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Product quality is rapidly becoming an important competitive issue. The superior reliability of many Japanese products has sparked considerable soul-searching among American managers.1 In addition, several surveys have voiced consumers’ dissatisfaction with the existing levels of quality and service of the products they buy.2 In a recent study of the business units of major North American companies, managers ranked “producing to high quality standards” as their chief current concern.3
Despite the interest of managers, the academic literature on quality has not been reviewed extensively. The problem is one of coverage: scholars in four disciplines — philosophy, economics, marketing, and operations management — have considered the subject, but each group has viewed it from a different vantage point. Philosophy has focused on definitional issues; economics, on profit maximization and market equilibrium; marketing, on the determinants of buying behavior and customer satisfaction; and operations management, on engineering practices and manufacturing control. The result has been a host of competing perspectives, each based on a different analytical framework and each employing its own terminology.
At the same time, a number of common themes are apparent. All of them have important management implications. On the conceptual front, each discipline has wrestled with the following questions: Is quality objective or subjective? Is it timeless or socially determined? Empirically, interest has focused on the correlates of quality. What, for example, is the connection between quality and price? Between quality and advertising? Between quality and cost? Between quality and market share? More generally, do quality improvements lead to higher or lower profits?
Five Approaches to Defining Quality
Five major approaches to the definition of quality can be identified: (1) the transcendent approach of philosophy; (2) the product-based approach of economics; (3) the user-based approach of economics, marketing, and operations management; and (4) the manufacturing-based and (5) value-based approaches of operations management. Table 1 presents representative examples of each approach.
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1. See: W. J. Abernathy, K. B. Clark, and A. M. Kantrow, Industrial Renaissance (New York: Basic Books, 1983); D. A. Garvin, “Quality on the Line,” Harvard Business Review, September–October 1983, pp. 64–75; D. A. Garvin, “Japanese Quality Management,” Columbia Journal of World Business, in press. J. M. Juran, “Japanese and Western Quality: A Contrast,” Quality Progress, December 1978, pp. 10–18; A. L. Robinson, “Perilous Times for U.S. Microcircuit Makers,” Science, 9 May 1980, pp. 582–586.
2. See: Barksdale et al., “A Cross-National Survey of Consumer Attitudes Towards Marketing Practices, Consumerism, and Government Relations,” Columbia Journal of World Business, Summer 1982, pp. 71–86; Center for Policy Alternatives, Consumer Durables: Warranties, Service Contracts, and Alternatives (Cambridge, MA: Massachusetts Institute of Technology, 1978), pp. 3-127–3-146; “Rising Concern on Consumer Issues Is Found in Harris Poll,” New York Times, 17 February 1983.
3. See J. G. Miller, The 1983 Manufacturing Futures Project: Summary of North American Survey Responses & Preliminary Report (Boston, MA: School of Management, Boston University, 1983), p. 14.
4. See: R. M. Pirsig, Zen and the Art of Motorcycle Maintenance (New York: Bantam Books, 1974); B. W. Tuchman, “The Decline of Quality,” New York Times Magazine, 2 November 1980.
5. See: S. Buchanen, ed., The Portable Plato (New York: The Viking Press, 1948); G. Dickie, Aesthetics: An Introduction (New York: The Bobbs-Merrill Company, Inc., 1971), p. 5.
6. See: L. Abbott, Quality and Competition (New York: Columbia University Press, 1955); Z. Griliches, ed., Price Indexes and Quality Change (Cambridge, MA: Harvard University Press, 1971); K. Lancaster, Consumer Demand: A New Approach (New York: Columbia University Press, 1971), p. 122; K. B. Leffler, “Ambiguous Changes in Product Quality,” American Economic Review (December 1982): 956–967.
7. See: Abbott (1955), p. 129; K. Lancaster, Variety, Equity, and Efficiency (New York: Columbia University Press, 1979), p. 28.
