Khairul Bahrun, Hernadianto, Ratna
Wili, Eti Arini, Rina Yuniarti
Universitas Muhammadiyah Bengkulu
Email: [email protected], [email protected],
[email protected], [email protected]
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ARTICLE INFO |
ABSTRACT |
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Date received : 12-10-2021 Revision date : 1-11-2021 Date received : 7-11-201 |
The purpose of the study was to analyze the effect of Total Quality
Management on Organizational Performance mediated by Knowledge Management.
This study used primary data in the form of a questionnaire to test
hypotheses and analyzed using Structural Equation Modeling (SEM). The sample
of this study amounted to 103 SMEs in Bengkulu City. The data analysis
technique used WarpPLS version 6.0 software. The
results showed that Total Quality Management had an effect on organizational
performance and knowledge management did not mediate the effect of TQM on
organizational performance. |
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Keywords: knowledge management; TQM; organizational
performance |
Introduction
Micro, Small, and Medium Enterprises (MSMEs)
play an important role in the economic growth of developing countries such as
Indonesia. The MSME sector was proven to be able to survive the global economic
crisis from 1997 to 1998. Even after the economic crisis the number of MSMEs
increased and was able to absorb 85 to 107 million workers until 2012 (Suci, 2017). It should be appreciated if MSMEs are an
important sector as a driving force for the Indonesian economy.
(Tambunan, 2012), revealed that one of the characteristics of
MSMEs in Indonesia is the potential to increase employment growth, generate
income, and reduce poverty. In addition, MSMEs play an important role in
economic development, distribution of development results, and increasing
international trade through diversification (LPPI, 2015).
Although MSMEs play an important role in
overall economic growth, in reality, there are still many traditional problems
faced by MSME actors in operational, financial, and performance development
activities, such as lack of capital both in quantity and source, low quality of
technology, lack of managerial skills and abilities. operating a business, low
productivity, regulatory burdens in the era of globalization, and a
technology-driven environment (Bassanini, Scarpetta, & Visco, 2000). In
addition, local MSME products in developing countries are less desirable than
imported products (Cheng Lu Wang & Chen, 2004). This is a
problem for domestic producers to compete with foreign products entering
Indonesia. For this reason, the right strategy is needed to win the competition
so that the products produced have high competitiveness and competitive
advantage to improve organizational performance.
One way to improve organizational performance
is by implementing Total Quality Management practices (Valmohammadi, 2011), which is
a customer-focused management system by involving all levels of employees
through continuous improvement (Mart�nez-Lemos, Puig Ribera, & Garc�a-Garc�a,
2014). (Almahamid & Qasrawi, 2017) revealing
that many researchers consider Total Quality Management as an approach to
improve efficiency, flexibility, and business competitiveness to meet customer
needs and have an impact on operational and financial benefits for
organizations to increase competitive advantage.
(Li, Zhao, Zhang, Chen, & Cao, 2018) Good implementation
of Total Quality Management will increase productivity, reduce production
costs, and improve quality. Total Quality Management can be implemented in any
organization or economic sector because Total Quality Management causes
product/service improvements, creates customer and employee satisfaction, and
improves financial performance, competitiveness, and productivity (Parvadavardini, Vivek, & Devadasan, 2016). Organizational performance can support
competitive sources through the capacity and capabilities of the operating
system selected by the organization, such as product/service prices, product
quality, and delivery times (Jagoda & Kiridena, 2015).
(Almahamid & Qasrawi, 2017) revealed
that the implementation of Total Quality Management had a positive effect on
organizational performance (Singh, Kumar, & Singh, 2018) (Shafiq, Lasrado, & Hafeez, 2019). This study proves that the more effective the
implementation of Total Quality Management, the maximum organizational performance
can be achieved. In contrast, (Kober, Subraamanniam, & Watson, 2012), stated that there is no evidence of the
relationship between Total Quality Management and financial performance because
the actors lack the commitment to implement Total Quality Management in the
face of external pressure. Total Quality Management practices encourage
organizations to improve good relationships with suppliers and customers (Honarpour, Jusoh, & Md Nor, 2018). This motivates the organization to gain more
knowledge about suppliers and customers from outside the organization.
The knowledge that has been acquired will be
disseminated within the organization while the existing knowledge can be
modified, and the new information used to respond to customer needs (Honarpour et al., 2018). For this reason, managing knowledge is very
important, so Knowledge Management is a solution for organizational success (Chen, Huang, & Cheng, 2009). (Almahamid & Qasrawi, 2017) showed
that Total Quality Management had a positive effect on the Knowledge Management
process (Ooi, Teh, & Chong, 2009). This
study reveals the importance of the practice of Total Quality Management in the
process of developing the right Knowledge Management for the organization.
Total Quality Management and Knowledge Management are long-term strategies to
achieve competitive advantage and innovation (Honarpour et al., 2018).
Knowledge Management is an important topic for
organizations (Al‐Hakim & Hassan, 2013). Knowledge
Management is a discipline and function of knowledge created, acquired, shared,
codified, and used through an environment that allows improving innovation and
organizational performance (Al-Tit, 2016). To improve competitiveness and rational
decision-making through the transfer of information derived from the knowledge
acquired by the company. (Almahamid & Qasrawi, 2017) there is a
positive influence between Knowledge Management and organizational performance,
both operational and financial (Zhining Wang & Wang, 2012).
