Jsbed 10 2013 0162

Journal of Small Business and Enterprise Development
Critical success factors of quality management practices among SMEs in the food processing industry in
Malaysia
Hayati Habibah Abdul Talib Khairul Anuar Mohd Ali Fazli Idris
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Hayati Habibah Abdul Talib Khairul Anuar Mohd Ali Fazli Idris , (2014),"Critical success factors of quality management
practices among SMEs in the food processing industry in Malaysia", Journal of Small Business and Enterprise
Development, Vol. 21 Iss 1 pp. 152 - 176
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JSBED
21,1 Critical success factors of quality
management practices among
SMEs in the food processing
152
industry in Malaysia
Hayati Habibah Abdul Talib
Universiti Teknologi Malaysia, Kuala Lumpur, Malaysia, and
Khairul Anuar Mohd Ali and Fazli Idris
Universiti Kebangsaan Malaysia, Bangi, Malaysia
Abstract
Purpose – The purpose of this research is to identify and validate a measurement model for
assessing the quality management practices among small and medium-sized enterprises, specifically
for the food processing industry in developing countries such as Malaysia.
Design/methodology/approach – A survey was initially conducted among SMEs using a
questionnaire mailed to the managing director of companies selected from the SMECorp directory.
A total of 207 respondents from SMEs were used for further analysis. Two steps of analysis were
undertaken to validate the measurement model of critical success factors: principal component
analysis and confirmatory analysis.
Findings – Eight critical success factors of quality management practices are proposed for assessing
quality management practices among SMEs in the food processing industry in Malaysia. A
measurement model was then developed. PCA with Varimax rotation revealed 13 components, eight of
which were retained for further analysis. First- and second-order CFAs identified the CSF
measurement model along with the goodness-of-fit index. Thus, the findings also reveal the status of
quality management practices among food processing SMEs in Malaysia.
Research limitations/implications – This paper is to evaluate only the CSFs; therefore, further
work is needed to evaluate the relationship between CSFs and organisational performance of SMEs in
the food processing industry in Malaysia.
Originality/value – There are various papers regarding the assessment of quality management,
especially on TQM practices in various industries. However, few assessments of the critical success
factors of quality management practices of SMEs in the food processing industry, especially in
developing countries like Malaysia, have been found to date. The findings of this paper will help the
industry to identify its current quality management practice to focus on improving its performance.
Keywords Malaysia, Quality management, Food industry, Critical success factor,
Small and medium-sized enterprises
Paper type Research paper
Introduction
Background to the problem
Journal of Small Business and Currently, Malaysia is faced with a new paradigm regarding the importance of the food
Enterprise Development processing industry in the country’s economic development, since it is one of the
Vol. 21 No. 1, 2014
pp. 152-176 sectors that contributes to employment and an increase in the country’s exports
q Emerald Group Publishing Limited (Government of Malaysia, 2006; Deros et al., 2006). Nowadays, this industry is no
1462-6004
DOI 10.1108/JSBED-10-2013-0162 longer considered a cottage industry because of its contribution to the Malaysian
economy (Idris, 2004; Government of Malaysia, 2006; Idris et al., 2007). Moreover, the Critical success
importance of this industry to the Malaysian economy is also driven by good prospects factors
in the world food market.
Referring to Malaysia’s Third Industrial Master Plan (IMP3) for 2006-2020, the food
industry is generally less vulnerable to economic changes. However, it has been
estimated that the present global retail sales of food products are worth $US3.5 trillion,
and this is expected to grow. The driving factors in food demand in the market are due 153
to:
.
changes in disposable income, lifestyles, demographics and increased health
consciousness;
.
changes in consumer demand, which compel food manufacturers to meet specific
requirements and preferences in regional and domestic markets; and
.
global trade liberalisation through multilateral and regional trade agreements,
which will expand market access and world trade in food products.
Therefore, these factors will lead to market expansion and product development in the
food processing industry. Although the value of exports and imports of food products
in this industry in Malaysia has increased, indirectly, it also leads to competition in the
market. Therefore, the quality concept is the critical element requiring consideration by
any organisation seeking success and an improvement in business excellence in the
market.
Generally, small and medium-sized enterprises (SMEs) in Malaysia are categorised
into two sectors:
(1) manufacturing; and
(2) services.
As reported by the Small and Medium Enterprises Corporation, SMECorp (formerly

