The purpose of this paper is to explore the relevant issues in the relationship between Total Quality Management (TQM) and the performance of SMEs. This study focuses mainly on the application of TQM in the Libyan industrial sector. The population surveyed includes only fifty fife Libyan manufacturing companies. Objectives: To determine the dominance of TQM practices in small and medium manufacturing companies in Libya and their relation to financial performance. This paper also discusses the need to mediate the relationship between the performance of TQM and SMEs. The Concept Paper conducts a comprehensive review of relevant literature prior to the development of proposals for TQM practices and the performance of SMEs. Moreover, apart from the continuous improvement that was found to have a significant correlation with corporate solvency, there was no statistically significant relationship between other TQM areas and the financial performance of companies in terms of liquidity, solvency and profitability. The collected data were analyzed using user frequency and methods (descriptive statistics), t-test, correlation and step regression analysis (deductive statistics). These results go hand in hand with the fact that TQM rewards are very long-term which means that any investment in quality efforts may not necessarily lead to any positive improvement in financial performance at once. This study has resulted in an important insight that could be a development campaign Quality SME long-term strategy is ideal for improving productivity. Improvements: The comparison of the TQM adoption between companies in terms of time period gives insights into TQM impacts, if any, when carried out over the long term.
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