Based on the description above, there are
still contradictions between Total Quality Management and organizational
performance. This study uses Knowledge Management which will mediate Total
Quality Management on organizational performance with a case study of MSMEs in
Bengkulu City. The existence of free trade makes SMEs need to maximize the
implementation of Total Quality Management in the face of increasingly
competitive market competition in improving organizational performance and the
quality of products/services offered. The purpose of this study is to determine
the purpose of Total Quality Management on organizational performance with
Knowledge Management as a mediating variable.
Method
This
research is descriptive quantitative with an explanatory approach. The
population in this study is SMEs in the city of Bengkulu. The research sample
amounted to 187 MSMEs. The sampling technique used is the convenience sampling
technique, which is a technique used to collect information from population
members who can provide the information needed by researchers (Sekaran, 2009).
The technique of collecting data is through an online questionnaire which is
distributed using a google form. Data analysis using Warp PLS version 6.0
program.
Of the 203
distributed questionnaires that could be processed, 175 (86%) and 28 (14%)
could not be returned, because the data were incomplete.
The validity test
uses convergent validity and discriminant validity with a p-value <0.05. The
validity test is presented in Table 1 and Table 2.
Table 1
Convergent Validity Measurement Results
|
Variabel |
Nilai AVE |
|
TQM |
0,505 |
|
KM |
0,531 |
Source: processed data (2021)
Table 2
Discriminant Validity Measurement Results
|
Variabel |
TQM |
KM |
KO |
|
TQM |
(0,722) |
0,503 |
0,06 |
|
KM |
0,503 |
(0,728) |
0,195 |
|
KO |
0,067 |
0,195 |
(0,861) |
Source: processed data
(2021)
Based on Table 1 and Table 2, it is known that both
the convergent validity and discriminant validity tests concluded that all
variables were valid and met the belief.
The reliability test in this study was tested using
the composite reliability coefficient and Cronbach's alpha value above 0.70.
The validity test is presented in Table 3:
Table 3
Composite Reliability Measurement Results and Cronbach's Alpha
|
Variabel |
Composite Reliability |
Cronbach�s Alpha |
|
TQM |
0,929 |
0,917 |
|
KM |
0,849 |
0,777 |
|
KO |
0,934 |
0,909 |
Source: processed data (2021)
Based on Table 3, it is concluded that all
variables in the study are reliable and can be relied upon to be used in
further analytical tests.
Table 4
Hypothesis testing
|
Direct Effects Before
Mediation Variables |
||
|
Relationship between
Variables |
Path Coefficient |
p-value |
|
TQM� -�� KO |
0,22 |
<0,01 |
|
KM - KO |
0,28 |
<0,01 |
|
Direct Effect After
Mediation Variable |
||
|
TQM - KO |
-0,08 |
0,11 |
|
TQM - KM |
0,59 |
<0,01 |
|
KM - KO |
0,04 |
0,26 |
Source: processed data (2021)
1. Testing Direct Effects Before Mediation Variables
a.
The
Influence of Total Quality Management on Organizational Performance
Based on Table 4, it is known that Total Quality
Management has a positive and significant effect on organizational performance.
This indicates that the implementation of Total Quality Management will play a
significant role in increasing the knowledge of an organization.
b.
The
Influence of Knowledge Management on Organizational Performance
Based on the calculation results show that
Knowledge Management has a significant positive effect on organizational
performance. This indicates that Knowledge Management has an important role in
improving organizational performance
2. Testing Direct Effects After Mediation Variables
a.
Effect
of Total Quality Management on Knowledge Management.
Based on Table 4, it is known that Total Quality
Management has a significant positive effect on Knowledge Management. These
results indicate that the practice of increasing Total Quality Management will
play a significant role in improving the knowledge management of an
organization.
3. Indirect Effect Test
a.
The
Influence of Total Quality Management on Organizational Performance through
Knowledge Management.
Based on Table 4, it is known that the path
coefficient value of Total Quality Management to organizational performance
before being included in the mediation variable and Total Quality Management to
organizational performance after being included in the mediation variable
decreased from 0.22 to -0.08 and the p-value was initially significant (<0,
01) becomes insignificant (0.11). According to Hair et al. (2010), when the
path coefficient value from the independent variable to the dependent variable
decreases and is not significant, the form of mediation that occurs is full
mediation. However, this is not supported by the direct influence test between
variables. The effect of Total Quality Management on Knowledge Management is
significantly positive, while Knowledge Management on Organizational
Performance is not significant. Thus, it is concluded that there is an
indication that Knowledge Management does not mediate the effect of Total
Quality Management on Organizational Performance. This shows that when
organizations implement Total Quality Management practices that encourage
organizations to carry out Knowledge Management processes, organizational
performance has increased but not significantly.
B. Discussion
The Influence of Total Quality Management on
Organizational Performance through Knowledge Management. The results showed
that knowledge management could not mediate the effect of total quality
management on organizational performance in MSMEs in Bengkulu City. The results
of this study do not support the research of Qaswari
et al (2017), which shows that the knowledge management variable can mediate
the effect of Total Quality Management on organizational performance. The
insignificant results may be due to the knowledge obtained from inside and
outside the organization is not used optimally and is not realized in the form
of knowledge that can provide added value for the organization to compete with
competitors.
Conclusion
The results showed that the knowledge
management variable did not mediate the effect of TQM on organizational
performance. This is because the implementation of KM is not good and is not
realized in the form of innovation that can provide added value so that it does
not improve organizational performance.
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