8. See: D. Levhari and T. N. Srinivasan, “Durability of Consumption Goods: Competition versus Monopoly,” American Economic Review (March 1969): 102–107; R. L. Schmalensee, “Regulation and the Durability of Goods,” Bell Journal of Economics and Management Science (Spring 1970): 54–64; P. L. Swan, “Durability of Consumption Goods,” American Economic Review (December 1970): 884–894; P. L. Swan, “The Durability of Goods and the Regulation of Monopoly,” Bell Journal of Economics and Management Science (Autumn 1971): 347–357; T. R. Saving, “Market Organization and Product Quality,” Southern Economic Journal (April 1982): 856.
9. See: C. D. Edwards, “The Meaning of Quality,” Quality Progress, October 1968, pp. 36–39; A. A. Kuehn and R. L. Day, “Strategy of Product Quality,” Harvard Business Review, November–December 1962, pp. 100–110.
10. See: Kuehn and Day (November–December 1962); R. M. Johnson, “Market Segmentation: A Strategic Management Tool,” Journal of Marketing Research, February 1971, pp. 13–18; P. Kotler, Marketing Decision Making: A Model Building Approach (New York: Holt, Rinehart and Winston, 1971), pp. 491–497; B. T. Ratchford, “The New Economic Theory of Consumer Behavior: An Interpretive Essay,” Journal of Consumer Research, September 1975, pp. 65–75.
11. See: E. H. Chamberlin, “The Product as an Economic Variable,” Quarterly Journal of Economics, February 1953, pp. 1–29; R. Dorfman and P. O. Steiner, “Optimal Advertising and Optimal Quality,” American Economic Review (December 1954): 822–836; L. J. White, “Quality Variation When Prices Are Regulated,” Bell Journal of Economics and Management Science (Autumn 1972): 425–436.
12. See: J. M. Juran, ed., Quality Control Handbook, 3rd ed. (New York: McGraw-Hill, 1974), p. 2; H. L. Gilmore, “Product Conformance Cost,” Quality Progress, June 1974, pp. 16–19.
13. See: Edwards (October 1968), pp. 36–39; Lancaster (1979), p. 28; H. Theil, Principles of Econometrics (New York: John Wiley & Sons, 1971), pp. 556–573.
14. See: E. Sheshinski, “Price, Quality, and Quantity Regulation in a Monopoly Situation,” Economica, May 1976, pp. 127–137; White (Autumn 1972).
15. See R. B. Yepsen, Jr., ed., The Durability Factor (Emmaus, PA: Rodale Press, 1982), pp. 12–15.
16. See: P. B. Crosby, Quality Is Free (New York: McGraw-Hill, 1979); Gilmore (June 1974).
17. See: G. Boehm, “ 'Reliability' Engineering,” Fortune, April 1963, pp. 124–127, 181–182, 184, 186; A. V. Feigenbaum, Total Quality Control (New York: McGraw-Hill, 1961), ch. 14; Juran (1974), pp. 8-9–8-32.
18. See: Feigenbaum (1961), chs. 10–13; J. M. Juran and F. M. Gryna, Jr., Quality Planning and Analysis (New York: McGraw-Hill, 1980).
19. See: J. Campanella and F. J. Corcoran, “Principles of Quality Costs,” Quality Progress, April 1983, p. 21; Crosby (1979).
20. See: R. A. Broh, Managing Quality for Higher Profits (New York: McGraw-Hill, 1982), ch. 1; Juran (1974), ch. 5.
21. See: Broh (1982); Feigenbaum (1961).
22. See The Consumer Network, Inc., Brand Quality Perceptions (Philadelphia, PA: The Consumer Network, Inc., August 1983).
23. See K. Ishikawa, “Quality and Standardization: Program for Economic Success,” Quality Progress, January 1984, p. 18.
24. See Juran (1974), pp. 2-4–2-9.
25. See E. S. Maynes, “The Concept and Measurement of Product Quality,” in Household Production and Consumption, ed. N. E. Terleckyj (New York: National Bureau of Economic Research, 1976), pp. 550–554.
