1 1 1 Importqnt

Int. J. Business Innovation and Research, Vol. 6, No.
3, 2012
Total quality management in service sector:

a literature review
Faisal Talib*
Mechanical Engineering Section,
University Polytechnic,
Faculty of Engineering and Technology,
Aligarh Muslim University,
Aligarh, Uttar Pradesh, India
E-mail: ftalib77@yahoo.co.in
*Corresponding author
Zillur Rahman
Department of Management Studies,
Indian Institute of Technology Roorkee,
Roorkee, Uttarakhand, India
E-mail: yusuffdm@iitr.ernet.in
M.N. Qureshi
Faculty of Engineering and Technology,
Department of Mechanical Engineering,
MS University of Baroda,
Vadodara, Gujarat, India
E-mail: mnqureshi@rediffmail.com
Abstract: Over the last two decades, service organisations have embraced total
quality management (TQM) as an effective management tool to improve their
service quality. They have begun to show a keen interest in TQM by working
on quality and related areas. TQM has become a major area of attention to
practitioners, managers and researchers due to its strong impact on business
performance, customer satisfaction and profitability. In the light of this, an
attempt has been made to study and understand the theory and concept of
TQM, its benefits as well as various facets of service components and its
classification. This study also explores the literature on the implementation of
TQM in selected service industries. The finding of this study provides a rich
contribution towards TQM theory, its role in service sector, as well as presents
the different components of services. This paper can help business managers
and quality practitioners in better understanding TQM, service systems concept
as well as TQM implementation in service sector. The scope for future study is
presented at the end.
Keywords: TQM; total quality management; service; service industry;
banking; ICT; information and communication technology; healthcare;
hospitality.
Copyright 2012 Inderscience Enterprises Ltd.
Electronic copy available at: http://ssrn.com/abstract=2725112
259
260
F. Talib, Z. Rahman and M.N. Qureshi

Reference to this paper should be made as follows: Talib, F., Rahman, Z. and
Qureshi, M.N. (2012) Total quality management in service sector: a literature
review, Int. J. Business Innovation and Research, Vol. 6, No. 3, pp.259301.
Biographical notes: Faisal Talib is an Assistant Professor at Mechanical
Engineering Section, University Polytechnic, Aligarh Muslim University,
Aligarh, (UP), India. He holds Masters in Industrial and Production
Engineering and currently pursuing PhD in Total Quality Management in
Service Sector from Indian Institute of Technology Roorkee, (Uttarakhand),
India. He has more than 13 years of teaching experience. He has 40
publications to his credit in national/international journals and conferences. His
special interest includes quality engineering, TQM, service quality, quality
concepts, industrial management, operations management and quality
management in service industries.
Zillur Rahman is an Associate Professor at the Department of Management
Studies, IIT Roorkee. He is a recipient of the Emerald Literati Club Highly
Commended Award and one of his papers was The Science Direct Top 25
Hottest Article. His work has been published and cited in various journals
including Management Decision, Managing Service Quality, Int. J. Information
Management, Industrial Management and Data Systems, The TQM Magazine,
Business Process Management Journal, Int. J. Service Industry Management,
Information Systems Journal, Decision Support Systems, Journal of Business
and Industrial Marketing and Int. J. Computer Integrated Manufacturing, etc.
M.N. Qureshi is an Associate Professor at the Faculty of Engineering and
Technology, Department of Mechanical Engineering, The MS University of
Baroda. He earned his Graduate and Post-graduate degrees in Mechanical
Engineering from MS University of Baroda and later on PhD degree from IIT
Roorkee, Roorkee. He has more than 75 publications to his credit in
national/international journals and on conference proceedings. His areas of
interests include logistics and supply chain management, industrial
management, quality management, etc.
Introduction
In the present era of rapid changes in market and economic development characterised by
phenomenon such as globalisation, deregulation of markets, advancement in technology
and intense competition, total quality management (TQM) becomes utmost important not
only in manufacturing sector but also in service sector. It seeks to integrate all
organisational functions to focus on meeting and surpassing customers requirements and
organisational objectives. TQM empowers every member of the organisation and offers
the opportunity to participate, contribute and develop a sense of ownership. It is intended
to promote continuous, sustained and long-term improvement in quality and productivity,
and eliminate employees fear of change. According to Kumar et al. (2011), TQM is a
modern management philosophy and a journey, not a destination. They further asserted
that it is a systematic management approach to meet competitive and technological
challenges which has been accepted by both service and manufacturing organisations
globally. TQM highlights the need to improve the quality of goods and services to better
utilise the resources of organisation (Collins, 1996). Kureshi et al. (2010) argued that the
terms TQM and business improvement are used interchangeably in the quality
Electronic copy available at: http://ssrn.com/abstract=2725112
TQM in service sector: a literature review
261
management research and showed significant relationship between them. Bellis-Jones

and Hand (1989) suggested that TQM is not just another management fad; it is capable of
delivering real competitive advantage. Lee et al. (2010) claimed that TQM being a
business management strategy, it also improves the quality of organisational
management, increase competitiveness and adds value to the customer as well as
provides a competitive edge for the organisations. This was also supported by Das et al.
(2008). Further, Holjevac (2008) stated that TQM is a system of enhancing and
improving flexibility, and introducing an effective and efficient business performance. He
further asserted that TQM guarantees a stipulated quality within the organisation.
Earlier, in 1970s, much of the initial attention was directed towards manufacturing
sector and was found to be effective in improving production and lowering
manufacturing costs as well as gain in competitive advantage (Garvin, 1983). The proven
potential of TQM to provide competitive advantage to manufacturing sector along with
universal applicability of the TQM concept have motivated and attracted academicians
and businesses managers to adopt TQM in the service sector as well (Issac et al., 2004;
Parasuraman et al., 1985; Sureshchandar et al., 2002). Though TQM has its origin in
manufacturing sector, it is widely believed that its principle and practices are equally
relevant to service sector as both use facilities as inputs to satisfy and surpass customers
needs. However, it is necessary to understand the unique characteristics of services for an
effective and successful implementation of TQM in service sector. According to Talib
et al. (2011e), TQM is a set of management practices applicable throughout the
organisation and geared to ensure the organisation consistently meets or exceeds
customer requirements. They emphasised that introducing TQM practices in an
organisation is a long-term commitment. The successful implementation and adoption of
TQM practices requires planning, time and efforts. Common TQM practices for service
sector include: top management, strategic quality planning, employee management and
involvement, supplier management, customer focus, process management, continuous
improvement, information and analysis, knowledge and education are important for
continuous and industry-wide improvement (Fotopoulos and Psomos, 2009). Further,
Talib et al. (in press a, 2011f) identified 17 TQM practices for service industries based on
extensive literature review. They are top management commitment; customer focus;
process management; quality systems; teamwork; communication, training and
education; continuous improvement and innovation; supplier management; employee
involvement; information and analysis; benchmarking; strategic planning; employee
encouragement; quality culture; human resource management; and product and service
design. Further, the findings of the study by Kumar et al. (2011) reported that there was a
positive impact of TQM implementation on different dimensions of company
performance, i.e. employee relation, operating procedures, customer satisfaction and
financial results. This was also claimed and supported by Yang (2006). However, the
implementation of TQM in the service sector is in its nascent stage and literature suggests
that fewer studies have been taken on the service industries as compared to the
manufacturing counterpart (Evans and Lindsay, 2005; Gustafsson et al., 2003). In context
to developing countries like India, the extant literature further suggests that there is a
need to study applicability of TQM programme in the Indian service sector for better
understanding the current status of TQM implementation (Karuppusami and
Gandhinathan, 2007), particularly when TQM is regarded as absolutely essential for
growth, stability and prosperity.
262
The scope of this study comes from the fact that role of quality has always been an
important issue in the products and services. With the environment becoming more
competitive and turbulent, service industries are increasingly concerned with obtaining a
sustainable competitive edge (Collins, 1996). This paper, therefore, has the main
intention of presenting an overview of TQM, its applicability and benefits together with
understanding the various facets of service components. Beside, this paper also presents
the complete classification of service industries in the Indian context. Towards the end,
this paper attempts to review literature on TQM in selected service industries and
discusses the conclusions of this study along with scope for future research.
An overview of TQM
The evolutionary philosophy of TQM which stands as a testimony today is due to the
pioneering contributions made by Juran, Crosby, Feigenbaum, etc. Jurans (1991) quality
trilogy (planning, control and improvement), Crosbys (1991) absolutes of quality
management (conformance to requirements, prevention, zero defects and cost of quality),
Feigenbaums (1990) 3 steps to quality (quality leadership, modern quality technology
and organisational commitment) and Demings (1986) 14 points and cycle (plan, do,
check and act, also called as PDCA cycle) constitute the most important aspects of the
TQM framework that quality gurus have recommended. The dominant emphasis of these
pioneers was on top management leadership for quality, supplier quality management,
process design and control, employee training and employee involvement in quality.
A significant number of industries have adopted some form of TQM framework in
their business and have derived most benefits (Rahman and Sohal, 2002). For instant,
many firms have utilised the Malcolm Baldrige National Quality Award framework as a
base model for TQM to improve quality and economic performance in the organisation
(Jung and Wang, 2006; Lee et al., 2010; Prajogo and Hong, 2008; Teh et al., 2009) and
have got positive and significant results. Furthermore, there is a trend towards stronger
demand for improved measures of the performance of the industries and TQM has a role
to play in relation to this (Williams et al., 2004). A review of the extant literature on
TQM in services revealed that research work has been taken on (Table 1):
x
barriers of TQM implementation
critical dimensions of TQM
development of TQM framework
development of TQM models
financial outcomes of service quality (SQ) initiatives
identification and implementation of TQM practices
impact of TQM in service industry
relationship between TQM and customer satisfaction
relationship between TQM and employee satisfaction
relationship between TQM practices and business performance
relationship between TQM practices and quality performance

