Organizational and Strategic Predictors of Manufacturing

8/7/2019 Organizational and Strategic Predictors of Manufacturing

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Technovation 21 (2001) 625636

www.elsevier.com/locate/technovation

Organizational and strategic predictors of manufacturingtechnology implementation success: an exploratory study

Gregory N. Stock a,*, Christopher M. McDermott b

a Department of Operations Management and Information Systems, College of Business, Northern Illinois University, DeKalb, IL 60115, USAb Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY 12180-3590, USA

Received 11 April 2001; received in revised form 2 May 2001; accepted 11 May 2001

Abstract

In this study, we empirically investigate how organizational and strategic variables are related to success in technology implemen-tation. Organizational culture, operations strategy, and the outcomes associated with manufacturing technology implementation areassessed from data collected from a sample of manufacturing plants across a wide range of industries. We then analyze the relation-ships between these variables using multiple regression analysis. Our findings indicate that both culture and strategy variables aresignificantly related to technology implementation, but the relationships are dissimilar for different types of implementation out-comes. 2001 Elsevier Science Ltd. All rights reserved.

Keywords: Manufacturing technology; Implementation; Organizational culture; Operations strategy; Empirical

1. Introduction

The traditional paradigm of operations managementand manufacturing strategy holds that efficiency is poss-ible only through the production of large volumes ofstandard products, while customization is necessarilypenalized with higher costs. Advanced manufacturingtechnology (AMT) directly contradicts traditional think-ing by promising the capability of providing bothefficiency and flexibility. In particular, we define AMTas a group of computer-based technologies, includingcomputer-aided design (CAD), robotics, group tech-nology, flexible manufacturing systems, automatedmaterials handling systems, computer numerically con-trolled machine tools, and bar-coding or other automatedidentification techniques (Sambasivarao and Deshmukh,1995; Zairi, 1992; Zammuto and OConnor, 1992).

Clearly, the most distinguishing feature of AMT is itscapability to provide a combination of flexibility andefficiency. While these operational benefits areextremely important, they may generally be seen as a

* Corresponding author. Tel.: +1 (815) 753-9329; fax: +1 (815)

753-7460.

E-mail addresses: [email protected] (G.N. Stock),

[email protected] (C.M. McDermott).

0166-4972/01/$ - see front matter 2001 Elsevier Science Ltd. All rights reserved.

PII: S0 1 6 6 - 4 9 7 2 ( 0 1 ) 0 0 0 5 1 - 7

means to the ultimate end of financial benefits, namely

improved profitability, market share, and sales growth.This paper therefore explores relationships associatedwith these competitive outcomes as well.

Successful implementation of AMT often requires dif-ferent types of organizations and/or management prac-tices than are found in more traditional environments.This is because these technologies often directly chal-lenge established norms and strategic options consideredin a pre-AMT facility. Because these technologies arequite different from the equipment they may be replac-ing, the culture of the adopting organization itself mayultimately affect the level of success managers have withthe technology. A firm whose organizational culture ischaracterized by flexibility-orientated values may bemore likely to be effective in implementing AMT thanone that is not (Zammuto and OConnor, 1992). Priorresearch has recognized a link between organizationalculture and operations strategy (Bates et al., 1996), so itstands to reason that a firms operations strategy mayalso be a factor in implementation success. A firm whosestrategy emphasizes operational flexibility might beexpected to be more effective in implementing manufac-turing technology than a firm emphasizing other com-petitive priorities.

Our paper focuses on how organizational culture and


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626 G.N. Stock, C.M. McDermott / Technovation 21 (2001) 625636

operations strategy relate to operational and competitive

outcomes in AMT implementation. The remainder of the

paper is organized as follows. The second section exam-

ines the literature relating to AMT implementation,

organizational culture, operations strategy, and oper-ational and competitive benefits. The next section dis-

cusses our methodological approach and sample. Wethen present our findings and end with a discussion ofthe contribution of this research to our understanding of

AMT implementation and how it may be relevant topracticing managers.

2. Conceptual framework

While it often represents a radical change from theirpredecessors on the shop floor, advanced manufacturingtechnology is widely used in many companies. Its rise

in popularity has been accompanied by questions regard-

ing its effective implementation. In this section, we out-

line the conceptual basis for our study. Based on an

examination of the literature on organizational culture

and operations strategy, we consider how these con-

structs might be expected to affect AMT implementation

outcomes. We then present a set of hypotheses that fol-low from this discussion.

2.1. Organizational culture

Culture as a factor in technology implementation has

received little attention in the literature. In fact, with few

exceptions (Bates et al., 1996), organizational cultureand its relationship to any area of operations manage-ment has been the topic of very little research. In this

paper, we explicitly examine the relationship between

organizational culture and AMT implementation.

