Understanding the emergence of redistributed manufacturing: an ambidexterity perspective

Abstract

This paper extends operations strategy theory on efficiency and flexibility trade-offs to the emergent phenomenon of redistributed manufacturing (RDM). The study adopts a multiple-case design including five small and five large pharmaceutical firms. We propose that organizations can gain the efficiency benefits of centralized manufacturing and the flexibility advantages of RDM by building an ambidexterity capability. To build such a capability, large firms can structurally partition their manufacturing and supply management functions, with one sub-unit managing centralized production and the other RDM. Smaller enterprises can build an ambidexterity capability by creating the right organizational context, where multi-skilled workers switch between efficient and flexible tasks. This paper contributes to theory by explaining the emergence of RDM using an organizational ambidexterity lens, laying the groundwork for new theory development in the field. We provide managers with a practical example of how to build an ambidexterity capability to realize flexibility and efficiency advantages.