x
TQM and knowledge sharing
TQM and new product development
TQM practices and its impact on role stressors
263
Therefore, it is not surprising that TQM is progressively occupying centre stage for
service industries regardless of the nature of the business they are in. It is indeed true that
over the past two decades, TQM has emerged as an important field of study in the service
sector.
Table 1
Study on TQM in service sector
Area/issue
Barriers of TQM implementation
Critical dimensions of TQM
Development of TQM framework

Development of TQM models
Financial outcomes of SQ initiatives

Identification and implementation of
TQM practices
Impact of TQM in service industry
Relationship between TQM and customer
satisfaction
Relationship between TQM and employee
satisfaction
Relationship between TQM practices and
business performance and culture
Relationship between TQM practices and
quality performance
TQM and knowledge sharing
TQM and new product development
TQM practices and its impact on role
stressors
References
Soltani et al. (2005), Huq (2005), Mosadegh Rad
(2005), Bhat and Rajashekhar (2009), Talib et al. (in
press a), Ab-Rahman et al. (2011)
Mahadevappa and Kotreshwar (2004), Saravanan and
Rao (2006), Tar (2005), Sureshchandar et al. (2002),
Talib and Rahman (2010a), Talib et al. (in press a,
2011b)
Yusof and Aspinwall (2000), Malhotra and Grover
(1998), Hafeez et al. (2006), Talib et al. (2011c,d),
Azam et al. (in press a)
Sureshchandar et al. (2001), Bayraktar et al. (2008),
Bou-Llusar et al. (2009), Kakkar and Narag (2007),
Talib and Rahman (2010a), Azam et al. (in press b),
Ooi et al. (2009)
Rust and Zahorik (1993), Rust et al. (1994, 1999), Brah
et al. (2000)
Aghazadeh (2002), Khamalah and Lingaraj (2007),
Gustafsson and Johnson (2003), Behara and Gundersen
(2001), Sureshchandar et al. (2002), Talib et al. (2011b)
Khan (2003), Kumar et al. (2009), Talib and Rahman
(2010b)
Mehra and Ranganathan (2008), Gonzalez et al. (2004),
Sahney et al. (2004), Yang (2006), Tar (2005), BouLlusar et al. (2005), Sila and Ebrahimpour (2005), Sit
et al. (2009), Yoon et al. (2006)
Yang (2006), Tar (2005), Bou-Llusar et al. (2005), Sila
and Ebrahimpour (2005), Ooi et al. (2007a,b, 2008),
Teh et al. (2009)
Prajogo and Mc Dermott (2005), Brah et al. (2002),
Hasan and Kerr (2003), Bou and Beltran (2005), Hafeez
et al. (2006)
Flynn et al. (1994, 1995), Arumugam et al. (2008),
Brah et al. (2002), Hasan and Kerr (2003), Prajogo
(2005), Prajogo and Brown (2004), Prajogo and Sohal
(2004), Ahire et al. (1996), Talib et al. (2011d)
Rad (2006), Jacobs and Roodt (2007), Hong et al.
(2004), Cheah et al. (2009)
Sun et al. (2009), Langerak and Hultink (2008), Dayan
and Benedetto (2009), Lukas and Menon (2004)
Teh et al. (2008, 2009), Lu and Lee (2007), Brah and
Lim (2006), Phusavat et al. (2007), Gilboa et al. (2008)
264
2.1 TQM definitions

A variety of definitions of TQM have been offered over the years by different authors.
However, there is still no universal agreement on these definitions (Reed et al., 1996). It
is generally accepted that the contemporary TQM literature evolved from works of
gurus such as Deming, Juran, Feigenbaum and Crosby, but there is not only one
standard definition of TQM. Table 2 compiles different definitions of TQM found in the
literature.
An analysis of these definitions suggests that, after all, they are not very different. For
instance, most emphasise on concepts such as continuous improvement, customer focus,
human resource management and process management. In general, the most common
elements agreed upon by the TQM authors are top management commitment, customer
focus, quality data and information, employee involvement, training and continuous
improvement (Curry and Kadasah, 2002; Prajogo and Hong, 2008). Some authors also
include soft and hard TQM elements, organisation performance and benchmarking as
well. One of the most striking features of the TQM literature is the absence of any
uniform definition of TQM.
Table 2
Different definitions of TQM as reported in literature
Author(s)
Definition
Deming (1986)
A management philosophy which develops all management principles and

practices from the belief that continual improvement of quality is the key to
success
Oakland (1989)
An approach for improving the competitiveness, effectiveness and flexibility

of an organisation
Berry (1991)
A total corporate focus on meeting and exceeding customers expectations

and significantly reducing costs resulting from poor quality by adopting a new
management system and corporate culture
Oakland (1993)
A new way of managing to improve effectiveness, flexibility and

competitiveness of a business to meet customers requirements
Zairi et al. (1994)
A positive attempt by the organisations concerned to improve structural,

infrastructural, attitudinal, behavioural and methodological ways of delivering
to the end customer, with emphasis on consistency, improvements in quality,
competitive enhancements, all with the aim of satisfying or delighting the end
customer
Roosevelt (1995)
A strategic architecture requiring evaluation and refinement of continuous

improvement practices in all areas of business
Dahlgaard et al.
(1998)
A management process which any organisation can implement through longterm planning, by using continuous quality management plans which lead the
organisation towards the fulfilment of its vision
Mohanty and Lakhe An approach for continuously improving the quality of goods and services
(2002)
delivered through the participation of all levels and functions of the
organisations
Palo and Padhi
(2005)
An integrated approach to bring continuous improvement in products and

services using proper tools, technology and training to meet customers
expectations on a continuous basis
Lee et al. (2010)
A business management strategy seeking to improve the quality of

organisational management, competitiveness and providing value to
customers
265
2.2 Benefits of TQM