In general, culture is the programming of the mindwhich distinguishes the members of one human group

from another (Hofstede, 1980). To be more specific,organizational culture is

a pattern of basic assumptionsinvented, discovered,or developed by a given group as it learns to cope

with its problems of external adaptation and internal

integrationthat has worked well enough to be con-sidered valid and, therefore, to be taught to new mem-

bers as the correct way to perceive, think, and feel in

relation to those problems (Schein, 1985).

The organizations culture is built on its shared valuesand ideas, but this is only one element that definesorganizational culture. An organizations culture is theset of shared ideas and values that serve as a means toaccomplish something (e.g. in the definition quotedabove, to solve problems).

Organizational culture affects the operation of a firm

in many different ways. As such, it is becoming increas-

ingly clear that it can and does play an important role

in many areas of managing an organization (Denison and

Mishra, 1995). Research on the topic provides useful

insight into the dimensions and variations of culture

within the firm. The conceptual model of organizational

culture used in this paper is the competing values frame-work (Quinn, 1988; Quinn and Rohrbaugh 1981, 1983;

Zammuto and OConnor, 1992). The competing valuesmodel is characterized by a two-dimensional space that

reflects different value orientations (Denison and Spre-itzer, 1991). The first dimension in this model, the flexi-bilitycontrol axis, shows the degree to which the

organization emphasizes change or stability. A flexibilityorientation reflects flexibility and spontaneity, while acontrol orientation reflects stability, control, and order.The second dimension in this framework, the internal

external axis, addresses the organizations choice

between focusing on activities occurring within theorganization (internal) and those occurring outside, in

the external environment. An internal orientation reflectsan emphasis on the maintenance and improvement of

the existing organization, while an external reflects anemphasis on competition, adaptation, and interaction

with the external environment.

This two-dimensional typology yields four ideal cul-

tural orientations that correspond to four major models

in organizational theory. Group culture emphasizes

flexibility and change and is further characterized bystrong human relations, affiliation, and a focus on theinternal organization. Developmental culture also

emphasizes flexibility but is externally oriented. Thefocus is primarily on growth, resource acquisition, crea-

tivity, and adaptation to the external environment. Con-

tinuing with this model, rational culture is also exter-

nally focused, but is control oriented. Such firmsemphasize productivity and achievement, with objec-

tives typically well-defined and external competition aprimary motivating factor. Hierarchical culture, like

rational culture, emphasizes stability. However, the

focus is on the internal organization. This orientation is

characterized by uniformity, coordination, internal

efficiency, and a close adherence to rules and regu-

lations. Fig. 1, which was adapted from prior work byQuinn and Spreitzer (1991), provides an illustration how

these ideal types fit within the two-dimensional compet-

ing values framework.

There are two important assumptions underlying this

framework. First, each quadrant is an ideal type. It is

likely that an organization will exhibit a combination of

different culture orientations, although one type may be

more dominant than the others. An organizations culturewould therefore be characterized by a profile in the two-

dimensional space, rather than a single point (Denison

and Spreitzer, 1991). Therefore, a high rating on one


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627G.N. Stock, C.M. McDermott / Technovation 21 (2001) 625636

Fig. 1. The competing values model of organizational culture.

dimension (e.g. internal orientation) does not exclude

high rating at the other end (e.g. external orientation).

The second key assumption of this model is that an

effective organization will most likely exhibit some

degree of balance among cultural types (and thus along

each axis). An overemphasis on one type (at theexclusion of others) may be dysfunctional and provide

the organization with a limited capability to respond to

the demands of its environment (Denison and Spreitzer,

1991). For example, a pure group culture might beprone to failure because a very limited knowledge of and

attention to external markets, as well as a lack of formal

mechanisms to guide it through times when such man-agement style is warranted. Thus, a firm whose culturalidentity maps exclusively toward either end of the

flexibility/control axis would find it dif ficult toadequately deal with the variety of challenges faced in

most business environments. The same point can be

made for a firm that is positioned exclusively at one endof the internal/external axis.

2.2. Operations strategy

There is general agreement that a firms operationsstrategy is comprised of four key competitive priorities:

cost, quality, flexibility and delivery (Adam and Swami-dass, 1989; Anderson et al., 1989; Leong et al., 1990).

Similarly, the effectiveness of a companys operationsstrategy is a function of the degree of linkage or consist-ency between the competitive priorities that are emphas-

ized and the corresponding decisions regarding the struc-

ture and infrastructure of operations (Adam and

Swamidass, 1989; Anderson et al., 1989; Hayes and

Wheelwright, 1984; Hill, 1994; Leong et al., 1990).Specifically, Hayes and Wheelwright (1984) definemanufacturing strategy as a sequence of decisions that,over time, enables a business unit to achieve a desired

manufacturing structure, infrastructure, and set of spe-

cific capabilities.The degree of fit between an organizations competi-

tive priorities and its key decisions regarding its invest-

ments provides the key to developing the full potentialof operations as a competitive weapon. This is nowhere

more true than for AMT, which fits within the realm ofbricks and mortar structural investments in the dis-cussion above. Interestingly, while this is clearly an

important link, surprisingly little research has explicitlyexplored its implications. Kim and Lee (1993), for

example, look at the relationship between manufacturing

technology and strategy, but at the business (not

operations) level. Ramasesh and Jayakumar (1993) argue

the importance of the link between operations strategy

and AMT selection, but in terms of technology justifi-cation, not success. Others have considered this issue

from these and other perspectives (Boyer, 1998; Cagli-

ano and Spina, 2000), although surprisingly little has

been done which examines this issue directly.

