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The growing diffusion and acceptance in the business world of Total Quality Management (TQM) has attracted greater interest on the part of academia. Although fundamental questions focus on how the different dimensions of TQM can bring about better business performance, a more recent recurring issue pertains to the relationship between TQM and technological innovation and whether technological innovation might provide a source of competitive advantage. Unfortunately, from both theoretical and empirical perspectives, the relationship between TQM and technological innovation appears contradictory and complex. This paper argues that the relationship might be better understood from the contingent perspective of strategic management and thus proposes a multidimensional intervening variable in the relationship, called Business Innovation Capability (BIC). An empirical study of 105 Spanish industrial firms reveals that the effect of some business practices suggested by TQM on technological innovation can be better understood when BIC dimensions are taken into account. [ABSTRACT FROM AUTHOR]