Grappling with a gusher! Manufacturing’s response to business success in small and medium enterprises

Abstract

This study examined how the operations in six New Zealand manufacturers responded to the turbulence in their business environment brought on by the success of their products. It was carried out in response to various calls in the business and operations strategies literature for more studies on how companies create configurations of capabilities that lead to competitive advantage, how these literature can be better integrated, and on internal fit within manufacturing. Case research and historiographic methods were used to record the competitive evolution of these firms. The study used semi‐structured interviews with Chief Executive Officers (CEOs) and operations managers, analysis of company and public records and a manufacturing practices survey instrument. We suggest that when small and medium‐sized enterprises (SMEs) are faced with sudden and dramatic success from an innovation, they need to focus the company’s energy and resources on that product and its niche. Then, in terms of manufacturing strategy, the key attribute to develop is an operation that can produce short runs at little or no cost penalty, achieve requisite product variety, provide short manufacturing throughput times, and operate at high levels of quality and delivery dependability. We find that an approach that develops manufacturing capabilities that are related to market requirements is preferred to panacea‐based approaches. Also, we see no common pattern in manufacturing capability development.

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