known as SMIDEC) (Small and Medium Enterprise Corporation, 2006), the number of
companies in the manufacturing sector is 40,793, of which 39,376 – i.e. 90 per cent –
are small and medium-sized enterprises. In addition, a third manufacturing sub-sector,
food and beverages, is dominated by SMEs, with 5,925 companies out of a total of 6,069
in this industry. However, SMEs are known to face problems in expanding and rarely
succeed in business because of their deficiencies in knowledge, skills and business
resources as well as a problem with low quality products (Quazi and Padibjo, 1998;
Yusof and Aspinwall, 2000; Temtime, 2003; Abdul Rahman and Tannock, 2005).
Therefore, the authors believe that, in order to encourage the players in this industry to
take advantage of those opportunities related to the potential of the food market, the
status of quality management practices requires investigation. Moreover, the status of
quality management implementation among SMEs in the food processing industry in
Malaysia remains unknown due to the research gap identified.
Research gap
Over the years many researchers have been working on quality management models of
business excellence and business performance for both large companies and SMEs in
general. However, as evidenced by the literature, very few research findings have been
reported on food-based SMEs, especially in Malaysia. Most previous studies related to
JSBED the food industry concern the impact of food sciences and quality assurance on food
safety and hygiene in other countries, such as the studies by Ogden and Grigg (2003),
21,1 Spiegel et al. (2003), Karipidis et al. (2009), Fotopoulos et al. (2010) and others.
Furthermore, in order to face the increasing competition in today’s marketplace,
SMEs, especially in the food processing industries in Malaysia, must intensify their
quality practices and increase their performance. However, a review of the quality
154 management practices in the food processing industry in Malaysia also shows that
very little empirical research has been conducted in the area of TQM implementation
within this industry. Additionally, research on quality management practices
conducted in manufacturing industry in Malaysia has been mainly concerned with:
.
the automotive industries, such as the work by Deros et al. (2006), Halim et al.
(2008), etc.;
.
the electric and electronics industry, such as the work by Agus (2005), Abdullah
et al. (2008), etc.; or
.
SMEs in general, such as the work by Abdul Rahman and Tannock (2005) and
Thiagaragan et al. (2001).
Consequently, to date, there are no empirical studies on quality management in the
food processing industry in Malaysia, and the extent of quality management practices
among SMEs in this industry is still a grey area. As a result, the authors believe that
the current situation of TQM implementation in Malaysian food processing companies
remains unclear. For this reason, research questions concerning aspects of quality
management practice among SMEs in the food processing industry in Malaysia are yet
to be answered and remain pending. Thus, posing the research question “What are the
total quality management practices that are significant for SMEs in the food
processing industry in Malaysia?’ aims to fill in the research gap. The answer to this
research question should provide Malaysia’s food processing or manufacturing
companies with practical assistance in the area of quality management
implementation. Further, this study aims to identify the TQM constructs and then
to develop a measurement model to assess the quality management practices of a SME
in the food processing industry. This study will contribute in identifying critical
factors of quality management practices for achieving and sustaining organisational
performance in this industry.
Literature review
TQM and identifying CSF
Total quality management (TQM) or business excellence has become a very popular
idea in the last decade. It has gained widespread acceptance as a means of gaining and
sustaining a competitive edge in the global market (Quazi and Padibjo, 1998; Yusof and
Aspinwall, 2000; Lakhal et al., 2006; Pinho, 2008). However, when trying to measure the
overall performance, or to identify the strengths and areas of improvement and to
prioritise efforts, organisations still face considerable difficulties (Kanji, 2001).
Furthermore, organisations need a framework that is comprehensive, flexible and easy
to adopt. Since success clearly depends on a combination of factors that are
interrelated, the approach must be holistic, important and at the same time ensure that
any change in one of the components will not have a negative effect on the overall
system (Kanji, 2001). Many companies are aware of the necessity to implement quality
management as well to attain the status through earning national or international Critical success
accreditation awards. factors
TQM is a management approach to improve the effectiveness, flexibility and
competitiveness of a business as a whole. The techniques of TQM can be applied
throughout all the departments of a company so that people from different
departments, with different priorities and abilities, will be able to communicate and
help each other (Hamzah and Ho, 1994). Furthermore, the best quality techniques and 155
TQM will help SMEs optimise their opportunity in the market. This is supported by
Lee (2002), where he noted that “The core principles of TQM encourage business
practices and they help enhance business excellence”. However, most of the TQM or
quality management research has been conducted in heavy industries such as the
automotive and electric and electronic industries; therefore, the authors have used
those previous studies to develop the measurement items for the CSF and ORGP
construct, which quantifies quality management practices among Malaysian food
SMEs. Furthermore, this is supported by Capmany et al. (2000), Singh et al. (2006) and
Karipidis et al. (2009), who noted that:
. . . since there [is] not enough experience in the implementation of quality practices in food
companies, the general research findings from the adoption of different quality practices,
such as TQM, ISO 9000 and others, in various economic sectors (food and non-food) are
significant.
According to Capmany et al. (2000), the transfer of experience from the non-food sector
is not ruled out, because previous research has revealed interesting similarities in the
application of such quality assurance systems in various food and non-food
organisations. Furthermore, manufacturing and service organisations have had similar
experiences with ISO 9000 in terms of the resources required for registration, the
motivation for implementation and the difficulties encountered with the standard. This
study may also draw on experience from the service sector in addition to the
manufacturing sector (Singh et al., 2006).
TQM constructs have been investigated extensively. The critical factors of TQM
can be described as best practices or ways in which firms and their employees
undertake business activities in all key processes (Sila and Ebrahimpour, 2005).
According to Sharma and Kodali (2008), TQM principles support the business
practices of cost reduction, enhance productivity and improve the quality of products
etc., all of which helps to support and fulfil the concept of excellence in manufacturing.
The key for successful quality management lies in these intangible factors and the
TQM tools and techniques (Brah et al., 2002).
Many researchers developing their frameworks are considering TQM as an
important parameter or construct and as an enabler for achieving manufacturing
excellence. Hence, they agree with the view that TQM excellence is a fundamental
criterion or element for achieving manufacturing excellence (Yusof and Aspinwall,
2000; Temtime, 2003; Sharma and Kodali, 2008; Pinho, 2008). However, TQM
implementation should be unique to an organisation (Temtime, 2003; Das et al., 2008).
According to Tari (2005), the critical factors of TQM differ from one author to another,
although there are common issues. TQM is much more than a number of critical
factors; it also includes other components, such as tools and techniques for quality
improvement. Thus, the authors identify and propose the construct of the critical
JSBED success factor by adapting and comparing the concept of total quality management
21,1 presented in the literature and described below.
Leadership. Many studies claim top management commitment to quality
programmes to be crucial to their success. Sila and Ebrahimpour (2005) proposed
that leadership plays a significant role in shaping the quality focus of the companies.
This is also supported by Tari et al. (2007), who claim that management leadership is
156 necessary for TQM effectiveness because leadership is directly related to quality
planning, human resources management, learning and customer focus. Moreover, this
element is concerned with the significance of the top leadership role and behaviour in
driving the organisation towards total quality (Sharma and Kodali, 2008).
Corporate planning. Corporate planning is important to examine how the company
develops, communicates, implements and improves its strategy and policy to achieve
excellence in company performance and a strong competitive position (Tan, 2002).

