Production competence revisited – a critique of the literature and a new measurement approach

Abstract

Purpose – The purpose of this paper is to seek remedy to two major flaws of the production competence literature, which concern: the way the production competence construct is operationalized and the way its effects on performance are measured. Design/methodology/approach – The paper proposes to measure production competence as the two-dimensional operational level construct it actually is, and to use Slack’s (1994) importance-performance matrix to study its business level performance effects. The three hypotheses developed are tested using a subsample of the International Manufacturing Strategy Survey database, which includes 465 manufacturing companies from 21 countries. Findings – The study offers additional empirical support for production competence theory. Going beyond supporting existing theory, the results give more detailed insight by indicating that low operational performance on even one important competitive factor leads to lower business performance (order-losing effect); excessive investment in increasing operational performance on any less important competitive factor does not necessarily lead to higher business performance. Practical implications – Using a large empirical dataset, the study shows that the importance-performance matrix is a useful tool for decision makers to assess and improve their company’s manufacturing strategy: it indicates how to prioritize between improvement efforts to positively contribute to business performance. Originality/value – The paper offers a novel approach to operationalize production competence. The importance-performance analysis approach adopted in this study avoids the two major drawbacks of previous production competence studies and offers an appropriate method to assess the impact of production competence on business performance.