Keywords

1 Introduction

Companies that embrace a high-quality, holistic approach to corporate sustainability, ensuring compliance with environmental standards and safeguard of natural resources and looking for new environmentally and socially conscious sustainability solutions that could minimize risks while delivering enhanced profitability through cost reduction, improved resource accessibility, marketing and recruiting benefits, are more likely to address short-term needs while positioning themselves for long-term success (Fust and Walker 2007).

While total quality management (TQM) has been implemented worldwide along the past three decades in several different either private or public industries (Ghobadian and Gallear 2001), corporate social responsibility (CSR) is a much more recent phenomenon.

Although several studies have shown that quality management does not always improve the sustainability of a firm, due to several factors such as lack of top management involvement (e.g. Viada-Stenger et al. 2010; Yeung et al. 2006), when responsiveness for quality is extended throughout all the levels in the organization, the success of TQM-based quality management systems is more likely to occur (Bou and Beltran 2005), and several studies have provided findings to support such positive relationship between TQM and performance (Jaca and Psomas 2015; Yeung et al. 2006; Samson and Terziovski 1999).

Considering the trade-off between CSR-based investments and profitability, regarding the relationship between CSR and organizations’ performance, findings have been quite inconclusive, and although some studies have suggested negative and neutral relationships (e.g. Parast and Adams 2012; McWilliams and Siegel 2000), several studies have reported positive influences of CSR strategies in organizations’ performance (Foote et al. 2010; Lu et al. 2013; Zali and Sheydayaee 2013).

The stakeholder theory suggests that, in order to create long-term value and generate sustainable wealth over time, organizations should guide decision-making, and expand the scope of their activities beyond shareholders’ own interests, to several other parties with vested interests, such as customers, employees, suppliers, governmental bodies, trade associations, trade unions and the community in general, among others. Since both approaches consider the interest of either internal or external stakeholders, TQM and CSR are generally considered appropriate corporate strategies that can enhance organizations’ value and potential sources in order to obtain sustainable competitive advantages (Benavides-Velasco et al. 2014).

Moreover, one of the key issues that have significantly interested scholars in the fields of TQM and CSR deals with the degree of overlap between both strategic approaches. According to McAdam and Leonard (2003), considering its greater penetration in organizations, TQM even may act as a key catalyst for developing CSR within organization.

Through a comprehensive literature review, this chapter aims to systematize knowledge on how the implementation of strategies based on TQM and CSR principles may create stakeholders’ value and generate sustainable competitive advantages for organizations. More specifically, anchored in the existing literature in both fields, the chapter aims to identify similarities and differences between both strategies in order to reduce/eliminate redundancies in the use of resources, to examine whether there is a relationship of complementarity between both regarding sustainability and trust factors, to explore how TQM can act as a foundation and key catalyst for the development of CSR-based strategies and to analyse how a strategy based on both orientations may contribute to organizations’ sustainable performance while improving the quality of life of the workforce and citizens in local communities, in particular, and even of society in general.

2 Background

While TQM has been implemented worldwide along the last decades in several different organizational contexts, CSR appears to be a much more recent phenomenon. First of all, it is important to understand what these two concepts are and how they evolved, although in the literature there is no consensus in this area.

2.1 Corporate Social Responsibility

Over the past decades, CSR and its effect on organizations’ success has been the subject of much academic debate and criticism, with most questions focusing on whether a company that is socially responsible is more likely to be financially successful (Foote et al. 2010). Similarly, there is also a growing interest among managers in CSR’s antecedents and consequences, especially for executives at multi-national and multidivisional companies (McWilliams et al. 2006).

Nevertheless, nowadays, the power of environment, citizens, potential investors, pressure groups and a wide range of other stakeholders is increasingly holding companies to account for social, environmental and economic impacts that they have on society and the natural environment, and companies, regardless of their size and target market, need to earn approval of the society to be able to remain in business (Gechevski et al. 2016).

As highlighted by Bowen et al. (2013), CSR refers to a fundamental morality regarding how a company behaves towards society, following ethical behaviour towards stakeholders and recognizing the spirit of both legal and regulatory environment. According to these authors, entrepreneurs’ social responsibility refers to obligation regarding defining policies and making decisions that converge towards a strategy that converge to societies’ goals and values.

As explained by Carroll and Shabana (2010), organizations’ social responsibility connects economic, legal, ethical and philanthropic dimensions with the expectations society has about these organizations. Similarly, Tarí (2011) considers that social responsibility refers to the set of business practices that meet or exceed the economic, legal, ethical and philanthropic expectations of society, considering all the interested parties in this issue. Mijatovic and Stokic (2010) also emphasize organizations’ ethical commitment to environmental and economic sustainability without depriving stakeholders.

The ISO 26000:2010 international standards provide guidance on how organizations should convert principles into effective actions and share best practices concerning social responsibility. As defined in these standards, CSR refers to the influences of organizations’ decisions and activities (products, services and processes) on society and environment, through transparent and ethical behaviour, contributing to society’s sustainable development (including its health and welfare) and taking into account stakeholders’ expectations, in compliance with applicable law and international norms, integrated throughout the organization, practised in its activities within its sphere of influence, being part of the organizational culture.

Other authors have redefined the concept of organization, placing it in its socio-economic context as a living organism that is fed by society and, in return, promotes societal well-being, contrary to the reductive concept of a simple economic entity that produces goods and services (Parsa et al. 2015). From this perspective, there is a symbiotic relationship between organizations and society, a mutualist spirit that generates benefits for both parties.

