The Effect of Total Quality Management Programmes on Financial Performance of Listed Manufacturing Firms in Kenya

Abstract

This study sought to determine the effect of TQM programmes on financial performance of listed manufacturing firms in Kenya. To achieve this goal, the study used a descriptive research design. The study used a census of all listed manufacturing firms. The study used both Primary and secondary data sources. Primary data was collected through a structured questionnaire while secondary data was extracted from financial statement of the listed manufacturing firms. Data analysis was done using descriptive statistics, Pearson’s correlation coefficient and regression analysis. The study found that the most popular TQM programmes used by the listed manufacturing firms are: ISO 9000 and continuous improvements. The findings observed that all the manufacturing firms complied with ISO 9000, this implies that most manufacturing firms were ISO certified. The findings also revealed that most manufacturing firms adopted integrated management systems to enhance information sharing; this contributed to cost reduction and thus improved financial performance of the listed manufacturing firms. The correlation results conclude that there was moderate correlation between TQM programs and financial performance of the listed manufacturing firms in Kenya. The findings also revealed that benchmarking practices and continuous improvement were statistically significant in the model. This is because their p-values were less than 5%. On the other hand, six sigma, IMS and firm size were found to be statistically insignificant because their probability values were above 5%. The limitation for this study is that it was limited to listed manufacturing firms in Kenya; the findings cannot be applicable directly or indirectly to other organizations operating outside the context of manufacturing sector. It would be appropriate for any reader to understand that these findings can only be used for comparative purposes only and not direct application of any other sector. The study therefore recommends that the Kenya Association of Manufacturers should ensure that manufacturing firms comply with the safety and regulatory framework on matters of quality management. This can be achieved by conducting regular audits to ensure that firms that provide goods and services comply with quality standards, policies and procedures in order to effectively provide quality services to the customers.