Investigating the impact of organizational excellence and leadership on business performance: an exploratory study of Turkish firms

SAM Advanced Management Journal, Wntr, 2008 by Musa Pinar, Tulay Girard

A distribution of firm size based on the number of employees indicated that 33.1% had 20 or fewer employees, 40.1% had 21 to 100, and 26.8% had more than 100 employees. Most firms in this region are small-to-medium sized operations, with 63.2% of all responding firms having 100 or fewer employees. Relatively few firms had ISO 9000 quality certification (11.8%) or were in the process of getting such certification (13.2%). Approximately 75% did not have and were not pursuing certification. Firms included in the survey varied substantially in export activities. Almost 30% had minimal no exports (less than 15% of sales); 33.7% had exports accounting for between 16% and 60% of total sales, and 36.8% had exports accounting for over 61% of sales. These figures suggest that the firms in this region of Turkey are fairly active in the export markets. Very few (7.1%) reported having a foreign partner.

Results

Before examining the impact of organizational excellence and leadership factors on business performance, effects of pertinent extraneous variables on business performance were investigated. Analysis of variance (ANOVA) was used to determine whether to include or isolate extraneous variables (i.e., industry, firm size) that could confound the effects of the independent variables on business performance--profitability, market share, growth, customer retention, sales growth, ROI, and personnel turnover. Firm size and industry type are more relevant control variables for business performance than variables such as exports as percent of sales, whether the firm has a foreign partner, or whether the firm is ISO 9000 certified. For example, exports as percent of sales can be affected by the profit margin of a particular product. Having a foreign partner or ISO 9000 certification may not be as directly or strongly related to firms' business performance as firm size and industry type. ANOVA did not reveal significant differences in any of the business performance variables based on the firm size and industry, where all of the P values of the F-tests were greater than the 0.05 significance level.

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In addition, univariate analysis of variance was used to test whether firm size and industry had an interaction effect in their relationship with business performance variables. Different size firms from different types of industries displayed exactly the same pattern in the seven business performance variables. The P values of the F-tests were greater than the 0.05 significance level. There were not confounding effects of the different sized firms from different industries on their profitability, market share, growth, customer retention, sales growth, ROI, and personnel turnover. Therefore, the following analyses were performed without having to include the extraneous variables.

The first step in the analysis was to test the measurement model components for internal consistency and discriminant and convergent validity. The second step involved testing the revised path model in Figure 2 based on the results of testing the measurement model.