The guidelines of improvement: Relations among organizational culture, TQM and performance Changiz Valmohammadi a , Shervin Roshanzamir b,n a Department of InformationTechnology, Faculty of Management and Accounting, Islamic Azad University-South Tehran Branch, Shariati Avenue, Tehran, Iran b Faculty of Industrial Engineering, Islamic Azad University-South Tehran Branch, Entezari-Oskuyi Alley, Gerami Street, Enghelab Avenue, Tehran, Iran article info Article history: Received 27 December 2013 Accepted 17 September 2014 Available online 31 December 2014 Keywords: Organizational culture Total quality management (TQM) Organizational performance Pharmaceutical industry Structural equation modeling (SEM) abstract This study has four main goals: (1) diagnosing the organizational culture of Tehran's pharmaceutical companies; (2) investigating the implementation of different categories of TQM in these companies; (3) comparing two models explaining the relationships among culture, TQM and performance; (4) determin- ing the effect of culture and TQM on performance, according to the preferential structural equation model. A total of 209 valid responses were obtained from CEOs and senior managers of quality, operations, R&D and sales departments in the surveyed industry. The results specify the hierarchy and market cultures as the dominant types of culture and the leadership category as the most developed aspect of TQM. The findings of this study suggest that Tehran's pharmaceutical companies emphasize on stability more than flexibility. The analysis shows the positive direct effects of culture and TQM on performance and also the positive indirect effect of culture through its positive effect on TQM. By analyzing the culture profile, development degrees of TQM categories and performance indicators, some appropriate theories of effectiveness and quality strategies are suggested. While the relationships among culture, TQM and overall performance have been examined separately just one to one in prior studies, this is the first look at all of them in one unique model. & 2014 Elsevier B.V. All rights reserved. 1. Introduction Total quality management (TQM) is described as a collective, interlinked system of quality practices that is associated with organi- zational performance (Choi and Eboch, 1998). TQM has been widely adopted by firms in the last 50 years and yet firms report less than optimal results (Jayaram et al., 2010). However, three-quarters of TQM have failed entirely or have created problems serious enough that the survival of the organization was threatened. Several studies reported that the most frequently cited reason given for failure was a neglect of the organization's culture (Cameron and Quinn, 2005). Many approaches to quality management, including TQM hardly give long- term success to organizations. This is mainly because of the proble- matic nature of organizational culture (OC) within which managers find it difficult to practice their TQM activities (Kaluarachchi, 2010). Cultural change is essential for the successful implementation of TQM (Rad, 2006). The important role of OC in TQM success is frequently referred to in the literature (Chung et al., 2010; Gimenez-Espin et al., 2013; Green, 2012; Haffar et al., 2013; Kaluarachchi, 2010; Prajogo and McDermott, 2005; Rad, 2006; Roldán et al., 2012; Zu et al., 2010). Organizational culture might create an environment (Mathew, 2007) that would impact on both business and operational firm performance (Cadden et al., 2013). Therefore both OC and TQM can individually and effectively promote overall performance. However, no previous empirical studies have investigated how OC and TQM jointly affect organization's performance. In this research we compare two structural equation models explaining the relationships among these three extensive variables, the preferential model is used to determine the relationship between OC and TQM and their effects on organizational performance. In this study, we adopt the instrument developed by Cameron and Quinn (2005) to diagnose organizational culture and the 2011–2012 criteria for performance excellence of the Malcolm Baldrige National Quality Award (MBNQA) to measure the six TQM categories and organizational performance. We use the structural equation modeling (SEM) technique to examine the data collected from the pharmaceu- tical companies of Tehran. The main objectives of this study are as follows: (1) diagnosing the organizational culture of the survey industry; (2) investigating the implementation of different categories of TQM in its companies; (3) comparing two models explaining the relationships among culture, TQM and performance; (4) determining the effect of culture and TQM on organizational performance, accord- ing to the preferential structural equation model. Several reports outside of the pharmaceutical industry have addressed the critical factors for success by implementing TQM (Inoue and Yamada, 2013). Contents lists available at ScienceDirect journal homepage: www.elsevier.com/locate/ijpe Int. J. Production Economics http://dx.doi.org/10.1016/j.ijpe.2014.12.028 0925-5273/& 2014 Elsevier B.V. All rights reserved. n Corresponding author. Tel: þ98 936 576 9986. E-mail addresses: ch_valmohammadi@azad.ac.ir (C. Valmohammadi), st_sh_roshanzamir@azad.ac.ir (S. Roshanzamir). Int. J. Production Economics 164 (2015) 167–178