TOTAL QUALITY MANAGEMENT,

SUSTAINABLE COMPETITIVE ADVANTAGE,

AND THE RESOURCE-BASED VIEW

AN EXPLORATORY STUDY OF TQM AND COMPETITIVE

ADVANTAGE AT FISHER & PAYKEL

HAMISH G. H. ELLIOTT

A PAPER SUBMITTED IN FULFILLMENT OF THE REQUIREMENTS FOR

MANT 591 - RESEARCH PROJECT, AND PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS IN
MANAGEMENT AT THE UNIVERSITY OF OTAGO, DUNEDIN, NEW
ZEALAND

21 ST MARCH 2004

NOT FOR PUBLIC RELEASE. THIS IS BOUND BY A

CONFIDENTIALITY CLAUSE. CONTACT AU THOR
CONFIDENTIAL FOR C E NSORED VERSION,
ABSTRACT

ABSTRACT
The aim of this research is to examine the relationships between Total Quality
Management (TQM) and sustainable competitive advantage at Fisher & Paykel
Appliances Ltd's Dunedin plant. The theory of how TQM may generate or support
sustainable competitive advantage has previously been relatively uncharted.
Therefore, this study is an exploratory case study using primary data from interviews
with the plant Quality Facilitator and HR Manager, and additional data from
secondary sources. The study also examines the stronger sustainability of competitive
advantage from resource combinations.

The foremost conclusion from this study is that the cornerstone of Fisher & Paykel's
competitive advantage lies in their innovative capacity, and that it is their core values
– style, integrity, care, and innovation – underpinning their quality-inspired systems,
operations, and culture that differentiate them in terms of innovative and competitive
product design and manufacturing. While innovative products are the final results that
generate value for the firm, it is the underlying quality systems, culture, and
infrastructure that generates and supports innovation.

The study finds that Fisher & Paykel's core competence is its ability to design,
manufacture, and get to market, innovative, stylish, and superior quality products
more quickly than competitors, and support the products with care and integrity
inspired quality service. It is the F&P way – their TQM system and culture – that
facilitates this core competence, and consequently, appears to generate sustainable
competitive advantage.

The holistic quality system (the F&P Way), strategic quality management planning,
process control and management, and care in the team environment are identified as
core gestalt combinations that appear to support Fisher & Paykel's sustainable
competitive advantage. The results of this study suggest that three dynamic
capabilities are the principal sources of sustainable competitive advantage at Fisher &
Paykel: customer focus (service & satisfaction), continuous improvement, and
innovation.
ABSTRACT

The value of this study is that establishes some empirical progress in the theoretical
explanation of the relationship between TQM and sustainable competitive advantage,
and how TQM can generate sustainable competitive advantage.

ii
ACKNOWLEDGEMENTS

ACKNO EDGE NTS

Firstly, I must extend a huge thank you to Professor Colin Campbell-Hunt for being
an inspirational and supportive supervisor, mentor, and friend. Without his guidance I
could not have undertaken such exploratory and unique research. Also thank you to Jo
Kirkwood, Diane Ruwhiu, and Tom Batley for their help and moral support.

Also, thank you to Professor Colin Campbell-Hunt, Diane Ruwhiu, and the
Department of Management for making time allowances for my NZ Youth Choir
commitments around the country during the semester.

Further, thank you to my MBus colleagues, Mark Olsen and Ryan Duff, for their
mutual support and comic relief during the wee small hours of the night. Also, a big
thank you to Hannah and 011ie for their support and putting up with my extended
working hours.

Finally, thank you to Fisher & Paykel Appliances Ltd. Dunedin Facility for allowing
me to undertake this research. Particularly, thanks to Gordon McGowan and Michelle
Read. I hope this research is of mutual benefit.

iii
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