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Dissertation Abstract

An Empirical Study Of The Impact Of Six Sigma Methodology On Organization  Financial Performance In The U.S.

Flora Ayeni
Regent University

The purpose of the present study was to compare the impact of two management methods --Total Quality Management (TQM) and the Six Sigma method --on the financial performance of organizations. Financial performance was measured as net income, return on assets, and stock price. The study sampled 45 companies from among manufacturing and non-manufacturing firms. All 45 companies had practiced TQM in the past and had then switched to Six Sigma. Financial data were collected for three years of each company's TQM phase and three years of its Six Sigma phase. Each company's financial performance measures during these six years were adjusted to the average for their industry for the same period in order to tease out any economic effect. A multivariate analysis of variance (MANOVA) using Hotelling's Trace was performed to simultaneously test for the effects of management methods (TQM and Six Sigma) and type of business (manufacturing and non-manufacturing) on the financial performance (Net Income, Return on Assets and Stock Price). Where significant effects were found, a t-test for each independent variable on the financial measure was performed so as to determine which of the two levels of the independent variable was the major contributor.

The result of the multivariate analysis of variance (MANOVA) showed a statistical difference of the main effects of management method (p=0.022) and type of business (manufacturing and non-manufacturing) (p=0.025). The results on the paired t-test showed a statistical difference between TQM method and Six Sigma method on the financial measures with a p-value of 0.033.