Product configuration,ambidexterity and firm performance in the context of industrial equipment manufacturing |
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Affiliation: | 1. Department of Operations and Technology Management, IE Business School, IE University, Calle Maria de Molina, 12-5, 28006 Madrid, Spain;2. Department of Management Science, Fisher College of Business, Ohio State University, 650 Fisher Hall, 2100 Neil Avenue, Columbus, OH 43210, United States;3. Department of Accounting, Goodman School of Business, Brock University, 248 Taro Hall, 500 Glenridge Avenue, St. Catharines, ON L2S 3A1, Canada;1. Neeley School of Business, Texas Christian University, Fort Worth, TX 76129, United States;2. Walton College of Business, University of Arkansas, Fayetteville, AR 72701, United States;1. Faculty of Economics and Business Administration, Babes-Bolyai University, Teodor Mihali str. 58-60, 400591, Cluj-Napoca, Romania;2. Institute for Technology Management, University of St. Gallen, Dufourstrasse 40a, CH-9000, St. Gallen, Switzerland;3. Swiss Institute for Entrepreneurship Management, University of Applied Sciences, HTW Chur Commercialstrasse 22, CH-7000, Chur, Switzerland;1. Department of Supply Chain Management, Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR 72701, USA;2. Department of Supply Chain Management, W.P. Carey School of Business, Arizona State University, Tempe, AZ 85287, USA;3. Korea University Business School, anam-5Ga, Seongbuk, Seoul 136-701, Republic of Korea;4. Department of Marketing, W.P. Carey School of Business, Arizona State University, Tempe, AZ 85287, USA;1. Department of Marketing and Management, Miller College of Business, Ball State University, Muncie, IN 47306, USA;2. Management Science Department, Moore School of Business, University of South Carolina, 1705 College Street, Columbia, SC 29208, USA;1. Oregon State University, USA;2. Florida State University, USA |
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Abstract: | The practice of configuring products to individual customer orders has found application in a variety of industry contexts, but little is known about the specific capabilities that firms develop to successfully compete when offering configurable products. Our research begins to fill this gap in the context of industrial equipment manufacturing. Drawing from the ambidexterity literature, we argue that firms have to balance dual goals of reducing variation and promoting variation in their product configuration activities by fostering two distinct firm-level capabilities: product configuration effectiveness (PCE) and product configuration intelligence (PCI). Specifically, we hypothesize that the simultaneous presence of PCE and PCI—that is, product configuration ambidexterity (PCA)—drives superior firm responsiveness and, indirectly firm sales and operating margin. However, we also contend that responsiveness gains through PCA can diminish with product complexity and can increase operating cost. We test these hypotheses by collecting both primary and secondary data from a sample of 108 European industrial equipment manufacturing firms. Results from our analyses indicate that PCA has an indirect effect through responsiveness on sales and operating cost but not on operating margin, with this effect diminishing with product complexity. Taken together, our results suggest that investment in developing PCA may represent a conundrum for industrial equipment manufacturing firms, because it translates into market but not financial advantages, and it is intertwined with product design decisions. We conclude this study with a discussion of the findings for theory and practice. |
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Keywords: | Product configuration Ambidexterity Customization Complexity Organizational capabilities Firm performance |
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