The multidimensional nature of production competence and additional evidence of its impact on business performance

Abstract

PurposeThe purpose of this paper is to look into production competence theory by proposing and validating a multidimensional construct, and offering additional empirical evidence regarding the contribution of production competence to business performance.Design/methodology/approachProduction competence is defined as a second‐order factor/construct in terms of five underlying dimensions: cost, flexibility, quality, delivery and environmental protection competence. Different scales are used to measure the construct, validated by a multi‐step process. Data from 274 manufacturing firms and structural equation modelling as the main technique are used for the analysis.FindingsThe paper suggests that manufacturing capabilities and their alignment with the competitive priorities pursued must be considered to explain the contribution of manufacturing to business performance. The provided evidence suggests that the manufacturing function significantly contributes to business performance, and enables us to conclude that production competence is a determinant of business performance.Practical implicationsFirms should focus on the development of manufacturing capabilities that are key for the market (and consistent with the business strategy). To achieve this, the production function should be integrated into the strategic planning process of the overall business strategy.Originality/valueMost research works to date deal with production competence as a one‐dimensional construct and reduce its measurement to a single index, fussing variables of different types. This paper provides a valid multidimensional operationalisation of production competence, considering environmental protection as a fifth manufacturing objective. It also offers additional empirical evidence regarding the positive link between production competence and business performance.