26. See: K. Lancaster, “A New Approach to Consumer Theory,” Journal of Political Economy, April 1966, pp. 132–157; Lancaster (1971); Lancaster (1979).
27. See Lancaster (1971), p. 7.
28. See Juran (1974), pp. 8–12.
29. See C. J. Bliss, Capital Theory and the Distribution of Income (Amsterdam: North-Holland, 1975), ch. 6.
30. See “Retiring Autos at 14,” New York Times, 3 April 1983, sec. 3, p. 1.
31. See S. W. Burch, “The Aging U.S. Auto Stock: Implications for Demand,” Business Economics, May 1983, pp. 22–26.
32. See J. A. Quelch and S. B. Ash, “Consumer Satisfaction with Professional Services,” in Marketing of Services, ed. J. H. Donnelly and W. R. George (Chicago, IL: American Marketing Association, 1981).
33. See: Kuehn and Day (November–December 1962); Johnson (February 1971).
34. See: D. F. Cox, ed., Risk Taking and Information Handling in Consumer Behavior (Boston, MA: Division of Research, Harvard University, Graduate School of Business Administration, 1967), ch. 11; D. R. Lambert, “Price as a Quality Signal: The Tip of the Iceberg,” Economy Inquiry, January 1980, pp. 144–150.
35. See: W. O. Hagstrom, “inputs, Outputs, and the Prestige of American University Science Departments,” Sociology of Education, Fall 1971, pp. 384–385; D. D. Knudsen and T. R. Vaughan, “Quality in Graduate Education: A Reevaluation of the Rankings of Sociology Departments in the Cartter Report,” American Sociologist, February 1969, p. 18.
36. See Steinway & Sons (Boston, MA: Harvard Business School, HBS Case Services #9-682-625, 1981), p. 5.
37. See P. C. Riesz, “Price-Quality Correlations for Packaged Food Products,” Journal of Consumer Affairs, Winter 1979, p. 234.
38. See Lambert (January 1980).
39. See Riesz (1979), p. 244.
40. See: H. J. Leavitt, “A Note on Some Experimental Findings about the Meanings of Price,” Journal of Business, July 1954, pp. 205–210; A. Gabor and C. W. J. Granger, “Price as an Indicator of Quality: Report on an Enquiry,” Economica, February 1966, pp. 43–70; J. D. McConnell, “An Experimental Examination of the Price-Quality Relationship,” Journal of Business, October 1968, pp. 439–444.
41. See Riesz (1979), p. 236.
42. See R. A. Westbrook, J. W. Newman, and J. R. Taylor, “Satisfaction/Dissatisfaction in the Purchase Decision Process,” Journal of Marketing, October 1978, pp. 54–60.
43. See “The Buying Consumer: Room Air Conditioners,” a report by Appliance Manufacturer (Chicago, IL: Cahners Publishing, 1979).
44. See Lambert (January 1980).
45. See: P. Nelson, “Information and Consumer Behavior,” Journal of Political Economy (March–April 1970): 311–329; P. Nelson, “Advertising as Information,” Journal of Political Economy (July–August 1974): 729–754.
46. See R. L. Schmalensee, “A Model of Advertising and Product Quality,” Journal of Political Economy (June 1978): 485–504.
47. Ibid., pp. 485–486.
48. See H. J. Rotfeld and K. B. Rotzoll, “Advertising and Product Quality: Are Heavily Advertised Products Better?” Journal of Consumer Affairs, September 1976, p. 46.
49. See C. T. Gilligan and D. E. A. Holmes, “Advertising Expenditure and Product Quality,” Management Decision (Vol. 17, No. 5): 392.
