six sigma impact on performance.pdf
ABSTRACTThe purpose of the present study was to compare the impact of two
management methods --Total Quality Management (TQM) and the Six Sigma
method --on the financial performance of organizations. Financial performance
was measured as net income, return on assets, and stock price. The study sampled
45 companies from among manufacturing and non-manufacturing firms. All 45
companies had practiced TQM in the past and had then switched to Six Sigma.
Financial data were collected for three years of each company’s TQM phase and
three years of its Six Sigma phase. Each company’s financial performance
measures during these six years were adjusted to the average for their industry for
the same period in order to tease out any economic effect. A multivariate analysis
of variance (MANOVA) using Hotelling’s Trace was performed to
simultaneously test for the effects of management methods (TQM and Six Sigma)
and type of business (manufacturing and non-manufacturing) on the financial
performance (Net Income, Return on Assets and Stock Price). Where significant
effects were found, a t-test for each independent variable on the financial measure
was performed so as to determine which of the two levels of the independent
variable was the major contributor.
The result of the multivariate analysis of variance (MANOVA) showed a
statistical difference of the main effects of management method (p = 0.022) and
type of business (manufacturing and non-manufacturing) (p = 0.025). The results
on the paired t-test showed a statistical difference between TQM method and Six
Sigma method on the financial measures with a p-value of 0.033.
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