As we noted in our earlier discussion, AMT is able

deliver a combination of flexibility and efficiency. Froma strategic perspective, the flexibility and economies ofscope (Goldhar et al., 1991) that arise from this capa-

bility of the technology are powerful. However, Jaiku-mar (1986) argues that many US firms have acquiredflexible technology for cost improvements alone ratherthan to improve flexibility. Voss (1986) concurs, arguingthat the choice of technology is too frequently decoupled

from the firms strategic goals. This misalignmentbetween strategic objectives and technology capabilities

can result in disappointment. The predominant featureof AMT is its ability to provide flexibility without trad-ing off against cost. When a firm tries to bypass theflexibility in favor of cost reduction, benefits may notbe realized.

To include a consideration of how strategy may relate

to AMT implementation, the present study includes an

assessment of the relative importance firms place on thecompetitive priorities of cost, quality, delivery and

flexibility. The scales used to measure each of these fourpriorities are based on those developed, validated, andused by the Boston University Manufacturing Futures

Survey (Miller and Vollmann, 1984).

2.3. Outcomes associated with AMT implementation

AMT can bring a number of benefit s t o a firm.Expected operational outcomes are commonly used to

justify the purchase of the equipment to upper manage-

ment. Operational benefits of AMT implementation can

include either productivity improvements, flexibilityimprovements, or both (Zairi, 1992). For example, a firmmight make productivity gains as a result of an AMT,

yet not achieve any benefits such as increased productline breadth. Another firm might have just the opposite


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mix of benefits. Zammuto and OConnor (1992) cite anumber of examples in the literature that illustrate these

different outcomes. In addition to these types of oper-

ational outcomes, AMT often provides improvements in

both the speed and quality of the manufacturing process.However, the primary attributes that distinguish AMT

from other production technologies is its ability to pro-vide low cost, flexible manufacturing.

A second type of outcome might result from AMT

implementation, namely competitive benefits. Oper-ational improvements are often less visible than the big

picture: profitability, sales growth, and market share. Itis possible, but not always the case, that the implemen-

tation of AMT leads to higher levels of competitive per-

formance, as measured by variables such as market

share, sales growth, or return on investment (Boyer etal., 1997; Ramamurthy, 1995).

2.4. Control variables

In addition to the primary variables of interest

(organizational culture, operations strategy, and oper-

ational and competitive outcomes), there are two sets of

control variables that are included in our analysis. First,

we consider the organizational change that might resultfrom the AMT implementation. In addition to direct

operational and competitive improvements, it is possible

that the process of implementing the technology might

lead to better communication, redesigned work flows, orbetter integration of work across functional boundaries

(Zairi, 1992). Changes in communication and interaction

related to AMT implementation have been shown toresult in greater satisfaction with the technology (de Pie-tro and Schremser, 1987). Thus, apart from operational

and competitive benefits, the firm may have learnedenough from the implementation process to make it quite

worthwhile (Tyre, 1991). Although organizational

change may have some intrinsic value, our interest in

this variable is in its possible role in the achievement of

the direct operational and competitive outcomes associa-

ted with AMT implementation. It stands to reason a firmwill be more likely to obtain these direct benefits if theyhave also achieved organizational improvements from

the technology. We therefore wish to separate the effect

of these organizational changes on implementation suc-

cess from the direct effects of our primary explanatory

variables of interest, culture and strategy.

A second set of control variables is related to the nat-ure of the technology itself. Technology can differ in

many different ways, and it seems likely that these dif-

ferences would have an effect on implementation effec-

tiveness. Therefore, it is important to control for the

characteristics of the technology when considering theeffects of organizational culture and operations strategy.

In characterizing the technology, we consider two attri-

butes: the newness of the technology and the level of

resources required by the firm to implement the tech-nology.

Technology newness has been characterized in a num-

ber of different ways. In one respect, it is organization-

specific, reflecting the firms level of experience or fam-iliarity with the technology (Abernathy and Clark, 1985;

McDonough and Barczak, 1992; Roberts and Berry,1985; Yoon and Lilien, 1985). Green et al. (1995) extend

this concept to differentiate between technical experi-

ence and business experience associated with a giventechnology. Technology newness may also be charac-

terized as the maturity of the technology. In contrast to

relative, firm-specific nature of technology newness asdiscussed above, technology maturity is an absoluteattribute, reflecting the level of development of the tech-nology apart from any particulars organizations expert-ise or experience (Ulrich and Ellison, 1998).