As long as TQM is adopted fully and practiced effectively in an organisation, many
advantages will be delivered. It will strengthen the organisational business performance
and competitive advantage. The successful implementation of TQM will result in tangible
and intangible benefits and are well acknowledged. Some of the potential benefits of
TQM are summarised in Table 3.
Table 3
A list of selected benefits of TQM as reported in literature
TQM benefits
Reduced cost of operation
Reference(s)
Oakland (1993), Hendriks and Singhal (1997),
Holjevac (2008)
Improved employee involvement
Dale (1994), Antony et al. (2002), Lewis et al.
(2005), Talib et al. (2010c)
Improved communication
Anjard (1998), Antony et al. (2002), Lewis et al.
(2005)
Increased productivity
Antony et al. (2002), Oakland (1989), Mohanty
and Lakhe (1998), Samson and Terziovski
(1999), Anderson et al. (1995)
Improved quality and less rework
Mohanty and Lakhe (1998), Antony et al. (2002),
Reed et al. (1996)
Improved customer satisfaction
Antony et al. (2002), Anderson et al. (1995),
Samson and Terziovski (1999), Reed et al.
(1996), Talib et al. (2010c)
Improved sustainable competitive advantage
Antony et al. (2002), Reed et al. (1996), Powell
(1995), Holjevac (2008)
Promoting continuous improvement and
Corbett and Rastrick (2000), Reed et al. (1996),
innovation
Bounds et al. (1994), Talib et al. (2010c)
Enhanced customer service and loyalty
Samson and Terziovski (1999), Reed et al.
(1996), Anderson et al. (1995)
Improved organisational management
Oakland (1989), Samson and Terziovski (1999),
Kumar et al. (2011)
Improved employee relations and satisfaction
Samson and Terziovski (1999), Anderson et al.
(1995), Holjevac (2008)
Improved financial performance
Reed et al. (1996), Salaheldin (2009),
Christensen (1995), Hendriks and Singhal (1997),
Talib et al. (2010c)
Improved process and performance management Lewis et al. (2005), Hendriks and Singhal (1997)
Improved products and services
Walton (1986), Hendriks and Singhal (1997),
Garvin (1988)
Improved employee moral and reduced errors
Ab-Rahman et al. (2011), Kumar et al. (2011),
Walah et al. (2002), Salegna and Fazel (2000)
Increased social responsibility and ethics
Holjevac (2008), Horner and Swarbrooke (1996)
An overview of services
Various service systems have been emerged out since early 1980s. These service systems
are based on different criterion. Of these four are worthy Chase (1978), Schmenner
(1986), Wemmerlov (1990) and Lovelock (1983). Chase (1978) segments by the extent
of customer contact in the delivery of the service. Schmenner (1986) classifies services
266
using two dimensions, with the degrees of interaction and customisation on one axis and
the degree of labour intensity on the other. Wemmerlov (1990) more recently presented a
service system scheme, where the variables of differentiation are the degree of
routinisation of the process, the object of the service process and customer contact.
While Lovelock (1983) has proposed classification of services into four distinctive
categories based on what a service organisation is actually processing and how does it
perform that task. Beside these four service system schemes, Liu and Wang (2008)
classify the structures of the previous classifications of services based on the schemes
concepts, i.e. discrete item scheme, continuum scheme and matrix scheme. Lusch and
Vargo (2008) perceived services as supplements to physical goods and referred as gooddominant logic, where tangible goods are the primary focus of economic exchange.
While Lovelock and Wirtz (2007) formulated non-ownership-based service paradigm
underlying in it the marketing exchanges, which do not result in a transfer of ownership
from seller to buyer are different from those that so. Another study by Gebaver et al.
(2008) suggested a comparable classification for business services, where services are
divided into three groups: customer services, product-related services and customer
support services. Katzan (2008) speaks about information services a resource capable
of supporting a service event based on information. Other studies on service system
schemes and classification are by Gebaver et al. (2006), Edvardsson et al. (2005),
Schmenner (2004) and Mayer et al. (2003).
A service organisation may be servicing individual customer or alternatively it may
be servicing their possessions. Further, the servicing may be physical as in case of
purchasing washing machine, the customer also receives services such as installation,
maintenance and repair or visiting a restaurant. Alternatively, the servicing may be
intangible as in case of education, information, museums, banking or securities.
Summary of selected schemes for service classifications are listed in Table 4.
Table 4
Summary of selected schemes for service classifications
Reference(s)
Chase (1978)
Lovelock (1983)
Classification dimensions
Extent of customer contact in the delivery of service
Nature of service, relationships, judgement, demand pattern and delivery
method
Schmenner (1986)
Degree of interaction/customisation and labour intensity
Wemmerlov (1990)
Degree of routinisation of the process, the object of the service process
and customer contact
Mayer et al. (2003)
A 2D model using personal of service assembly and process of delivery
Schmenner (2004)
Degree of variation of customisation and interaction, relative throughput
time
Liu and Wang (2008)
Discrete item scheme, continuum scheme and matrix scheme
Gebaver et al. (2008)
Business services for growth of product, customer services, productrelated, services and customer support services
Lovelock and Wirtz
Distinction between marketing through services or service marketing,
(2007)
product-related services and service as a product
Lusch and Vargo (2008) Service-dominant logic, where tangible goods are the primary focus of
economic exchange
Godlevskaja et al. (2011) Services categorisation schemes are grouped under eight service
paradigms: goods vs. services or manufacturing vs. services paradigm,
contemporary service industries paradigm, non-ownership service
paradigm, goods-focused paradigm, services-for-growth paradigm,
service-focused paradigm, relationship paradigm and service in
automated environment
267
3.1 Definitions of service

Services have been defined in many ways but with no general agreement as to what really
constitute services. But before drawing attention towards the varieties of definitions on
services, it is important to draw distinction on different categories of services. Service
can be divided into four distinct categories (Zeithaml et al., 1996):
x
Service industries and companies: Whose core product is a service, e.g. hotels
(lodging), railways (transportation), banks (financial services), education, etc.
Services as product: Range of intangible product offerings that customers value and
pay for in the marketplace, e.g. information technology (IT) consulting services
offered by Accenture, IBM, telecommunication services offered by MTNL, BSNL,
training services, shipping services, etc.
Customer service: Service provided in support of a companys core product, e.g.

maintenance of equipment, installation of machine or e-gadget, on-site and off-site
services, customer care centres, etc.
Derived service: Value derived from physical goods is the derived service, e.g. razor
provides barbering services, computer provides information and data manipulation
services, drugs and medicines provide medical services, etc.
The different definitions of services have been compiled in Table 5.

Table 5
Various definition of service as reported in literature
Author(s)
Cowell (1984)
Definition
Activities, benefits or satisfactions, which are offered for sale or are
provided in connection with the sale of goods
Those separately identified, and essentially intangible, activities that
Stanton (1986)
provide want of satisfaction and that are not necessarily tied to the
sale of a product or another service
Something that can be bought and sold but which you cannot drop
Gummersson (1987)
on your foot
It includes all economic activities whose output is not physical
Quinn et al. (1987)
product or construction, is generally consumed at the time it is
produced and provides added value in forms that are essentially
intangible
Any kind of performance that one party can offer to another that is
Kotler and Turner (1993)
essentially intangible and does not results in the ownership of
anything
Zeithaml et al. (1996)
Services are deeds, processes and performances
An economic activity that creates value and provides benefits for
Lovelock and Wirtz (2004)
customers at specific times and places by bringing about a desired
change in, or on behalf of, recipient of the service
Edvardsson et al. (2005)
A value co-creating processes with customers
Karwan and Markland (2006) A package made up of a set of tangible and intangible elements
Bygstad and Lanestedt (2009) Services are a non-material equivalent of a goods
268
3.2 Service characteristics

Services nowadays in most of the modern products are combination of both tangible and
intangible acts. For instance, take the case of hair dressing at barbershop, the customer
will likely also benefit from a number of hair care products and might even purchase
some for home use. When purchasing an air conditioner, the customer also receives
services such as installation, maintenance and repair. To understand the nature and
meaning of services, it is important to know the different features of services. The four
distinctive characteristics referred by some researchers as 4Is of services, namely
(Dotchin and Oakland, 1994; Hope and Muhlemann, 1997):
x
intangibility
inconsistency
inseparability
inventory.
3.2.1 Intangibility
It is one of the most important distinctive properties of service. Service has no physical
attributes and as a result impossible for a customer to taste, feel, hear or smell before they
buy it. The customer cannot assess the intangible aspect of service before the event and
hence, customers often must use the reputation of a service organisation and its
representatives to judge quality (Dotchin and Oakland, 1994). Zeithaml (1981) observed
that services often cannot be evaluated in advance of the user. The customer must rely on
experience of the service itself or on trust. However, service providers can take account
of customer psychology and make plans to cope with the difficulties of demonstrating
their offerings, while designing a new or revised service package.
3.2.2 Inconsistency
Inconsistency in most of the service literature is also referred to as variability or
heterogeneity. Heterogeneity of services occurs in consequence of explicit and implicit
service elements relying on customer preferences and perception. Differences exist in the
outputs of service provider producing the same service over a time within the same
organisation. The interaction between customer and provider may vary by customer
(Sasser et al., 1978). This inherent variability makes it difficult to set precise quantifiable
standards for all of the elements of service.
3.2.3 Inseparability
Inseparability is a characteristic of a service which indicates that it cannot be separated
from the creatorseller of the product and thus, it has the property of simultaneity.
Simultaneity occurs because the customer has to be present before any services can take
place. Whereas foods are produced first, then sold and consumed, most services are sold
first and then produced and consumed simultaneously (Zeithaml et al., 1996). Morris and
Johnston (1987) argued that the employee providing the service must first diagnose
individual customer expectations then customise the service on the basis of the diagnosis.
269
The employee must also assess the quality of his or her performance, as it takes place,
against their assessment of the customers expectations, while remain ready to detect and
respond to any adverse customer reactions which may occur.
3.2.4 Inventory
Another distinguishing characteristic of service is that they are produced and consumed at
the same time that causes elimination of inventory. This characteristic is also called as
perishability. Service cannot be saved, stored, resold or returned. A seat on a train or in a
theatre or telephone line capacity or a tax consultants time not used cannot be reclaimed
and used or resold at all later time. Perishability is in contrast to manufacturing goods that
can be stored in inventory or resold another day or even return if the consumer is
unhappy. Perishability makes these actions an unlikely possibility for most services.
Thus, perishability also requires that service production and service delivery often must
exist simultaneously (Dotchin and Oakland, 1994).
3.3 Sectoral classification

