**1. Introduction**

Organizations competing in dynamic industries are required to be cognizant of challenges and complexity in maintaining a balance between initiating changes through innovations and maintaining stability in their existing processes. Unpredictability within dynamic competitive markets creates a paradox between

replicating stable processes or re-allocating resources toward innovation [1]. Hence, organizational success tends to be contingent on organizational commitment and capability to continuously explore a new way of doing things and exploit existing competencies [2]. Markets in dynamic industries tend to exert more significant pressure on competing firms to sense and respond to cues in their environment by creating flexible and adaptable core capabilities. The recent trends toward the adoption and implementation of total quality management have been indicative of competitive challenges in dynamic industries. As competitive advantage tends to erode at an accelerated pace [1], organizations that are responsive to intra-organizational cues and shifts in elements within the immediate organizational environment may have a better chance of success and prosperity [3, 4]. A healthy competitive position in the marketplace requires managers to coordinate among various internal processes, such as continuous improvements, innovations, and efficiency, through enhanced organizational learning capability. Moreover, internal coordination among process improvement, innovation, and organizational learning may lead to equilibria between continuous changes in various constituents in quality management and maintaining stability in existing processes. Integrated total quality management strategies enable managers to explore and implement a novel way of doing things and maintain stable and standard processes by repetition and duplication of high-performing processes. A number of researchers have posited that the performance outcome of quality management strategies tends to be contingent on the managerial capability to coordinate among timely innovations, investment in human capital, enhanced learning capability, and knowledge collaboration among organizational members and subunits [5–8]. Moreover, integrated quality management enables organizations to exploit the existing core capabilities and channel organizational knowledge into individual and team cognitive energy to gain competitive advantage and enhance organizational performance e.g., [8, 9] and organizational excellence [10]. Moreover, integrated quality management provides a window of opportunity for managers to detect and adapt to the external environment contingencies in a timely fashion [11]. The inconsistency in the causal linkage between desired performance outcome [12, 13] and integrated quality management strategies and practices at the operational level remain inconsistent [14, 15]. Past studies have shown inconsistent results in the relationship between performance and integrated quality management. For example, research by Powell [16] and Westphal et al. [17] revealed no statistical significance between performance and total quality management. In contrast, few researchers have reported a direct and positive association [18, 19] or a mediated relationship between organizational performance and quality management. Previous researchers have parsed and identified various components of integrated quality management and investigated each component's relationship with performance.

In this body of work, the financial measure of organizational success [8], human resource capability [20], research and development were explored as firm-specific capability [9]. Furthermore, integrated total quality management draws upon firmspecific resources and capabilities and coordinates a strategic balance between exploring new ideas and exploiting existing firm-specific capabilities [9, 21]. Such capabilities developed within integrated quality management tend to be non-imitable and sources of competitive advantage and higher performance [22, 23]. The causal ambiguity in the relationship between quality management and performance led to failures in the implementation of quality management [16]. Furthermore, causal ambiguity in the quality management-performance relationship has refocused research studies on the interrelationship between constituent elements of quality

#### *Exploring the Effects of Learning Capability and Innovation on Quality Management… DOI: http://dx.doi.org/10.5772/intechopen.102503*

management and organizational performance. For instance, research by Modarres and Pezeshk indicated that the relationship between total quality management and organizational performance is mediated by organizational learning and innovation performance. Similarly, Huang et al. [6] argued that individual interactions mediate the innovation performance in the quality management method and the degree of the team learning that may result from team member interactions.

Another body of research centered on the interrelationship between investment in human capital and success in the implementation outcome of quality management [7]. Other researchers have discussed that the quality management-performance relationship tends to be contingent on creating a culture of dyadic trust among organizational members and promoting knowledge sharing among the organizational members [6]. Both dyadic trust and knowledge sharing create an internal organizational environment that generates enhanced cognitive learning. Furthermore, knowledge sharing allows accumulated knowledge by members of the organization to become the basis for diverse ideas and explorations of novel routines. Within this body of research, the relationship between quality management and performance tends to be contingent on a culture of employee empowerment within organizations [24]. Such a culture promotes an environment of learning and interaction, mutual trust, and information sharing among organizational members that may lead to the introduction of new products and services and the implementation of new codes in the organization.

Parsing quality management into its constituent parts and their synthetic roles within quality management have partially contributed to our understanding of the performance-quality management relationship. However, previous researchers have provided little information about the interactive effects of quality management with organizational learning and innovations to explain performance variations within corporations. This chapter derives from contingency theory to examine the contingency theory, neglected in recent quality management studies, to examine the interactions between quality management and two important variables, organizational learning, and innovations in explaining variations in organizational performance.

