Enhancing effects of manufacturing flexibility through operational absorptive capacity and operational ambidexterity

A large body of research investigates how manufacturing flexibility in uncertain environments leads to firm performance, with mixed results. The mixed findings could be due to differences across firms in terms of the capabilities to acquire, assimilate, and transform knowledge and to simultaneously pursue both the exploitation of existing operational capabilities and the exploration for new operational capabilities. Building on the literature that suggests that manufacturing flexibility mediates the relationship between environmental uncertainty and firm performance, we explore the applicability of two organizational learning contingencies to the operations environment: operational absorptive capability and operational ambidexterity. Absorptive capacity enables the recognition and assimilation of new knowledge. Ambidexterity determines whether this knowledge will be applied for both exploration and exploitation. Using a sample of 852 manufacturing firms, we find that environmental uncertainty affects firm performance directly and indirectly through manufacturing flexibility. Furthermore, both operational absorptive capacity and operational ambidexterity moderate the relationship between environmental uncertainty and manufacturing flexibility and the relationship between manufacturing flexibility and firm performance. Theoretical and practical implications are discussed.     

The effect of operational slack,diversification, and vertical relatedness on the stock market reaction to supply chain disruptions

This paper empirically examines whether operational slack, business diversification, geographic diversification, and vertical relatedness influence the stock market reaction to supply chain disruptions. The results are based on a sample of 307 supply chain disruptions announced by publicly traded firms during 1987–1998. Our analysis shows that firms with more slack in their supply chain experience less negative stock market reaction. The extent of business diversification has no significant effect on the stock market reaction. Firms that are more geographically diversified experience a more negative stock market reaction. We find that firms with a high degree of vertical relatedness experience a less negative stock market reaction. These results have important implications on how firms design and operate their supply chains to mitigate the negative effect of supply chain disruptions.     

The differing impacts of operational and financial slack on occupational safety in varying market conditions

Operations management scholars have long debated the right level of slack resources required to optimize a production system. Recent research suggests that the right level of operational slack, typically in the form of inventory, is very little but not none. However, this conclusion was reached without considering the role of slack resources in occupational safety, which is a critical oversight since the safety literature predicts that the reduction of operational slack harms workers. To address this gap, secondary data from 3945 publically listed U.S. firms is used to explore the role of operational and financial slack as well as market factors in occupational safety. The results show that decreasing operational slack harms workers and that this effect is mitigated when firms hold higher levels of financial slack. Furthermore, the external market environment also plays a crucial role in the operational slack – safety relationship.     

How does the economic policy uncertainty affect the relationship between financial slack and firm performance in emerging countries?

This study investigates the moderating effect of economic policy uncertainty (EPU) on the relationship between slack resources and firm performance in emerging countries. By using 47,523 firm-year observations from seven emerging market economies through the period of 2010–2018, the results show an inverse U-shaped relationship between slack resources and firm performance. The findings also demonstrate that EPU acts as a negative moderator for the slack–performance relationship. In high EPU environments, the marginal benefit from one additional unit of slack is smaller relative to low EPU environments. This study contributes to the slack resources-firm performance literature by emphasizing the role of the broader external environment as a moderator.     

Does the Diversification–Firm Performance Relationship Change Over Time? A Meta‐Analytical Review

We study the relationship between diversification and firm performance in the context of the decline in levels of diversification over time. We argue that the pressure to reduce diversification may have more strongly affected those firms whose diversification strategies were most detrimental to firm performance. We employ meta‐analytical regression (MARA) in order to test our hypotheses, using a total of 267 primary studies containing 387 effect sizes based on 150,000 firm‐level observations from over 60 years of research on the diversification–firm performance relationship. The findings suggest that levels of unrelated diversification have decreased, whereas levels of related diversification have increased since the mid‐1990s, following an initial decrease in the 1970s and 1980s. Furthermore, we find that the relationship between unrelated diversification and firm performance has improved significantly over time, whereas the relationship between related diversification and performance has remained relatively stable.     