2.2 Total Quality Management

Being for a long time framed at an operational context, quality management begins to rise interest from a strategy point of view, with a focus shift towards strategic quality management. As highlighted by Hellsten and Klefsjo (2000), the evolution of quality management reached a point where quality is considered as a key factor for competition, moving from a narrow manufacturing-based perspective to a corporate emphasis applied to all business functions and employees with broader implications for management. In this context, Garvin (1987) proposed eight critical dimensions of quality that can serve as a framework for strategic analysis: performance, features, reliability, conformance, durability, serviceability, aesthetics and perceived quality. As highlighted by the author, although the most traditional notions of conformance and reliability remain important, they are subsumed within a broader strategic framework. Considering their business strategy and their positioning, companies focus on one or more dimensions of quality; being sure with the upstream of this process, they must consider that quality is strategic and in this strategy formulation process they do not disregard the external context.

From an evolutionary perspective, quality management starts to consider organizations as a whole, originating a new approach called total quality management and focusing on both internal and external stakeholders, and is described by Miller (1996) as a continuous effort from top management to take the necessary steps to enable everyone in the organization to grasp information about quality principles to meet or exceed the expectations of internal and external customers. TQM may be conceptualized as a structured approach to refocus organizations’ behaviour, planning and working practices towards an employee-driven culture, problem-solving, stakeholder oriented, values integrity and open and fear-free, in such a way that organizations’ business practices are based on seeking continuous improvement, devolution of decision-making, removal of functional barriers, eradication of sources of error, teamworking, honesty and fact-based decision-making (Ghobadian and Gallear 1996).

Hansson (2003) considers TQM as an important management philosophy in the sense that it supports the organization in satisfying customers. According to Ghobadian and Gallear (1996), several values underpin the TQM concept, such as an implicit convergence of multiple interests (employees, shareholders, customers, suppliers and the wider society), an emphasis on individual/collective honesty and integrity, stakeholders’ satisfaction as everyone’s key priority, people as key internal success factors, management’s responsibility for maintaining an environment in which employees can perform efficiently and effectively, organization viewed as a chain of interlinked processes, continuous improvement pursuing, emphasis on prevention, high interaction between parties (employees, customers, suppliers), mistakes considered as learning opportunities, employees empowerment, strategic alliances with suppliers, mutual respect concerning all relationships, decisions based on facts, functional integration and openness within and outside the organization.

Table 13.1 shows some of the main conceptualizations of TQM reported in literature.

Table 13.1 Conceptualizations of total quality management
Full size table

As can be observed from these different points of view, TQM underpins the effectiveness and efficiency in the use of resources, and, in this sense, several authors such as Isaksson (2006) or Hellsten and Klefsjo (2000) approach a TQM framework highlighting the importance of providing higher value (increasing internal and external customer satisfaction) at lower costs (resource use efficiency), which is consistent with the objectives of economic sustainability.

The efficient use of resources debate converges to the issue of sustainability, and, in this context, the evolving quality framework is upgraded and aligns with this premise, according to Al Nofal and Zairi (2002) who argue that the shift from product/service orientation to customer/market orientation shows that different focus in different time periods marks the different emphasis in TQM and sustainability.

3 TQM and CSR as Sustainable Competitive Advantage Sources

3.1 TQM and CSR Through the Lens of RBV

Authors have ground their research on different theoretical approaches to study if and how TQM-based frameworks (e.g. ISO 9001, European Excellence Model) and CSR may lead to sustainable competitive advantages, such as the resource-based view of the firm.

As proposed by several researchers, such as Barney (1991) or Peteraf (1993), sustainable competitive advantages may be defined as organizations’ abilities to develop and implement a value creating strategy in such a way that current and potential competitors are unable to duplicate such strategy. Grounded in Penrose’s (1959) work The Theory of the Growth of the Firm and later extended by other researchers (e.g. Barney 1991; Wernerfelt 1984), the resource-based view of the firm (RBV) became one of the leading and most influential theories in the management theorizing history, with a prominent role in the study of sustained competitive advantages.

A core premise of the RBV of the firm is that, rather than simply monitoring its competitive environment to identify sources of competitive advantages, organizations should look inside and compete on the basis of their own internal resources and capabilities. The supporters of this perspective argue that sustainable competitive advantages depend primarily on the application of a bundle of valuable resources (both tangible and intangible) at companies’ disposal (e.g. Wernerfelt 1984). According to Galbreath’s (2005) typology, (1) tangible resources would include financial and physical assets, (2) intangible resources that are assets would include intellectual property and organizational and reputational assets, and (3) intangible resources that are skills include capabilities. Resources and capabilities are the primary constants upon which an organization can establish its identity and frame its strategy, and they are the primary sources of firms’ competitive advantage (sustained over time), and, thus, firms’ design of strategies should exploit each one of their unique characteristics (Grant 1991).

Barney (1991), in particular, and RBV promoters in general focused on attributes that resources should possess to generate and sustain a long-term competitive advantage, arguing that resources and capabilities must be valuable, rare, imperfectly imitable and non-substitutable. According to Peteraf’s (1993) model, transforming a short-term competitive advantage into a sustained competitive advantage requires four conditions that must be met: superior resources (heterogeneity within an industry), ex post limits to competition, imperfect resource mobility and ex ante limits to competition. Grant (1991) points to four characteristics of resources and capabilities which are likely to be critical determinants for firms’ sustainable competitive advantage: durability, transparency, transferability and replicability.