Effective strategic business planning and deployment of plans, alongside a focus on
the requirements of customers, suppliers and other stakeholders are crucial to the
success of TQM implementation (Brah et al., 2002). In addition, leadership has an
indirect effect on customer focus through strategic planning (Sila and Ebrahimpour,
2005). Thus, TQM should not be branded as a competitive strategy that is only for
large firms (Brah et al., 2002).
Human resource management. Human resource management has a greater effect on
quality outcomes (Tari et al., 2007). This result may indicate that people are a key
factor in TQM success. Additionally, employee empowerment is important for quality
improvement because it facilitates a sense of ownership. Employee empowerment
practices can improve internal and external quality outcomes (Yoo et al., 2006).
Customer focus. Customer focus has a direct effect on financial performance (Lakhal
et al., 2006). Boon et al. (2007) noted that customer focus was found to be significant and
that it contributes to employees’ job involvement. Moreover, customer satisfaction lies
at the heart of the marketing concept, where profit is made through the satisfaction of
consumers’ demands (Dubrovski, 2001). TQM has a positive link with customer
orientation in that strong consumer orientation encourages the firm to consistently
identify new customer needs and expectations, which leads to better performance
(Pinho, 2008).
Supplier focus. The relationship between buyer and supplier is an important factor
in organisational performance. According to Tari et al. (2007), firms must reinforce
their relationship with suppliers in order to manage their processes more efficiently.
This is supported by Temtime and Solomon (2002), whose study shows that the use of
supplier management and relationships will lead to achieving competitive advantage
in the long run.
Information management. In the areas of information and analysis, organisations
must have capabilities in the use of measurement and information for business
performance such as performance measurement, quality data and benchmarking.
However, information and analysis has an indirect effect on business results that is
mediated through human resources management and process management (Sila and
Ebrahimpour, 2005). However, the core practice of acquiring information and its
analysis has a direct and significant effect on both operational and financial
performance (Lakhal et al., 2006).
Process management. Process management encompasses the systems and Critical success
procedures for establishing quality in the many shopfloor activities involved in factors
manufacturing. Additionally, this element is given considerable attention by
management through the use of various tools and techniques (Sharma and Kodali,
2008). This construct also concerns how the organisation manages, evaluates and
improves its key process for quality output. This is supported by Tari et al. (2007), who
claim that process management influences continuous improvement and leads to high 157
quality outcomes.
Quality assurance. Referring to Baines (2002) as cited by Manning and Baines
(2004), quality assurance systems aim to assure that a product is safe. Additionally,
they noted that quality assurance schemes have evolved out of a need to demonstrate
due diligence in relation to hygiene requirements, they may also be used to gain access
to quality food markets. The implementing of a quality assurance system in the global
food market strengthens companies’ positions and improves their competitiveness

(Karipidis et al., 2009). Quality assurance may also benefit companies by allowing them
to create consumer and customer value (Trienekends and Zuurbier, 2008).
Furthermore, the use of standards as a management tool in companies promotes
and serves as indicators which measure the effectiveness and efficiency of business
processes (Piskar and Dolinsek, 2006).
Measurement model for the CSFs for quality management practices among SMEs in the
food processing industry in Malaysia
Based on a comprehensive review of previous studies, a measurement model was
developed to measure the critical success factors (CSFs) of quality management
practices among SMEs in the food processing industry in Malaysia. The critical factors
are identified from the various literature related to quality management practices as
well as TQM and organisational performance. There are several indicators that have
been identified as appropriate for SMEs to adopt for measuring the implementation of
TQM and its effects on business performance in the Malaysian food processing
industry. As shown in Figure 1, there are eight latent elements to the CSFs that enable
the evaluation of the quality management practices of SMEs in this industry, which
are:
(1) leadership;
(2) corporate planning;
(3) human resource management;
(4) customer focus:
(5) supplier focus;
(6) information management;
(7) process management; and
(8) quality assurance.
The role of the top management would in turn affect corporate planning, human
resource management, information management, customer focus, supplier focus,
process management and quality assurance implementation in the organisation. As
supported by previous studies, the implementation of these constructs has a great
JSBED
21,1
158
Figure 1.
Measurement model of
CSF of quality
management practices
influence on the performance; thus, it is believed that the CSF constructs will have a
significant effect on the performance of SMEs in the food processing industry. Thus,
they need to be given more attention by the management of companies so as to plan the
constructs that are effective and efficient and that would enhance organisational
performance.
Research methodology
The study began with an exploratory study, to counter-check whether the factors
presented in the literature were in agreement with the opinions or practices of the
owners of companies, particularly in the context of the Malaysian food processing
industry. The survey instrument used in this study is largely derived from reviewing
various conceptual and empirical quality management related studies, such as Powell
(1995), Agus (2005), Tari et al. (2007) and Feng et al. (2008). The questionnaire
developed was modified and adapted to the background of the Malaysian food
industries. A five-point Likert scale ranging from 5 ¼ strongly agree to 1 ¼ strongly
disagree is used in order to show the levels of the statement agreement of the
respondents. The questionnaire developed was mainly in the Malaysian national Critical success
language; however, in order to reduce the ambiguity of the technical terms, a translated factors
version in English was also provided.
This study is based on empirical data collected through questionnaires. The
selected respondents in this study involve SMEs in the food processing industry,
pooled from the SMECorp list. Questionnaires were sent to the managing director of
companies or to persons who were knowledgeable about the quality management 159
practices and performance of the companies (Metts, 2007; Zakuan, 2009; Nandakumar
et al., 2010). In a SME environment, the decision-maker is often the CEO who is also the
chief strategist. Hence, this practice is essential to guarantee that the survey
respondents do possess the knowledge required to answer the questionnaire
appropriately (Agus, 2000; Tan and Tan, 2005; Santos-Vijande and Alvarez-Gonzalez,
2007; Skrinjar et al., 2008).