A second attribute of the technology to be considered

is the level of resources required for its implementation

(Galbraith, 1990). Prior research has shown that

implementation projects experiencing cost overruns,

which is an indicator of a greater-than-expected level of

resources required, had lower levels of effectiveness in

implementation (Leonard-Barton and Sinha, 1993). In

addition, the cost of a technology, which is a reflectionof the resources required for implementation, has been

identified as an important technology attribute (Green etal., 1995).

In particular, we would expect that higher levels of

newness and resource requirements would negatively

affect the success of AMT implementation. Explicitly

considering these constructs allows us to control for theireffects in our analysis.

2.5. Hypotheses

The discussion of organizational culture above, parti-

cularly the implications provided by the Zammuto and

OConnor (1992) framework relating AMT implemen-tation to the competing values model, leads to first setof hypotheses to be tested in this study. The primary

argument is that flexibility oriented cultures will be morelikely to achieve operational success from AMT

implementation than control-oriented cultures. Although

it is not explicitly argued by Zammuto and OConnor(1992), their framework would also seem to imply that

a firm whose culture is control-oriented would be ill-suited to the task of implementing advanced manufactur-

ing technology and would therefore be unlikely to achi-

eve success in this activity.

Hypothesis H1a: A flexibility orientation (group ordevelopmental culture) will be positively associatedwith operational success in AMT implementation.

Hypothesis H1b: A control-oriented culture

(hierarchical or rational culture) will be negatively


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associated with operational success in AMT

implementation.

The next set of hypotheses relate organizational cul-

ture to competitive success, as measured by financialoutcomes such as profitability, market share, and sales

growth. As a firm becomes more externally focused, itshould become more attuned to the demands of the mar-

ket. It follows that such a firm is implementing AMT inorder to satisfy an identified market need, rather thanpurely to achieve some technical objective that may or

may not be important to customers. We would therefore

expect that a firm implementing AMT is more likely toachieve competitive success if it has a high degree of

external orientation. Although this specific propositionhas not been explored in the literature, a good deal ofprior research has shown the importance of access and

use of external sources of information in similar activi-

ties such as new product development (Clift and Vand-

enbosch, 1999; MacPherson, 1997; Moorman and Slote-

graaf, 1999).

A more general theoretical construct that considers the

use of external information is that of absorptive capacity,

which is the ability of an organization to acquire and

exploit external information for commercial ends (Cohenand Levinthal, 1990). In fact, a small subset of research

has found that absorptive capacity is an important factor

in technology-related activities such as information sys-

tems use (Boynton et al., 1994) and new product devel-

opment (Atuahene-Gima, 1992; Stock et al., 2001).

From the perspective of the competing values model,

we would thus expect a firm that emphasizes an externalorientation (developmental or rational culture) would bemore likely to be skilled in acquiring and using external

information and therefore to be more likely to achieve

positive competitive outcomes. Conversely, we would

also expect that an internal orientation would be nega-

tively related to competitive outcomes. Therefore, the

next two hypotheses follow:

Hypothesis H2a: An external orientation

(developmental or rational culture) in organizationalculture will be positively associated with competitive

success in AMT implementation. Hypothesis H2b: An internal orientation (group or

hierarchical culture) in organizational culture will be

negatively associated with competitive success in

AMT implementation.

In addition to these expectations related to specificcultural orientations, we also draw on the assumption of

the competing values model that an organization will be

more effective if it exhibits a balance in its culturalorientation. We would therefore expect that a balanced

orientation (one that exhibit high levels of more than one

dimension) would be more likely to achieve effective

outcomes from AMT implementation. Therefore, the

next hypothesis follows:

Hypothesis H3: A balanced cultural orientation (high

levels on more than one dimension) will be positivelyassociated with effective outcomes in AMT

implementation.

The final hypothesis explores the relationship betweenimplementation benefits with operations strategy. As wenoted above, the literature indicates an important con-

nection between operations strategy and the success of

technology implementation. In particular, prior research

has provided evidence that a flexibility emphasis in afirms strategy is likely to result in more effectiveimplementation. Therefore, our final hypothesis follows:

Hypothesis H4: A flexibility emphasis in a firmsoperations strategy will be positively associated with

effective outcomes in AMT implementation.

3. Methodology

3.1. Data collection

A mail questionnaire, based on several areas in the

literature, was sent to 470 plant managers and vice-presi-

dents of manufacturing. In cooperation with the Amer-

ican Production and Inventory Control Society (APICS),

six industries were selected to increase the generaliz-ability of our findings; automotive, electrical, plastics,textiles, metal fabrication, and furniture. Out of the orig-

inal 470 questionnaires, 97 responses were received, for

a response rate of 20.6%. This response rate is consistentwith other published survey-based works in both oper-

ations and technology management (Ramamurthy, 1995;

Vickery et al., 1993). Although our study is limited to

some extent by the use of a single respondent, using a

single, well-informed source is common in recent

empirical research in advanced manufacturing tech-nology implementation (Ramamurthy, 1995; Small and

Yasin, 1997) and manufacturing strategy (Klassen and

Whybark, 1999; Vickery et al., 1993). Furthermore, this

approach is consistent with that used in Denison and

Mishras (1995) study of organizational culture andeffectiveness.