50. See Barksdale et al. (Summer 1982), p. 78.
51. See: R. D. Buzzell and F. D. Wiersema, “Modeling Changes in Market Share: A Cross-Sectional Analysis,” Strategic Management Journal, 1981, pp. 27–42; R. D. Buzzell and F. D. Wiersema, “Successful Share-Building Strategies,” Harvard Business Review, January–February 1981, pp. 135–144; C. S. Craig and S. P. Douglas, “Strategic Factors Associated with Market and Financial Performance,” Quarterly Review of Economics and Business, Summer 1982, pp. 101–111; B. T. Gale and B. S. Branch, “Concentration versus Market Share: Which Determines Performance and Why Does It Matter?” The Antitrust Bulletin, Spring 1982, pp. 83–105; L. W. Phillips, D. Chang, and R. D. Buzzell, “Product Quality, Cost Position, and Business Performance: A Test of Some Key Hypotheses,” Journal of Marketing, Spring 1983, pp. 26–43; S. Schoeffler, R. D. Buzzell, and D. F. Heany, “Impact of Strategic Planning on Profit Performance,” Harvard Business Review, March–April 1974, pp. 137–145.
52. See Buzzell and Wiersema (January–February 1981), p. 140.
53. See: Schoeffler, Buzzell, and Heany (March–April 1974), p. 141; Gale and Branch (Spring 1982), pp. 93–95.
54. See: Buzzell and Wiersema (1981); Craig and Douglas (Summer 1982); Phillips, Chang, and Buzzell (Spring 1983).
55. See: R. E. Cole, “Improving Product Quality through Continuous Feedback,” Management Review, October 1983, pp. 8–12; Garvin (in press).
56. See Campanella and Corcoran (April 1983) p. 17.
57. See: Campanella and Corcoran (April 1983); Crosby (1979); Gilmore (June 1974); H. L. Gilmore, “Consumer Product Quality Cost Revisited,” Quality Progress, April 1983, pp. 28–33.
58. See: R. S. Kaplan, “Measuring Manufacturing Performance: A New Challenge for Managerial Accounting Research,” The Accounting Review (October 1983): 686–705; S. C. Wheelwright, “Japan — Where Operations Really Are Strategic,” Harvard Business Review, July–August 1981, pp. 70–71.
59. See Phillips, Chang, and Buzzell (Spring 1983), p. 27.
60. See Garvin (September–October 1983).
61. See Crosby (1979).
62. See “Quality Cost Survey,” Quality, June 1977, pp. 20–22.
63. See: Gilmore (June 1974); Gilmore (April 1983).
64. See Gale and Branch (Spring 1982), pp. 96–97.
65. See Phillips, Chang, and Buzzell (Spring 1983), pp. 38–39.
66. Ibid., p. 37.
67. See M. E. Bader, Practical Quality Management in the Chemical Process Industry (New York: Marcel Dekker, 1983), ch. 1.
68. See: Chamberlin (February 1953); Dorfman and Steiner (December 1954).
69. See: Craig and Douglas (Summer 1982); Phillips, Chang, and Buzzell (Spring 1983); Schoeffler, Buzzell, and Heany (March–April 1974).
70. See Schoeffler, Buzzell, and Heany (March–April 1974), p. 141.
71. See: Buzzell and Wiersema (January–February 1981); Phillips, Chang, and Buzzell (Spring 1983).
72. See A. R. Andreasen, “A Taxonomy of Consumer Satisfaction/Dissatisfaction Measures,” Journal of Consumer Affairs, Winter 1977, pp. 11–24.
73. See H. Takeuchi and J. A. Quelch, “Quality Is More Than Making a Good Product,” Harvard Business Review, July–August 1983, pp. 139–145.
74. See: W. Skinner, “Manufacturing — Missing Link in Corporate Strategy,” Harvard Business Review, May–June 1969, pp. 136–145; W. Skinner, “The Focused Factory,” Harvard Business Review, May–June 1974, pp. 113–121; S. C. Wheelwright, “Reflecting Corporate Strategy in Manufacturing Decisions,” Business Horizons, February 1978, pp. 57–66.
75. See Wheelwright (July–August 1981).