In search of the source of the stream: the process of formation of manufacturing strategy in small and medium‐sized enterprises

Abstract

This paper reports on research investigating the process of formation of manufacturing strategy in six UK manufacturing small and medium‐sized enterprises (SMEs). Realised manufacturing strategy can be considered to be the pattern formed in the stream of actions taken within a firm’s manufacturing function. The research aims to locate the source of that stream by identifying the causal origins of strategic manufacturing actions using a strategy charting method. The findings indicate that, for these companies, realised manufacturing strategy is predominantly formed through a bottom‐up emergent process, arising from the preferences of personnel within the manufacturing function. For most strategic manufacturing actions, there is no demonstrable link to business strategy. As such, these firms are not following best‐practice manufacturing strategy literature, which advises that manufacturing strategy be derived from business strategy in a top‐down deliberate process. This is the case despite differences in the size, products, customers, ownership structures and histories of the companies. The paper speculates that, in UK SMEs, more widely, manufacturing strategy may similarly not arise from the pursuit of business objectives. This may be because the concept of manufacturing as a potential strategic weapon is absent in the SME community, or because the formalised top‐down deliberate process of developing manufacturing strategy associated with this concept is inappropriate in the dynamic environments in which most SMEs operate.