An empirical assessment of the financial performance of Malcolm Baldrige Award winners

The Malcolm Baldrige Award was created in 1987 to curtail the US loss of market share to foreign producers and to encourage a focus on management of quality and customer satisfaction. However, since its inception there has been a long‐running controversy on whether winning this award does enhance future financial performance and ultimately shareholders' wealth. Examines how Baldrige Award winners perform with respect to several accounting and financial metrics. Specifically, assesses Baldrige Award winners' financial performance relative to industry benchmarks and a control group of similar firms. The results suggest that award winners are superior financial performers and are valued higher by investors compared with similar sized firms and industry benchmarks. However, no evidence was found that winning the award causes changes in firm value in the award year and subsequent years. The results suggest that the Baldrige Award winners are examples of firms that stand out as performance leaders in their industries. Since one of the purposes of the award is to stimulate quality awareness among US firms, the Baldrige recipients may be construed as a conspicuous centerpiece of the US quality management movement.