Towards a Theory of Competitive Progression: Evidence from High‐Tech Manufacturing

Abstract

This study replicates and extends Ferdows and De Meyers' observed ‘sand cone’ model of cumulative competitive capabilities by means of Roth's related competitive progression theory (CPT). Using path analysis, we model and test the relationships among the generic competitive capability constructs of conformance quality, delivery reliability, volume flexibility, and low cost as predicted by CPT. Our results, drawn from a sample of high‐tech manufacturers, provide further evidence that on average, these four capabilities are acquired both cumulatively and in that sequence. We also find that each generic capability increases operational know‐how and reduces non‐value‐added directly and/or indirectly through the enhancement of successive capabilities in the progression, which in turn improves profitability. The paper contributes a theoretical rationale for the observed sand cone effect, describes how the competitive progression acts to influence accelerated organizational learning over an innovation cycle, and offers evidence that combinative capabilities have strategic value for high‐tech manufacturers.

Causal Relationship between Supply Chain Dynamic Capabilities, Technological Innovation, and Operational Performance

“…As an organization grows through advanced manufacturing technology, introduction of world-class manufacturing practices, and global competition, it improves its multidimensional operational performance. An organization that has achieved superior performance in one area can synergistically improve another through learning [38]. A multidimensional measure of operational performance is conceptualized as an intended or realized competitive performance and is assessed by cost, quality, flexibility, and delivery measures [39][40][41].…”

Empirical investigation of alternate cumulative capability models: a multi-method approach

“…The first cumulative capabilities model is supported by Competitive Progression Theory (CPT) developed by Rosenzweig and Roth (2004). CPT theory argues that sustainable competitive capabilities can be built cumulatively, starting from quality to delivery to flexibility and to cost (Q-D-F-C).…”

“…First, quality (Q) and delivery (D) are capable of improving the other two capabilities (F and C). Second, this sequence allows manufacturers to develop the fundamental capabilities (Q and D) because lessons learned from these initial efforts are required to develop the other capabilities (F and C), which are more difficult to master (Rosenzweig and Roth, 2004). These two arguments are further explained below.…”

“…Among others, the most popular cumulative model argues that cumulative capabilities are built from first mastering quality then progressing further to delivery, flexibility and, lastly, to cost (Rosenzweig and Roth, 2004). This Q-D-F-C sequence, or the so-called sand-cone model (Ferdows and de Meyer, 1990), has been found in manufacturing industries from mainly developed countries (Ferdows and de Meyer, 1990;Gro ler and Grübner, 2006;Rosenzweig and Roth, 2004) and recently among Spanish manufacturers (Avella et al, 2011). The second most popular model follows the Q-D-C-F sequence.…”

“…For example, Rosenzweig and Roth (2004) argue that the Q-D-F-C model is suitable for manufacturers competing in high-tech environments. Quality and product introduction speed may form the basis of cumulative capabilities for manufacturers competing in more competitive and rapidly changing industries, where product life cycles are shorter (Flynn and Flynn, 2004).…”