An Empirical Study on the Impact of On-site Improvement Activities on Corporate Financial Performance

Purpose: This study empirically analyzes the impact of on-site improvement activities in companies-specifically, the use of problem solving tools, the number of improvement initiatives, and the improvement rate-on financial performance, as well as the moderating effects of company type and improvement type in this process.Methods: The analysis is based on 168 award-winning cases from the “On-site Improvement and Free Format (Manufacturing)” category of the National Quality Circle Contest organized by the Korean Standards Association (KSA), which includes a diverse range of companies representative of the overall Korean industry.Results: The results of the study are as follows. First, the number of problem solving tools used had a statistically significant effect on financial performance. Furthermore, the number of on-site improvement activities fully mediated the relationship between the number of tools used and financial performance. Second, company type was found to play a moderating role in the relationship between the number of on-site improvements and financial performance, with the effect being strongest among large enterprises. This moderating effect aligns with previous studies conducted in the manufacturing sector and suggests that such findings may be extended beyond manufacturing to the broader industrial context. However, improvement type did not show a statistically significant moderating effect. Third, the improvement rate did not have a significant effect on financial performance and did not mediate the relationship between the number of tools used and financial performance. Fourth, improvement type partially moderated the relationship between improvement rate and financial performance. While no moderating effect was found in productivity enhancement or cost reduction categories, a negative moderating effect was observed in quality improvement cases.Conclusion: Company type was found to have a significant moderating effect. These findings suggest that on-site improvement activities have a positive impact on corporate financial performance and indicate that the degree of such impact can vary depending on company type and the type of improvement activity undertaken.