Multiple sampling techniques, a combination of stratified and systematic sampling,
were used to identify the selected companies from the SMECorp list. Multiple
techniques involving postal, electronic and fax services and interviews have been used
and follow-up reminder letters have been sent purposely to increase the response rate.
The questionnaires were distributed to a total of 1,160 SMEs leading to only 207
useable questionnaires (a response rate of 18 per cent). To encourage completion,
respondents were promised, and received, a summary of the research findings as
recommended by Burca et al. (2006).
A reliability test was conducted. The value of each variable, as measured by each
statement on a scale of 1-5 was computed using the reliability analysis procedure. A
minimum a value of 0.7 for such variables indicates that the variables converge and
are good measures for the concept studies (Nunnally, 1978; Sekaran, 1996; Hair et al.,
2006). The results of the reliability test show a Cronbach’s a value ranging from 0.798
to 0.926. This indicates an internal consistency with the a value of more than 0.70, thus
no items have been dropped from each variable. Table I shows the summary of internal
consistency. The survey with 61 measured items had an overall a of 0.972; therefore
the instrument has been proved to be an acceptable instrument and confirmed as being
highly reliable.
Dimension/construct Number of items Cronbach’s a
CSF dimension 61 0.972
Constructs
Leadership 7 0.873
Corporate planning 7 0.845
Information management 7 0.881
Human resource management 9 0.884
Customer focus 8 0.875
Supplier focus 7 0.798
Process management 8 0.911 Table I.
Quality assurance 8 0.926 Summary of internal
consistency of CSF
Note: n ¼ 207 dimension
JSBED Analysis
21,1 The demographic data and profiles of the valid respondents were analysed and
summarised. In terms of the size of companies, 53.1 per cent of the respondents are
considered small, 25.60 per cent medium and 21.3 per cent micro enterprises. One hundred
per cent of the respondents were Malaysians. Referring to the market orientation, 51.7 per
cent of respondents target their products at local and international markets, 45.9 per cent
160 only to local markets, while 2.4 per cent were only for international markets. Regarding
the issue of accreditation received, only 20 per cent of the respondents do not have any
accreditations and 80 per cent are accredited with some quality certification or award.
To test for a potential non-response bias, a t-test was performed for the mean values
of the responses to a sample of the measurements of the critical success factors of quality
management practices between the early and the late respondents. Respondents from the
first and second mailings were categorised as early respondents, while those who
responded after the second mailing were categorised as late respondents. In this study,
the final data was split into two, depending on the dates they were received; those who
responded before or after the cut-off date, respectively (Armstrong and Overton, 1977;
Kaynak, 2003). The t-test was performed on the responses of these two groups and the
results yielded no significant statistical difference (at 95 per cent significance level). On
the critical success factor constructs, the results indicated that the mean values between
the two groups did not differ significantly, thereby suggesting that non-response bias
did not seem to be a problem in this study.
Evaluating CSFs constructs

We analysed the measured CSF items by using exploratory factor analysis via
principal component analysis in order to test whether the items in fact measure the
pre-specified constructs. These steps are discussed in the following subsections.
However, in accessing instrument validation, the reliability and validity needed to be
measured. To determine the appropriateness of a measurement instrument for
measuring a phenomenon, several tests must be employed at various stages of
development and empirical validation of the construct (Ahire and Devaraj, 2001). For
this study, we examine the approaches that have been implemented for the assessment
of content validity, unidimensionality-reliability, convergent validity and discriminant
validity. The validity and reliability of the measurement model can be validated by
confirmatory factor analysis using structural equation modelling (SEM) (Chau, 1997;
Tsaur and Liang, 2008). Additionally, the CSF dimension of the quality management
practices test using SEM-AMOS 5.0 was concerned with the sample size. Nevertheless,
including all the indicators from the scale in a structural equation model will require a
large sample size, which cannot always be obtained (Tena, 2004). It is also reported
that more items also require a larger sample size (Hair et al., 2006). Then, in order to
reduce the number of parameters to be estimated and to lower the complexity of the
model we decided to use the formation of composite variables (summated) in this study
(Landis et al., 2000; Tena, 2004). Therefore, the authors believe the 207 useable
questionnaires are adequate to run confirmatory factor analysis (CFA) using AMOS.
Exploratory factor analysis

Prior to conducting the factor analysis, the two tests were performed in order to check
the possible presence of multicollinearity or correlation among the items and the
appropriateness of factor analysis. Firstly, inspection of the correlation matrix revealed Critical success
the presence of many coefficients of 0.3 and above, which supports the factorability of factors
the correlation matrix (Tabachnick and Fidell, 2001; Field, 2000; Pallant, 2007).
Secondly, to verify if the dataset was suitable for factor analysis, the
Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy value has to be equal to,
or greater than, 0.6 and that the Barlett’s test of sphericity value is significant, where
the significant value should be 0.05 or smaller (Meyers et al., 2006; Pallant, 2007; Leech 161
et al., 2008). However, for this study, the KMO value is 0.916 and Bartlett’s test is
significant, where p ¼ 0.000; therefore, it is appropriate to conduct the factor analysis
(Tabachnick and Fidell, 2001; Meyers et al., 2006; Pallant, 2007).
The next stage of analysis was to analyse the CSFs element of the quality
management practice. In order to examine whether the items of a construct shared a
single underlying factor and to establish the discriminant validity of the constructs
under investigation, an exploratory factor analysis (EFA) was performed (Salaheldin,