Agile manufacturing: Relation to JIT, operational performance and firm performance

A structural model incorporating agile manufacturing as the focal construct is theorized and tested. The model includes the primary components of JIT (JIT-purchasing and JIT-production) as antecedents and operational performance and firm performance as consequences to agile manufacturing. Using data collected from production and operations managers working for large U.S. manufacturers, the model is assessed following a structural equation modeling methodology. The results indicate that JIT-purchasing has a direct positive relationship with agile manufacturing while the positive relationship between JIT-production and agile manufacturing is mediated by JIT-purchasing. The results also indicate that agile manufacturing has a direct positive relationship with the operational performance of the firm, that the operational performance of the firm has a direct positive relationship with the marketing performance of the firm, and that the positive relationship between the operational performance of the firm and the financial performance of the firm is mediated by the marketing performance of the firm.     

Inside the black box of high-growth firms in a crisis-hit economy: corporate strategy,employee human capital and R&D capabilities

In an attempt to open the black box of high-growth firms within turbulent economic environments, this paper explores the role of corporate strategy, employee human capital and R&D capabilities in achieving exceptional growth performance in a crisis-hit economy. Relative and absolute growth measures based on both employment and sales are computed utilizing survey data on 1500 firms in the midst of the Greek crisis. Our findings indicate that adopting a geographical diversification strategy significantly increases the likelihood of becoming a fast-growing firm, irrespective of the growth metric used. Entering in diverse product markets and taking advantage of R&D capabilities appear to additionally contribute to relative employment change in HGFs of smaller size. Based on the absolute employment growth indicator, we provide some evidence that HGFs of larger size are able to grow fast through product diversification, acquiring other firms or by investing on training low-skilled employees. Nevertheless, hiring already highly educated persons seems to matter only for sales HGFs, while research collaborations are found to negatively affect the probability of growing fast in terms of sales.

     

Collaboration in Multi-Partner R&D Projects: The Impact of Partnering Scale and Scope

How can firms design collaboration structures for effective performance in R&D projects that involve multiple partners? To address this question, we examine the theoretical underpinnings of collaboration structures in multi-partner R&D projects—i.e., the scale and the scope of partnering efforts. Partnering scale captures the extent of resource interdependencies between a firm and its partners; partnering scope captures both the breadth and depth of the interdependencies between a firm and its partners. Using primary data from 147 multi-partner R&D projects, we develop and test hypotheses that examine the impact of partnering scale and scope decisions on partnering performance. Results indicate that partnering scale has a curvilinear relationship with partnering performance. That is, intermediate levels of partnering scale are associated with higher partnering performance, compared to low or high levels of partnering scale. However, we also find that the nature of this relationship is moderated by the sub-dimensions of partnering scope. Specifically, increase in partnering breadth appears to magnify the negative effect of partnering scale on performance. In contrast, increase in partnering depth appears to overcome this negative effect, allowing firms to operate at higher levels of partnering scale. Taken together, these results highlight the importance of adopting a comprehensive approach to designing collaboration structures for multi-partner R&D projects.     

The Relationship between Slack Resources and the Performance of Entrepreneurial Firms: The Role of Venture Capital and Angel Investors

In this study, we seek to further delineate factors that condition the relationship between slack resources and firm performance. To do so, we develop and test a model that establishes the role of venture capital (VC) and angel investors as powerful external stakeholders who positively moderate the slack–performance relationship. In addition, we provide more insight into this relationship by examining differences between these two types of private investors and by examining the role of their ownership stakes. We test our hypotheses using a sample of 1215 private firms, including VC‐backed firms, angel‐backed firms, and similar firms without such investors. We find that the presence of VC investors positively moderates the relationship between both financial and human slack resources and firm performance, while angel investors only positively moderate the effect of human resource slack. Further, VC investors are only marginally better at helping entrepreneurs to extract value from human resource slack than angel investors and they are no better when it comes to financial slack. Finally, we find that the impact of financial and human resource slack on firm performance is more positive in VC‐backed firms when investors hold high ownership stakes, an effect which is significantly stronger than when angel investors hold high ownership stakes.     

Interrelationships among lean bundles and their effects on operational performance

The aim of our research is to disentangle the complex relations among lean bundles and operational performance. In particular, we focus on the direct and mediating effects on operational performance of three of the main lean manufacturing bundles, namely Just in Time (JIT), Total Quality Management (TQM) and Human Resource Management (HRM). We run statistical analysis on the High Performance Manufacturing round III database, a survey involving 266 plants in nine countries across three different industries. Our results show that JIT and TQM have a direct and positive effect on operational performance while HRM has a mediated effect on it. Theoretical and managerial implications of our findings are then drawn and discussed.     