The usual method adopted by economist to understand the relative importance of various
segments of an economy is to divide it into three sectors of activity (Zeithaml et al.,
1996).
x
primary sector (agriculture and mining)
secondary sector (manufacturing, electricity, gas, water supply and construction)
tertiary sector (services).
This three-sector economic theory is also called as the three-sector hypothesis developed
by Colin Clark and Jean Fourasti. According to this hypothesis, the focus of an
economys activity shifts from the primary sector, through the secondary and then finally
to the tertiary sector (Figure 1) based on the gross domestic product (GDP) output.
Figure 1
Stages and divisions of economy into three sectors
270
3.3.1 Primary sector

The contribution of this sector comes from agriculture, agribusiness, fisheries, forestry,
all mining and quarrying industries. In short, it is predominantly dependent on natural
resources.
3.3.2 Secondary sector

This sector comprises manufacturers and industries. It is mainly dependent on the
products of the primary sector as raw material and produces goods for consumption. This
sector has broad classifications such as energy industry, steel production, automobile
industry, textile industry, etc.
3.3.3 Tertiary sector

This is the service sector where the output is not goods but various services that make life
comfortable. This sector includes government, financial, education, health, etc. Figure 2
presents the contribution of each sector to Indias GDP. The service sector is a major
contributor to the nations GDP and manufacturing and agriculture sectors which were
dominant earlier in developing nations are comparatively growing slowly as compared to
services.
After considering the global economic development trends as well as Indias GDP
contribution towards service (tertiary) sector, it is clear that national economic
advancement is spearheaded by the service sector. If India has to achieve the same degree
of development as the advanced (developed) countries, India will need to focus on the
service sector as the engine for development and growth. To understand this in a better
way, service sector needs to be classified.
Figure 2
Contribution of three sectors to Indias GDP, 2009
16.95%
Agriculture sector
Industrial sector
57.28%
Source: i3, CMIE (2010).
25.77%
Service sector
271
3.4 Service sector classification

Service sector is very wide in its gamut, covering all human activities whether it is
education, health, information and communication technology (ICT), banking,
transportation, etc. It is not easy to classify service sector in a simple and useful manner
due to variability or heterogeneity characteristic of service. However, the classification
proposed by i-cube, (information infrastructure for institutions), Centre for Monitoring
Indian Economy Private Limited (i3, CMIE, 2010), India, covers almost all important
aspects of service. It is a more standard approach to classify service sector and is
presented in Table 6. The contribution of these service industries (Table 6) to Indias
GDP as on 2008 is depicted in Figure 3.
Table 6
Classification of service sector
Industry
Hospitality industry (hotel and
tourism)
Recreational industry
Wholesale and retail trading

Transport services
Financial services
Communication services
IT industry
Other (miscellaneous) services
Source: i3, CMIE (2010).
Services
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
Hotels and restaurant

Tourism
Production and distribution of films
Media broadcasting
Exhibition of films
Media content
Animation content provider
Other recreational services
Trading
Retail trading
Road transport and allied services
Railway transport and allied services
Air transport and allied services
Shipping transport and allied services
Transport logistics services
Banking services
Investment services
Asset financing services
Other fund-based financial services
Fee-based financial services
Other financial services
Telecommunication services
Courier services
Computer software
Information technology enabled services (ITeS)
Health services
Education
Business consultancy
Storage and distribution
Other miscellaneous services
272
Figure 3
Total contribution of service industries to Indias GDP (in %), 2008
Public administration Others, 2.31

and defence, 5.18
IT/Software , 6.2
Banking , 7.48
Real estate and

business, 7.53
Healthcare, 2.09**
Storage , 0.06
Transport , 6.36
Communication , 6.05
Education, 3.78*
Hospitality , 10.24
Note: *Expenditure on education by education and other departments as percentage of

GDP.
**Expenditure on healthcare by government as percentage of GDP.
Source: CSO (2010) and i3, CMIE (2010).
Literature review of TQM in service sector
The scope of this section is to study and explore an in-depth literature review on the
issues related to TQM focusing on the impact of TQM implementation and its
applicability in different service industries.
After reviewing the voluminous literature, it was classified into four categories
depending on the importance, nature of literature available and future requirement for
further improvement. The classification categories so chosen are:
x
TQM in healthcare
TQM in banking
TQM in hospitality (including hotels and tourism)
TQM in ICT (including telecommunication services, ITeS and computer software

services).
273
The reasons for choosing the above mentioned four industries are as follows:
x
These industries represent the backbone of the Indian economy They share about
56% (more than half) of the service sectors GDP at factor cost in the country (i3,
CMIE, 2010). Thus, they play an effective role in the growth and development of
Indian economy as well as in the Indian service sector. Figure 4 depicts the GDP
contribution of these industries in the service sector.
As per the annual report to the people of employment published by Ministry of

Labour and Employment (MoL&E), Government of India (GOI), July 2010, the
service sector especially ICT, hospitality, healthcare and financial (including banking
services) are highly labour-intensive industries and provides substantial employment
(MoL&E, GOI, 2010). Hence, they have shown their major presence in the Indian
service sector.
According to the CMIE, the net annual income generated by these industries is
steadily increasing from last five years except during the global economic slowdown
period of 20082009, which shows some decline in the net annual income. But in the
coming years, it is predicted that net income of these industries will again rise. This
shows that these industries play a major role in the progress and development of
country.
In addition, these service industries are large enough to capture and represent almost
all the critical features of customer-perceived quality and the key dimensions of
excellence that management may encounter (Al-Marri et al., 2007; van Dun et al.,
2011; Yusuf et al., 2007).
Finally, these industries reflect the Indian service sector mainly by its wide
variability of Quality Management (QM)/TQM implementation levels.
Figure 4
Total GDP contribution of four service industries in Indian service sector (in %), 2008
Source: CSO (2010) and i3, CMIE (2010).
274
4.1 TQM in healthcare industry

One of the important services in the Indian economy has been health. This is one of the
largest and most challenging sectors and holds a key to the countrys overall progress.
Currently, the health sector of India accounts for about 1.9% of its GDP. Also, total
public expenditure (both central and state governments) is raised to 1.4% of GDP in
20092010 (Planning Commission Report on Health, Government of India, 2010).
Therefore, during the eleventh five year plan, while the central government makes every
effort to augment resources for health, state governments will be persuaded to assign at
least 78% of state expenditure towards healthcare.
In India, the past few years have witnessed an increasing concern over the quality of
healthcare services. The government policies have significantly changed the healthcare
scenario in India. Quality has been shown to be an important element in the consumers
choice of hospitals. In light of these changes, there is an emerging need to improve the
quality of healthcare services. Further, the changing market and accreditation pressures
have motivated hospitals to implement TQM concepts. The TQM application in hospitals
is seeking ways to lower costs and improve care. Several researchers have asserted that
successful implementation of TQM can result in significantly superior outcomes in
healthcare organisation (Karasa et al., 2008; Miller et al., 2009; Short and Rahim, 1995)
such as the upgradation of SQ, improvement in healthcare quality and productivity, and
satisfying both internal and external customer.
Several research studies have been carried out on the implementation of TQM in
healthcare industry in different parts of the world. These studies are summarised in
Table 7 as reported in the literature.
Table 7
Industry
Research studies on TQM in healthcare as reported in the literature

Author(s)
Main purpose of the study Approach
Major findings
Healthcare Kozak et al. To identify employees

Exploratory study TQM perception is
(2007)
perceptions of the extent
associated with importance
to which TQM
of employees responsibility
programmes are
and participation, patients
implemented into their
satisfaction, responsibility of
upper-level management,
hospital organisations; and
measurement and reward
to explore whether or not
system and support of
they perceive any problems
upper-level management
with a successful
implementation of TQM
programmes
Lee et al.
(2007)
To reveal the problems

associated with
unsatisfactory delivery
of services in the current
healthcare system of
China as experienced by
patients of diverse socioeconomic backgrounds,
including SQ, accessibility
and affordability
Literature
For the successful
review on the
developmental
system in a hospital requires
problems of
hospital control, developing
Chinas
an incorporated performance
contemporary
measurement system and a
healthcare system broad approach for quality
progress

