LINKING TQM TO PROFITABILITY AND MARKET SHARE: THE MEDIATING ROLE OF CUSTOMER SATISFACTION AND THE MODERATING ROLE OF COMPETITIVE INTENSITY IN SERVICE INDUSTRIES

Abstract

This empirical investigation offers a comprehensive study of the complex relationship between Total Quality Management (TQM) practices and organizational performance in the service sector. Previous studies have demonstrated generally positive associations, but they did not specify the mediating or contextual factors that influence and shape this relationship in service environments. This study addresses several important gaps in the current literature by proposing and testing an integrated conceptual framework. In this framework, customer satisfaction functions as a mediating variable, while competitive intensity serves as a moderating variable in the link between TQM and organizational performance. A rigorous methodology is employed based on the theoretical foundations of the Resource-Based View and Structure Conduct Performance paradigms. Cross-sectional survey data were collected from a sample of 312 senior executives across various service industries in Nigeria. Advanced statistical analysis using Partial Least Squares Structural Equation Modeling (PLS-SEM) reveals significant direct positive effects of TQM implementation on both profitability and market share. More critically, mediating analysis shows that customer satisfaction closely mediates these effects, demonstrating that TQM influences organizational performance through both direct and indirect pathways. The moderating analysis indicates that competitive intensity amplifies the relationship between TQM and market share and similarly affects profitability. These findings carry important theoretical implications, as they elucidate the mechanisms through which TQM creates value in service organizations. Furthermore, key boundary conditions are identified that influence the effectiveness of TQM.

Keywords: Total Quality Management, Profitability, Market Share, Customer Satisfaction, Competitive Intensity, Service Industry, Resource-Based View.