The proposed model (**Figure 1**) and hypotheses tested both direct and interaction effects between quality management, organizational learning, and innovation on various organizational performance levels. In contrast to parsing the constituent parts and their synthetic roles within quality management, the present research proposes that the interactions between quality management and learning capability and innovation tend to positively impact organizational performance. The present research views quality management as an integrated, gestalt, and adaptive method capable of continuously learning [25] and innovating novel routines and new core competencies. Furthermore, present research argues that integrated quality management allows for incremental modifications and radical reengineering of existing operations and enables managers to be flexible and enable the transformation and enhancement of internal capabilities.

### **2. Interaction effects of quality management with learning capability**

Integrated quality management practices promote cross-functional communication and frequent exchanges of complex information among individuals and teams.

Interaction between quality management and learning capability across subunits is likely to result in a novel way of doing things. Such knowledge creation commits top executives to allocate resources to employees' education, expression of new ideas, and team learning.

Furthermore, the managerial challenge in establishing a stable and reliable process tends to be contingent on creating an organizational culture. Such culture focuses on creating new knowledge and continuous organizational learning and the existing experience curve accumulated through information flow across subunits [6]. Such a seamless flow of information across subunits allows organizational members and managers to explore novel routines and exploit existing knowledge. Integrated quality management enables top managers to invest in continuous education and learning through employees' interactions. Over time, the accumulated education and learning become the basis for organizational learning capability [25, 26] and the flexibility to explore new routines and continuous process improvement [27]. According to Jerez-Gomez et al. [28], the interactions between top management commitment to employees' education and employee involvement in strategic directions of the organization enhance learning as one of the organization's core competencies. Moreover, higher levels of learning and education tend to lead to better implementation of quality management, greater innovation, higher quality of products and services, and higher organizational performance [26].

Moreover, high levels of learning capability within quality management enhance organizational awareness and ability to absorb new knowledge and transform the collective organizational know-how into new products and competitive advantage [9]. In contrast, low adaptive learning and low organizational performance tend to be attributed to parochial organizational practices and the inability to absorb new knowledge [29]. Similarly, the interaction between quality management and organizational innovations is likely to allow exploration for the opportunity to develop new products and services. Innovation tends to be among the success factors that contribute to high

#### *Exploring the Effects of Learning Capability and Innovation on Quality Management… DOI: http://dx.doi.org/10.5772/intechopen.102503*

corporate performance [9, 22]. Previous researchers have argued that a positive association between innovation and organizational performance tends to be contingent on the flexible structural design that facilitates subunits innovations and interconnectedness, decentralized decision-making, and accumulated organizational learning [13, 30–32]. According to Singh and Smith [33], quality management practices promote an organic environment within organizations that is conducive to innovation and high levels of learning. Such organic structural design promotes employee interactions and crossfunctional links and interactions. Furthermore, the organic structural design creates greater flexibility [34], that facilitates the speed and extent of innovations, and timely adaptation to changes in the firm's industry environment.

Moreover, quality management practices that promote the timely introduction of products and services to the marketplace can lead to competitive advantage and high organizational performance [8]. Similarly, entrepreneurial mindset within organizations tends to be a key factor in technological and product innovations. Furthermore, entrepreneurial mindset enables managers to respond to environmental changes by reallocating valued resources within the organization toward new products and services and enhancing corporate performance [22, 30, 35, 36]. Finally, quality management creates a culture of collaborations and exchanges of new ideas as employees interact within each function and cross-functionally. Researchers must identify the interrelationship among quality management, learning capability, and innovations to realize a deeper understanding of how employee interaction may lead to higher organizational learning capability and innovations. Furthermore, research studies should explore the interactive effects of quality management, learning capability, and innovation on organizational performance. Given the above, this study hypothesizes the main and intersection effects between integrated quality management, organizational learning, and innovations in the following manner:

*H1: There will be a positive and significant relationship between quality management, organizational and organizational performance.*

*H1a: There will be a positive relationship between quality management, organizational learning.*

*H1b: There will be a positive relationship between quality management, organizational, and innovation.*

*H2: There will be a positive relationship between organizational learning and organizational performance.*

*H3: There will be a positive relationship between innovation and organizational performance.*

*H4: The interactions between quality management and organizational learning positively influence the relationship between quality management and organizational performance.*

*H5: The interactions between quality management and innovation positively influence the relationship between quality management and organizational performance.*

#### **3. Methodology**

#### **3.1 Sample and data**

**Data.** The data used in this study were collected by the survey method. The survey was carried out during the year 2015 and provided information on Iran's food business environment, quality management, organizational learning, innovation performance, and organizational performance. Top executives and senior managers represent the most appropriate sources of information for this study. The population of top executives and managers was determined to be 400. A questionnaire and cover letter were mailed to the managing director or chief executive officer of each company from the Food Industry in Iran. A total of 37% of the 400 mailed surveys was completed and returned, a sample of 148. All 148 completed surveys were used in this investigation. Given the population of *N* = 400, the Cochran sample size formula indicated a sample of *n* = 148 allows the study to draw correct inferences from the population.
