According to some authors (Flynn et al., 1994 Flynn, B. B., Schroeder, R. G. and Sakakibara, S. 1994. A framework for quality management research and an associated measurement instrument. Journal of Operations Management, 11: 339–366. [Crossref] , [Google Scholar]; Baldwin & Johnson, 1996 Baldwin, J. R. and Johnson, J. 1996. Business strategies in more and less innovative firms in Canada. Research Policy, 25: 785–804. [Crossref], [Web of Science ®] , [Google Scholar]), the implementation of a Total Quality Management (TQM) system could foster the innovation process in companies due to TQM elements such as continual improvement or customer focus. However, there is also literature where TQM is seen as a management system that can hinder the innovation process, limiting it to just incremental innovation or reducing it to the present customers' desires (Prajogo & Sohal, 2001 Prajogo, D. I. and Sohal, A. S. 2001. TQM and innovation: A literature review and research framework. Technovation, 21: 539–558. [Crossref], [Web of Science ®] , [Google Scholar]). The objective of the present paper is to clarify the relationship between TQM and organizational innovation. A model of the relationship was developed and tested using a sample of 451 Spanish companies. Information was collected from personal interviews with general managers of companies in the selected population, following a structured questionnaire. Structural equation modelling was applied. Clear evidence that TQM promotes innovation within companies is provided. There is also evidence that companies that apply TQM and companies that develop organizational innovation get more benefits than companies than do not. The managerial implications are that companies that operate in sectors where continuous innovation is a necessity should not only see TQM as a good way of improving quality but also as a way to facilitate the innovation process.