Tradeoffs in Manufacturing? A Meta‐Analysis and Critique of the Literature

An ongoing, important question in the operations strategy literature pertains to tradeoffs: Can manufacturers focus on multiple priorities simultaneously or achieve strength on multiple capabilities without sacrificing performance of another? In this paper, we accumulate, integrate, and examine the wide spectrum of conclusions reached in the literature concerning tradeoffs using modified meta‐analysis methods. Based on two decades of empirical research in operations strategy, we find that the evidence in the literature indicates manufacturers, on average, do not report experiencing tradeoffs among the competitive dimensions of quality, delivery, flexibility, and cost as suggested by the classical tradeoffs model. Our meta‐analysis also reveals that the way variables are operationalized, whether initiatives are implemented, and the unit of analysis are all related to the degree and nature of the evidence a paper contains with respect to the tradeoffs issue. We interpret our meta‐analysis results in the context of the prevailing model of manufacturing strategy and the theory of performance frontiers. We also discuss how the research designs used in this literature, which are predominantly cross‐sectional, affect the nature of the evidence generated and the conclusions that can be drawn. We go on to suggest research designs that more directly assess the tradeoffs issue.     

COMPETITIVE PRIORITIES: INVESTIGATING THE NEED FOR TRADE‐OFFS IN OPERATIONS STRATEGY

A heated debate continues over the need for trade‐offs in operations strategy. Some researchers call for plants to focus on a single manufacturing capability and devote their limited resources accordingly, while others claim that advanced manufacturing technology (amt) enables concurrent improvements in quality, cost, flexibility, and delivery. Yet there is little empirical evidence for or against the trade‐off model. In response, this study addresses the question: “To what extent do manufacturing plants view competitive priorities as trade‐offs?” We employ survey data collected from managers and operators in 110 plants that have recently implemented AMT. Our findings suggest that trade‐offs remain. However, perceived differences in competitive priorities are subtle and may vary across levels of the plant hierarchy.     

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.     

Decision Sciences Research in China: A Critical Review and Research Agenda—Foundations and Overview*

This article focuses on decision sciences research in China, providing an overview of current research and developing a foundation for future China‐based research. China provides a unique research opportunity for decision sciences researchers, owing to its recent history, rapid economic development, and strong national culture. We examine recent economic reforms and their impact on the development of research questions in the decision sciences, as well as discuss characteristics of the diverse regions in China and their potential as sites for various types of research. We provide a brief overview of recent China‐based research on decision sciences issues relating to national culture, supply chain management, quality management, production planning and control, operations strategy, and new product development and discuss some of the unique methodological challenges inherent in China‐based research. We conclude by looking forward to emerging research opportunities in China.     

Socially Responsible Practices: An Exploratory Study on Scale Development using Stakeholder Theory

Socially responsible practices of firms have evolved into an important area of research in operations management; however, it remains challenging to identify specific scales that capture multiple dimensions of such social practices. In this exploratory study, we use stakeholder theory to develop new multi‐item measurement scales linked to multiple groups (i.e., internal, supplier, customer, and community stakeholders). Furthermore, we empirically test a higher order multidimensional construct that collectively assesses the socially responsible practices of a firm. Using these stakeholder‐derived constructs as taxons in a cluster analysis, we identify important patterns in the way that multiple groups of stakeholders are engaged. Finally, we demonstrate that the set of social practices are complementary and concentrating on one group can yield spillover effects to other specific stakeholder groups.     

Exploiting the balanced scorecard in the Operations Department: the Ducati Motor Holding case

The literature has widely discussed how to measure manufacturing performance. However, even though several indicators have been proposed, manufacturing reporting systems still suffer from a number of problems, which according to recent contributions, can be solved through the adoption of integrated performance measurement systems (PMSs). This article aims at understanding whether such integrated PMSs–namely the balanced scorecard–can actually solve the problems, which usually affect the reporting system of the Operations Department. The article presents a case-study developed in Ducati Motor Holding and then outlines the main conclusions and managerial implications. The empirical analysis demonstrates that the key benefits brought about by the balanced scorecard concern a higher responsiveness of the decision-making process and more intense cooperation among all units related to operations management (namely, manufacturing, logistics, quality management, procurement, maintenance).     

Elaborating the Contingency Theory of Organizations: The Case of Manufacturing Flexibility Strategies

What determines which manufacturing flexibility strategies are feasible and which are not? In this paper, I build both theoretical and empirical understanding of task‐environmental contingencies that may either enable or constrain the selection of various flexibility strategies. The special emphasis is on the various plant‐level actions that are used to seek manufacturing flexibility. Demand uncertainty and variability, technology, and competitive strategy emerge as the most important contingencies, although not in ways that are immediately apparent. Finally, managerial implications at both the corporate as well as manufacturing unit levels are discussed.     

