Employees’ skills, manufacturing flexibility and performance: a structural equation modelling applied to the automotive industry

Abstract

The issue of manufacturing flexibility (MF) is gaining growing importance in production/operations management, mainly due to the changing nature of competition, and in such a context, the efficient use of resources may be a major concern and challenge for manufacturing strategy in many industries, particularly in the capital intensive automotive industry. Building on the foundation laid by previous researches on flexibility concerns, the objective of this study is to gain further insights on the nature of the linkage between employees' skills and MF, as well as its impact on business performance. Moving toward such purpose, a structural equation modelling is applied to data collected from 144 manufacturing firms in the automotive industry from several countries. Findings provide evidences that workforce' skills may foster MF as an effective approach to cope with uncertain environments and turbulent markets. More precisely, results show that employees' skills directly influence new product, volume and mix flexibility, which in turn directly influence business performance. Moreover, findings revealed that MF mediates partially the relationship between employees' skills and business performance.

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