As noted thus far, the characteristics of a CEO are antecedents of the outcome of quality management. Correspondingly, previous studies contend that a CEO’s strong support of quality management is crucial to the execution and development of quality management activities (McAdam 1999). Moreover, because quality management promotes customer satisfaction via innovation (Goetsch and Davis 1994), it can be predicted that it will have a significant effect on business performance. Thus, we designed a research model as shown in Fig. 1.
The relationship between entrepreneurship and quality management activities
The exact definition of entrepreneurship is still in dispute, as the subjects and levels of analyses are different for each scholar. Some scholars define entrepreneurship as a process of promoting opportunities without being governed by controllable resources (Stevenson and Jarillo 1990); some define it as the creation of new organizations (Gartner 1985), while some define it as a corporate activity to explore and execute to create something new (Baron and Shane 2007); On the other hand, still others define entrepreneurship as the creation of new business, that is, activities to harness opportunities in markets by expanding organizational capacity and integrating newly produced internal resources (Burgelman 1984). In essence, entrepreneurship can be defined as a starting-up of a new business with innovativeness, management and improvement of existing organizations, and activities to facilitate outcome.
The sub-dimensions of entrepreneurship are innovativeness, risk taking, and proactiveness (Covin and Slevin 1986; Matsuno et al. 2002). Innovativeness is a process through which entrepreneurs transform market-oriented ideas into an opportunity. It signifies newness and uniqueness, which allow firms to be efficient and distinguished from competitors. Risk taking refers to a propensity towards promoting risks; it describes the level of willingness to aggressively pursue something despite prevailing uncertainty, or the degree of insensitivity towards or enjoyment of risks. Proactiveness defines a future-oriented viewpoint, or a tendency for aspiring to obtain leadership by anticipating and promoting new opportunities and exploiting emerging markets.
Entrepreneurship, as one of the characteristics of a CEO, thus plays an important role in quality management activities. The constructs of entrepreneurship (i.e., innovativeness, risk taking, and proactiveness) can also be considered as preceding variables of willingness to perform quality management activities, which means that these factors can also have a vast effect on quality business performance. The implementation of quality management per se, is a display of risk taking behavior and promoting innovativeness, and it is correlated with the characteristics of the CEO. In other words, quality innovation management is dictated by the characteristics of the CEO of an organization, which has been suggested as important situational factors of quality management (Lawler et al. 1992).
Shin et al. (1998) asserted that innovativeness is a tendency for executing and willing to experience creational ideas and that it positively affects innovative quality management activities, such as product development or product innovation. Schriesheim and Cogliser (2009) suggested that because quality innovation is not achieved via a phased process of sequential steps, but via a committed performance of quality innovation factors, firms with CEOs that are highly proactive are more likely to execute quality management activities. Furthermore, risk taking, which is a tendency for audaciously trying out unfamiliar methods of quality innovation, has a great effect on quality management activities because it allows firms to beat their competitors to developing and launching new products that are meaningful to customers, which in turn attenuates the uncertainty about the future of the company (Schriesheim and Cogliser 2009). Therefore, based on these discussions, we established the following hypothesis regarding entrepreneurship and quality management activities:
Hypothesis 1
Entrepreneurship of public performance center CEOs will have a positive effect on quality management activities.
The relationship between the perception of social responsibility and quality management activities
Bowen (1953) was the first to suggest an academic definition of corporate social responsibility (CSR). Since then, there have been many studies on CSR and suggestions of its definition, without much success in establishing a single, agreed definition. Even the terms related to the concept of social responsibility are used in a variety of ways, such as corporate responsibility or responsible business, corporate citizenship, corporate sustainability, corporate ethics, and sustainable entrepreneurship (Kim and Kim 2010). The World Business Council for Sustainable Development (World Business Council for Sustainable Development WBCSD 1999) defined corporate social responsibility as the “continuing commitment by business to contribute economic development while improving the quality of life of the workforce and their families as well as the community and society at large”. The most commonly used definition of corporate social responsibility is that from The European Commission in 2001, that social responsibility is an integrating concept that requires firms to “have in place a process to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders” (Preuss, Haunschild, and Matten 2009). This definition presents CSR in the viewpoint of stakeholders (i.e., members of society). That is, corporate social responsibility can be seen as a corporate activity that aims at elevating the firm’s value (Donaldson and Preston 1995).
Carroll (1991) and Maignan (2001) propounded four sub-dimensions of corporate social responsibility: economical responsibility, which is based on creating profit; legal responsibility, which demands law-abiding practices; ethical responsibility, which compels to do what is right and fair, and charitable responsibility, which demands donating resources to local communities to improve the quality of life.
Corporate social responsibility pertains to quality management. Quality management is a comprehensive management tactic to achieve performance via customer satisfaction. Previous studies suggest that CSR can have a positive effect on achieving such quality management goals. It has been found that CSR enhances a firm’s reputation and image (Brown and Dacin 1997; Sen and Bhattacharya 2001), and also positively affects employee satisfaction and organizational commitment (Brammer et al. 2007). Moreover, it has been proffered that CSR has positive effects in enhancing the qualities of products or services (Kim et al. 2011). Most notably, CSR affects customers’ perception of quality, and is an important factor in customer satisfaction (Kim and Yoon 2011). Integrating these studies together, CSR not only increases a firm’s reputation but also increases quality by prompting employee satisfaction, which ultimately leads to customer satisfaction. In the cases of public performance centers, in particular, CSR is more highlighted than in the cases of general firms because the core objective of public performance centers is to improve the quality of lives of local residents via expanding their enjoyment of arts (Lee 2006). As has been noted, the effect of CSR on customer satisfaction is translated into the public performance center industries, with public performance center CEOs’ perception of CSR directly affecting customer satisfaction. Given these points, it can be predicted that public performance center CEOs’ perception of CSR holds an intimate relationship with quality management. Therefore, we established the following hypothesis regarding the perception of CSR and quality management activities:
Hypothesis 2
Public performance center CEOs’ perception of corporate social responsibility will have a positive effect on quality management activities.