Pooling Data Across Transparently Different Groups of Key Informants: Measurement Equivalence and Survey Research*

Survey research is often deployed in the study of situational issues facing organizations and functions within organizations. One particular survey research approach can be described as follows: (1) survey questionnaires involving perceptual questions about a situational issue are administered to key informants, one key informant per unit of analysis; (2) key informants vary in a transparent manner across units of analysis such that groups of these key informants are discernible; and (3) perceptual responses, after data collection, are then pooled to create a single larger data set for subsequent statistical manipulations. In this methodological note, we draw attention to this particular survey research approach and ask the question: When is it appropriate to pool data provided by key informants with transparently different demographics across units of analysis so as to create a single larger data set for statistical manipulations? We use a simple example and data from a published study to motivate the relevance and gravity of this methodological question. Offering the concept and empirical assessment of measurement equivalence as the answer to this methodological question of data pooling, we prescribe and demonstrate, with the total quality management→customer satisfaction relationship, the procedural steps for evaluating the seven subdimensions of measurement equivalence. In conclusion, we highlight methods that should be adopted, before data collection, to minimize the risk of violating measurement equivalence. After data collection and for the instances when the empirical assessment for measurement equivalence advises against pooling of such data, we also offer suggestions for analyzing such data and presenting associated statistical results.     

Flexibility configurations: Empirical analysis of volume and product mix flexibility

In this paper we address flexibility and investigate the relationship between volume and product mix flexibility. One view of flexibility is that of being a capability in itself; another view is that of flexibility as an enabler, providing the manufacturing system with properties on which other competitive capabilities are built. In this research, the latter view of flexibility is used, where flexibility acts as a second order competitive criterion. The aim is to differentiate between two dimensions of flexibility important to the manufacturing value chain, i.e., volume and product mix flexibility, and to investigate how different flexibility configurations are related to various manufacturing practices. A clustering research approach is used to identify groups of companies based on flexibility configurations. The groups are then analyzed with respect to characteristics and impact on operational performance. For the empirical investigation, we use empirical data from the high performance manufacturing (HPM) study, including three industries and seven countries—a total of 211 plants. We find that flexibility configurations based on high or low levels of volume and mix flexibility combinations show significant differences both in terms of operational performance, and in terms of emphasis put into different flexibility source factors.     

Theory Development in Operations Management: Extending the Frontiers of a Mature Discipline via Qualitative Research

This invited paper discusses theory development in operations management. Many stellar researchers have made excellent contributions to theory development in our field. Operations management is a maturing discipline. Recently, theory driven empirical research has become common in top‐tier journals in our field. Impelled by this trend and due to the path dependency of research, in general, researchers have examined operations phenomena using theories from management and organizational science. How do we extend the frontiers of knowledge in our maturing discipline? How do we develop theories within the field of operations management? In examining some of the seminal ideas that have shaped our field, a common characteristic is that they relied on observational studies and conceptual reasoning. Is it time for us to stress the usefulness of qualitative research methods in our field? Could this lead to an intellectual renewal in our field and extend the frontier of a maturing discipline? This paper explores these questions and advances the notion that qualitative analysis needs to be emphasized more than it has been in recent past. This paper is meant to provoke discussion among empirical researchers in operations management.     

Fuzzy multi-attribute decision-making for evaluating manufacturing flexibility

Evaluation of manufacturing flexibility in operations management is important to determine the competitiveness of manufacturing system, and is being increasing discussed in the literature on manufacturing system. The objective of this research is to develop a multi-attribute decision-making model based on fuzzy set theory to improving the manufacturing flexibility evaluation process. Since most information available in this stage is not numerical, fuzzy linguistic assessment is used to represent the performance rating of all flexibility metrics under flexibility dimensions and importance grade of all flexibility dimensions. This paper proposes a modified LOWA operator, which uses the maximum entropy weights, and uses it to direct computation on linguistic terms. The developed model evaluates the degree of manufacturing flexibility that can assist decision-makers, when making capital investment decisions and measuring performance, in finding the need for improving manufacturing flexibility, and in determining the dimensions of flexibility as the best directions to improvement. Examples using a case study of leading Taiwan firm in the bicycle industry are used to illustrate the concept developed. In addition, sensitivity analysis can be performed to examine the solution reasonability.     

