Manufacturing technology and strategy formulation: keys to enhancing competitiveness and improving performance

Abstract

Porter [Porter, M.E., 1996. What is strategy? Harvard Business Review 74 (6), 61–78.] claims that a proper link between strategy and manufacturing operations is a key to developing sustainable competitive advantage. To be successful in this globally competitive, rapidly changing environment, organizations must formulate strategic plans that are consistent with their investment in and use of manufacturing technology. This study proposes that organizations that invest in advanced manufacturing technology and develop mechanisms for manufacturing managers to participate in strategy formulation will have improved competitive capabilities and better performance than firms that do not. Using the result from a large‐sample survey, this study develops valid and reliable measures of advanced manufacturing technology and manufacturing managers' participation in strategy formulation as well as the competitive capabilities of a firm. Linear structural equation analysis (LISREL) results show that the relationships between a firm's practices in these two areas and its competitive capabilities are found to be statistically significant and positive. Also, high levels of these competitive capabilities lead to high levels of performance as measured by customer satisfaction and marketing performance.