Total Quality Management and Nanostore Performance in Informal Retail: Evidence from Honduras - A Structural Equation Modeling Analysis of Mediation Effects (#1102)

Authors

Ortega-Jimenez, Cesar H

Melgar-Martínez, Narciso A

Tome, Jose R.

Abstract

This study examines the impact of Total Quality Management (TQM) on nanostore performance in informal retail settings, exemplified by Honduras, using Structural Equation Modeling (SEM). A cross-sectional survey of 170 nanostore owners revealed significant relationships between TQM practices and performance outcomes: β=0.45 (p<0.001) for customer satisfaction and loyalty (CSL), β=0.39 (p<0.001) for operational performance (OP), and β=0.30 (p<0.001) for competitive advantage (CA), with R² values of 0.45, 0.40, and 0.38, respectively. Mediation analysis showed that employee engagement, customer involvement, and process formalization account for 42–50% of TQM’s effects, thereby advancing TQM theory by identifying mediating mechanisms in micro-retail. Urban nanostores exhibited stronger TQM effects than rural ones (e.g., β=0.50 vs. 0.40 for CSL), reflecting higher customer density and infrastructure access. These findings provide theoretical and practical frameworks for implementing TQM in informal retail, offering strategies for micro-retailers and policy insights for inclusive economic development.