Table 7
275
Research studies on TQM in healthcare as reported in the literature (continued)
Industry Author(s)
Main purpose of the study
Approach
Major findings
Horng and
Huarng
(2002)
To know the extent of TQM Questionnaire

adoption by the individual survey of 76
hospitals in Taiwan and to hospitals in
test a multi-level model
Taiwan
addressing the issue of TQM
adoption as one type of
organisational adaptation
The nature of the network

relationship and prospector
strategy, the two constructs
out of five identified
constructs are positively and
significantly related to the
extent of TQM adoption
Raja et al.
(2007)
Comparing quality awards

and the selection criteria for
assessing healthcare
processes quality status in
private sector healthcare
institutions
Cross-sectional
methodology and
principal
component
analysis (PCA)
were used
Provide insights into the

relationships among the
dimensions such as
relationship between
leadership, resource
measurement, people
management, process
management and customer
satisfaction
Kunst and
Lemmink
(2000)
Identifying and exploring

success parameters of high
quality performance and
their inter-relationships
Cross-sectional
methodology and
factor analysis
using PCA were
used
Different
variables/parameters are
linked to progress in TQM
and business performance
Cross-sectional
methodology and
correlation
approach were
used
Top managements
commitment increased the
successful implementation
Examining the
implementation of TQM in
the healthcare sector in
Qatar and determining the
most implemented TQM
initiatives, the level of
understanding and
knowledge of TQM and the
critical success factors
(CSFs) of TQM
implementation
Cross-sectional
methodology and
MannWhitney
test were used
Common understanding
exists between managers
about the significance of top
management support,
employee training and
involvement in the TQM
implementation
Duggirala Identifying the dimensions

et al. (2008) of patient-perceived TQS in
the healthcare sector and
there impact on patients
satisfaction
Cross-sectional
methodology and
multiple
regression
analysis were
used
Mosadegh Investigate the success of

Rad (2005) TQM and barriers to its
successful implementation
Salaheldin
and
Mukhalalati
(2009)
Positive link between

progress in TQM and
perceived SQ by customers
Barriers related to
implementation: human
resources, strategic and
structural problems
Vital role of supplier in

supporting quality
improvement
Seven distinct dimensions of
patient-perceived TQS
highlighted
Positive and significant
relationships among the
dimensions and patient
satisfaction have been found
276
Table 7

Industry Author(s)
Arasli and
Ahmadeva
(2004)
Ovretveit
(2000)
Approach
Proposing a quality
Cross-sectional
improvement model for
methodology and
health promotion in
ANOVA test
hospitals in Northern
were used
Cyprus as well as comparing
and understanding their
existing problems and
challenges
To present an overview
of TQM initiatives in
European healthcare
Major findings
Public sector is in a much
worse position than the
private sector in terms of
total quality
The proposed model could
contribute to total quality
practices of hospitals in
developing countries
Theoretical
Describes reasons behind the
literature review rise in interest in health
quality and quality methods
in Europe in the last one and
a half decade. Then explains
how TQM is different from
other approaches and its
strengths and weaknesses for
healthcare quality
improvement. And finally
concludes with a summary
of lessons for health
organisations introducing
TQM which arises from the
European experience
Karasa et al. To assess the contributions

(2008)
of internal marketing to
the success of TQM
applications by means of
employee communication
and participation
Literature review, The cultural changes needed

questionnaire
to maintain the success of
survey,
TQM applications in the
descriptive
organisation were not
statistics,
achieved, there were
Chi-square tests problems in the internal
were performed communication system,
and used
effective participation of
employees was not
achieved, and public
relations and internal
marketing activities were not
employed in a sufficient
manner
Nwabueze
(2011)
Survey-based
study
To delineate the essential

leadership traits for the
effective implementation
of TQM in a healthcare
environment
The personality traits are

seen as ineffectual for TQM
implementation by National
Health Service Chief
Executives. Therefore,
organisations should
concentrate on the use of the
so-called traditional
paradigm of leadership:
planning, organising,
controlling and commanding

Table 7
277
Industry Author(s)
Hariharan
and Dey
(2010)

To develop a comprehensive
framework for improving
intensive care unit
performance
Approach
Utilises a quality
management
framework by
combining cause
and effect
diagram and
logical
framework
Major findings
Stakeholders identified
various intensive care unit
issues. Managerial
performance, organisational
processes and insufficient
staff were considered as
major issues. Finally, a
logical framework was
developed to plan an
improvement project to
resolve issues raised by
clinicians and patients
Ababaneh To investigate empirically
Questionnaire
Bureaucratic, supportive and
(2010)
the impact of organisational survey along
innovative cultures have a
culture and quality
with descriptive significant and positive
improvement practices in
statistics, Pearson influence on quality
Jordanian public hospitals
correlation,
improvement practices.
regression
Compared with bureaucratic
analysis and
and supportive cultures,
ANOVA test
innovative culture appears to
were employed play a stronger role in
quality improvement
practices
Noor
To provide an empirical
Questionnaire
Practice of quality
Hazilah
analysis on the practice of
survey along with management was found to
(2009)
quality management among one-way
be significantly higher in
employees of Malaysian
ANOVA, factor district hospitals than in the
public hospitals at the district, analysis and
national referral centre.
state and national level
validity tests
However, there was no
hospitals, and aims to perform
significant difference in
a comparative analysis on
perception on
quality management practices
implementation outcome
among the three levels of
between the three levels of
hospitals
hospitals
Azam et al. To identify and critically
Review of
This paper provides insight
(2012b)
analyse the quality
literature on
about contemporary quality
parameters in health care
healthcare quality parameters for HCE on
establishment (HCE)
with critical
critical analysis of relevant
described in the literature
analysis in
literature
relation to their
over all impact
on patient
management
evolving also an
integrated quality
model for HCE
4.2 TQM in banking industry

The banking industry is the largest and progressive industry in the service sector which
caters to the needs of the different categories of people and become a mass consumption
service. Notably, the SQ tends to play an important role in high involvement industries
278
like banks (Al-Marri et al., 2007). Banking in India is fairly mature in terms of supply,
product range and reach even though reach in rural India still remains a challenge for
the private sector and foreign banks.
Ministry of Finance, GOI has divided Indian banks into three types public sector
banks, private sector banks and foreign banks (Ministry of Finance, Government of India,
2009). Currently, India has 27 public sector banks (i.e. with the GOI holding a stake), 22
private banks (these do not have government stake, they may be publicly listed and
traded on stock exchanges) and 30 foreign banks (Ministry of Finance, Government of
India, 2009). Beside this, around 100 scheduled commercial banks are also actively
participating and making business in the Indian banking sector. The overall growth of
GDP in banking and financial services as per Central Statistical Organisation (CSO,
2010) and i3, CMIE (2010) is estimated to be 7.09% in 2008, representing an increase
from the level of growth of 6.7% during 2007, indicating a performance and
infrastructure growth of this sector. According to the survey, Indian banks have combined
network of over 55,000 branches and 20,000 ATMs. This predicts that the Indian banks
are in a position to deal with total quality service (TQS) and are at par with other largest
international banks.
Many studies have proved that the performance of banks is significantly and
positively linked with the SQ (Bellou and Andronikidi, 2008; Krishnaveni and Divya,
2006; Ladhari et al., 2011; Longbottom and Hilton, 2011) and to achieve quality in
service, the TQM is highly essential (Al-Marri et al., 2007; Kassem, 1998). The TQM is
discussed and implemented in various dimensions by different researchers. Some of these
studies on TQM in banking industry are presented in Table 8.
Table 8
Research studies on TQM in banking industry as reported in the literature
Industry Author(s)
Banking Al-Marri
To examine CSFs for
Empirical case
industry et al. (2007) TQM implementation in studies were
UAE banking sector
collected from
250 banks in
UAE that have
embarked on
TQM successfully
Vermeulen
and Crous
(2000)
Discusses the importance Questionnaire

of training and education survey-based study
of TQM in the
commercial banking
industry of South Africa
Major findings
About 16 CSFs were
identified. They are top
management support,
continuous improvement,
benchmarking, customer
focus, recognition and
reward, service design,
service technologies, service
culture, social
responsibility, service caps,
quality department, quality
system, human resource
management, problem
analysis and strategy
No respondents found to
agree that their
organisations have a welldeveloped TQM training
strategy and plan
About 33% of respondents
have indicated that their
organisations have a welldeveloped TQM training
curriculum

Table 8
279
Research studies on TQM in banking industry as reported in the literature (continued)
Industry Author(s) Main purpose of the studyApproach

Mellahi
and
Eyuboglu
(2001)
To examine critical
Case study-based
factors for successful
approach
in the Turkish banking
sector
Major findings
The results showed that
successful TQM
implementation requires
managements unwavering
commitment to TQM and
enthusiasm, formal national
bodies to introduce
organisations to TQM and
provide assistance during and
after TQM implementation, and
a highly educated and
competent management team
Kayis et al. To propose a model

(2003)
linking perceived SQ,
customer satisfaction,
customer loyalty and
employee satisfaction
while implementing
TQM among Australian
and Korean banking
industries
Questionnaire
survey
methodology was
used and
correlation
analysis was
performed
Safakli
(2004)
Literature review Need for updating and

and questionnaire implementing new rational
management methods followed
survey
by motivation and training of
employees and employers
To assess the need of

TQM in the banking
sector of the Northern
Cyprus
Tested the developed model and

found significant relationships
and path links between
perceived SQ, customer
satisfaction and customer
loyalty as well as between TQM
practices and employee
satisfaction
Continuous monitoring of
customer satisfaction is also
necessary to make TQM more
effective
Selvaraj
(2009)
To present the important