The relationship between social capital and quality management activities
Social capital is understood as a resource derived from social relationship structures, and is accessible and available for certain behaviors or purposes (Lin et al. 2001). The definition of social capital is varied in accordance with various academic traditions, level of analyses and focus of research, and its effect sites also run the gamut from human resources development and firm performance to regional or national prosperity (Huh 2011). Nevertheless, the fundamental focal point of social capital is that relationship networks are valuable resources that explain social behavior. Hence, social capital has been widely utilized to illustrate social behavior or results, such as promotion (Labianca 2004), interdepartmental exchange and integration of resources within organizations (Tsai and Ghoshal 1998), team performance (Labianca 2004), creation of intellectual resources (Nahapiet and Ghoshal 1998), knowledge flow (Bell and Zaheer 2007), and knowledge sharing (Yang and Farn 2009).
The sub-dimensions of social capital are structural, relational, and cognitive dimensions (Nahapiet and Ghoshal 1998). The structural dimension refers to the type of actors’ overall network, including network ties and network configuration (Nahapiet and Ghoshal 1998). The relational dimension is specified as the relational characteristics formed and developed between individuals via interdependent processes (Granovetter 1992), and the cognitive dimension is defined as facilitating an understanding of things or common behavior patterns through shared goals, values, languages or meanings (Coleman 1988).
It is believed that social capital prompts the development of intellectual resources within an organization by affecting the conditions required for the exchange and integration of knowledge (Nahapiet and Ghoshal 1998). Social capital is based on the premise that network ties allow access to useful resources. Social network is the path through which information and knowledge flow, thereby facilitating exchanges of knowledge (Uzzi 1996; Hansen 1999; Levin and Cross 2004).
An organization’s innovative capacity largely dictates its ability to utilize intellectual resources. Several preceding studies on innovation have focused on the creation or use of knowledge, and those studies on knowledge or intellectual resources set innovation as the key outcome variable (Ahuja 2000; Subramaniam and Youndt 2005; Collins and Smith 2006; Frenz and Ietto-Gillies 2009; Zhang et al. 2009). This implies that knowledge creation and innovation are closely related. Innovation is a result of the interdependence and exchange of knowledge among various actors, as well as the convergence of different knowledge (Landry et al. 2002; Zheng 2010). Products and services are developed through such exchanges of knowledge (Hargadon and Sutton 1997). Summarizing the points discussed thus far, innovation is a process in which organizations solve problems through an accumulation of new knowledge, and knowledge creation is an integral part of innovation (Smith et al. 2005; Subramaniam and Youndt 2005).
Quality management spotlights gaining competitive advantages through achieving quality. It puts weight on customer satisfaction, human respect, and social contribution, while encouraging all members of the organization to utilize all available means to innovate and improve business to increase competitiveness, ultimately targeting to achieve organizational objectives (Kim et al. 2007). Drawing on this purpose of quality management, it is clear that innovation is a critical factor in quality management. All things considered, social capital is a condition required for the exchange and integration of knowledge, which prompts the creation of new knowledge and innovation. As we have discussed, innovation is an important factor in quality management, thereby suggesting that social capital comprises a significant portion of quality management. Therefore, we established the following hypothesis regarding social capital and quality management activities:
Hypothesis 3
The social capital of public performance center CEOs will have a positive effect on quality management activities.
The relationship between quality management activities and business performance
Quality management has a considerable effect on firms’ profitability, productivity and quality (Bou-Llusar et al. 2009), in addition to accomplishing performance (Gallear and Ghobadian 2004). Furthermore, previous studies revealed that the various methods of quality improvement via quality management improve operational and financial performance as well (Saravanan and Rao 2007). Schriesheim and Cogliser (2009) argued that quality management is not only confined to the production stages (e.g., process control and inspection), but is extended to envelop the overall operations of a firm, from designing products that meet customer demands to establishing corporate culture that underscores quality. In addition, the difference in business performance between firms using quality as a competitive weapon and those that are not has been identified in a strategic perspective.
Adam (1994) analyzed that various regulatory approaches for quality management improved the operating performance and financial results. Lawler et al. (1992) conducted a study on 100 American companies to measure quality management activity by using the elements of productivity, quality, customer service, competitiveness, profitability, worker satisfaction, job transfer result, and quality working condition. Such quality management activity was found to enhance the market share and profit margin, which are the operating performances. Furthermore, Zairi (2012) conducted empirical study that indicated that executing quality management activity have positive effect on the market share and profit margin. In this relationship, the variables of quality management execution were shown to have an important role.
Hence, we established the following hypotheses regarding quality management and business performance:
Hypothesis 4
The quality management activities performed by public performance center CEOs will have a positive effect on market performance.
Hypothesis 5
The quality management activities performed by public performance center CEOs will have a positive effect on financial performance.