Relationships between Italian companies’ operational characteristics and business growth in high and low lean performers

Abstract

Purpose: The purpose of this paper is to analyze relationships between operational characteristics and business growth in Italian manufacturing companies comparing high lean performers (HLPs), which are companies with a high degree of application of lean practices, and low lean performers (LLPs). This analysis aims at highlighting the effect of the implementation level of lean practices on operational characteristics of Italian companies and, as a consequence, on business growth. Design/methodology/approach: A classification in “LLPs” and “HLPs” of Italian manufacturing industries has been developed in order to measure the company’s degree of application of lean practices. A survey was carried out, and a combination of cluster analysis and multi-group structural equation path model was developed in order to answer research hypotheses. Findings: Results suggest that HLPs are characterized by a greater number of employees and a larger turnover. The operational characteristics that contribute to the business growth owing to the introduction of lean practices are as follows: the range of different finished products managed, the delivery reliability, and speedy response to warranty claim. No differences between HLPs and LLPs in terms of business growth have been highlighted when companies vary the batch size, reduce the medium production time, reduce the percentage of finished products which are subject to claim, and increase the percentage (of turnover) of R&D investment. The study highlights that “LLPs” companies are apparently capable of changing their production schemes and adjusting themselves better for customizing their products. Practical implications: Companies that aim at implementing lean practices should focus their attention on practices that affect the operational characteristics that contribute to the business growth. Moreover, because of the complexity and effort for the implementation of certain lean practices connected to supplier, workforce, quality, and production efficiency, these practices are more suitable only for large firms with enough resources. Originality/value: As an attempt to offer strategic and operational perspective on Italian lean practices implementation, this study examined how the degree of application of the different lean practices has an impact on operational and companies’ performance. Hence, even if the present study is limited to the Italian manufacturing companies, it could be a representative of companies that are operating in developed countries that are facing the so-called “anemic growth.”