TQS factors in Indian
commercial banks and
examines the level of
practices in three groups
of Indian banks
Questionnaire
survey
methodology was
used and t-test,
one-way ANOVA
and multiple
discriminant
analysis were
applied
The important TQM factors are:

top management commitment
human resource management
technical and important systems
customer focus
employee satisfaction
service culture
social responsibility
servicescapes
Li et al.
(2001)
To survey the entire

Meta-analysis
population of licensed
approach
banks in Hong Kong on
their quality management
initiatives and to analyse
the current status of
quality management
initiatives in Hong Kong
Result shows that they have

68% success rate for quality
initiatives
They have also gained customer
satisfaction, efficiency and
quality awareness
They tend to devote more effort
in meeting service standards
and providing prompt services
280
Table 8

Industry Author(s)
Major findings
Sureshchandar To propose a holistic

et al. (2001)
model for TQS by
illustrating the
relationships between
identified dimensions
with a specific focus on
the banking sector
Empirical study
using
confirmatory
factor analysis
(CFA) approach
Identified 12 dimensions of
TQM for banking sector:
top management
commitment and visionary
leadership, human resource
management, technical
system, information and
analysis system,
benchmarking, continuous
improvement, customer
focus, employee
satisfaction, union
intervention, social
responsibility, servicescapes
and service culture
Arasli et al.
(2005)
To measure the SQ
perceptions of Greek
Cypriot bank customers
Descriptive,
factor analysis
and multi-variate
regression
analysis were
applied
The expectations of bank

customers were not met,
where the largest gap was
obtained in the
responsiveness-empathy
dimension
Longbottom
and Hilton
(2011)
To investigate service
Longitudinal
improvement initiatives survey-based
within a major UK bank study
and assess issues which
may have contributed to
the current financial crisis
Service improvement
initiatives have focused on
the use of popular business
models, SERVQUAL,
balanced scorecard (BSC)
and European Business
Excellence Model. Results
show that participant
perceptions towards these
models are generally
negative, with a high
incidence of failure to
achieve expected results and
negative organisational
consequences
Ladhari et al.
(2011)
To compare perceptions
of bank SQ among
Tunisian and Canadian
customers and to
determine which
dimensions of SQ make
the greatest contribution
to overall customer
satisfaction and loyalty
Respondents in both
countries reported high
levels of perceived SQ in
banks. However, Canadians
reported higher perceived
SQ than Tunisians for all
five SERVQUAL
dimensions
Questionnaire
survey along with
CFA, ANOVA
and linear
regression were
also used

Table 8
281
Industry Author(s)
Vinodh et al.
(2006)
Reports a research
project which was
begun by adopting a
new technique called
total quality function
deployment (TQFD)
Shih et al.
(2011)
To establish an
Questionnaire
understanding of the gap survey,
in perceived quality
descriptive
between employees
statistical
(internal) and customers analysis,
(external) of banks
reliability
concerning all the
analysis, t-test
indicators of the different of independent
dimensions of intellectual samples were
capital with the
conducted
perspectives of BSC
Major findings
Statistical tests
An exclusive financial
and validating the accounting system was
framework
designed to portray the
performance of Innovative
TQFD framework. The
results of statistical tests on
the feedback data indicated
the practical validity of the
frameworks and models
developed in this research
project
The findings show that there
are perceived gaps in human
capital of banks. The option
employees are satisfied
with work performances is
considered to be important
by customers but not by
bank personnel. On the
other hand, banking
personnel believe that their
education level is important,
but it is not emphasised by
customers
4.3 TQM in hospitality industry

The World Economic Forum Report (2009) on travel and tourism competitiveness
indicates that India is ranked at 11th place in the Asia Pacific region and 62nd overall. It
is ranked the 14th best tourist destination for its natural resources and 24th for its cultural
resources with a number of world heritage sites (Ministry of Tourism, Government of
India, 2010). Beside this, Indian hospitality industry has contributed many more
achievements and is being one of the fastest growing industries in terms of gross revenue
and foreign exchange earnings. It also stimulates growth and expansion in other
economic sectors such as agriculture, horticulture, handicrafts, transportation,
construction, etc., as well as gives momentum to growth of service exports. It is a major
contributor to the national integration process of the country as well as preserver of
natural and cultural environment. Studies have further shown that hospitality sector is one
of the fastest growing sectors across the world and constitutes one of the basic factors of
a countrys economic growth (Holmes, 2007; Politis et al., 2009). Towards the
contribution to the Indian economy, according to CSO (2010) and i3, CMIE (2010), the
contribution of hospitality industry to GDP was 15.9% in 2008 which includes 8.3% for
tourism, 1.56% for hotels and restaurants, and remaining for other trade services. This
figure will sky rocket in 2010 when Delhi hosts the Commonwealth Games. It is also
expected that hospitality sector is expected to generate tremendous employment and
foreign exchange by 2019.
282
Quality is considered to be of great importance in the hospitality industry especially

TQM. With the emergence and popularity of TQM, the hospitality industry continues to
be heavily involved in the implementation of TQM-related practices. Lazari and
Kanellopoulos (2007) reported in their study that cooperation between internal and
external elements is critical for successful TQM implementation and enhances the moral
of employee fulfilment and increasing hotel efficiency. Li et al. (2007) further asserted
that leadership and guest focus are the principles most commonly incorporated into TQM
programmes of hotel. Finally, hospitality industry has identified out performers in TQM
committed hotels and is likely to improve customer satisfaction and ultimately financial
performances (Claver-Corts et al., 2008). Therefore, TQM has received a lot of attention
in the tourism and hospitality journals. TQM approach has been applied to all segments
of the hospitality and tourism industry in the literature (e.g. hotels, restaurant, food
services, etc.) The extant literature on TQM in the hospitality sector has been summarised
and presented in Table 9.
Table 9
Industry
Research studies on TQM in hospitality industry as reported in the literature

Author(s)
Hospitality Claver-Corts
industry et al. (2008)
Sila and
Ebrahimpour
(2003)
Holjevac
(2008)
Major findings
To analyse how TQM is

associated with some
managerial factors and to
verify whether more TQMcommitted hotels achieve
higher performance
A cluster and
regression
analysis were
conducted
Managerial factors are

significantly further developed
in hotels with a stronger TQM
commitment, which also have
higher performances
To analyse and compare

the TQM practices of three
luxury hotels located in the
north-eastern part of the
US as well as the effect of
these practices on their
business results
Exploratory
research using a
case study
approach
Leadership, guest and market

focus, and information and
analysis emerged as the three
most significant TQM factors
successfully implemented in
these three hotels
Strategic planning emerged as
one of the most difficult
factors to implement
To emphasise business
Literature review
ethics as a dimension of
and theoretical
TQM in tourism in helping approach
Croatia approximate EU
standards
Business ethics increases the

reputation and market
competitiveness of an
enterprise
To restore trust in business,
ethical leadership is more
necessary
Business ethics prescribes
profit making
Chartrungruang To study the relationship

et al. (2006)
between customer service
and TQM training in the
hotels located in Western
and Thai hotels as well as
to examine the perceptions
of staff towards guestorientation and the
provision of quality guest
services
Questionnaire
survey
methodology
with one-way
ANOVA
approach and
PCA and t-test
were used
There are differences between

guests and staff, and that these
differences vary in the case of
both Western and Thai hotels
The SQ skills needed by
frontline staff were also found
to differ in the case of
Western and Thai hotels

Table 9
283

(continued)
Industry Author(s)
Keating and
Harrington
(2003)
Approach
Major findings
To review the literature on

the implementation of
quality programme in the
hotel industry
Review of the
literature
Top management sponsorship and

the provision of training and value
promotion throughout the
organisation were found to be
important factors in the Irish
industry
Quality management in
contemporary hospitality
organisations is lacking in
involvement, communication and
teamwork dimensions
Salameh and
To examine the relationship
Barrows (2001) between TQM and
employee training in
restaurant industry of Canada
Methodology Evidence of relationship between

training and TQM is strengthening
used was
in restaurant environment
in-depth
interviews with
managers
Training does result in a
continuous performance
improvement, positive impact on
the level of the SQ delivered,
preparing employees for the change
process, low turnover rates, higher
morale, etc.
Daghfous and
Baskhi (2009)
To assess and explore the

degree to which UAE
hotels are using IT
strategically to integrate
and improve back-end
operations and customer
service with special focus
on TQM, customer
relationship management and
supply chain management
Exploratory
study using
descriptive
approach
through
questionnaire
survey
Proposes a conceptual model to

illustrate the value of IT-enabled
organisational change and
knowledge management for a
better understanding of the
strategic challenges facing
IT/information system (IS)
managers in the hotel industry
Pyo (2000)
To discuss the perspectives

and research agenda of
quality research in tourism
and hospitality
Literature
review
Identified a variety of important

components of TQM (such as
training/education, etc.) as they
relate to the hospitality and
tourism industries
Arasli (2002)
To discuss the TQM

philosophy of performance
and receptiveness in
northern Cyprus hotels
Empirical
analysis
Three- and five-star hoteliers

policies and implementations in
northern Cyprus are still very
unfamiliar with the TQM
approach
Further, these hotels need some
new, cheap, simple and logical
total quality approaches
284
Table 9
Industry