The questionnaire requested that the respondent con-

sider a recent AMT implementation project in answering

the questionnaire items. The instrument collected data

for variables measuring organizational culture, organiza-

tional change achieved as a result of AMT implemen-tation as well as a battery of questions assessing the spe-

cific type of technology implemented and about therespondent and their firm. In developing the survey


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instrument, we drew on previously validated question-

naire items whenever possible. Organizational culture,

as conceptualized by the competing values model, was

measured using an instrument adapted from a published,

validated scale by Quinn and Spreitzer (1991). Whereappropriate questionnaire items were not available for

other constructs, we used relevant variables discussed inthe literature to develop the needed scales.

The survey instrument designed by Quinn and Spre-

itzer (1991) measures each of the four quadrants in thecompeting values model discussed above. Each of these

ideal types is measured by four items. Each item lists

an organizational attribute, and asks the respondent to

indicate on a five-point scale (1 is lowest and 5 ishighest) the extent to which the attribute characterizes

the respondents organization. This questionnaire wasused for a sample of 796 observations in an earlier study

and found that it was highly reliable, with Cronbachsalpha coefficients ranging from 0.77 to 0.84.

Consistent with our discussion above, we explore two

types of AMT benefits in this paper: organizational andoperational. The literature suggested a number of items

to include to measure these constructs. Operational bene-

fits can cover a number of different areas, including out-put levels, efficiency, cost reduction, reliability, repeat-ability, quality, and flexibility (Boyer, 1998; Zairi,1992). We therefore developed a set of scales that indi-

cate the effectiveness of implementation for a set of

operational measures. Our scale measuring operational

benefits is similar to the scale of internal operating per-formance variables developed by Small and Yasin

(1997).The literature also suggested a number of items to

include which measure the elements of the organiza-

tional change construct. An extensive literature review

indicated that specific measures in this category shouldinclude the extent to which the technology has improved

work flows, communication, integration of businessactivities, and management control. At a more general

level, another indicator in this category would be the

extent to which the technology has enabled the firm tomeet organizational goals (Goodman and Griffith, 1992;Zairi, 1992).

3.2. Variable definition

We initially reduced the original questionnaire data to

a smaller, more meaningful data set. The first step wasto perform a principal components analysis to obtain the

operational and competitive outcome variables used as

dependent variables in the subsequent regression analy-

sis. The varimax rotated component matrix for this

analysis, shown in Table 1, indicates that there are twocomponents. In the first component, items with signifi-cant loadings are related to operational outcomes, while

in the second component items with significant loadings

Table 1

Principal component loading matrix (varimax rotation) for outcome

variables

Item Component

1 2

Improved work flow 0.688 0.191

Increased output 0.800 0.027

Increased efficiency 0.856 0.004

Increased reliability 0.813 0.062

Increased repeatability 0.776 0.014

Increased quality 0.725 0.015

Increased flexibility 0.646 0.065

Sales growth 0.073 0.765

Market share 0.086 0.775

Return on investment 0.026 0.744

% Variance explained 40.6 17.9

% Cumulative variance explained 40.6 58.5

are related to competitive outcomes. For interpretation

purposes for this and other principal components analy-

ses, we follow the procedure of Stevens (1992), which

explicitly considers sample size in determining whether

a component loading is statistically significant. For asample size of 97, this procedure indicates that loadingsof approximate 0.520 and higher would be significant atthe 0.01 level. Significant loadings are shown in boldtype in Table 1. In deciding how many components to

retain, we employed the Kaiser (1960) criterion of keep-

ing components with eigenvalues of greater than one.

Two variables were created by averaging the significant

items for each component (Dunteman, 1989). The vari-able measuring operational outcomes was namedOUTFOPER; the variable measuring competitive out-

comes was named OUTFCOMP.

To assess perceptions of organizational culture, we

used a scale based on the competing values model

developed by Quinn and Spreitzer (1991). This scale

consists of four variable groupings (each of which in

turn consists of four items) corresponding to the four

ideal culture types specified in the competing valuesmodel. To explore our sample of firms within the com-peting values framework, we employed principal compo-

nents analysis on these questionnaire items. Our results

are shown in Table 2, with significant loadings againshown in bold type. The first component included itemsthat are characteristic of two culture types; developmen-

tal culture and rational culture. Because this componentrepresents a balance between developmental culture and

rational culture, we have named the variable associated

with this component CULTFBAL1. The second compo-

nent included items associated with the group culture

type. Its associated variable is named CULTFGRP. Thethird component also represented a balance among more

than one culture type, in this case, developmental cul-

ture, hierarchical culture, and rational culture. The vari-


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Table 2

Principal component loading matrix (varimax rotation) for organizational culture variables

