
countries. Among the top five QM practices implemented in the Australian SMEs, Six Sigma was identified as the least
popular and ISO 9000 certification as the most widely known and used. In the UK sample, majority of SMEs had
adopted the ISO 9000 standard followed by Lean and Six Sigma. The average duration of implementation of Lean or
Six Sigma in SMEs was 5–6 years (in both countries), though experience of using the ISO 9000 standard is more than
12–14 years. Many SMEs in the sample have not moved beyond ISO 9000 certification and consider it as a destination
to their quality improvement journey. Similar findings were reported in the past literature (Antony, Kumar, and Labib
2008; Dora et al. 2012; Ghobadian and Gallear 1996; Yusof and Aspinwall 2000). The Australian SMEs seemed to be
more aware, concerned and mature than their UK counterparts in the implementation of QM. One of the key findings
that support the above statement is the statistics on absence of QM practices in 8 out of 64 SMEs in the UK compared
with 0 out of 92 SMEs in Australia.
Majority of the UK firms implementing Lean and Six Sigma had previously secured ISO certification. Further in-
depth analysis revealed that 17 out of 23 (approximately 74%) Lean firms in the UK had ISO 9000 certification in place
before embarking on the Lean Journey. Another interesting outcome of the analysis shows that 10 of these 17 (59%)
Lean firms have embarked on Six Sigma. This analysis gives an indication that ISO 9000 or a good quality manage-
ment system is the foundation or building block to embark on Lean and Six Sigma. Similar findings were reported in
the Australian study and in consensus with previous studies (e.g. Prajogo 2006) – almost all firms have implemented
ISO standards prior to adopting any advanced QM practices like Lean. This strongly indicates that ISO standards facili-
tates development of basic understanding of QM practices as well as encourages the firms to follow the path of continu-
ous improvement and implement advanced QM practices (Prajogo 2006; Van Iwaarden et al. 2008). It was encouraging
 International Journal of Production Research 6487

Table 3. QM practices adopted by SMEs in Australia and the UK.

QM practices undertaken Australia (Count) UK (Count)

ISO-Standards 78 49
Lean 33 17
TQM 15 5
Kaizen 6 7
Six-Sigma 4 10
Theory of Constraints 4 0
Business Process Reengineering 2 1
No quality initiative undertaken 0 8

to see that SMEs in Australia were more progressive in adopting advanced QM practices such as Lean compared with
their UK counterparts.
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However, the trend towards implementing Six Sigma was very low in the Australian case as well. Literature also
indicates less evidence of Six Sigma implementation in the SME (Antony, Kumar, and Labib 2008; Kumar 2010;
Timans et al. 2011). This fact further facilitates to explore the reasons for not implementing Six Sigma at the SME
level. Findings presented in Table 4 explain the reasons for the low implementation of Six Sigma in SMEs based on the
qualitative comments of respondents.
Most of the Australian SMEs highlighted their concern over the existing ‘conceptual confusion’ and its potential
‘relevance’ to them and stated reasons such as ‘No strategic benefit at this stage, organisation not mature enough’. The
other reasons highlighted by SMEs were ‘lack of knowledge’ and the state of ‘unawareness’ towards Six Sigma, hence
expressed their concerns such as ‘Not enough information known about Six Sigma’ and ‘Never heard of it’. ‘Lack of
resources’ was categorised as another reason for not implementing Six Sigma. In the case of the UK firms, majority
were discouraged to implement Six Sigma due to the lack of knowledge of the system to kick off the initiative (29.27%
of the total firms not implementing Six Sigma). This was followed by other reasons such as ‘not sure if relevant’, ‘lack
of resources’, ‘never heard’ and ‘cost issues’.
However, the literature cited the most common reasons for not implementing advanced QM practices such as Six
Sigma were ‘availability of resources’, ‘absence of top management commitment’ and ‘status quo’ towards ISO 9000
(Antony, Kumar, and Labib 2008; Dora et al. 2012). The Australian study indicated the lack of maturity of SME to
understand and implement Six Sigma that needs further exploration in future research. Authors are of similar opinion
that getting the basics right, i.e. rigorously following a standard and procedures for daily operations and applying tools
of continuous improvement, may prepare SMEs to move to the next level of the QM journey, i.e. Lean and Six Sigma.
This requires testing and validation in future research.
As shown in Figure 2 for the Australian survey, 12 (48%) out of 25 small firms and 7 (10.4%) out of 67 medium
enterprises do not have a separate quality department. When compared against the UK SMEs, almost similar results
were observed - 7 (33.7%) out of 16 small firms in the UK do not have a quality department in place as compared with
6 (12.5%) out of 48 medium-sized firms. Due to limited number of staff in small firms, usually a person performs
multiple tasks (Thomas and Webb 2003; Yusof and Aspinwall 2000), compared with medium-sized enterprises where
organisational structures seem more developed.

