Recent research in operations strategy has focused on showing the extent to which manufacturing's competence in developing and executing one or more competitive capabilities affects the organization's overall business performance. Several of those efforts have produced models, such as the 'sand cone', that suggest an ideal sequence in which manufacturing capabilities should be developed. However, efforts to empirically validate such sequential models, except for one recent study, have been inconclusive. This paper takes a different approach to examining the relationships among competitive capabilities. The existing cross-sectional studies of manufacturing capabilities are integrated to synthesize a proposed model of: (1) the relationships among manufacturing capabilities, and (2) the relationships between those capabilities and business performance. The proposed model is synthesized using data from previous studies, other models and theoretical arguments. Meta-analysis is used to identify aspects of the model that appear better supported by empirical research and those that require further study. The implications of this proposed model with regard to research, practice and future research in operations strategy are discussed.
IntroductionThe measures used to evaluate a company's performance have historically been financial ones, such as the monetary value of sales and profits or percentage return on monetary investment. Because external groups place a strong emphasis on such financial measures, the internal performance measurement systems used within companies have also tended to be financial, usually focusing on costs [1]. The cost accounting systems used today, which include measures of efficiency and variance, represent an effort to relate internal performance measures to external ones.The usefulness of these cost accounting systems in guiding a company towards the correct strategic competitive decisions, especially related to manufacturing, has been questioned by several authors [2][3][4]. The response to this challenge from accountants has been in the form of a new approach to cost accounting, known as activity-based costing (ABC)(see [5,6]). Others, however, have argued that even an improved cost accounting system does not solve the problem, that measures other than cost are needed to gauge adequately manufacturing performance relative to a competitive strategy (see [7][8][9] for some of the most pressing arguments).Although many authors agree on the need to use more non-financial measures of performance, there appears to be little, if any, agreement on precisely which measures to use. Part of the reason for this lack of consensus is the obvious need for each company to use measures which are relevant to its own situation. On the other hand, some common basis for selecting performance measures would seem worthwhile, both to avoid an unnecessary proliferation of measures and to ensure that important variables are being measured correctly. This latter reason is especially true with regard to academic research, some of which is now collecting empirical data to gauge manufacturing performance.This article has four purposes. First, to draw together and summarize the diverse literature regarding manufacturing performance measurement within the framework of competitive strategy. Most of that literature has appeared in publications ranging from cost accounting journals to engineering trade publications, with little in the usual operations management journals. Second, to develop a taxonomy for categorizing performance measures. Because many different measures exist for the same variable, one is often left wondering what
A large-scale random sample is used to empirically examine the relationships between implementation of Advanced Manufacturing Technology (AMT) and three organizationlevel measures that have historically been attributed to AMT, but not fully tested along the AMT spectrum: market-oriented flexibility of the production process, organizational integration of production processes, and administrative intensity of the organization. Results indicate that as an organization moves along the technology scale from stand-alone AMT (e.g., CNC machines) through functionally oriented AMT (FMS and CAM) toward CIM, not only do its production processes become more integrated with each other, but those processes become more integrated with other functional systems of the organization, and the quality and timeliness of production information increase. Furthermore, this relationship becomes stronger as companies increase their level of implementation for the latter two technologies. Conversely, market-oriented flexibility decreases and administrative intensity is not observed to change as companies move along the technology spectrum. Future research should examine how organizational redesign and implementation strategies that accompany AMT implementation can concomitantly enhance organizational integration of the production process and market-oriented flexibility.Ma ti age tn r n t . an d I n re rn a t i o n a I Jo 11 rn a I of Ope rations and Production Munagetnent. He is an associate editor of Journal of Operations Management and is co-author of the text Operations Management: Concepts, Methods, and Strategies.
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