🚀 go-pugleaf

----------------------------Original message----------------------------


#FYI:
#
#The 10/93 article in BusinessWeek was based on analysis done by the
#Juran Institute.  It is my opinion that the pub.'d results from this
#source is suspect for two reasons: they are a quality institute
#supportive of the quality movement and they do consulting work
#inthe field; secondly, they are quality consultants and not
#recognized as experts in analyzing financial or firm performance.
#
#This is not meant to slam the Juran Institute.  I believe they do
#fine work.  I even beleive their study.  However, I question their
#methodolgy on another plane.  The study was compared against the Dow
#Jones Industrial average and the S & P 500 indices.  I ask those of
#you who are familiar with statitistical studies can you tell me how
#these two comparisons offer a rational sampling group?  And, why
#would their comparison (of the two groups) be valid?
#
#My interpretation of the results:
#
#Essentially, the it shows that MBNQA winners will outperform
#broad based industry bundles of stock on stock prices only.  Given
#the small number of MBNQA award winners I don't beleive the analysis
#is particularly valid.  Also, given that typically, small firms
#outperform large firms in stock price, and given that MBNQA winners
#have a large composition of small firms relative to large firms
#relative to the DJIA or S&P 500 this is not a valid comparison based
#on sampling bias--INMYOPINION.
#
#My suspicions arise because it is well known that firms that apply
#for the MBNQA or the Deming award in Jpan often go to great lengths
#to win the awards at the expense of their custoemrs and shareholders.
# There have been several executives fired here and in Japan after
#winning these awards.  If the pursuit of the awards were truly
#valuable these 'winners' would be lauded not hung out to dry.
#
#The other source cited, the GAO study is even more affected by bias.
#They chose firms that scored 700 or higher on the MBNQA, not winners,
#and measured them on things like ROA and,.... perceptions of employee
#satisfaction, customer satisfaction etc--by executives associated
#with the award process.  The GAO study, while convincing and suitable
#for whitewashing unsuspecting beleivers, is dangerous (if your
#reputation is on the line) when used in the presence of non-believers
#who are statistically enhanced.  I can't find my copy right now, but
#I stopped using when I discovered its errors (after the second time).
#
#All of this aside, you have the problem of comparing firm performance
#across industries.  Which industry you are in, and the forces that
#drive the industry have significantly more impact than whether or not
#a quality program is intact.
#
#One other study, which is no longer often cited that sounds more
#intriguing is the PIMS study from the early eighties which went
#something like:  if you had the highest perceived quality in the
#industry despite market share, you earned higher profits than
#competitors.  Earlier studies showed that high market share was
#directly correlated with higher profits.
#
#Anyway, so much for the bubble.  There is still an opportunity for
#doing a study which compares the performacne of the firm to others
#within its industry--and excludes the bias that is the principle
#weakness of these other studies.

#
#Charles Barclay                         2404 Maile Way
#Dept. of MIR                            Honolulu, HI 96822
#U. of Hawaii                            Fax:  808 956-2774
#                                        Phone:  808 956-8545
#E-mail:    barclay@busadm1.cba.hawaii.edu
#
#

Thanks for all the response. I am collecting all the data and trying to
analyze it. I will post my findings. Based on the above I believe a more
valid statistical validation of the study is of interest. One needs to use
operationalized measures of profitability and also account for external
factors that may impact profitability (e.g. the recession, economic
climate). This isolation and selection of the variables is important to
ensure the correlation between MBNQA criteria compliance (for scores above
X) and profitability and removal of other noise factors that impact
profitability.
What is the best way to get PIMS access as it seems to be the only source to
get SBU level performance for MBNQA winners (AT&T, Xerox, IBM, etc.).

Anyone interested in a joint study??

Thanx again
Subo