The influence of cost of quality on the performance of food manufacturing companies: an empirical study

Purpose: Due to the ever-increasing competitive and complex business environments, food manufacturing companies have to maintain high-quality products while simultaneously minimizing customers' costs. Cost of quality (COQ) plays a crucial role in enhancing companies' efficiency and reducing expenditures that can contribute to companies' competitive performance. This paper investigates the underlying relationship between the level of COQ practices adoption (prevention, appraisal, internal, and external failure costs) and organizational performance in Palestinian Food Manufacturing Companies (PFMC). Design/Methodology/Approach: A quantitative research methodology using a structured questionnaire collected data from 119 PFMC. Partial least squares structural equation modeling was used to analyze collected data. Findings: Results indicated that COQ adoption has a significant positive effect on the organizational performance of PFMC. Besides, prevention, external, and internal failure costs were all associated with a positive impact on organizational performance of PFMC, whereas appraisal cost did not affect organizational performance. Originality: This study is considered one of the first studies to investigate COQ practices' effect on organizational performance in food manufacturing companies in a developing country context. Thus, it adds significant value to literature responding to calls to tackle competitiveness issues in current complex business environments. Keywords: Cost of quality, quality costing system, TQM, food manufacturing, developing country, organizational performance, Palestine.