Analysis of the relationships among TOC use, TOC outcomes, and organizational performance

Purpose – The purpose of this paper is to examine empirically the relationships among the three elements of the theory of constraints (TOC), a number of observable outcomes expected to be associated with the application of TOC, and organizational performance. Design/methodology/approach – A model, which incorporates TOC elements as antecedent to TOC outcomes and TOC outcomes as antecedent to organizational performance, is proposed. Data were collected from 110 organizations identified as TOC adopters, and the model was assessed using a structural equation modeling methodology. Findings – Results indicate that the proposed model fits the data well. Adoption of TOC yields observable TOC outcomes, which lead to improved business unit performance. Analysis suggests that the use of TOC is effective in improving organizational performance. Research limitations/implications – Scales are developed for use in future TOC research. Practical implications – TOC is found to be effective in improving organizational performance. Originality/value – While this work was begun much earlier than the work of Boyd and Gupta, this work revises their model and main hypothesis. TOC scales are developed and validated for use by future TOC researchers.