As already shown in previous sections, TQM and CSR have manifest several concerns in this arena. Benavides-Velasco et al. (2014) consider that TQM and CSR are potential sources for obtaining sustainable competitive advantages, but this perception had an evolutionary process regarding both approaches.

As TQM concerns, its association with reaching sustainable competitive advantages dates back to the 1990s (Molina-Azorín et al. 2015). Powell (1995) argues that TQM may represent a potential source of sustainable competitiveness, opinion corroborated by Woodruff (1997) who added that relying only in innovation and product quality strategies alone does not guarantee the existence of competitive advantages. Based on the idea that organizations face growing difficulties in sustaining competitive advantages only anchored in static resources, Su et al. (2014) propose a dynamic capability-based strategy explaining how to sustain a competitive advantage in quality, arguing that meta-learning helps sustain a high level of quality performance, while sensing weak signals and resilience to quality disruptions improves the consistency of quality performance.

Based on an analysis of the seminal TQM literature, Reed et al. (2000) provide arguments showing how strategic TQM issues may generate a cost- or differentiation-based advantage; using concepts from resource-based theory, the authors show how TQM-based processes have the potential to create sustainability of advantage, highlighting that the individual components of the strategy’s process embody tacitness and are a complex system, thus producing the causal ambiguity that can protect a TQM-based advantage from imitation.

Indeed, there is a large body of empirical evidences supporting a positive relationship between adopting TQM-based strategies and generating sustainable competitive advantages (e.g. Curkovic and Pagell 1999; Samson and Terziovski 1999; Hendricks and Singhal 1997; Flynn et al. 1995). For example, analysing the relationship between TQM and performance in a sample of US firms, Powell (1995) found that certain tacit, behavioural, imperfectly imitable TQM-based resources (e.g. open culture, employee empowerment and top management commitment) can drive TQM success and produce advantage, concluding that these tacit resources, and not TQM tools, allow to outperforming competitors. Escrig-Tena et al. (2001) demonstrated that the introduction of TQM can generate a wealth of distinctive competencies which partly explain how a competitive advantage can be generated or boosted. Yunis et al. (2013) found that TQM is an important dynamic resource that competitive strategies support, allocate and enhance in order to achieve sustainable competitive advantage. Moreover, the researchers found that soft TQM elements have a higher impact on reaching operational performance and explained that these soft elements include the major forces of change, innovativeness and continuous improvement, namely, the tacit knowledge, experience and problem-solving abilities.

Although the understanding on how CSR can be aligned with corporate strategy and how firms’ environmental policy can meet the needs of its key communities can be grounded on framework as the agency theory, the stakeholder theory or the institutional theory, to the extent that companies engage in CSR strategically, such behaviour can be also analysed through the lens of the resource-based view of the firm (McWilliams et al. 2006). Hart (1995), in the first theoretical paper to apply the RBV framework to CSR, highlighted that, for some organizations, environmental social responsibility may represent a resource able to lead to a sustained competitive advantage. Since then, the number of studies focused on CSR, and adopting a resource-based view (frequently combined with other theoretical approaches), has grown in recent years, beginning with a focus on environmental aspects and subsequently extending to more general issues of CSR, as, for example, corporate social disclosure (Branco and Rodrigues 2006). The RBV support of CSR, as a practice, develops from the belief that it can lead to unique characteristics that offer a competitive advantage (Foote et al. 2010).

Russo and Fouts (1997), Sharma and Vredenburg (1998) and Bansal (2005) are examples of studies approaching CSR, grounded in the resource-based view of the firm, with a high impact in literature, recording thousands of citations. For example, Russo and Fouts (1997) conclude that companies reporting higher levels of environmental performance had also higher financial performance, and McWilliams et al. (2002) stressed that, when supported by political strategies, CSR strategies may be conducted to develop sustainable competitive advantages.

Based on the initial idea that CSR has garnered much attention over the past decades, with most questions focusing on whether a company socially responsible is more likely to be financially successful, Foote et al. (2010) conclude that, although without measurable empirical evidences, there is support in literature that engaging in CSR-based approaches has a significant influence on performance. Investigating the impact of CSR activities on corporate performance, Kang and Liu (2014) argue that undertaking CSR leads to greater financial returns compared to related cost, concluding that engaging in CSR is beneficial for firms and thus worth implementing.

Drake and Rhodes (2015) consider that sustainability challenges have a relevant impact on stakeholders. Regarding CSR, these authors point out that organizations have not yet understood its true potential, because this approach is used in the perspective of cost minimization or risk prevention, while companies should go further, namely incorporating the organizational strategy and acting in the perspective of adding value to improve the competitive position. The ISO 26000:2010 international standards present this strategic framework concerning the importance of responsibility in the context of organizations’ performance, namely, respecting to competitive advantages.

3.2 Total Quality Management and Its Impact on Stakeholders

Various studies demonstrate that TQM-based quality management systems have positive influences on several stakeholders, such as employees (Para-González et al. 2016; Dubey et al. 2015), customers (Wang et al. 2012; Tarí et al. 2010) or shareholders (Chaudary et al. 2015), among others.