2009). Exploratory factor analysis using a principal component analysis (PCA) was
used for the extraction method. Varimax with Kaiser normalisation was applied prior
to factor rotation, thus keeping factors with an eigenvalue of 1 or greater. According to
Tabachnick and Fidell (2001) and Hair et al. (2006), factor loadings greater than 0.3 are
considered to meet the minimal level, loadings of 0.4 are considered to be more
important, and if the loadings are 0.5 or greater then they are considered to be highly
significant. In this study, a factor loading of 0.4 was used as the cut-off point.
The goal of PCA is to reduce the measured variables to a smaller set of composite
components that captures variables with as much information as possible in the
measured variables with as few components as possible (Park et al., 2002). A PCA was
conducted on the dataset in order to understand the relationships amongst a set of
underlying dimensions (Yamandram and White, 2006). The 61 items measured the
CSFs of quality management practices of the SMEs in the Malaysian food industry.
The research model is subjected to the PCA using SPSS Version 16. The exploratory
factor analysis of CSF quality management practices reveals the presence of 13
components with eigenvalues exceeding 1; these 13 components accounted for 71.340
per cent of the total variance.
However, on examining the items, the authors decided to eliminate five items that
were allocated to five components and retained only eight components because of the
uninterpretability of the items or components. This decision was made as suggested by
Costello and Osborne (2005) and Pallant (2007), where a factor with fewer than three
items is generally considered weak and unstable and is not an optimal solution.
Therefore, only eight components appeared to be interpretable; these accounted for 62
per cent of the total variance. This total variance is adequate for further analysis,
which requires a minimum of 50 per cent of the variance (Tabachnick and Fidell, 2001;
Meyers et al., 2006). After eight components (factors) were extracted from the EFA
procedure, the authors interpreted the results by assigning labels to the factors. The
underlying factors were labelled as follows:
.
Factor 1: Quality assurance – This encompasses 11 items that represent 39 per
cent of the variance. The items are all related to quality assurance practices for
the wholesomeness of food products. Quality assurance is important and has a
significant impact on business performance. The internal consistency for
component 1 is 0.932.
JSBED .
Factor 2: Leadership – This includes nine items that account for 4.4 per cent of
21,1 the variance with a Cronbach’s a of 0.89. This item deals with the importance of
support from the top management for the implementation of quality
management practices in order to enhance quality practices and for achieving
company excellence. This element is concerned with the role of the top leader and
his/her behaviour in driving the organisation towards total quality.
162 .
Factor 3: Information management – This consists of eight items. This construct
focuses on the management of quality information that influences company
performance. Information and analysis have a direct effect on business results
through human resource management and process management. This factor
signifies 4 per cent of the variance, while reliability is 0.899.
.
Factor 4: Customer focus – This comprises nine items that deal with the
importance of the customer and focuses on how the management gains and
sustains customer relationships and satisfaction. It accounts for 3.7 per cent of
the variance and 0.866 for internal consistency.
.
Factor 5: Human resource management – This includes six items that are
associated with human resource management as one of the CSF of quality
management practices in the SMEs in this industry. This factor explains 3 per
cent of the variance. The a is 0.863.
.
Factor 6: Process management – This includes six items that are related to the
practice of quality management as a means of attaining high standards of
organisational performance. This factor explains 3 per cent of the variance, with
a reliability of 0.866.
.
Factor 7: Supplier focus – This comprises four items that deal with the
importance of how the management establishes a good relationship with their
suppliers as well as measuring their capabilities to fulfil the quality of materials
required. This component accounts for 2.7 per cent of the variance with an
internal consistency of 0.801.
.
Factor 8: Corporate planning – Only three items are included in this component.
This component is significant as it reveals whether the company has a clear
quality vision and has communicated with every employee in the company. This
factor explains 2.2 per cent of the variance with a Cronbach’s a of 0.737.
Confirmatory factor analysis

A confirmatory factor analysis was conducted to investigate measurement reliability
and validity and also to confirm the measurement developed (Hair et al., 2006).
Referring to Rahman and Bennett (2009), during EFA, some items were dropped from
the scales because they loaded into an unintended factor with a low loading value.
Several items were also dropped from the scale during the examination of the fit of the
measurement model through CFA. Each decision to drop an item from the scale was
made based on the statistical evidence and a thorough consideration being given to the
importance of the items to the research objectives. Therefore, to assess the
measurement model, CFA was conducted using AMOS 5.0 to investigate empirically
the suitability of the proposed model to the data. SEM appeared to be the most
appropriate method for addressing the research question through an analysis of the
multiple relationships between the dependent, mediating, moderating and independent
variables (Hu and Bentler, 1999; Chang and Chen, 2008). Moreover, SEM has become a Critical success
standard tool in many scientific disciplines for investigating the plausibility of factors
theoretical models that might explain the relationships among a set of variables (Hu
and Bentler, 1999).
Following the results of the PCA as discussed above, the eight labelled factors were
selected and measured by 56 items of CSF. Thus, eight constructs for the determinants
of CSF dimensions were retained for further CFA. This stage is also known as “testing 163
the measurement model” where CSF dimensions were tested using the first order
confirmatory factor model to assess a construct’s validity (Demirbag et al., 2006; Hair
et al., 2006). Referring to Kaynak (2003), Yee et al. (2005), Al-Hawari and Ward (2006),
Amin and Isa (2008), Jung and Hong (2008) and Zakuan et al. (2010), to assess the
measurement model, two analyses were conducted. Initially, a first-order CFA model
was used to examine the measurement model using AMOS 5.0. The purpose of a
measurement model is to describe how well the observed indicators serve as a