Table 4. Reasons for not implementing Six Sigma by Australian and the UK SMEs.

Reasons for not implementing Six Sigma Australia (% age) UK (% age)

Lack of Knowledge of system to kick off 42.62 29.27

Not sure if relevant 31.15 21.95
Lack of resources 814.75 19.51
Never heard >
>
17.07
Cost issue >
> 17.07
>
>
Other competing initiatives >
< 14.63
ISO is accepted and necessary 11.48 12.20
>
>
Leadership Desire >
> 12.20
>
>
Suitable for large company >
:
7.32
Bureaucratic 4.88
 6488 M. Kumar et al.

100.0%
89.6% 87.5%
90.0%
80.0%
70.0%

Percentage
56.3%
60.0%
52.0% 48.0%
50.0%
40.0% 33.7% Australia
30.0% UK
20.0%
10.4% 12.5%
10.0%
0.0%
Yes No Yes No
Small Medium
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Existence of Quality Department

Figure 2. Existence of quality department in small and medium-sized firms.

When asked about existence of teams for problem solving in the firm, similar results were obtained in both coun-
tries, i.e. 42 and 31% of the firms in the Australia and the UK respectively do not have teams for problem solving activ-
ities. Further analysis of data showed that small business owners struggled in comparison with medium-sized firms
(in both countries) to form teams for problem solving for improving their critical business processes. More than 50% of
the sample firms (in both countries) have teams for problem solving to conduct review meetings either once a week or
only when the problem occurs in the business processes. Medium-sized firms held more team review meetings during a
week compared with the small firms for resolving mundane or complex problems in the organisation.
The details of approaches existing within SMEs for training and knowledge transfer (KT) to their staff are presented
in Table 5. Majority of the SMEs provided in-house training to their employees rather than seeking external help of con-
sultants. This is a cost-effective way of imparting knowledge within organisations. ‘Self-education’ was rated as the sec-
ond most common way of KT in the Australian SMEs followed by assistance from external consultants or attending
conferences. Self-education, whilst being proactive, is often unplanned and could sometimes result in creating concep-
tual confusion with respect to various QM practices. SMEs also used internet, books/research articles and self-education
medium to train their employees.
Pearson Chi-Square test was conducted to check the difference in the KT mechanism in SMEs. There was no degree
of association between size of firm and KT mechanism as the Pearson Chi-Square significance value was greater than
0.05 (p-value ranged from 0.62 to 0.99) for the KT variables. Also, irrespective of the types of QM practices imple-
mented, no significant differences were observed in the KT mechanism of the participating SMEs. The area of knowl-
edge transfer is quite contemporary (Howard 2005) and more focus is required.

Table 5. Knowledge transfer mechanism to improve understanding of QM practices in Australia and the UK.

Knowledge Transfer (KT) mechanism Australia (% age) UK (% age)

In-house Training 81.52 93.8

Conferences 20.65 17.2
External Consultants 27.17 31.3
Internet 13.04 14.1
Self-Education 36.96 18.8
Book/research articles 13.04 9.4
Other methods 11.96 9.4
 International Journal of Production Research 6489