Moreover, managers exhibiting a personal commitment to quality, acting as a role model and ensuring merit-based reward system have a key influence, through direct effects on several important outcomes, including employees’ attitudes (Oakland 2011), increased job satisfaction and employee commitment (Clark et al. 2009). Several studies have shown that diverse HRM practices such as training, incentive systems have a positive moderating effect on the relationship between TQM-based quality management systems and customer satisfaction (e.g. Chandler and McEvoy 2000). For example, organizations engaged in TQM-based improvement programmes are more responsive to changes in internal and external customers’ needs, positively influencing performance (Wang et al. 2012). TQM-based strategies and policies’ effective deployment, as well as operations’ systematic and continuous revision and improvement, allow firms to reach sustainable results (Oakland 2011). Organizations continuously pursuing process improvements allow mutual and long-term loyalty between organizations and their stakeholders (Oppenheim and Przasnyski 1999) and can benefit with higher operational reliability and innovation, better productivity levels and significant waste reduction (Prajogo and Sohal 2006).

Indeed, supporting quality management literature is filled with empirical evidences (surveys and case studies) on the TQM approach, as well as its influence on organizational performance. Although some studies found no evidence of a positive relation between TQM and financial performance (e.g. Kober et al. 2012), several research projects brought empirical evidences supporting a positive relationship between both variables, such as Shrivastava et al. (2006) or Rahman (2001) concerning profitability; Akgün et al. (2014) concerning ROI, gross margin and earnings; Hendricks and Singhal (2001) concerning operating income and sales; and Agus et al. (2000), concerning revenue growth, among many others.

Several studies also show empirical evidences regarding the positive influence of TQM-based quality management systems on operational performance, such as product and process innovation (Honarpour et al. 2017; Aminbeidokhti et al. 2016; Perdomo-Ortiz et al. 2009); productivity (Iyer et al. 2013); efficiency (Salhieh and Abu-Doleh 2015; Hasan and Kerr 2003); lead time (Sadikoglu and Zehir 2010; Boyer 1991); flexibility (Escrig-Tena et al. 2012); service quality (Talib et al. 2011); delivery performance (Samson and Terziovski 1999); cost-effectiveness (Modgil and Sharma 2016; Lee and Whang 2005); product quality issues, such as scrap level, rework level and waste reduction (Fuentes et al. 2006; Shrivastava et al. 2006); customer satisfaction (Fuentes et al. 2006; Hasan and Kerr 2003); market benefits (Psomas and Fotopoulos 2010); and corporate image among society (Yang 2006), among other operational benefits.

Moreover, rooted in the idea that satisfied internal customers contribute to satisfying needs and expectations of external customer, supporting quality management literature shows that, as internal customers, employees are as important as external customers (Youssef et al. 2014). As a result, TQM is frequently associated with quality of work life (QWL) issues. A QWL cultural underpinning anchors a successful TQM strategy and aims at creating a fear-free organization in which employee involvement is vigorously pursued, generating a high degree of reciprocal commitment (employee to the goals and development of the organization and the organization to the needs and development of the employee) (James 1992). Employees’ identification process with the company begins with the projection of a strong clear corporate image through its outward presentation of premises and products and is fostered by the use of slogans and a clear mission statement reinforced with consistent management behaviours (Webley and Cartwright 1996).

Concerning QWL, several papers report empirical evidences regarding the positive influence of TQM-based quality management systems on many issues such as work satisfaction (Mendes 2010; Hasan and Kerr 2003; Hoonakker et al. 2000), employee morale (Sadikoglu and Zehir 2010; Samson and Terziovski 1999), job enrichment (Youssef et al. 2014), opportunity for growth and relationships with co-workers (Carayon et al. 1999), responsibility for the safety and health of employees and local community (Youssef et al. 2014; Podgórski 2000), organizational commitment (Mendes and Jesus 2017; Carlos et al. 2014; Karia and Asaari 2006; Allen and Brady 1997), organizational citizenship behaviour (Carlos et al. 2014), job involvement and career satisfaction (Karia and Asaari 2006), empowerment (Andrade et al. 2017; Sweis et al. 2013), perceived organizational support (Allen and Brady 1997), corporate image among employees (Webley and Cartwright 1996) and physical working conditions, mental state, career orientation, effect on personal life, self-respect and sense of achievement (Joseph et al. 1999), among other QWL issues.

3.3 Corporate Social Responsibility and Its Impact on Stakeholders

Although CSR’s critics argue that CSR distracts from the fundamental economic role of businesses, which is to make money, and that CSR is nothing more than a feel-good programme, which attempts to serve as a watchdog over large and powerful corporations, proponents of CSR argue that corporations benefit in many ways by operating with a longer-term view of their organization and role in society than they do by focusing on just their own short-term profits (Foote et al. 2010).

The evolution of the CSR concept originated several categorization proposals of CSR’s models based on diverse dimensions. For example, Carroll (1979) proposed the CSR pyramid, a three-dimensional social performance conceptual model including four dimensions: discretionary (e.g. philanthropic issues, community support), economic (e.g. efficiency, profitability), legal (e.g. compliance with applicable laws) and ethical responsibilities (e.g. “beyond compliance” measures).