Item Component

1 2 3 4

Participation, open discussion 0.088 0.816 0.265

0.018Empowerment of employees to act 0.337 0.602 0.510 0.197

Assessing employee concerns 0.413 0.764 0.130 0.001

Human relations, teamwork, cohesion 0.194 0.847 0.245 0.020

Flexibility, decentralization 0.357 0.268 0.530 0.307

Expansion, growth, and development 0.706 0.041 0.202 0.239

Innovation and change 0.832 0.243 0.068 0.001

Creative problem solving processes 0.626 0.471 0.024 0.075

Control, centralization 0.029 0.179 0.413 0.731

Routinization, formalization, structure 0.199 0.061 0.137 0.822

Stability, continuity, and order 0.021 0.079 0.479 0.684

Predictable performance outcomes 0.192 0.125 0.789 0.214

Task focus, accomplishment, achievement 0.378 0.369 0.559 0.042

Direction, objective setting, goal clarity 0.169 0.336 0.720 0.024

Efficiency, productivity, profitability 0.613 0.264 0.408 0.041

Outcome excellence, quality 0.678 0.151 0.318

0.121% Variance explained 21.45 19.75 16.36 13.84

% Cumulative variance explained 21.45 41.20 57.56 71.40

Table 3

Principal component loading matrix (varimax rotation) for operations strategy variables

Item Component

1 2 3 4

Inventory costs 0.491 0.245 0.037 0.220

High performance products 0.145 0.114 0.773 0.171

Fast delivery 0.158 0.105 0.356 0.685Rapid design changes 0.388 0.057 0.707 0.147

Capacity utilization 0.858 0.004 0.202 0.068

Consistent quality 0.116 0.208 0.618 0.261

Delivery reliability 0.195 0.023 0.071 0.817

Rapid volume changes 0.107 0.427 0.045 0.524

Labor productivity 0.698 0.257 0.030 0.254

Conformance to specifications 0.534 0.518 0.038 0.174

Lead time reduction 0.283 0.652 0.201 0.138

Large product variety 0.087 0.817 0.339 0.011

Quick changeover 0.376 0.638 0.027 0.076

% Variance explained 30.80 11.64 9.55 8.98


able associated with this component is named

CULTFBAL2. Finally, the fourth component includes

three items characteristic of hierarchical culture, and its

associated variable is named CULTFHIER. As before,the variable associated with each component was created

by averaging its significant items.The presence of these mixed components

(CULTFBAL1 and CULTFBAL2) allows us to examine

whether organizations in our sample exhibiting a balanceof culture types were more effective in achieving organi-

zational and operational benefits than pure ideal types.As will be discussed below, each of the two mixed vari-

ables, CULTF

BAL1 and CULTF

BAL2, represents vary-

ing degrees of balance among cultural types.

To measure operations strategy among these firms, weagain employed principal components analysis to reducea multiple item scale to a smaller set of variables. This

scale consisted of multiple items assessing operations

strategy along four primary competitive priorities: cost,

quality, flexibility, and speed. The results of this princi-pal components analysis are shown in Table 3, with sig-nificant loadings shown in bold type. The variableSTRFCOST indicates a strategic emphasis on cost;

STRFQUAL indicates a strategic emphasis on quality


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Table 4

Principal component loading matrix (varimax rotation) for control variables

Item Component

1 2 3 4

Immature technology

0.143 0.040

0.138 0.893New technology to firm 0.238 0.091 0.807 0.023

New technology to industry 0.237 0.248 0.467 0.526

Technology required new business practices 0.230 0.347 0.694 0.172

Required more business resources 0.099 0.836 0.008 0.742

Long implementation time 0.115 0.785 0.119 0.126

Required more technical resources 0.043 0.857 0.067 0.031

Improved communication 0.741 0.095 0.030 0.165

Improved integration of business activity 0.839 0.068 0.063 0.132

Improved management control 0.750 0.031 0.117 0.081

Met organizational goals 0.668 0.160 0.096 0.138

% Variance explained 22.49 20.67 12.88 10.87


Table 5

Variable definitions

Variable name Description Questionnaire items Cronbachs a

Output, efficiency, reliability, repeatability, quality,OUTFOPER Operational outcomes 0.87

flexibility, work flows

OUTFCOMP Competitive outcomes Profitability, market share, sales growth 0.63

CULTFGRP Group culture Participation, empowerment, concern, teamwork 0.87

CULTFHIER Hierarchical culture Control, formalization, stability 0.63

CULTFBAL1 Developmental and rational culture balance Growth, change, creativity, productivity, quality 0.82

Hierarchical, rational, and developmentalCULTFBAL2 Predictable outcomes, task focus, goal clarity, flexibility 0.78

culture balance

Inventory reduction, capacity utilization, laborSTRFCOST Cost emphasis 0.64

productivity

High performance products, rapid design changes,STRFQUAL Quality/design emphasis 0.58

consistent quality

STRFFLEX Flexibility emphasis Lead time reduction, product variety, quick changeover 0.67

