Quality and Productivity: Contradictory<i>and</i>Complementary

Abstract

Is superiority in quality compatible with superiority in productivity, or do the two conflict? One stream of research argues that they are compatible, another argues that there are inherent trade-offs, while still another finds little or no relationship. This study seeks to reconcile the apparent contradictions. Building on Juran's (1989) recognition that perceived quality is a function of two distinct dimensions of quality, a model that estimates and compares the relationship for different industry sectors is developed. From this analysis, it is hypothesized that a positive relationship is more likely for goods manufacturers, while a negative relationship is more likely for services. General support for the hypotheses is found using data from the Swedish Customer Satisfaction Barometer.