From the Great Wall to great workflow: lean six sigma in Chinese listed companies

Purpose: The efficiency-enhancing and performance-boosting benefits of lean six sigma (LSS) practices have been advocated in both academia and industry. However, their mediating and moderating effects remain unclear and the impact of LSS practices is underdeveloped in the Chinese context. Therefore, by focusing on publicly listed companies in China, this study aims to investigate whether, how and when LSS practices link to organizations’ innovation and financial performance. Design/methodology/approach: Data from 66 Chinese publically listed companies spanning a period of 25 years (2000–2024) was analyzed using the difference-in-difference method which compared the changes in outcomes over time between a treatment group and a control group. Findings: This research found that LSS practices are positively related to firm-level outcomes including innovation and financial performance. The authors also confirm the mediating effect of operational capability on these relationships. Moreover, the empirical evidence suggests that implementing the quality management systems (QMS) standard, ISO 9001, moderates the relationships between LSS practices and innovation and financial performance such that these relationships are stronger for firms in organizations with higher maturity levels in implementing the standard. Practical implications: This study sheds light on LSS theory and offers valuable recommendations for lean managers on how to leverage LSS practices to improve their innovation and performance capabilities. Originality/value: This research provides novel insights into the influence of LSS practices on firm-level outcomes such as the level of innovation and financial performance. To the best of the authors’ knowledge, this study is the first to theoretically propose and empirically validate how and when LSS practices influence firm outcomes by introducing the mediating mechanism of operational capability and the boundary condition of QMS standards.