Based on the previous works of Carroll (1991) and Swaen and Chumpitaz (2008), Palihawadana et al. (2016) found that perceived CSR is explained through four dimensions: legal, ethical, economic and philosophy responsibility. According to these authors, philosophy responsibility deals with companies’ voluntarily participation in charitable projects, active sponsorship in social events, donations to charities and concerns with the enhancement of a society’s quality of life.

Dahlsrud (2008) proposed a five-dimension model:

  1. 1.

    The environmental dimension, concerning the natural environment (e.g. cleaner environment, environment stewardship)

  2. 2.

    The social dimension, referring to the relationship between business and society (e.g. contributing to a better society)

  3. 3.

    The economic dimension, regarding socio-economic or financial aspects, including describing CSR as a business operation

  4. 4.

    The stakeholder dimension, involving interactions with stakeholders (e.g. employees, suppliers, customers, communities)

  5. 5.

    The voluntariness dimension, referring to actions not prescribed by law (based on ethical values, beyond legal obligations)

Also referred to as the three CSR’s pillars (people, planet and profit), the triple bottom line (TBL) approach is certainly one of the most accepted CSR models and widely employed both in the literature and in practice known, placing emphasis on (1) responsibility for society (people), (2) responsibility for environment (planet) and (3) responsibility for financial success (profit). Coined by Elkington (1997) and characterized according to its contribution to economic prosperity, environmental quality and social capital (González-Rodríguez et al. 2015), the TBL systematic approach has become increasingly fashionable in management, consulting, investing and NGO circles over the last few years, based on the idea that firms cannot be successful in the long run if they consistently disregard the interests of key stakeholders and that the overall fulfilment of obligations to communities, employees, customers and suppliers, among other parties, should be measured, audited and reported just as the financial performance has been for more than a century (Norman and MacDonald 2004).

As stressed by Geva (2008), the concentric circle model, based on the work of the Committee for Economic Development in 1971, holds that CSR firms have direct responsibility to promote the quality of life, even at the expense of profitability; this responsibility could be extended to sustainable development, environmental health and the social determinants of health (Dimmler 2017).

In accordance with whatever the model considered, building sustainable relationships with stakeholders corresponds to a starting point for running a business ethically, paying attention to both social and ecological environment (Du et al. 2015). As highlighted by Deng et al. (2013), CSR does not involve only economic or legal responsibilities but also firms’ involvement in initiatives directed at social wealth protection and thus firms’ improvement in the quality of life of clients, employees and shareholders.

Indeed, there are several different reasons associated with organizations’ active CSR agenda, and as highlighted by Sprinkle and Maines (2010), most of the benefits of CSR naturally mirror the reasons for engaging in CSR. As reported by several researchers, such as Lenssen et al. (2010), Graafland and Van De Ven (2006) or Solomon and Lewis (2002), several important reasons motivate companies to pursue CSR-based strategies, such as willingness to improve the organizational image or reputation of the organization, the need to comply with regulations, a way of political lobbying and pressure from clients/consumers.

According to Sprinkle and Maines (2010), there are several different reasons underlying organizations’ motivations for engaging in socially responsible endeavours:

  • Altruistic intentions, simply believing that their CSR efforts are part of being a good global citizen.

  • A window dressing way to appease various stakeholder groups (e.g. nongovernmental organizations) in order to avoid negative publicity, and, in such a perspective, CSR may simply be viewed as another cost of doing business.

  • Potential contracting benefits, believing that CSR helps recruit, motivate and retain employees (frequently reported as one of the most significant benefits of CSR programmes).

  • Customer-related motivations, believing that CSR may entice consumers to buy companies’ products/services, allowing them to reap price premiums or garner increases in market share.

  • Focus on environmental concerns, leading to reductions in production costs.

  • Integral part of risk management efforts, believing that CSR may be an effective lever for easing legal or regulatory constraints, regarding, for example, avoiding (or reducing) emissions’ reduction and other adverse incidents and reducing the chances of lawsuits and damages to reputation.

  • Supplier-related motivations.

  • Believing that, just as customers may be more likely to purchase goods and services from socially responsible firms, suppliers may be keen on working with such organizations and thus allowing positive spill over effects for suppliers.

  • Potential to attract capital from investors and receive better terms from creditors, believing that many individuals likely wish to align their investments with their moral aims.

Shnayder et al. (2016) systematize the several potential motivations into two main dimensions:

  • Financial or profit-based (at least in part) motivations, such as competitiveness in labour market, consumer demands and safety, creating shared value, efficiency, ensuring future success, entering new markets, growth, image, increasing yield, internal assessment/self-regulation, profit, regulatory compliance, supply chain synergy and sustainability, among others

  • Intrinsic or value-based motivations, such as child welfare, climate change mitigation, full landfills, human rights, improving biodiversity, improving consumer nutrition, improving health, increasing exercise among children, influencing consumer behaviour, maintaining soil fertility, protecting environment and resources, reducing emissions, species extinction, supporting fairness/equality and supporting small-scale business

Although there are no doubts about the clear influence of CSR-based strategies on the society in general and especially in what the quality of life concerns, the relationship with organizations’ performance and quality of working life is not so obvious, and many studies have been performed along the last couple of decades in order to better understand CSR’s benefits for organizations.

