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The Study on Relation between Six Sigma Implemented Period and Financial Performance: Using Smoothing Spline Function  

Ryu, Changheon (Department of Applied Statistics, Yonsei University)
Park, Minjae (Business School, Hongik University)
Publication Information
Journal of Applied Reliability / v.16, no.2, 2016 , pp. 78-89 More about this Journal
Abstract
Purpose: In this paper, we investigate whether the endeavors for Six Sigma quality management by a firm have positive effects on its financial performance and the length of Six Sigma implemented period affects its financial status. We find a relationship between Six Sigma implemented period and several financial performance index using a smoothing spline function. Methods: A smoothing spline function is used in order to analyze the relationship between efforts for quality management and financial performance. Specifically, the return on assets, return on equity, sales cost and business fee are investigated as dependent variables and the efforts for quality management as independent variable. Results: As a result of the analysis, the indication is that companies that put effects into the Six Sigma quality management have a positive result in its financial status. In detail, the efforts for Six Sigma quality management have positive effects on total asset turnover ratio and Six Sigma implemented period on net income to net sales ratio. Additionally, companies with longer (shorter) period of Six Sigma program have more (less) improvement in its financial status. Conclusion: It can be concluded that the company's efforts for quality management positively influence financial performance.
Keywords
Financial Performance; Return on Assets; Six Sigma; Smoothing Spline Function;
Citations & Related Records
Times Cited By KSCI : 4  (Citation Analysis)
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