Supply chain integration and operational performance: The contingency effects of production systems

The boundary conditions of supply chain integration (SCI) have been widely studied in order to find out when SCI is applicable and effective. However, prior studies have mainly focused on external contextual factors, such as supply complexity, environmental uncertainty and country-level infrastructure. This study contributes to the SCI literature by examining the contingency effects of internal production systems on the relationship between supplier integration, customer integration and operational performance. Based on organizational information processing theory, we provide evidence to show that the impact of supplier and customer integration on operational performance varies across production systems, such as one-of-a-kind production, batch production and mass production systems. The empirical results also reveal how supplier and customer integration can be matched with different configurations of production systems in order to achieve the desired quality, flexibility, delivery or cost performance.     

Less is More,or Not? On the Interplay between Bundles of Slack Resources,Firm Performance and Firm Survival

Although a significant body of research has investigated the independent effects of distinct types of slack resources, current theoretical and empirical work does not sufficiently clarify how bundles of slack resources affect firm outcomes. Drawing on the resource constraints literature and the slack literature, we investigate how distinct bundles of financial and human resource slack influence firm performance and survival. Using a sample of 4715 European information and communication technology firms, we show that neither parallel resource abundance (having slack in financial and human resources) nor parallel resource constraints (lacking slack in financial and human resources) are optimal for firm performance and survival. However, firms with selective constraints that combine slack in financial resources with constraints in human resources exhibit superior performance without decreased survival prospects. Taken together, this study extends current research by providing a more nuanced view of the relationships between slack resources, firm performance, and firm survival.     

Linking sourcing and collaborative strategies to financial performance: The role of operational innovation

In this study we investigate the influence of subcontracting-in production related jobs, outsourcing and collaborations with non-supply chain partners on small manufacturing firms' operational innovation. Further, we investigate the mechanism through which these sourcing and collaborative strategies influence small firm performance by focusing on the potential mediating role of operational innovation in the relationships. The structural equation modeling analysis of data collected from 476 small manufacturing firms, suggests that outsourcing, subcontracting-in, and collaborations with non-supply chain partners are positively related to operational innovation. Further, the structural equation modeling results indicate that operational innovation fully mediates the influence that subcontracting-in has on financial performance but partially mediates the influence of outsourcing and collaborations with non-supply chain partners on small firm financial performance. Implications for theory and practice are discussed.     

Outsourcing to a non-developed supplier market: The importance of operational aspects in outsourcing

This article investigates how firms manage outsourcing in situations of a non-developed supplier market. This study followed the initial outsourcing activities and strategies of two case companies in the wood product manufacturing industry. The findings show that greater focus needs to be placed on operational aspects associated with non-developed supplier markets, which contrasts with the traditional strategic view of outsourcing. For practitioners, this article suggests that it is important to emphasise that the learning curve for a supplier can be lengthy, and also that alternative outsourcing routes are available when outsourcing to a non-developed supplier market.     

Linking green purchasing capabilities to environmental and economic performance: The moderating role of firm size

This study identifies firms’ green purchasing capabilities, classified into operational capabilities and dynamic capabilities, and measures their effects on the environmental and economic performance of a firm. We developed instruments to measure operational green purchasing capabilities and dynamic green purchasing capabilities. This study also investigates the moderating effect of firm size on the relationship between green purchasing capabilities and firm performance. The structural equation model (SEM) is used to analyse 239 responses from Japanese manufacturing companies. The results indicate that their green purchasing capabilities positively affect environmental and economic performance. Operational capabilities and dynamic capabilities have different levels of effects on green purchasing performance. A further analysis of the moderating effect of firm size shows that the high economic performance of green purchasing relies on the level of dynamic capabilities rather than firm size.     