measurement instrument for the latent variables.
First-order CFA
The first measurement model tested showed that the CSF of quality management
practices had an eight-construct structure composed of leadership (LS), corporate
planning (CP), human resources management (HRM), information management (IM),
customer focus (CF), supplier focus (SF), process management (PM) and quality
assurance (QA). If the result of the first-order measurement model test with multiple
factors showed an inadequate fit, then a re-run CFA needs to be conducted. In order to
assess the measurement model and arrive at a good fit index, they are some important
aspects that need to be considered.
Before examining the hypothesised relationships, the global fit of the model needs to
be assessed. There is an excess of goodness of fit indices that can be used as summary
measures of a model’s overall fit (Skrinjar et al., 2008). Research evidence supports the
need to use more than one index (Stevens, 2002; Skrinjar et al., 2008). However, the
overall fit of the measurement and structural model is checked initially by examining
the x 2 statistics. A significant x 2 statistic indicates an inadequate fit, but this statistic
is sensitive to sample size and model complexity. Therefore, rejection of a model on the
basis of this evidence alone is inappropriate (Hair et al., 2006; Chen, 2008; Su et al., 2008;
Rahman and Bennett, 2009).
A number of indices were used to determine whether the fit of the data to the model
was adequate (Chau, 1997; Rahman and Bennett, 2009). Referring to Hair et al. (2006),
the use of multiple indices of different types and typically using three to four fit indices
provides adequate evidence of model fit that should be used to assess a model’s
goodness of fit and should include e.g. the x 2 value and the associated degree of
freedom (df), one absolute fit index (GFI, RMSEA, or SRMR), one incremental fit index
(CFI or TLI), one goodness of fit index (GFI, CFI, TLI) and one badness of fit index
(RMSEA, SRMR). Moreover, Hair et al. (2006) suggested that the researcher should
report at least one incremental index and one absolute index, in addition to the x 2
value and the associated degrees of freedom. At least one of the indices should be a
badness of fit index. A model reporting the x 2 value and degrees of freedom, the CFI
and the RMSEA will often provide sufficient unique information to evaluate a model.
JSBED In this study, following Kaynak (2003), in assessing whether or not the model fits the
21,1 data, the assessment of the model was done by examining the standardised loadings
estimates (standardised residual), modification indices and a number of goodness of fit
statistics (Chau, 1997; Kaynak, 2003; Yee et al., 2005; Al-Hawari and Ward, 2006;).
According to Hair et al. (2006), Meyers et al. (2006) and Salaheldin (2009), when testing a
measurement model, the researcher should expect to find relatively high loadings which
164 show that a good conceptual understanding of the construct and its items existed. The
rule of thumb used in assessing the standardised regression weight (factor loadings)
estimates that loadings should be at least 0.5 Thus, the low loadings suggest that a
variable is a candidate for deletion from the model (Byrne, 2001; Abd Hamid, 2006; Hair
et al., 2006; Yamandram and White, 2006; English et al., 2010). After considering the
suggested improvement given by the modification index and also referring to the theory,
the re-run of the CFA was conducted after deciding which items will be eliminated in
order to improve the fit indices. This process takes place several times until the model
fitness is achieved. Table II summarises the measurement models for CSF of quality
management practices, and Figure 2 shows the CSF dimensions of quality management
practices and their standardised regression weight for each variable.
Second-order CFA
The specification of a second-order CFA model is actually quite similar to a first-order
model if we view the first-order construct as indicators. First-order factor models
explain covariance among latent constructs better than a higher-order representation
of the same data. The first-order model will always fit better in absolute terms because
it uses more paths to capture the same amount of covariance (Hair et al., 2006). The
confirmatory factor analysis for CSF yielded a second-order factor structure providing
After modification
Measurement of index
Goodness of fit statistics Suggested model for CSF (re-run CFA achieved
(GOF) statistics (inadequate fit)a adequate fit)b
Chi-square (df) – 3,496.526 265.263

(1,456) (181)
p-value $0.05 0.000 0.000
x 2/df #3.0 2.401 1.466
Goodness of fit index (GFI) $0.9 0.635 0.898
Adjusted goodness of fit index
(AGFI) $0.8 0.600 0.858
Comparative fit index (CFI) $0.9 0.751 0.964
Tucker-Lewis index (TLI) $0.9 0.736 0.954
Normed fit index (NFI) $0.9 0.641 0.897
Root mean square error of
approximation (RMSEA) #0.10 0.082 0.048
a
Table II. Notes: The model inadequately fitted with the data. Thus, modification was needed to improve the
Summary of fitness of the model. In purposely eliminating the items to improve the model, fit indices are
goodness-of-fit (GOF) considering the value of standardized regression weight (R 2) and modification indices (MI). bGFI and
indices of CSF NFI are nearest to the fix index, while the other fit indices indicate a recommended level of indices,
dimensions thus suggesting a well-fitting CSF measurement model
Critical success
factors
165
Figure 2.
First-order CFA (adequate
fit) in assessing a CSF
dimension of quality
management
a satisfactory model fit. The absolute fit measure was acceptable with comparable
incremental and parsimonious fit indices. The final confirmatory factor analyses for
CSF elements provided an adequate fit, which ensures the applicability of the
distinctive factors in the following analysis.
Referring to the result of the second-order CFA, the modified CSF model with eight
constructs and consisting of 22 items showed an adequate GOF, as shown in Table III.
CFA for CSF resulted in an adequately fitting model of the x 2 statistic; this was 291.73
(degrees of freedom ¼ 201; p , 0:001), with the x2/df ratio having a value of 1.451,
i.e. less than 2.0, thereby indicating a good fit. The goodness of fit index (GFI) was
JSBED
Suggested First-order CFA Second-order CFA
21,1 Goodness of fit (GOF) statistics statistics (adequate fit)a (adequate fit)b
Chi-square (df) – 265.263 291.733

(181) (201)
p-value $ 0.05 0.00 0.00
166 x2/df # 3.0 1.466 1.451
Goodness of fit index (GFI) $ 0.9 0.898 0.890
Adjusted goodness of fit index
(AGFI) $ 0.8 0.858 0.861
Comparative fit index (CFI) $ 0.9 0.964 0.961
Tucker-Lewis index (TLI) $ 0.9 0.954 0.956
Normed fit index (NFI) $ 0.9 0.897 0.887
Root mean square error of
Table III. approximation (RMSEA) # 0.10 0.048 0.047

Summary of goodness of
a
fit (GOF) for the CSF Notes: To confirm the constructs in the first-order CFA, then a second-order CFA is conducted to
measuring model based confirm the construct and items; bGFI and NFI are very near to the fit index, while the other fit indices
on first- and second-order indicate a recommended level of indices, thus suggesting a CSF measurement model with an
CFA acceptable fit
0.890, which is below the acceptable fit index; however, this index value is close to the
threshold value of 0.90, and hence acceptable. The comparative fit index (CFI) was
0.961 and the Tucker-Lewis index (TLI) was 0.956. These scores are more than 0.9,
which is an excellent fit. The root mean square error of approximation (RMSEA) value
is 0.047, which is less than 0.08 and thus indicates a good fit.
On the factor loading, the standardised coefficient estimates are between 0.631 and
0.908, which are good since they are above 0.5 with a p-value of , 0.001. Therefore, it is
suggested that these eight constructs with 22 items can be used to measure the CSF
dimension of quality management practices among SMEs in the food processing
industry in Malaysia. The result of second-order CFA showed that the CSF constructs
exhibit both convergent and discriminant validity. Table IV shows the final retained
items with their corresponding standardised loading and the reliability of the
constructs. According to the variation of the CSF dimension of quality management
practices among SMEs in the food processing industry in Malaysia, the mean
distribution of each latent construct of the CSFs has been measured in this study.
Whereas leadership and quality assurance appear to be the most crucial constructs
with mean values of 4.51 and 4.50, respectively, information management appears to be
the lowest construct in comparison to the other elements of the CSFs measured in this
study. The maximum squared correlation in all pairs was smaller than AVE (minimum
value is 0.50), which supports the presence of discriminant validity. Meanwhile, the
standardised regression weight for all indicators and constructs is shown by Figure 3.
It is shown that all indicators and constructs have a good factor loading and are a valid
means of assessing the CSF dimension in this industry.
Results and discussion

