THE RELATIONSHIP BETWEEN ORGANIZATION STRATEGY AND ORGANIZATION PERFORMANCE : THE MEDIATING ROLE OF TOTAL QUALITY MANAGEMENT

Abstract

This study examines the relation between organization strategy of differentiation and cost leadership and total quality management (TQM). Furthermore, it investigates relationship between TQM and organization performance and thus, whether TQM is mediating variable in relationship between organization strategy and organization performance.The empirical data for this study was drawn from a survey of 58 middle/senior managers from sevices firms in Riau. The analysis was conducted using structural equation modeling (SEM).The findings indicate that organization strategy is positively and significantly relation and TQM. TQM relation on performance financial and quality performance. Organization strategy not relation on performance and TQM not mediates the relationship between organization strategy (differentiation and cost leadership) and innovative performance measures . The implication is that TQM needs to be complemented by other resources to more effectively realize the strategy in achieving a high level of performance, particularly innovation.