Indeed, management and economics literature is filled with many empirical evidences (surveys and case studies) regarding the influence of CSR-based approaches on organizational performance. Although some researchers found no evidence of a positive relation between CSR and financial performance (e.g. Madorran and Garcia 2016), several studies reported empirical evidences supporting a positive relationship between CSR and several variables, such as ROA (Wei and Lin 2015), net profit margin (Kamatra and Kartikaningdyah 2015), return on invested capital and sales growth rate (Oh and Park 2015) and investor loyalty (Arikan et al. 2016), among others. As highlighted by Nollet et al. (2016), this is particularly true in the longer run.

Moreover, several empirical results also suggest a positive and significant influence of CSR-based approaches on operational performance issues such as productivity (Hasan et al. 2016; Wei and Lin 2015), customer satisfaction (Saeidi et al. 2015; Luo and Bhattacharya 2006), customer loyalty (Aramburu and Pescador 2017; Pérez and del Bosque 2015) or customer perceived value and intention to spread word of mouth (Arikan et al. 2016), among others.

Finally, as observed with TQM, CSR-based initiatives also appear to influence positively the quality of working life. Indeed, empirical evidences suggest a close relationship between CSR and organizational commitment (Asrar-ul-Haq et al. 2017; Panagopoulos et al. 2016), especially in what the affective concerns (Kim et al. 2017; Mory et al. 2016), organizational citizenship behaviour (Islam et al. 2016; Rupp et al. 2013), job satisfaction (Barakat et al. 2016; Du et al. 2015), job performance (Kim et al. 2017) and corporate image/reputation among employees (López-Fernández and Rajagopal 2016; Komodromos and Melanthiou 2014), among other issues.

4 Dual Strategic Approaches Based on TQM and CSR

TQM and CSR’s theoretical framework shows that both approaches have been attracting the attention of several authors and suggest great similarities between them. Within this context, there is a need to understand whether these two approaches are complementary or overlapping, because both focus on internal and external stakeholders, are based on adding value to organizations and focus on efficiency and effectiveness, and their success depends strongly on their internalization in organizational culture, as explained by Benavides-Velasco et al. (2014) about CSR and Garvin (1987) about TQM.

4.1 Similarities Between TQM and CSR

Although organizations’ image and reputation and the level of satisfaction of society regarding their actions are more related to the implementation of CSR actions (Benavides-Velasco et al. 2014), the truth is that both TQM and CSR approaches are shown in literature to have several similarities, and according to McAdam and Leonard (2003), CSR has a strong affinity with the principles of quality management.

For example, as explained by Kok et al. (2001), TQM has a foundational similarity to CSR in that it has an ethical anchor while at the same time contributing to organizational goals and measures (McAdam and Leonard 2003). TQM principles appear to be consistent with both the legitimate ethical and instrumental sides of CSR (McAdam and Leonard 2003). Vinten (1998) highlights the role that ethical considerations play in various quality award schemes, stressing that there is scant evidence in the awards that ethical issues have achieved high materiality and that organizations that constantly have a negative ethical impact may find the withdrawal of public approval and of the market for its product or services. Indeed, as highlighted by McAdam and Leonard (2003), the founders of modern quality management and business excellence (e.g. Crosby, Deming, Juran) considered ethics, principles and respect for people as key principles, such as other more recent researchers (e.g. Fisscher and Nijhof 2005; Gentili et al. 2003).

Moreover, both management approaches focus on identified needs of various stakeholders (employees, customers and society) and share common values such as proactive action, the importance of win-win relationships with partners as well as adopting an ethical perspective that exceeds the expectations of society and laws (Benavides-Velasco et al. 2014). In fact, throughout last decades, both CSR and TQM progressed towards common purposes, including ensuring customers’ confidence, enhancing organizational credibility and demonstrating the focus on long-term sustainability’s advantages over short-term profitability (ASQ 2009).

According to the BSR’s recent report in partnership with the American Society of Quality, exploring the connection between CSR and quality and opportunities for increased collaboration, (1) both CSR and TQM are based on a set of values and beliefs, such as “do no harm”, “zero waste”, “make external costs visible” and “driving out fear” between management and employees, (2) both have a very strong focus on people (not just customer satisfaction but also quality of working life and employee satisfaction), and (3) both share common lines of thinking regarding several concerns, such as making hidden costs visible, corporate governance, empowerment, proactive behaviour and internal alignment (ASQ/BSR 2011).

As referred by Zink (2007), there are many similarities between TQM and CSR, and based on a stakeholder approach, corporate sustainability justifies a redefinition of TQM goals, taking into account that the (long-term) survivability of an organization is related to the survivability of society, and therefore CSR has to play a stronger role within business. Indeed, as highlighted by Zink (2005), the “implementation of a TQM system” corresponds to one of the economic and financial criteria assessed by the Sustainability Index of the SAM Sustainability Group (which is delivering data for the Dow Jones Sustainability Group Index), based on a Corporate Sustainability Questionnaire, which has a stakeholder orientation and includes specific CSR concepts.

As already seen previously, literature provides many evidences regarding the benefits provided by TQM and CSR individually, and both share common similarities. In fact, TQM and CSR are generally considered potential sources to obtain sustainable competitive advantages. The question here is whether stakeholders may benefit from a dual strategy based on both TQM and CSR approaches. The March 2008 Quality Progress Quick Poll indicated that 82.8% of respondents agreed that social responsibility and environmental sustainability should be considered a part of quality management (ASQ 2009). In TQM systems, attention is generally paid to social responsibility as far as the impact on society is recognized and implemented within the company (Fisscher and Nijhof 2005).