A second-order CFA was conducted for the modified CSF model, the results of which
showed that the goodness of fit was satisfied, as shown by Table III. Although the GFI
Critical success
Standardised Average
regression Composite Cronbach’s variance factors
weight reliability alpha extracted
Latent constructs and observed indicators/items (R 2) (CR) (a) (AVE)
Quality assurance (three items) 0.91 0.909 0.77

QA1. The company places importance on food 167
safety improvement through quality assurance
practices 0.864
QA2. The quality assurance programme ensures
that the organization meets its own output
requirements and customer expectations 0.908
QA3. Quality assurances are benchmark
requirements of the food safety system 0.859
Leadership (three items) 0.78 0.779 0.55

LS1. The management is always committed to the
company’s quality programmes 0.658
LS3. The management views quality as an
important factor in attaining a competitive edge 0.749
LS5. The management actively encourages
changes and implements a work culture of
excellence in achieving “Best practices” 0.804
Process management (two items) 0.79 0.787 0.66

PM4. The company uses quality techniques/tools
for improvement in the manufacturing process 0.842
PM6. The management is committed to quality
improvement activities 0.774
Information management (three items) 0.83 0.825 0.62

IM1. The company has a systematic performance
measurement system 0.772
IM5. Quality indicators are used as key
performance indicators 0.764
IM6. The company actively engages in quality
benchmarking of competitor’s products, services
and processes 0.815
Human resource management (two items) 0.70 0.70 0.54

HRM4. The company encourages employees to be
totally involved in all quality activities 0.829
HRM6. The staff know their roles and work
responsibilities 0.631
Customer focus (three items) 0.78 0.773 0.53

CF3. Customer needs and expectations are
effectively disseminated and understood by all
staff members 0.745
CF4. The company encourages employees to Table IV.
consider customer needs and expectations 0.714 Second order CFA result
CF6. The company conducts a customer of CSF dimensions of
satisfaction evaluation 0.733 quality management
(continued) practices
JSBED
Standardised Average
21,1 regression Composite Cronbach’s variance
weight reliability alpha extracted
Latent constructs and observed indicators/items (R 2) (CR) (a) (AVE)
Supplier focus (three items) 0.79 0.774 0.56

168 SF1. The company has a good cooperative
relationship with its suppliers 0.789
SF2. The suppliers are required to meet the quality
and specifications of raw materials 0.795
SF3. Quality is the main criterion for selecting
suppliers instead of prices or delivery schedules 0.640
Corporate planning (three items) 0.74 0.737 0.50

CP2: The management briefs all staff members on

the objectives and strategies of the company 0.750
CP5: The management involves its employees in
setting the objectives and planning for the
company 0.679
CP6: The responsibility for quality is allocated to
Table IV. all members of the organization 0.672
value of 0.89 did not meet the threshold of 0.9, it was very close. The RMSEA value of
0.47 and the CFI value of 0.961 were above the respective threshold levels of 0.08 and
0.9. Therefore, the result supported the view that all indicators are reliable and valid in
order to measure the CSF construct of quality management practices among SMEs in
this industry, as shown by Table IV. Furthermore, Table V shows their relationship
and that the highest correlation is between process management (PM) and information
management (IM), (r ¼ 0.639). In addition, Table VI shows the standardised regression
weight and squared multiple correlations for the CSF constructs from the second-order
CFA. Since the value of each indicator is above the threshold value of 0.5, all constructs
are significant at p , 0.001. This shows that the items and constructs measured fit
well with the data.
Additionally, in order to assess the quality of the final measurement model, this study
examined the reliability, convergent validity and discriminant validity of the construct.
Referring to Table IV, all items for CSF constructs have good reliability and validity.
However, the presence of significant factor loadings and the acceptable fit statistics for
the CFA indicate that the model, as currently specified, demonstrates satisfactory
convergent and discriminant validity. Moreover, the measurement model is therefore
deemed acceptable for use in subsequent structural model analyses. In this study, the
construct reliability of all constructs exceeds the recommended level, and the average
variance extracted for all the constructs exceeds 0.5. These results indicate that the
measurement items have high reliability and validity and that all the scales met the
requirements for testing the structural model (Hair et al., 2006; Yang and Jolly, 2008).
The survey results indicate that most constructs of CSF dimensions are
inter-related, as shown by Table V, and are consistent with the findings of prior
research in non-food-based industries, such as Abdullah et al. (2008), Agus et al. (2009),
and Zakuan et al. (2010). However, based on the factor loading (standardised regression
Critical success
factors
169
Figure 3.
Second-order CFA
(adequate fit) in assessing
a CSF dimension of
quality management
weight), the results are as shown in Table VI, and demonstrate that process
management (PM) appears to be the most essential aspect in the CSFs of quality
management practices. This is supported by Kaynak (2003) and Zakuan (2009), who
claim that PM is the fundamental TQM element and its implementation has a
significant impact on organisational performance. Although the survey respondents
indicate a high degree of process management in their CSFs, they recorded a low
degree of supplier focus (SF) in comparison to the other elements of the CSFs
dimension of quality management practices measured in this study. This finding is
JSBED supported by Eng and Yusof (2003) in their study on TQM implementation in the
21,1 electrical and electronics industry in Malaysia.
In addition, the findings from the CFA showed the significant relationship between
constructs and items for measuring the CSF of quality management practices in the
food processing industry in Malaysia. Although the standardised regression weight
(factor loading) is shown to be moderate, being in the range 0.718-0.877, the eight
170 constructs formed based on the TQM philosophy in measuring the quality of
management practices among SMEs in this industry are significant, reliable and valid.
Therefore, the research questions identified at the beginning of this research have been
answered. Moreover, it can be concluded that SMEs in this industry in Malaysia are
also implementing TQM practices. However, their implementation is still at an early
stage and requires improvement. This finding is also in line with Mann et al. (1998,
1999); their study of 56 firms in the UK food industry indicates that this industry has
been relatively slow in adopting business excellence principles. Furthermore, they also
revealed the causes of the result:
.
this industry has not been exposed to the same degree of international
competition as some other industries; and
. the majority of companies are applying traditional methods of management and
are not learning from the experiences of best-practice companies and do not
apply a systematic approach to achieving business improvement.
Accordingly, the SMEs of this industry in Malaysia exhibit this scenario.
Dimension/latent construct n Mean SD 1 2 3 4 5 6 7 8
CSF dimension
1. QA 207 4.50 0.544 –
2. CP 207 3.94 0.652 0.464 –
3. SF 207 4.42 0.506 0.473 0.470 –
Table V. 4. LS 207 4.51 0.505 0.549 0.585 0.481 –
Descriptive statistics on 5. CF 207 4.15 0.532 0.505 0.549 0.486 0.540 –
the latent construct of 6. IM 207 3.91 0.706 0.563 0.628 0.473 0.563 0.588 –
CSFs based on the 7. PM 207 4.30 0.593 0.623 0.512 0.510 0.557 0.616 0.639 –
second-order CFA 8. HRM 207 4.22 0.594 0.454 0.545 0.473 0.521 0.505 0.518 0.494 –
Standardized coefficient
(factor loading) Squared multiple correlation
Path (R 2) p-value (R 2)
CSF ! QA 0.752 0.000 0.566

