Company-specific production systems and competitive advantage

Abstract

Purpose – In order to improve competitiveness on a global scale, multinational enterprises increasingly develop a company-specific production system (XPS) and deploy it in their worldwide operations. An XPS is synonymous with a tailored corporate-wide improvement programme. The purpose of this paper is to explore the circumstances under which an XPS can provide a competitive advantage. Design/methodology/approach – The paper uses an explorative case study methodology to investigate the link between the establishment of an XPS and competitive advantage. Specifically, the paper investigates the part of the Volvo Group's globally implemented Volvo production system (VPS) that aim to improve the manufacturing processes worldwide. Due to its historical trajectories, Volvo constitutes a unique case for studying the trend and effects of XPS. The resource-based view of the firm provides the theoretical foundation for the analysis. Findings – The paper concludes with four research propositions. P1: In industries with widespread XPS implementation, an XPS is a necessary resource for achieving competitive parity; P2a: Early-starters get an instant temporary competitive advantage; P2b: Late-starters can achieve a temporary competitive advantage if they implement an XPS at a faster speed than competitors; and P3: An XPS can provide a sustainable competitive advantage if it has a superior fit with other path-dependent resources in the organisation. Research limitations/implications – The paper proposes an updated VRIO model, which is better suited for understanding the relations between an XPS and competitive advantage. The major limitation of the study is the single-case design, which complicates generalisation from the VPS to an XPS of the propositions set forward. Originality/value – Despite the significant trend in modern operations management, XPSs have received remarkably limited attention from academia except for the Toyota Production System. Presumably, this is the first paper to discuss the recent trend of XPS and its contribution to competitive advantage.