4.2 Towards a Relationship of Complementarity Between TQM and CSR

TQM and CSR practices are in many ways complementary (e.g. Benavides-Velasco et al. 2014). Several works suggest that TQM-based quality management systems can be a platform and catalyst for effectively developing CSR within organizations (e.g. Poureh 2015; Zink 2007), and, thus, CSR can be advanced more rapidly in organizations if it can be incorporated in already established TQM models, methodologies and change programmes (McAdam and Leonard 2003).

Indeed, social responsibility is somehow already reflected in the several different models of excellence such as the European Foundation for Quality Management (EFQM) Model of Excellence or the Malcolm Baldrige National Quality Award (MBNQA) Model (Nováková et al. 2014; Foote et al. 2010). As stated by Fisscher and Nijhof (2005), in general, TQM-based models (e.g. EFQM and Malcolm Baldrige National Quality Award Models), a focus on stakeholder value is embedded (customers, employees and society as a whole). Indeed, excellence models are considered valuable instruments to transfer the concept of corporate sustainability into practice (e.g. Zink 2007).

In the initial 1988 Baldrige Criteria for Performance Excellence, public responsibility was focused narrowly on mechanisms used for external communication of information concerning corporate support of quality assurance or improvement activities outside the company, but over the next years, this item was expanded to include how firms extend quality leadership to the external community and integrate responsibilities to the public for health, safety, environmental protection and ethical business practice into quality policies and activities (including how firms promote quality awareness and sharing with external groups, how firms encourage employee leadership and involvement in quality activities of external organizations, among other questions) (Foote et al. 2010).

The EFQM Excellence Model grounds on several fundamental concepts defining the underlying principles that form the foundation for achieving sustainable excellence in any organization. Two of these principles are clearly in line with the CSR approach:

  • According to the Creating a Sustainable Future principle, “excellent organisations have a positive impact on the world around them by enhancing their performance whilst simultaneously advancing the economic, environmental and social conditions within the communities they touch” (EFQM 2012).

  • According to the Sustaining Outstanding Results principle, “excellent organisations achieve sustained outstanding results that meet both the short and long term needs of all their stakeholders, within the context of their operating environment” (EFQM 2012).

Moreover, regarding the criteria providing the framework to help organizations to convert the fundamental concepts into practice, three of these are also clearly in line with the CSR approach:

  • According to the Leadership criterion, “excellent organisations have leaders who shape the future and make it happen, acting as role models for its values and ethics and inspiring trust at all times” (EFQM 2012).

  • According to the People criterion, “excellent organisations value their people and create a culture that allows the mutually beneficial achievement of organisational and personal goals. They develop the capabilities of their people and promote fairness and equality. They care for, communicate, reward and recognise, in a way that motivates people, builds commitment and enables them to use their skills and knowledge for the benefit of the organisation” (EFQM 2012).

  • According to the Society Results criterion, “excellent organisations achieve and sustain outstanding results that meet or exceed the needs and expectations of relevant stakeholders within society” (EFQM 2012).

Similarly, some of the Baldrige Criteria for Performance Excellence are also clearly in line with the CSR approach:

  • The Leadership criterion deals with how senior leaders’ personal actions guide and sustain the organization and how the organization fulfils its legal, ethical and societal responsibilities (NIST 2015).

  • The Workforce criterion deals with how the organization ensures workplace health, security and accessibility for the workforce, among several other issues (NIST 2015).

  • The Leadership and Governance Results deals with several different outcomes, including results concerning meeting and surpassing regulatory and legal requirements, ethical behaviour, stakeholders’ trust in senior leaders and governance and fulfilment of societal responsibilities and support of key communities, among others (NIST 2015).

As highlighted by Zutshi and Sohal (2005), the integration of different management approaches (e.g. quality management system, environmental system, occupational health and safety system) can result in significant tangible and intangible benefits including cost savings and more efficient use of valuable organizational resources, greater acceptance by employees and higher staff motivation, better scope for input by stakeholders and enhanced confidence of customers and positive market/community image, among others, although the authors recommend obtaining top management’s full commitment, ensuring adequate resources to integrate the approaches and promoting communication and training across the organization, in order to minimize resistance for changes.

Applying quality principles, such as continuous improvement, empowerment and errors/waste reduction, contributes to the overall CSR profile of organizations that can differentiate their brands/reputation and attract top talent, when taking responsibility for protecting the future of societies and environments in which they operate (ASQ 2009).

As reported by Benavides-Velasco et al. (2014), the implementation of both TQM and CSR can allow efficiency improvements, a reduction of bureaucracy by eliminating duplication of policies and procedures and the alignment of goals and processes.

In fact, several CSR issues and applications can benefit from quality frameworks, including a range of tactical-level tools and approaches that can help CSR leaders to develop stronger, business-aligned cases for action and robust programmes for improvement on a variety of CSR issues: waste reduction, worker empowerment, governance, health and safety and supplier engagement, accountability and transparency. For example, waste minimization and pollution prevention, which, for CSR, address key issues regarding resource use, energy and significant environmental trends that affect a wide range of stakeholders, including consumers and communities, are at the centre of TQM-based quality improvement programmes through efficient manufacturing layouts and inventory controls aiming at reducing waste from overproduction, waiting time, transportation, inventory, overprocessing, reduced factory footprints, excessive motion, defects and raw materials (ASQ/BSR 2011).

