1.1 Introduction

The quality of a company's products and processes has an intrinsic relationship with its financial and strategic performance. A US General Accounting Office study of the 20 highest-scoring Malcolm Baldrige National Quality Award applicants suggested that these organizations achieved better quality, lower cost, greater customer satisfaction, improved market share, and higher profitability compared to their competitors (GAO, 1991). Using a database of 3000 companies representing over 16,000 years of data, the Profit Impact of Market Strategy study (W-13) ^[1] concludes that, In the long run, the most important single factor affecting a business unit's performance is the quality of its products and services relative to those of its competitors.

Yet, quality remained the Cinderella of the competitive weapons available to American and West European businesses up until the mid-1980s. Indeed, the contemporaneous operations strategy literature is replete with strategic formulations which focused solely on a single variable, overly simplistic dynamic of competition (lower-the-price, higher-the-profits) to obtain competitive advantage. Unfortunately, this paradigm failed in the face of newer paradigms which called for strategy formulations that drew from a richer and more exhaustive set of variables, such as quality, flexibility, and agility (Fine and Hax, 1985; Swamidass, 1986; Skinner, 1996a,b) to gain higher market share, and hence, higher profitability.

Many corporate (Fine and Hax, 1985; Skinner,...