THE IMPACT OF QUALITY AND INNOVATION ON COMPANY PERFORMANCE IN CROATIAN MANUFACTURING INDUSTRY

The main aim of this paper is to define the impact of total quality management together with incremental and radical innovations on companies’ performance in Croatian manufacturing industry. The data collected by a questionnaire were analyzed by structural equation modeling (SEM). The research tested fi ve hypotheses, and in this process two were confi rmed and three rejected. The results show that implementing total quality management and radical innovations lead to improved business performance. On the other side incremental innovations do not show any infl uence when it comes to Croatian manufacturing performance. Lead by these findings managers of Croatian manufacturing companies can optimize their investments in quality and innovation as main sources
of competitive advantage. Results of the survey can be useful for scientists, experts and managers operating in the field of quality and innovation.