November 2021

IZA DP No. 14875: The Impact of a New Quality Management Practice on Firm Performance: Evidence from Pakistan

Mahvish Faran, Karl Taylor

This paper uses a novel firm level data set to investigate the impact of a unique quality management practice on the production and productivity of a large-scale garments manufacturer in Pakistan. The analysis provides evidence that production complexity is an important element in determining the impact of management practices, as there are sizeable differences in the effects between complex and basic lines of assembly. Most specifications show that the implementation of the new quality management practice has a negative impact on lines at the extreme ends of the complexity spectrum, while conversely it has a positive impact on those basic lines which exhibit the highest levels of complexity. We find evidence consistent with a quantity-quality trade off, in that whilst the implementation of the new management practice generally adversely impacted upon productivity it had the desired effect of reducing the number of daily quality defects observed after the intervention.