BUSINESS STRATEGY,MANUFACTURING FLEXIBILITY,AND ORGANIZATIONAL PERFORMANCE RELATIONSHIPS: A PATH ANALYSIS APPROACH

It has been argued in the literature that business strategy and manufacturing flexibility independently affect the performance of an organization. However, no empirical examination of the interrelationship among these three constructs has been performed. In this paper, based on a field study of 269 firms in the manufacturing industry, the identified constructs have been used to test a theoretical model using path analysis techniques. Our results indicate that business strategy contributes both directly and indirectly to organizational performance. The findings provide evidence of direct effects of (i) business strategy on manufacturing flexibility and (ii) manufacturing flexibility on organizational performance.     

Real Options in Management and Organizational Strategy: A Review of Decision‐making and Performance Implications

This paper contributes to the debate on the role of real options theory in business strategy and organizational decision‐making. It analyses and critiques the decision‐making and performance implications of real options within the management theories of the (multinational) firm, reviews and categorizes the organizational, strategic and operational facets of real options management in large business settings. It also presents the views of scholars and practitioners regarding the incorporation and validity of real options in strategy, international management and business processes 1 . The focus is particularly on the decision‐making and performance attributes of the real options logic concerning strategic investments, governance modes and multinational operations management. These attributes are examined from both strategic and operating perspectives of decision‐making in organizations, also with an overview of the empirical evidence on real options decision‐making and performance.     

Investment in Facility Changeover Flexibility for Early Entry into High‐Tech Markets

A model is introduced to analyze the manufacturing‐marketing interface for a firm in a high‐tech industry that produces a series of high‐volume products with short product life cycles on a single facility. The one‐time strategic decision regarding the firm's investment in changeover flexibility establishes the link between market opportunities and manufacturing capabilities. Specifically, the optimal changeover flexibility decision is determined in the context of the firm's market entry strategy for successive product generations, the changeover cost between generations, and the production efficiency of the facility. Moreover, the dynamic pricing policy for each product generation is obtained as a function of the firm's market entry strategy and manufacturing efficiency. Our findings provide insights linking internal manufacturing capabilities with external market forces for the high‐tech and high‐volume manufacturer of products with short life cycles. We show the impact of manufacturing efficiency and a firm's ability to benefit from volume‐based learning on the dynamic pricing policy for each product generation. The results demonstrate the benefits realized by a firm that works with its manufacturing equipment suppliers to develop more efficient and flexible technology. In addition, we explore how opportunities afforded by pioneer advantage enable a firm operating a less efficient facility to realize long term competitive advantage by deploying an earlier market entry strategy.     

A FRAMEWORK AND MEASUREMENT INSTRUMENT FOR JUST-IN-TIME MANUFACTURING

While Just-in-Time (JIT) manufacturing has emerged as one of the major tools to enhance manufacturing competitiveness, no attempt has been made to develop a reliable and valid measurement instrument for empirical research in JIT. Without such an instrument, generalization beyond the immediate sample is difficult or misleading. We have proposed a JIT framework and developed a valid and reliable instrument with 16 summated scales for dimensions that capture essential aspects of JIT useful in assessing its impact in manufacturing environments. In addition, we discuss in detail the interactive nature of JIT practice. And, we propose a step-by-step approach to reliability and validity testing. Four JIT practices (equipment layout, pull system support, supplier quality level, and Kanban) are identified as major contributing factors to JIT performance.     

An Empirical Study of Equivalence Judgments vs. Ratio Judgments in Decision Analysis*

Two commonly used elicitation modes on strength of preference, equivalence and ratio judgments, were compared in an experiment. The result from the experiment showed that ratio judgments were less effective than equivalence judgments. Based on an iterative design for eliciting multiattribute preference structures, equivalence judgments outperformed ratio judgments in estimating single‐attribute measurable value functions, while being nearly more effective than ratio judgments in assessing multiattribute preference structures. The implications of the results from the experiment are that multiattribute decision‐making techniques should take advantage of the decision maker's inclination of making effective equivalence trade‐off judgments, and that useful techniques should be devised to incorporate different commonly used techniques, such as multiattribute utility theory and the Analytic Hierarchy Process, to elicit and consolidate equivalence trade‐off judgments.     

Preferences for One‐Shot Resolution of Uncertainty and Allais‐Type Behavior

Experimental evidence suggests that individuals are more risk averse when they perceive risk that is gradually resolved over time. We address these findings by studying a decision maker who has recursive, nonexpected utility preferences over compound lotteries. The decision maker has preferences for one‐shot resolution of uncertainty if he always prefers any compound lottery to be resolved in a single stage. We establish an equivalence between dynamic preferences for one‐shot resolution of uncertainty and static preferences that are identified with commonly observed behavior in Allais‐type experiments. The implications of this equivalence on preferences over information systems are examined. We define the gradual resolution premium and demonstrate its magnifying effect when combined with the usual risk premium.