(continued)
Author(s)
Breiter and To attempt a summary

Questionnaire survey
Bloomquist survey of TQM
using statistical tests
(1998)
programmes in the hotels approach
of the US
Major findings
Size, affiliation and lodging
segment are significantly
associated with hotels using
TQM
The most common barrier to
TQM success is failure of
management leadership
Politis et al. To present the

(2009)
development of a business
excellence model
applicable in the
hospitality industry
Two surveys using

questionnaires were
conducted: the first one
for the development of
the models criteria and
sub-criteria, and the
second one for the
assessment of the criteria
and sub-criteria weights
The implementation of the

model in a number of highclass Greek hotels shows its
applicability and suitability to
be used as a benchmarking
system
Tar et al.
(2010)
A cluster analysis was

carried out, then ANOVA
and regression analysis
were performed
Three levels of quality and

environmental commitment
have been identified. The
findings showed that the
commitment to quality and
environmental practices
influences hotel performance
Wang et al. To investigate the

(in press)
relation of TQM, market
orientation and hotel
performance and to
understand market
orientation has the
mediating effect on the
relationship between
TQM and hotel
performance
Survey research using

questionnaire, structural
equation model (SEM)
and discriminate analysis
for analysis and testing
TQM positively affects hotel

performance. Market
orientation positively affects
hotel performance. Market
orientation has the mediating
effect between TQM and hotel
performance
Tar et al.
(2009)
A structured questionnaire Certified hotels develop better

the key factors and have better
with closed questions is
performance
used to collect data and
reliability, and validity test
was conducted
To identify the levels of

commitment to quality
and environmental
management in the
Spanish hotel industry,
and to test the relationship
between those
commitment levels and
firm performance
To study whether quality

certified hotels develop
some managerial key
factors in a significantly
better way and have better
performance

Table 9
Industry
285

(continued)
Author(s)
Major findings
Williams
To develop understanding
et al. (2010) about the quality of usergenerated content (UGC)
on websites from the
customers point of view
Interviewees were
conducted with small
sample of five regular
hotel room purchasers
Three types of information are

needed by the person using
UGC on hotel websites:
objective information about
the hotel; information about
the reviewers qualifications
and information about the
reviewers beliefs and
expectations
Mak (2011) To find out why tour

operators implement
quality assurance, and
what problems and
challenges they face in
doing so
Utilised a multiple-case
study approach,
interviewing the senior
managers of three
accredited tour operators
using formally structured
questions
A number of negative aspects

to the ISO 9000 certification
were found, including the high
cost of implementation,
lukewarm reception by staff,
reduced effectiveness over
time and that consistency of
procedures did not equate to
good or improving quality
4.4 TQM in ICT

The era of economic liberalisation and globalisation has ushered in a rapid change in the
service industry. As a result, over the years, India is witnessing a transition from
agriculture-based economy to a knowledge-based economy. The knowledge economy
creates, disseminates and uses knowledge to enhance its growth and development. One of
the major functional pillars of this economy is ICT, ITeS and software development
services industry. IT and software industry has been one of the fastest growing business
over the last two decades. India has targeted this industry as the highest priority area and
is actively pursuing IT and software business in the global market mainly in Europe and
the USA. A large number of Indian software companies have acquired international
quality certification. The Department of Communication and IT has been making
continuous efforts to make India a front-runner in this age of information revolution.
Several policies have also been framed on the key issues of IT infrastructure, egovernance as well as IT education. Currently, the IT and software sector of India
accounts for about 5.8% of its GDP (2009) as compared to 5.5% of GDP (2008) with an
increase of 0.3% of GDP between 2008 and 2009 (NASSCOM, 2010).
Beside this, the communication sector (including telecommunication services) is also
a major driver of the Indian economy. The share of this sector to GDP has increased from
0.7% in the 1980s and 1% in the 1990s to 3.6% during 2005. In 2008, the sector
accounted for 5.65% of GDP (i3, CMIE, 2010). The communication sector has
outperformed other sectors if looking at the growth rates of this sector from last five
years. Adding another star towards the achievement, communication sector has also had a
significant impact on employment in the country. It is predicted that the sector will
generate an additional 8.5 million jobs by 20142015, taking the total number of jobs in
the sector to above 10.3 million (Ministry of Communication and Information
Technology, Government of India, 2010).
286
In recent years, ICT, ITeS and software have become a critical component in various
service industries such as the telecommunication, banking, education, etc. The quality of
communication, IT and software component is of paramount concern to everyone,
including users and developers. Both practitioners and academicians agree that ICT, ITeS
and software quality improvement techniques lead to a reduction in costs. The need for
TQM in ICT, ITeS and software industry becomes highly relevant (Sparrow et al., 2006;
Wali et al., 2000). The consensus is that there is a greater need to foresee and respond to
the customer needs and to assure quality in communication, IT and software development
industry.
The summarised reported literature on TQM in ICT, ITeS and software industry is
presented in Table 10.
Table 10
Research studies on TQM in ICT as reported in the literature
Industry
Author(s)
ICT, ITeS,
and
software
industry
Rahman and
Siddiqui
(2006)
Investigates relationship
Questionnaire
between TQM and IS and to survey was
analyse the realisation of
conducted to
pragmatic goals by Indian various Indian
firms through TQM for IS companies of
different classes
such as insurance,
banking, software
manufacturers, etc.
Synergy between TQM

and IS is catching fast in
India
Empirical study
To identify the critical
using CFA
factors of TQM in
approach
software industry and to
provide a holistic
framework to implement
TQM throughout the
software development cycle
in the software industry
Develops a validated
instrument for effective
in software industry
Issac et al.
(2004)
Parzinger and To present the salient

Nath (1998)
underlying constructs
essential for successful
programme in software
development industry
Approach
Empirical study
using factor
analyses
Parzinger and To study the effectiveness Empirical study

using correlation
Nath (2000)
of TQM programmes in
improving software quality analysis
and to examine the
relationships between TQM
implementation factors and
several measures of
software quality
Major findings
Improvement in the
quality of products and
services
Optimisation of human
resources and cost and
time of production were
reduced are other benefits
Identifies eight constructs

pertinent to an effective
TQM programme in
software development
A positive relationship
between the TQM
implementation factors
and the indicators of
software quality was
found

Table 10
287
Research studies on TQM in ICT as reported in the literature (continued)
Industry Author(s)
Sohn et al.
(2008)
Approach
SEM approach
To present a systematic
approach for improving the
quality of official statistics
in Korean information and
telecommunication industry
Empirical study
Vitharana and To identify the critical
Mone (1998) factors and proposed an
instrument to measure them
for software quality
management
Major findings
A model was proposed that
can be used as a tool for
improving the quality of
official ICT statistics
Identified six critical
factors: management
commitment, education and
training, customer focus,
process management,
software metrics and
employee responsibility
Pezeshki et al. To investigate the

(2009)
asymmetric relationship
between performances of
service attributes and
customer satisfaction
through a case study in the
mobile telecommunication
industry to prove that the
importance of a service
attribute is a function of the
performance of that attribute
An empirical study
using questionnaire
and Kano customer
satisfaction model
and the importanceperformance
analysis method for
analysis and
comparison were
applied
Results indicate that there is

a dynamic relationship
between service attributes
and overall customer
satisfaction. The importance
of service attributes can be
derived from their
performance and this can be
proved in the mobile
telecommunication sector
Hsu and Su
(2002)
To examine how quality

management practices are
implemented in Taiwans
telecommunication industry
Questionnaire
survey were
conducted to collect
the data and
statistical methods
such as SPSS and
SAS were used for
analyses
Most of the Taiwans

telecommunication
companies were fairly weak
in quality performance.
Advanced quality
management training
programmes are seldom
implemented and the
companies do not rely on a
few reasonably reliable
suppliers
Gunasekaran
et al. (2006)
To propose a model-TQM
integrated with software and
information technologies
(TISIT), that integrates the
TQM foundations with
software and information
technologies
The approach used

were conducting six
case studies, an
exploratory study
and literature
studies to design a
model called TISIT
The TISIT model is capable

of eliminating or reducing
the perception,
understanding, design,
process and operations gaps
which have emerged in
todays organisations due to
global competition
Su et al. (2001) Use of TQM in the Taiwans Questionnairecomputer and its peripheral based survey using
industry
Friedman rank test
and Pearson
correlation analysis
The quality performance of

most of Taiwans computer
and peripheral companies
are still vulnerable
288
Table 10