STRFSPD Speed/responsiveness emphasis Fast delivery, delivery reliability, rapid volume changes 0.57

TECHFMAT Immaturity of technology Technology immaturity Single item

New technology to firm, new business practices neededTECHFEXP Inexperience with technology 0.42

for implementation

Technical resources, business resources, implementationTECHFRES Resources required to implement technology 0.80

time

Communication, integration, management control,ORGFCHNG Organizational change 0.76

organizational goals met

and design; STRFFLEX indicates a strategic emphasis

on flexibility; and STRF

SPD indicates a strategic empha-

sis on speed and responsiveness.

Finally, we developed the control variables using

scales consistent with technology and organizationalchange dimensions outlined above. Seven technology

items and four organizational change items were

included in this scale, and then principal components

analysis was performed to reduce these items to a set

of four variables that were generally consistent with theexpected theoretical constructs. Table 4 shows the results

of this analysis, again with significant loadings shownin bold print. The first component can be interpreted as

indicating the extent of positive organizational change

occurring after the AMT implementation, and is definedas the variable ORGFCHNG. The second component is

interpreted as the degree to which business and technical

resources required for implementation exceeded thelevel expected before implementation. The component

score for this component we defined to be the variableTECHFRES. The third and fourth components were

slightly more troublesome to interpret because the item

new technology to industry loaded highly on both thethird and fourth component. To avoid confusion, we

dropped this item in defining the remaining two vari-ables. Therefore, the variable associated with the third


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Table 7

Regression resultsa

Dependent variable

OUTFOPER OUTFCOMP

INTERCEPT 3.058*** 3.330***(0.675) (0.892)

CULTFGRP 0.284*** 0.299**

(0.106) (0.140)

CULTFHIER 0.167** 0.184*

(0.082) (0.109)

CULTFBAL1 0.125 0.456***

(0.127) (0.167)

CULTFBAL2 0.053 0.045

(0.121) (0.158)

STRFCOST 0.025 0.080

(0.091) (0.120)

STRFQUAL 0.103 0.096

(0.086) (0.112)

STRFFLEX 0.157* 0.146

(0.079) (0.141)STRFSPD 0.005 0.077

(0.104) (0.105)

TECHFMAT 0.139** 0.091

(0.062) (0.082)

TECHFEXP 0.046 0.056

(0.063) (0.083)

TECHFRES 0.151** 0.024

(0.068) (0.090)

ORGFCHNG 0.383*** 0.187

(0.096) (0.130)

R2 0.399 0.215

Overall F 4.533*** 1.867*

a Standard errors are shown in parentheses. *p0.10; **

p

0.05; ***p

0.01.

culture) is associated with lower competitive perform-

ance outcomes. In contrast, a tendency toward cultural

balance, as shown by higher levels of CULTFBAL1, is

associated with better competitive performance out-

comes. Moreover, the constituent items of the

CULTFBAL1 variable represent an external cultural

orientation.

Our first set of hypotheses examines the question ofwhether organizational culture is related to operationalsuccess in AMT. In particular, hypothesis H1a predicts

that a flexibility orientation will result in positive oper-ational outcomes, while H1b predicts that a control

orientation will result in negative operational outcomes.

The results of the first regression model provide no sup-port for H1a, but they do support H1b. Clearly, neithera group nor a hierarchical cultural orientation is associa-

ted with better operational performance.

The second set of hypotheses considers cultural orien-

tation and its relationship to competitive outcomes. Here,

we predicted that an external orientation would be posi-tively related (H2a), and an internal orientation would be

negatively related (H2b), to competitive success. In this

case, the results of the second regression model provide

support for both of these hypotheses. Both CULTFGRP

and CULTFHIER, which represent an internal orientation,

were significant with negative coefficients. CULTFBAL1,composed of items from both developmental and rational

culture, represents an external orientation. This variablewas significant with a positive coefficient. Therefore, an

external orientation was positively related to competitivesuccess, while an internal orientation was negatively

related to competitive success.

The third hypothesis explores the relationship betweenbalance in cultural orientation and implementation out-

comes. To evaluate H3, we consider both regression

models. In the first model, neither balanced culture vari-able (CULTFBAL1 or CULTFBAL2) was significantlyrelated to operational success. However, because

CULTFBAL1 was significantly related to competitivesuccess, there is some partial support for this hypothesis.

Finally, the fourth hypothesis predicts that a flexibilityemphasis in operations strategy will lead to better

implementation outcomes. As in the case of the third

hypothesis, our results provide partial support for H4. In

particular, a strategic flexibility emphasis was positivelyrelated to better operational outcomes, while there was

no relationship with competitive outcomes.