4.2 Success and failure factors

CSFs are very important for the viability of any business as failure to address CSFs could result in failure of the busi-
ness (Achanga et al. 2006; Antony, Kumar, and Labib 2008; Prajogo and Sohal 2004; Rockart 1979). In order to evalu-
ate the understanding of the CSFs and their implementation status in the firm, respondents were asked to rate the
importance of each CSF on a five-point Likert scale, with 1 referring to ‘not important at all’ and 5 as ‘very important’.
In order to find the gap between the importance of a CSF and its actual practice in company, a similar rating scale
(where 1 represents ‘very poor practice’ and 5 corresponds to ‘very good practice’) was used to measure the extent of
implementation of CSFs within firms. Based on the case study findings from the UK study (Kumar and Antony 2009),
slight modification was made in the CSFs for the Australian study. Two new factors that emerge from the case studies
conducted by Kumar and Antony (2009) in 10 UK firms – ‘fact-based decision-making’ and ‘networking with Govern-
ment & Academia’ – were included in the Australian study. Results are presented in Table 6.
The Australian study identified (Table 6) ‘leadership and management commitment’, ‘communication’ and ‘educa-
tion & training’ as the top three CSFs in the successful implementation of QM practices in SMEs. Similar findings were
reported in the UK study with ‘leadership and management commitment’ considered as the most important CSFs, whilst
‘vision & planning’ and ‘IT & innovation’ received the lowest mean value of importance. Most of the items in both
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studies had a mean importance equal to or greater than 4. Majority of the items in Table 6 received similar scores. In
both countries, the mean score for each CSF in practice is lower than given for its importance.
A t-test was performed (at 5% significance level) to identify whether the mean value for importance and actual prac-
tice of CSFs were statistically different from each other. Result showed that the gap between the mean values of impor-
tance and practice was statistically significant in both countries. This indicates that even though the respondents
acknowledge the importance of CSFs for any QM practice implementation, in practice there is a gap. There could be
many reasons for this gap, but smaller gap means more effective implementation of the QM practices and higher chance
of success from implementation.
CSFs were tested against the control variables (size of firm or type of QM implemented) to identify the degree of
association between control variables and CSFs. Interestingly, no significant differences were identified across the factors
listed in Table 6 with respect to size of the firm (small vs. medium-sized) or types of QM practices implemented (Lean/
Six Sigma vs. ISO 9000). SMEs implementing ISO perceived the importance of these CSFs in a similar way as firms
implementing Lean and/or Six Sigma. The CSFs findings clearly indicate that, irrespective of the type of QM practices
or size of the firm, ‘leadership and management commitment is the most important factor to make QM successful
followed by ‘communication’, ‘education & training’, ‘linking QM to employees and customers’, ‘fact-based decision-
making’ and ‘culture change’. Majority of the items rated higher in Table 6 relate to the softer side or the human side
of QM implementation (Achanga et al. 2006; Prajogo and Sohal 2004; Samson and Terziovski 1999; Timans et al.
2011). The results indicate that it is the softer/organic factors that make the QM implementation successful in an
organisation, and therefore priority should not be given to the mechanistic factors like project management and usage of
tools and techniques of the QM only. Again, the factors listed above are equally important for innovation management
(Box and Woodall 2012; Keathley 2012; Prajogo and Sohal 2004). The CSFs support organisational culture for

Table 6. Gap analysis of CSFs of QM practices in the Australian SMEs.

Critical success factors Importance Practice GAP Sig.*

Leadership & Mgmt. Commitment 4.64 3.87 0.77 .000

Organisational Infrastructure 4.20 3.63 0.57 .000
Cultural Change 4.10 3.28 0.82 .000
Education and Training 4.27 3.50 0.77 .000
Fact-based decision-making 4.26 3.53 0.73 .000
Linking QM practices to Customers 4.16 3.34 0.82 .000
Linking QM practices to Business Strategy 4.02 3.32 0.7 .000
Linking QM practices to Employees 4.24 3.44 0.8 .000
Linking QM practices to Suppliers 3.98 2.98 1 .000
Communication 4.44 3.68 0.76 .000
Project Management Skills 4.07 3.20 0.87 .000
Project Prioritisation and Selection 3.97 3.26 0.71 .000
Usage of Innovative techniques and IT systems 3.77 3.23 0.54 .000
Networking with Government and Academia 2.96 2.60 0.36 .006

*Test performed at 5% sig. level.

 6490 M. Kumar et al.

Table 7. Impeding Factors to the implementation of QM practices.

Impeding factors from literature Rating from the Australian study Rating from the UK study

