Linking Quality with Social and Financial Performance: A Contextual, Ethics‐Based Approach

The objectives of this study are to test the relationships among total quality management (TQM) practices, corporate social performance (CSP), and financial and market performance (FMP); and to determine the moderating effects of two contextual factors—country and sector—on these relationships through the lenses of several theories, including stakeholder theory, integrative social contracts theory (ISCT), and legitimacy theory. Using data from the various sectors of the economies of two developing countries, Turkey and North Cyprus (NC), we tested the proposed model utilizing structural equation modeling (SEM). The results from both samples supported the proposed model relationships, providing support for the idea that focusing on stakeholder interests embedded in various TQM practices helps improve both CSP and FMP. Country of origin had no moderating effects on these relationships, whereas sectoral effects were highly significant. The study also discusses the managerial and research implications of these findings.