The contingency effects of environmental uncertainty on the relationship between supply chain integration and operational performance

This paper extends prior supply chain research by building and empirically testing a theoretical model of the contingency effects of environmental uncertainty (EU) on the relationships between three dimensions of supply chain integration and four dimensions of operational performance. Based on the contingency and organizational information processing theories, we argue that under a high EU, the associations between supplier/customer integration, and delivery and flexibility performance, and those between internal integration, and product quality and production cost, will be strengthened. These theoretical propositions are largely confirmed by multi-group and structural path analyses of survey responses collected from 151 of Thailand's automotive manufacturing plants. This paper contributes to operations management contingency research and provides theory-driven and empirically proven explanations for managers to differentiate the effects of internal and external integration efforts under different environmental conditions.     

Partner Type Diversity in Alliance Portfolios: Multiple Dimensions,Boundary Conditions and Firm Innovation Performance

Our research extends the current knowledge based view on the configuration of alliance portfolios and their deployment in different external knowledge environments. We study these alliance portfolios in a longitudinal sample (1996–2010) for over three thousand firms that operate in a large number of industries in the Netherlands. Our findings indicate that partner type variety and partner type relevance, as different dimensions of partner diversity in alliance portfolios, both have an inverted U‐shaped association with firm innovation performance. However, alliance portfolios characterized by both high partner type variety and high relevance cause inferior innovation performance. Different external knowledge environments, characterized by different levels of industry modularity and scope of knowledge distribution, moderate the inverted U‐shaped associations of partner type variety and relevance in alliance portfolios with firm innovation performance in opposing directions. While for partner type variety, a high level is found to be optimal in environments with greater modularity or broader scope of knowledge distribution, for partner type relevance it turns out that a low level is optimal under more modular industry conditions.     

The effects of slack resource of R&D professionals on firm performance: evidence from traditional manufacturing firms in an emerging economy

Abstract

As an important component of organizational human resource slack (HR slack), the slack of research-and-development (R&D) professionals has been studied by several authors. However, it remains unclear whether and how this small component of general HR slack, i.e. the slack of research-and-development professionals (RHR slack), may affect overall firm performance in an emerging economy without much R&D tradition or pro-R&D institutions. Based on two organizational theories, i.e. institutional theory and the resource-based view of the firm (RBV), we propose competing hypotheses on the relationship between RHR slack and firms’ accounting performance. We also examine whether the relationship between RHR slack and firm performance should be linear or curvilinear. Finally, we also test the relationship between RHR slack and other dimensions of firm performance. Several interesting findings have been obtained. For instance, neither the perspective based on institutional theory nor that based on RBV can fully predict all types of RHR slack-performance relationships, be these relationships linear or curvilinear.     

Corporate entrepreneurship: a test of external and internal influences on managers’ idea generation,risk taking,and proactiveness

Because upper managers have the responsibility to set the corporate entrepreneurship agenda, their entrepreneurial characteristics matter to a firm's successful implementation of corporate entrepreneurship. This study investigated influences on the idea creation, risk taking, and proactiveness perceptions of upper managers in a random sample of 105 Thai manufacturing firms. Results indicate that these managers' idea generation was influenced by the type of product produced, the size of the company, and the extent of firm support for individual entrepreneurship. Managerial risk taking was associated with firm size and extent of support for personal entrepreneurship. Managerial proactiveness as associated only with the scope of firms' competition, firm size, organizational entrepreneurial climate and support for personal entrepreneurship. Results suggest that firm context can influence the basis for corporate entrepreneurship.     

How Competitive Action Mediates the Resource Slack–Performance Relationship: A Meta‐Analytic Approach

The fungibility of organizational slack provides firms significant latitude in addressing both internal and market pressures. A vast literature suggests that slack influences firm performance; however, the empirical record is mixed, and the underlying mechanism linking slack to performance remains ambiguous. We address these issues by theoretically expanding the slack–performance model to include mediation. Specifically, we develop and test a model in which a firm’s competitive behaviours direct the utilization of slack toward the realization of firm performance. Our meta‐analytic‐based structural equation model supports partial mediation, showing that competitive behaviours provide some resolution to the conflicted understanding of how slack affects performance. Further, we provide value to the slack literature by consolidating the evidence for the effects of various types and forms of organizational slack. Beyond providing robustness to our theoretical model, doing so offers a more complete understanding of how operationalizations of slack and performance outcomes matter.