Lack of Resources 1 1
Lack of Knowledge 2 2
Lack of Top Management Commitment 3
Lack of Training 4 3
Poor Employee Participation 5 5
Internal Resistance 5 4
Ineffective Communication 5

continuous quality improvement and developing capability of inductive–deductive reasoning (through QM projects, edu-
cation and training, cross-functional team and knowledge sharing) that may promote creative thinking in employees
involved in QM implementation.
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Respondents were asked to identify the top five impeding factors that were considered as barrier to QM implementa-
tion. The results of the analysis show (see Table 7) that the lack of resources was one of the most important impeding
factors in the successful introduction of the QM practices in the Australia and the UK SMEs. Lack of resources covers
many aspects including financial resources, human resources, time, etc. Lack of resources was also cited as the most
common impeding factor in the SME literature on QM/CI initiatives that deter progress of any change management pro-
gramme in SMEs (Antony, Kumar, and Labib 2008; Ghobadian and Gallear 1996; Kumar 2007; Timans et al. 2011;
Yusof and Aspinwall 2000).
The relative ratings of impeding factors were different in the Australian and the UK SMEs. It was surprising to see
lack of top management commitment excluded from the list of top five impeding factors in the UK study, though this
ranked third in the Australian study. Does this indicate that the UK leaders are more committed to QM practices com-
pared with their Australian counterpart? Also, communication was ranked within the top five factors in the Australian
study but missing from the list in the UK study. The reasons for these differences need to be examined further by con-
ducting qualitative study in the form of case study or action research.

4.3 Impact (Benefit) of QM on organisational performance

In order to assess the impact/benefit of implementing QM practices, respondents were provided with a list of nine per-
formance metrics, extracted from the literature, for the UK study (Antony, Kumar, and Labib 2008; Beheshti and Lollar
2003; Hvolby and Thorstenson 2001; Kumar 2007; Sila, Ebrahimpour, and Birkholtz 2005). Two new metrics, namely
‘reduction of defects’ and ‘reduced work-in-progress’, were included in the Australian study. Respondents were asked to
rate benefits on a five-point Likert scale, where 1 represents ‘negative improvement’; 2 ‘no benefits’; 3 ‘some benefits’;
4 ‘significant benefits’; and 5 corresponds to ‘crucial’. Respondents were also given an option of ‘not applicable’. The
results are presented in Table 8.

Table 8. Comparing benefits of QM practices in the Australian and the UK SMEs.

Australia UK
Gap
Benefits N Mean N Mean

Reduction of scrap rate 87 2.77 56 3.78 1.01*

Reduction of cycle time 86 2.60 58 4.14 1.54*
Reduction of delivery time 86 3.38 56 3.65 0.27*
Reduction of defects 85 3.85 NA NA
Reduced work in progress 86 2.76 NA NA
Increase in productivity 86 3.58 58 4.08 0.50*
Reduction of production costs 86 3.42 54 3.59 0.17
Increase in profitability 86 3.66 54 3.62 0.04
Improved sales 84 3.26 54 3.41 0.15
Reduction of customer complaints 86 3.45 54 3.73 0.28*
Reduction of employee complaints 85 3.42 54 3.68 0.26*

*Statistically significant at 5% level.

 International Journal of Production Research 6491

The mean scores for the nine common performance metrics listed in the questionnaire across the two countries var-
ied to a great extent. The t-test shows that seven out of nine variables listed in Table 8 have significant differences in
the mean scores between the Australian and the UK SMEs. The Australian study (see Table 8) suggests that respondents
were confused about the benefits achieved or the organisations were not fully realising the benefits. The maximum mean
value attained is 3.85 for ‘reduction of defects’ followed by ‘increase in profitability’ and ‘increase in productivity’,
respectively. This could be due to several reasons such as the maturity of firms in terms of QM implementation, how
the benefits are measured and documented. The reasons for the differences in results need to be further explored. Other
benefits identified by the respondents included ‘increased customer base’, ‘improved discipline’, ‘structured problem
solving’, ‘more knowledge of advanced tools of quality for conducting continuous improvement projects’ and ‘improved
chances for business expansion’.
A comparison between small and medium-sized firms was conducted against the performance indicators to check
the degree of association between the size of the firms and performance indicators. The significance test revealed no dif-
ferences in the performance of the small firms compared with the medium-sized firms after the implementation of QM
practices in both countries. Spearman correlation test identified no degree of association between the size of the firm
and the aforementioned performance indicators. Irrespective of size of the firm, significant improvement was observed
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in cycle time and productivity after the implementation of QM practices.

