PRODUCTION COMPETENCE AND ITS IMPACT ON BUSINESS PERFORMANCE

There has been increasing research attention given to production compe tence as the source of competitive advantage. Viewing production compe tence as the function of the fit between business strategy and manufac turing structure, the authors examine the impact of production compete nce on business performance. This study explores how to obtain a fit b etween business strategy and manufacturing structure and whether the f it will lend a competitive edge to a manufacturing firm. Seven hypothe ses concerning the associations among business strategies, manufacturi ng structural complexity, and business performance are presented. The sample consists of 170 firms operating in U.S. manufacturing industrie s. Data were obtained via a mail survey and Compustat. The major findi ngs of the research are that (1) there is a significant association be tween business strategy and manufacturing structural complexity, imply ing that business strategy has a profound influence on manufacturing s tructural decisions; and that (2) production competence has a signific ant association with business performance. A major finding in this res earch suggests that a manufacturing firm can significantly improve its business performance by attaining a proper alignment of manufacturing structure with business strategy. A paradigm of corporate manufacturi ng strategy is developed for future research.