The relationship between total quality management practices and their effects on bank’s technical efficiency

The purpose of this paper is to investigate the relationship between total quality management (TQM) practices and banks’ technical efficiency.

A survey questionnaire was constructed to measure TQM practices and quantitative data were collected to measure banks’ technical efficiency. The respondents were required to indicate their degree of implementation of quality management practices in the survey instrument. Organizational performance was indicated by quantitatively measuring banks’ technical efficiency using data envelopment methodology.

The study found that there is a relationship between TQM practices and organizational performance, as measured by banks’ technical efficiency. Furthermore, the TQM practices of human resources management and technical systems would appear to be important practices in impacting banks’ technical efficiency.

This study only considered commercial banks registered in the first market of Amman Stock Exchange due to quantitative data availability. Also, due to data envelopment analysis methodology of homogeneous, Islamic banks were excluded from the study. It can be argued, however, that the surrogating of different organizational performance in one measurement such as technical efficiency and which TQM practices have the strongest impact on such a measure can offer possibly different facets of a single phenomena such as TQM.

Although research on the relationship was investigated by relating TQM practices and a single organizational performance, but no research have surrogated many organizational performance in one measurement such as technical efficiency.