The effect of Six Sigma on corporate performance in the manufacturing and service sectors

Luis F Ojeda, Purdue University

Abstract

As global competition becomes more intense, organizations try to implement strategies that allow them become more efficient, increase quality and productivity, and stay ahead of their competition. Over the years, there have been different programs or methodologies that companies have adopted with the purpose of achieving enhanced operational performance and bottom line impact. Six Sigma is one of the strategies that have gained more popularity during recent years, being adopted by companies in both manufacturing and service. There have been numerous claims by adopting companies about the financial benefits of implementing Six Sigma. However, the number of studies conducting empirical research to back those claims is limited. The purpose of this study was to evaluate whether Six Sigma impacts corporate performance and the extent to which that impact is similar for manufacturing and service companies. The study was conducted by selecting a sample of 48 companies, within the manufacturing and service sectors, and assessing the effect of Six Sigma adoption by comparing their financial performance with the performance of control companies that did not implement Sig Sigma, during a period of 8 years after implementation. The statistical results provided evidence to conclude that Six Sigma has a positive effect on financial performance in the long term, showing significant results for years 7 and 8 after implementation, with the sample companies outperforming their corresponding control companies for these periods of time. The results were consistent in both manufacturing and service for year 8, validating that the impact of Six Sigma is similar for both sectors.

Degree

M.S.

Advisors

Schmidt, Purdue University.

Subject Area

Management

COinS