Research studies on TQM in ICT as reported in the literature (continued)
Industry Author(s)
Santouridis To investigate crucial factors

and Trivellas that lead to customer loyalty
(2010)
in the mobile telephony
sector in Greece, namely SQ
and customer satisfaction
Sharma et al.
(2010)
Loukis et al.
(2009)
Rothenberges
et al. (2010)
Khan (2010)
Approach
Field research was
conducted.
Reliability tests
and statistical
analyses were also
performed
Major findings
Customer service, pricing

structure and billing system
are the SQ dimensions that
have the more significant
positive influence on
customer satisfaction, which
in turn has a significant
positive impact on customer
loyalty
To theorise the changes
The paper utilises The study extends the scope
surrounding the introduction institutional theory of institutional analysis by
explaining how institutional
of a management control
and drawing on
innovation, TQM techniques, empirical evidence contradictions impact to
create and make space for
within Telecom Fiji Limited from multiple
sources including institutional entrepreneurs,
who in turn, modify existing
interviews,
routines or introduce new
discussions and
routines in fluid
documents
organisational environments
which also exhibit evidence
of resistance
Both BPR and TQM have
To empirically investigate and Utilises Cobb
Douglas
considerable positive
compare the moderating
production
moderating effects of a
effects of business process
function
similar magnitude on the
reengineering (BPR) and
relationship between ICT
TQM on the business value (a moderated
generated for firms by their regression model) investment and firm valueadded. Also, different BPR
ICTs investment
and TQM activities have
different moderating effects
on ICT business value,
process simplification and
process improvement
Validation of the Results reported an increase
The study proposed a
model by analysing in development quality was
construct of development
positively associated with
quality as the key determinant software project
of software development
data collected from increases in both
productivity and product
a benchmarking
development productivity and
quality
consortium in India product quality
Questionnaire and An integrated approach is
The study investigates the
semi-structured
required to implement the
total qualify management
TQM practices to realise
dimensions, based on Deming interview were
used, and
strategic quality objectives.
management model, in
telecommunication industry regression analysis The study extends the
of Pakistan and also assesses was also utilised applicability of the Deming
management model to a new
the TQM practices of cellular
industry
mobile telephone operators
and suggests measures for
improving their
competitiveness
289
Conclusions
This research paper has presented a vast array of literature on TQM and its applicability
in the service sector. This effort is more systematic in explaining various facets of service
components and its classification. Beside this, this paper also contributes to the theory,
definition and benefits of TQM as well as extant literature review of TQM in different
service industries. Based on the review of relevant literature and the findings from the
current literature survey, this study demonstrates that TQM has positive impact on
service organisation performance and has been adopted as a useful approach in a number
of foreign as well as Indian major service industries, such as healthcare, banking,
education, hospitality and ICT, ITeS and software industry. This paper presents some
selected studies on TQM implementation in different service industries. Further, the
outcome of this research suggests that TQM is applicable to the service sector and is
responsible for growth and development of countrys economy. Its implementation is
associated with better business performance and more rigorously it is being implemented,
the better the business performance.
However, the success or failure of TQM in service systems largely depends on the
initiatives and enthusiasm of members constituting the service organisation. The TQM
literature suggested that organisations that want to implement TQM effectively must have
patience, because TQM is a long-term process and requires major changes in cultural
aspects as well as employee mindset in an organisation. Therefore, to make TQM
movement a success, a new initiative has to be generated across the globe and following
initiatives need to be taken:
x
identify the key areas of service
identify the key practices for successful implementation of TQM
commitment by the top management in implementing TQM for continuous

improvement
a vision for the change
customer focus and orientation should always be there
management structure issue
human resource focus
environmental focus
innovation focus
With such initiatives, TQM can be successfully applied to service industries to achieve
better results. This paper can help managers in better understanding the TQM, service
system concept as well as TQM implementation in service sector. This study also helps in
better understanding the sectoral classification as well as service sector classification in
Indian context as proposed by different organisations and bodies.
290
5.1 Limitations and future research

The authors understand that there are some limitations, which must be considered for
future research. Firstly, the classification of the service categories is somewhat subjective
and based on the certain indices such as GDP at factor cost, employment rate, annual
income and importance of customer-perceived quality in the specific industry, which may
change from time to time. In addition, the actual categorisation of service industries was
the result of the judgement of the authors. Although due care has been taken by the
authors but there is possibility of omitting any other service industry. Secondly, this study
was confined only to service sector consisting of four service industries (i.e. healthcare,
banking, hospitality and ICT). It is suggested that future research should cover not only
these four service industries but also industries such as education, transportation, real
estate, recreational services, wholesale and retail trading, and business consultancy
services, where TQM concept can enrich the working style and organisation
performance. Thirdly, during the literature review of TQM in service sector, empirical
studies dealing with different issues of TQM and SQ appear to be lagging behind, as most
of them examined were not empirical in nature. More conceptual, case studies and
empirical research is needed to clarify and validate relationships among theoretical
constructs, which can be integrated into practical managerial frameworks. Fourthly,
future research is called for those areas where no or least work has been taken by the
researchers as found during the literature review. Some of the gaps identified were
research on sustainability development in TQM, total quality environment management,
TQM in managed care organisations, criteria for effective implementation of TQM,
identifying and examining dimensions that drive the application of multi-dimensionality
of TQM from both internal and external perspective, etc. Fifthly, as with many research
studies, there is a risk that additional relevant literature has not been considered or
included in this review. Thus, this literature survey on TQM in service industries is only
limited to the included research work used in this study. Future studies can also look at
other major TQM areas and issues, and a broader classification may be proposed that
may include analytical studies, business excellence frameworks in service industries, etc.
Further, the present literature survey considered to have made a significant contribution
towards TQM in service sector and proves to be useful as an example of a methodology
that might be used to track the extent of TQM implementation in service industry by the
researchers and academicians. Finally, from an implementation perspective, service
industries are in need of systematic and dynamic performance management approach.
Such approaches should be able to measure, monitor, track and continuously improve the
different aspects of organisational performance.
Acknowledgements
The authors would like to gratefully acknowledge the anonymous referees and the EditorIn-Chief Prof Angappa Guna Gunasekaran for their helpful and invaluable comments
which helped in improving the presentation of this paper considerably.
291
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Int. J. Business Innovation and Research, Vol. 6, No.

Total quality management in service sector:

Copyright 2012 Inderscience Enterprises Ltd.

Electronic copy available at: http://ssrn.com/abstract=2725112

F. Talib, Z. Rahman and M.N. Qureshi

Electronic copy available at: http://ssrn.com/abstract=2725112

TQM in service sector: a literature review

management research and showed significant relationship between them. Bellis-Jones

F. Talib, Z. Rahman and M.N. Qureshi

barriers of TQM implementation

critical dimensions of TQM

development of TQM framework

development of TQM models

financial outcomes of service quality (SQ) initiatives

identification and implementation of TQM practices

impact of TQM in service industry

relationship between TQM and customer satisfaction

relationship between TQM and employee satisfaction

relationship between TQM practices and business performance

relationship between TQM practices and quality performance

TQM in service sector: a literature review

TQM and knowledge sharing

TQM and new product development

TQM practices and its impact on role stressors

Study on TQM in service sector

Development of TQM framework

Financial outcomes of SQ initiatives

F. Talib, Z. Rahman and M.N. Qureshi

2.1 TQM definitions

Different definitions of TQM as reported in literature

A management philosophy which develops all management principles and

An approach for improving the competitiveness, effectiveness and flexibility

A total corporate focus on meeting and exceeding customers expectations

A new way of managing to improve effectiveness, flexibility and

Zairi et al. (1994)

A positive attempt by the organisations concerned to improve structural,

A strategic architecture requiring evaluation and refinement of continuous

An integrated approach to bring continuous improvement in products and

Lee et al. (2010)

A business management strategy seeking to improve the quality of

TQM in service sector: a literature review

2.2 Benefits of TQM

A list of selected benefits of TQM as reported in literature

F. Talib, Z. Rahman and M.N. Qureshi

Summary of selected schemes for service classifications

TQM in service sector: a literature review

3.1 Definitions of service

Customer service: Service provided in support of a companys core product, e.g.

The different definitions of services have been compiled in Table 5.

Various definition of service as reported in literature

F. Talib, Z. Rahman and M.N. Qureshi

3.2 Service characteristics

TQM in service sector: a literature review

3.3 Sectoral classification

primary sector (agriculture and mining)

secondary sector (manufacturing, electricity, gas, water supply and construction)

tertiary sector (services).

Stages and divisions of economy into three sectors

F. Talib, Z. Rahman and M.N. Qureshi

3.3.1 Primary sector

3.3.2 Secondary sector

3.3.3 Tertiary sector

Contribution of three sectors to Indias GDP, 2009