5. Implications and conclusions

The findings of our analysis present some interestingimplications. First, there are certain orientations of

organizational culture that are likely to lead to positive

results in implementing advanced manufacturing tech-nology, and there are other orientations that are likelyto lead to negative results. Contrary to our expectations,

for operational outcomes, the cultural dimension that

proved to be important was the internal/external orien-

tation, rather than the flexibility/control orientation.Higher levels of internal orientation, whether reflectingflexibility (group culture) or control (hierarchicalculture), were negatively related to operational success.

A similar conclusion can be drawn for competitive out-

comes, namely that an internal orientation is likely tolead to undesired results. However, higher levels of

external orientation were positively related to competi-

tive success, which was consistent with our expectations.

Because this culture variable reflected two culture types(development and rational culture), these results also

suggest that a somewhat balanced cultural orientationencompassing more than one orientation (in this case

both control and flexibility) would likely lead to positivecompetitive outcomes. Operations strategy was parti-

cularly interesting, because for one type of outcome

(operational success) it played a significant role, whilefor the other (competitive success) it did not.

We can now tie these individual implications and

results together into a broader set of recommendations.


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For both types of implementation outcomes, there seems

to be a consistent pattern of what to avoid in an organiza-

tionnamely, a culture that overemphasizes an inward-looking orientation. Having identified what is likely notto work, we can also identify what to encourage in anorganization. Here, there are different recommendations

for different types of outcomes. As a manager, onewould want both operational and competitive success.

Consistent with the findings of Voss (1986), our resultsimply that technology implementation should be linkedto a firms strategic objectives. For operational successin particular, a strategic emphasis on flexibility appearsto be key. For competitive success, an outward-looking

culture that incorporates a balance of both control and

flexibility seems to be an important organizationalcharacteristic. Values such as growth, change, creativity,and productivity should be encouraged within the

organization. The lessons are therefore relatively

straightforwarda manager should foster an externallyoriented organizational culture and formulate an oper-

ations strategy that emphasizes flexibility as a key com-petitive priority.

The importance of organizational culture to manufac-

turing strategy has been recognized in prior literature

(1996), but little empirical research relating organiza-tional culture to other areas of operations management

is found in the literature. This study addresses that need

in the literature by specifically considering the relation-ship between organizational culture, operations strategy,

and technology implementation effectiveness. The

results of this study suggest that both culture and strat-

egy are linked to different types outcomes related toAMT implementation. Given our sample size and levelof industry representation, however, we would caution

that our findings should be viewed as exploratory. Inves-tigation of these issues for a larger sample size and

across a greater range of industries would useful, as

would further refinement and validation of our measure-ment instrument. In addition, a good deal more work still

needs to be done to explore these issues in greater detail.

For example, one direction for future research might

investigate why strategy and culture variables wererelated differently to different types of implementation

outcomes. Another potentially valuable area of inquiry

would be an examination of specific managerial actionsthat may lead to the development of different cultural

types. These topics would provide interesting and valu-

able first steps for future research in this area.

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Gregory N. Stock is Assistant Professor in the College of Business atNorthern Illinois University. His research has focused on technology andsupply chain management. His recent articles have examined technology

transfer, manufacturing technology implementation, product development,and new organizational approaches to supply chain management and havebeen published in journals such as IEEE Transactions on Engineering

Management, the Journal of Operations Management, the Journal of HighTechnology Management Research, Production and Inventory Manage-ment Journal, and the International Journal of Operations and Production

Management. Prior to beginning his academic career, Dr Stock spent sev-eral years in industry as a design engineer in high technology industriessuch as computer graphics and data communications. He has B.S. andM.S. degrees in electrical enginering from Duke University and the Ph.D.degree in operations management from the University of North Carolina.Dr Stock has taught undergraduate and gradate courses in operations man-agement, supply chain management, and technology management at a var-iety of institutions, including Northern Illinois University, Arizona StateUniversity, and the China-Europe International Business School.

Christopher M. McDermott is Associate Professor in the Lally School

of Management at Renssealer, where he teaches operations/technologymanagement, new product development, and strategy at the Masters,Ph.D., and Executive levels. Dr McDermotts courses also engage corpor-ate clients such as General Motors, Ford, IBM, Hewlett-Packard, and Gen-eral Electric through Renssealers satellite distance education program. Hisresearch on the above and other topics is based on his ongoing interactionswith numerous organizations, as both a researcher and consultant. He hasa B.S. in Engineering from Duke University and his Ph.D. in Businessfrom the University of North Carolina. His work experience includes pos-itions at Westinghouse Electric Company and at Fairchild, where he wasan on-site contractor at NASAs Goddard Space Flight Center. Hisresearch has been published in journals such as Production and Inventory

Management Journal, The Journal of Operations Management, IEEETransactions on Engineering Management, Business Horizons, and the

Journal of High Technology Management Research. He is co-author of abook on the management of radical innovation, Radical Innovation: How

Mature Companies Can Outsmart Upstarts.

Organizational and Strategic Predictors of Manufacturing

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