MUNCIE, Ind. - Fierce competition in the 1990s led many small businesses to emulate their Fortune 500 counterparts by incorporating "total quality management" policies, says a new study from Ball State University.

A survey of middle managers at 184 Midwest-based firms with fewer than 100 employees found all the companies were improving quality by simultaneously satisfying employees, customers and suppliers.

"We've seen a major shift to total quality management in the last 10 years," said Donald F. Kuratko, the Stoops Distinguished Professor of Entrepreneurship who co-authored the study with John Goodale and Jeff Hornsby, management professors.

Total quality management, also known as TQM, is a structured system incorporating bench marking, strategic planning, data information collection, employee empowerment, customer satisfaction and product quality.

"Small firms saw they needed to be flexible in order to be successful and increase profits," said Kuratko, who is also the executive director of the Midwest Entrepreneurial Education Center. "In today's competitive market, they must quickly exploit opportunities. They have to be able to turn ideas into products fast. TQM allows them to do that."

The late W. Edwards Deming conceived the management theory for use by the U.S. military during World War II. Deming took the concept to Japan following the war and is credited with transforming the Far East nation from a bombed-out wasteland into one of the world's economic superpowers in less than 20 years.

"Major American firms were the first to pick up total quality management practices in the 1980s," said Kuratko. "Small business owners saw how successful the system was and began to incorporate the practice into their structures a short time later."

The survey found 60 to 70 percent of the respondents systematically collected information to measure customer satisfaction and instituted employee training programs focusing on quality.

Middle managers who responded to the survey said a company becomes more flexible and is better suited to meet changing trends when employees are highly involved in the decision-marking process, Goodale said.

"Employees - not management - are the front line people who work with customers and manufacturing equipment on a daily basis," he said. "Employees are better able to spot problems, find solutions and make a major contribution to the company. If a firm must make changes fast, empowered workers are more flexible and are more willing to find ways to make changes."

Goodale believes recently introduced Internet-based communications systems will increase focus on customer satisfaction.

"This will be especially true for manufacturing firms because e-mail and other forms of high tech communications will allow them instant access to their customers," he said. "You are going to see more firms building products for individual customers instead of mass producing items."

(NOTE TO EDITORS: For more information, contact Kuratko at dkuratko@bsu.edu or (765) 285-9002; Goodale at jgoodale@bsu.edu or (765) 285-5323; or Hornsby at jhornsby@bsu.edu or (765) 285-5306.)