CSF ! CP 0.848 0.000 0.719
CSF ! SF 0.718 0.000 0.516
CSF ! LS 0.843 0.000 0.711
Table VI. CSF ! CF 0.845 0.000 0.714
The factor loading of CSF CSF ! IM 0.873 0.000 0.762
constructs based on the CSF ! PM 0.877 0.000 0.769
second-order CFA CSF ! HRM 0.812 0.000 0.659
Conclusion and further work Critical success
The PCA is commonly termed “the EFA”. The purpose of exploratory analysis is to factors
identify the factor structure or model for a set of variables. This is often involved in
determining the number of factors that exist, as well as the pattern of the loadings and
to evaluate each variable and those that are correlated within the same measured
constructs (Stevens, 2002; Zikmund, 2003). This study has identified eight reliable and
valid CSF constructs proposed for the SMEs in the Malaysian food industry. These 171
constructs have a total of 61 items. Then, the results of the EFA revealed eight major
dimensions of the CSFs that consist of 56 items for measuring the implementation of
quality management practices among SMEs in this industry; this was confirmed by
CFA using Amos. However, CFA results reveal that eight constructs with 22 measured
items are reliable and valid in assessing the CSFs dimension of quality management
practices. The results also showed that reliability and validity was achieved. Thus,
generalising, we conclude that the goodness of fit of the measurement model of CSF in
this study was acceptable for proceeding to the structural model. They consist of
quality assurance, leadership, information management, customer focus, human
resource management, processes management, supplier focus and corporate planning.
The important contribution of this paper is in the instrument used for this study and
will provide Malaysian manufacturing companies with a practical understanding in
the area of quality management practices based on TQM implementation, particularly
in food processing SMEs. Moreover, this study is significant and valuable to
researchers and practitioners because it identifies the key elements of the CSFs in
implementing quality management practices to enhance organisational performance of
the SMEs in the food industry. Consequently, SMEs will be able to use the instrument
to evaluate their TQM implementation initiatives and, at the same time, be able to
identify problem areas requiring improvement.
In terms of limitations, this paper only concentrates on assessing the constructs and
measured items of the CSFs of quality management practices through EFA and CFA.
Hence, further analysis is needed to evaluate the relationship between this
measurement model and the organisational performance. Furthermore, the authors
will be able to use this valid instrument to enhance the understanding of the process
and to develop an applicable TQM theory in the different industrial environment of the
food industry. Therefore, the authors will use the reliable and valid CSF measurement
model in assessing the impact on the organisational performance of SMEs especially in
the food processing industry in Malaysia via structural equation modelling.
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Corresponding author
Hayati Habibah Abdul Talib can be contacted at: hayati@ic.utm.my
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Universiti Kebangsaan Malaysia, Bangi, Malaysia

As reported by the Small and Medium Enterprises Corporation, SMECorp (formerly

excellence in company performance and a strong competitive position (Tan, 2002).

food market strengthens companies’ positions and improves their competitiveness

2007; Skrinjar et al., 2008).

Dimension/construct Number of items Cronbach’s a

CSF dimension 61 0.972

Evaluating CSFs constructs

Exploratory factor analysis

under investigation, an exploratory factor analysis (EFA) was performed (Salaheldin,

Confirmatory factor analysis

measurement model is to describe how well the observed indicators serve as a

Chi-square (df) – 3,496.526 265.263

Chi-square (df) – 265.263 291.733

Table III. approximation (RMSEA) # 0.10 0.048 0.047

Results and discussion

Quality assurance (three items) 0.91 0.909 0.77

Leadership (three items) 0.78 0.779 0.55

Process management (two items) 0.79 0.787 0.66

Information management (three items) 0.83 0.825 0.62

Human resource management (two items) 0.70 0.70 0.54

Customer focus (three items) 0.78 0.773 0.53

Supplier focus (three items) 0.79 0.774 0.56

Corporate planning (three items) 0.74 0.737 0.50

CP2: The management briefs all staff members on

Accordingly, the SMEs of this industry in Malaysia exhibit this scenario.

Dimension/latent construct n Mean SD 1 2 3 4 5 6 7 8

CSF ! QA 0.752 0.000 0.566

Technology Management, Vol. 19 No. 1, pp. 22-37.

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