4.3 Empirical Research on Strategic Approaches Based on Both TQM and CSR

As already observed in previous sections, a significant body of literature has been focusing on both TQM and CSR phenomena individually, either theoretically or empirically. However, as a combined strategy, the truth is that these issues are barely explored.

But, although only few empirical studies have been conducted around the world, approaching potential benefits gained through combined CSR-TQM approaches, grounded in both services (e.g. hospitality, finance) and manufacturing contexts (e.g. IT, energy, automotive), findings seem to support the idea discussed in several theoretical papers according to which organizations could benefit from such strategy. Findings highlight a growing awareness and commitment from organizations worldwide regarding both CSR and quality improvement issues, leading progressively to the development of systems based on the integration of CSR and TQM principles.

Overall the few results provide support to the idea that combined CSR-TQM approaches enable organizations to gain competitive advantages. As observed on the summary provided in Table 13.2, CSR appears as a valuable resource leading to sustainable competitive advantage by promoting and supporting the development of TQM, even if CSR could have a direct effect on improving internal quality results (operational) but an indirect effect on external quality results. Moreover, TQM could mediate the relationship between CSR and performance.

Table 13.2 Empirical studies focused on both TQM and CSR approaches
Full size table

5 Concluding Remarks

Organizations are increasingly concerned about how their actions affect the environment and social welfare, and employees, consumers, investors, lenders, governmental agencies and other stakeholder groups are demanding that firms operate in a socially responsible manner.

Through a comprehensive literature review, this chapter systematizes knowledge on how the implementation of strategies based on TQM and CSR principles may create stakeholders’ value and contribute to organizations’ sustainable performance, while improving the quality of life of the workforce and citizens in local communities, in particular, and even of society in general.

Overall, this literature review shows that there are many evidences in the academic literature that sustainability-based approaches should be thought proactively and strategically. Several authors have been advocating the idea of complementarity between TQM and CSR approaches, especially regarding issues concerning sustainability and trust. Briefly, our literature review allows us to highlight several fields where similarities between both approaches seem evident: (1) process orientation, (2) stakeholder focus, (3) commitment, (4) efficacy of resources management, (5) contribution to competitiveness, (6) organizational reputation, (7) long-term planning and (8) continuous improvement assessment culture.

Although a significant body of literature has been focusing on both TQM and CSR phenomena individually, as a combined strategy, this review highlights that these issues are barely explored. Even without enough direct and measurable empirical evidences, literature supports the idea that engaging in a joint strategy combining TQM and CSR principles may increase stakeholders’ value and lead to a significant influence on performance; the few empirical findings available seem to support the idea that combined CSR-TQM approaches are potential sources for obtaining sustainable competitive advantage, suggesting a growing awareness and commitment from organizations worldwide regarding both CSR and quality improvement issues, leading progressively to the development of systems based on the integration of CSR and TQM principles.

While the volume of research has increased significantly over the last decades and approached most of the issues in business theory, currently, as academic fields, TQM and CSR remain wide-ranging, and multi-faceted research fields and the nature of the relationships between TQM, CSR and advantages remain quite unexplored. For example, at the stakeholder level, many studies analysed the direct influence of each approach, but literature suggests that together TQM and CSR can have different effects on each stakeholder. Moreover, there is a need for broader and deeper studies to see if organizations can manage a balanced approach in relation to other contexts, such as adverse markets, and less developed TQM systems. These are issues that certainly deserve further empirical research, approaching several different organizational, environmental and competitive contexts and pondering the use of alternative research methods, especially in what longitudinal approaches concerns.

Moreover, there are no consistent findings concerning the contribution of adopting TQM or CSR principles to EIS (entrepreneurship, innovation and sustainability) ecosystems. Indeed, if as already observed, both TQM and CSR are generally associated to organizations’ sustainability, concerning innovation and entrepreneurial orientation; the potential relation has not reached a similar academic consensus. In fact, while sustainability is a core issue in both TQM and CSR approaches, the nature of the relationship between TQM/CSR and innovation remains quite inconclusive. While some evidences point to the inexistence of relationship, some studies conclude that TQM- and CSR-based working environments sustain innovation, and according to other researchers, innovation can inclusive be prevented. Similarly, regarding the relationship between TQM or CSR and entrepreneurial orientation, some previous studies were found to be inconclusive, and in general they did not show agreement concerning findings. Indeed, some studies highlight a lack of relationship between variables, whereas others conclude that TQM- and CSR-based working environments promote entrepreneurial orientation, either directly or as a mediation effect.

As a result, although literature on TQM and CSR points to several long-term benefits, additional research is clearly needed to expand the influence spectrum of TQM and CSR over EIS ecosystems, in particular. For example, further research may focus on explaining how TQM and CSR can act as a supportive contextual value which interacts with other organizational phenomena (e.g. organizational ambidexterity) in promoting innovation and entrepreneurial orientation and thus contributing to effective EIS ecosystems. Because each EIS ecosystem is unique, comparisons between different EIS ecosystems exposed to different levels of TQM and CSR principles’ dissemination would certainly contribute to shed light on such issue. Moreover, most of the few studies available are cross-sectional in nature. Considering that organizational behaviour is dynamic by nature, literature fails clearly in explaining the dynamic effect of TQM and CSR principles’ dissemination on EIS ecosystem; longitudinal research studies would contribute with further explanations concerning long-term effects.