To gain better insights into the impact of QM practices such as Lean and Six Sigma on organisational performance,
two clusters were created. The first cluster includes firms implementing Lean, Six Sigma or Lean Six Sigma, and the
second cluster included firm implementing only ISO 9000. Testing of the mean performance between the two clusters of
firms across Australian and the UK samples revealed significant differences – firms implementing Lean/Six Sigma out-
performed ISO 9000-certified firms across the nine performance criteria. This provides evidence that irrespective of the
size of firms, Lean/Six Sigma does have a positive impact on organisational performance, provided the initiative has the
support from senior management, and resources are made available for education and training of the employees (Dora
et al. 2012; Kumar 2010).
Respondents also replied to an open-ended question on the use of key quality tools that facilitated in improvement
of the operational performance of SMEs. Majority of SMEs were using few basic tools of QM/CI such as Pareto Analy-
sis, Cause and Effect Diagram, and Process Mapping. The knowledge and usage of advanced tools of Lean and Six
Sigma such as SPC, Design of Experiment, Failure Mode and Effect Analysis, and Hypothesis Testing were limited to a
very small fraction of the total respondents. As indicated above, SMEs implementing Lean and Six Sigma realised more
benefits from implementation of QM practices compared with non-adopters of Lean and Six Sigma. Both basic and
advanced tools of quality management promote inductive–deductive discovery process (by going back and forth
between idea and data), which is the key to process innovation (Box and Woodall 2012). Inductive–deductive iteration
in the form of the DMAIC process improvement framework or Plan Do Check Act (PDCA) cycle or the Lean five prin-
ciples can also lead to innovations (Box and Woodall 2012; Browning and Sanders 2012; Hoerl and Gardner 2010). A
systematic use of Lean and Six Sigma tools and sharing of its benefits through regular communication and group discus-
sion develop statistical thinking in the workforce, which is an important aspect of innovation.

5. Discussion and conclusion

This research on QM practices adopted by manufacturing SMEs in Australia and the UK provides a number of insights
into the maturity of SMEs to implement and realise benefits from the use of basic and advanced QM practices. ISO
9000 certification is the most popular QM practice used by SMEs in the two countries, with no more than 36% of
Australian and 26% of UK SMEs moving beyond ISO 9000 to advanced QM practices such as Lean and Six Sigma.
Interestingly, the Australian SMEs are more mature in implementing Lean and slow in embracing Six Sigma compared
to their UK counterparts. Nonetheless, results from both countries are in consensus with the literature (Coleman and
Douglas 2003; Gotzamani 2004; Kanji 1998; Soltani and Lai 2007; Terziovski, Samson, and Dow 1997; Timans et al.
2011), indicating that a good quality management system such as ISO 9000 could act as a foundation or building block
to embark on Lean and Six Sigma.
Results from this research suggest that the trend to adopt Six Sigma is quite slow compared with Lean. Although
the Australian SMEs have shown certain deviation in parameters from the findings in the UK, overall Six Sigma imple-
mentation is a real dilemma for SMEs. The common reasons cited for not implementing Six Sigma in this study are
similar to those reported in the literature, namely: ‘lack of knowledge of the system’, ‘never heard about Six Sigma’,
‘lack of availability of resources to implement Six Sigma’, ‘not sure if Six Sigma is relevant to their organisations’ and
‘cost issues’ (Antony, Kumar, and Labib 2008; Kumar 2007; Timans et al. 2011). However, Australian results further
highlight the issues of readiness or maturity to implement Six Sigma and its relevance in the SMEs context. It is
 6492 M. Kumar et al.

