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The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners

Author

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  • Huiming Liu

    (Department of Industrial Engineering, Tsinghua University, Beijing 100084, China)

  • Su Wu

    (Department of Industrial Engineering, Tsinghua University, Beijing 100084, China)

  • Chongwen Zhong

    (School of Economics and Management, Beijing Institute of Petrochemical Technology, Beijing 102617, China)

  • Ying Liu

    (School of Economics and Management, Beijing Information Science and Technology University, Beijing 100192, China)

Abstract

Quality management practices have become increasingly important as firms seek to obtain quality certifications to dominate markets. To date, adequate research evaluating the effects of quality management is lacking. In this work, we used Chinese quality awards to evaluate a firm’s quality level. A PSM-DiD (propensity score matching and difference-in-difference) model describing the relationship between quality award effects and financial benefits in terms of return on assets was developed. We further used a hierarchical regression to examine the influence of operational performance on financial benefits. The results show that quality awards cannot assure their winners a higher return on asset. Indicators of operating performance, such as less lead time and higher inventory turnover, can significantly enhance firms’ profitability. The moderating effects of operational performance suggest that firms may focus on how to translate quality management practices into business improvement. This study also contributes to the operation management literature by describing how firms need outstanding financial performance for sustainable development and continuous improvement.

Suggested Citation

  • Huiming Liu & Su Wu & Chongwen Zhong & Ying Liu, 2020. "The Sustainable Effect of Operational Performance on Financial Benefits: Evidence from Chinese Quality Awards Winners," Sustainability, MDPI, vol. 12(5), pages 1-23, March.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:5:p:1966-:d:328456
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