CEO's locus of control, TQM implementation and financial performance

This study examines the effects of the personality variable, locus of control on TQM implementation, and the effect of TQM implementation on the financial performance of Tunisian manufacturing firms. The model is tested using structural equations, surveying 70 Tunisian firms. The causal analysis results show no significant and direct effect of TQM implementation on sales and operating income growth, but a negative and significant direct effect of TQM implementation on ROA and ROS. Furthermore, results show a negative relationship between external locus of control and the TQM implementation. Similarly, the internal locus of control moderates the relationship between TQM implementation and financial performance. The key managerial implications of these results are that firms should not get disillusioned with TQM when short term improvements did not materialise and that many personal characteristics affect the benefits of effective TQM implementations. Although the locus of control is controllable by managers, managers must set rational expectations for the degree of benefits from TQM based on their firm's characteristics.