worthwhile for researchers and practitioners to investigate the need for Six Sigma implementation in SMEs (Kumar,
Antony, and Tiwari 2011) especially when past quality Gurus such as Ishikawa (1990) stating the regular use of seven
basic tools of continuous improvement (CI), to resolve up to 95% of quality-related problems in an organisation. The
use of the basic quality tools is also useful for incremental innovations that can be vitally important for SMEs to remain
competitive (Box and Woodall 2012). However, SMEs using advanced QM practices such as Six Sigma may benefit
from its systematic approach to process and product improvement, and innovation (Bisgaard 2006). Although the field
of QM is closely related to innovation and new product development, it is not viewed by business leaders as being
related to innovation (Box and Woodall 2012; Browning and Sanders 2012). Academic fraternity has a key role to
bridge the existing gap in quality management and innovation management research.
Results of our surveys reveal that CSFs of QM practices are independent of firm size and the type of QM practices
implemented. Leadership was considered as highly important and was being addressed accordingly by SMEs. Strong
leadership and management commitment are required to make any change initiatives successful in the organisation
(Achanga et al. 2006; Antony, Kumar, and Labib 2008; Kumar 2010; Prajogo 2006; Timans et al. 2011). Hence, it is
imperative for SMEs to have a strong management commitment and good leadership skills before embarking on any
QM practices.
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The inclusion of a new factor – ‘Networking with Government and Academia’ – in the Australian study received
the lowest rating. Given the resource constraints issue faced by SMEs, these networks could provide the required sup-
port and resources to raise awareness, promote and help SMEs implement QM practices such as Lean and Six Sigma.
The low rating for this factor is an indication of limited knowledge of SMEs to access the relevant funding or support
mechanism available from government or academic institutions (Khurshid, Kumar, and Waddell 2012; Kumar and
Antony 2009; Thomas 2007). The need to investigate the status of industry–academia linkages in relation to quality
management education and training is very important and requires further investigation.
SMEs belonging to a similar geographical location or making use of similar operational processes could also follow
the UNIDO’s (www.unido.org) cluster development methodology and pool resources for the provision of professional
training and education services with respect to Lean and Six Sigma. SMEs can form consortiums to face the challenge
of Six Sigma methodology. Cluster development methodology is encouraged through involvement of other players such
as academic institutions, industrial and professional association, chambers of commerce and even government.
Interestingly, different results were observed in the performance of SMEs after implementation of QM practices in
the two countries. The UK firms outperformed Australian SMEs across the nine performance metrics. Further explana-
tion was provided on the small improvement in performance of Australian SMEs – this could be the result of the matu-
rity of QM in SMEs, lack of understanding of performance measurement, and management and reporting. However,
firms implementing Lean/Six Sigma outperformed ISO-certified SMEs, as demonstrated in the Australian and the UK
samples. Similar findings were reported in the literature–researchers conducted few cross-sectional studies to understand
the relationship between Lean (Prajogo 2006), Lean/Six Sigma and performance of SMEs (Achanga et al. 2006; Antony,
Kumar, and Labib 2008; Kumar 2007; Kumar and Antony 2009; Timans et al. 2011). The results of the previous studies
have shown that many SMEs were not aware of Lean/Six Sigma or had the resources to implement Lean/Six Sigma
projects, but those who have adopted it have reaped benefit both at the strategic and at the operational levels.
The comparison between the two clusters, i.e. Lean/Six Sigma firms and firms implementing ISO 9000 or other QM
practices, indicates that SMEs are realising improvement in their performance metrics as they are advancing in their
quality journey from ISO to Lean/Six Sigma. This may help SMEs to achieve the goal of incremental innovation
through process improvement as indicated by SMEs implementing Lean/ Six Sigma (Antony, Setijono, and Kumar
2012). We propose that Lean/Six Sigma may be seen as a facilitator for process/incremental innovation, which is consis-
tent with the view that QM practices such as Lean, Six Sigma and TQM provide a fertile environment and platform for
innovation (Box and Woodall 2012; Browning and Sanders 2012; Prajogo and Sohal 2004; Samson and Terziovski
1999).
Critical analysis of the literature points towards the fact that the previous studies were conducted in an entire SME
sector and limited studies were done in sector-specific SMEs. Manufacturing SMEs is a large and complex sector, and is
very difficult to generalise the findings to the entire manufacturing sector. It is difficult to address all the issues collectively
for the entire SME sector; therefore, future studies should attempt to conduct sector-specific investigations to understand
the criticality involved in implementing QM practices within a given sector. The significance of sector-
specific studies is to record and address the idiosyncratic behaviour and issues of one sector and then the next. Therefore,
this survey has contributed significantly and data in this area form a foundation for further qualitative research.
Another area that requires further investigation from researchers’ and practitioners’ perspective is the relationship
between ISO 9000 and other QM practices such as Lean and Six Sigma. Is ISO 9000 a window dressing exercise for
SMEs to increase their market share/ customer base? Does strict adherence to the guidelines of ISO 9000 help SMEs to
 International Journal of Production Research 6493

improve their operational performance? Does ISO certification ensure smoother transition to advanced QM practices
such as Lean and Six Sigma? The statistical validity of these questions will be tested in the second phase of the study
using mixed method approach of the survey and multiple case studies. The regular use and effectiveness of the basic
tools of QM/CI in resolving quality-related issues in SMEs may add more validity to Ishikawa’s statement that up to
95% of quality-related problems could be resolved using the basic tools of CI. Again the relationship between QM prac-
tices and innovation in the context of SMEs need further exploration as the limited knowledge that does exist is focused
primarily on large organisations.

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