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A Study of Technology Adoption in Manufacturing Firm

A Study of Technology Adoption in Manufacturing Firm
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  A study of technology adoption inmanufacturing firms Yohanes Kristianto  Department of Production, University of Vaasa, Vaasa, Finland  Mian Ajmal College of Business Administration, Abu Dhabi University, Abu Dhabi, UAE  Richard Addo Tenkorang  Department of Production, University of Vaasa, Vaasa, Finland, and  Matloub Hussain College of Business Administration, Abu Dhabi University, Abu Dhabi, UAE  Abstract Purpose  – The purpose of this paper is to study the effect of technology adoption on operationalcompetitiveness by taking an example from international manufacturing companies. Design/methodology/approach  – This paper develops a conceptual model to generate strategicflexibility and benefit for a manufacturing firm by managing manufacturing strategy and technologyadoption with different leadership roles. Findings  – The results show that the leadership role is a significant factor to motivate strategicflexibility and generate higher benefit. For intellectuals, the mechanism provides a new approach toexplicate technology adoption in a manufacturing company. Besides, it provides a deep-rootedpreliminary point for supplementary empirical assessment. The mechanism facilitates managers toexpand their understanding of the leadership role for trust building and knowledge sharing inmanufacturing firms. Practical implications  – With that enhanced understanding, the managers can spotlight theiractions, which help further to perk up their firm’s competitiveness provoked by supporting theknowledge sharing activities through appropriate leadership roles. Originality/value  – The mechanism developed in this study is believed to be the first sober effort toprovide a deeper theoretical understanding of trust building for improving operationalcompetitiveness in manufacturing firms with a practical approach. Keywords  Manufacturing industries, Manufacturing technology, Technology adoption, Leadership,Manufacturing strategy, Strategic flexibility Paper type  Research paper 1. Introduction Capabilities development leads to enhance the existing technologies and competenciesthat a particular firm may possess (Brown and Bessant, 2003) to achieve competitiveadvantage over competitors (Porter, 1980). The competences are built from The current issue and full text archive of this journal is available at The authors are most grateful to two anonymous reviewers for their constructive andhelpful comments which helped to improve the presentation of the paper considerably.Professor Josu Takala from Department of Production, University of Vaasa also provided hisresearch materials and helpful comments on the presentation of this paper. This research issupported by FUDGE Project and Fimmec under a contract agreement with the Department of Production, University of Vaasa, Finland.  JMTM23,2 198 Received 23 March 2011Revised 30 April 2011Accepted 15 May 2011  Journal of Manufacturing TechnologyManagementVol. 23 No. 2, 2012pp. 198-211 q Emerald Group Publishing Limited1741-038XDOI 10.1108/17410381211202197  the manufacturing vision, that is, the manufacturing strategy for the recognitionof the organizational design specifications (Costa and Lima, 2009). Manufacturingcapabilities that are generally categorized in terms of quality, cost/efficiency,delivery/responsiveness, and flexibility are something that manufacturing unit musthaveinordertocompete(MillerandRoth,1994;HallgrenandOlhager,2006)andtoenableafirmsustainingasuperiorperformancepositioninthecapabilityrelativetocompetitors(McIvor, 2008). The ability to master technological competencies has underpinnedespecially the remarkable industrial achievements of Asian countries like Korea andTaiwan (Rahman and Bennett, 2009).In global competition, the firm should compete through its manufacturingcapabilities in terms of cost, quality, dependability, and flexibility as statements of thecompetitivedimensionsofmanufacturing(Voss,2005;Miltenburg,2008).HayesandPisano (1996) suggest that capabilities are activities that a firm can do better than itscompetitors and they are difficult to imitate or transfer enabling firms to enjoysustainable advantage over their rivals (Grewal and Slotegraaf, 2007). However,capabilities derive less from specific technologies or manufacturing facilities and morefromsystemsandroutines:people,managementandinformationsystems,learning,andorganizational focus (Ljungquist, 2007; Xiaosong Peng  et al. , 2008) which is in essenceevolving and renewing capabilities overtime (Lavie, 2006) in response to changingmarketconditions(EisenhardtandMartin,2000).Thislessderivationmakesdifficultiesfor introducing manufacturing flexibility, where in general is a reflection of adaptiveresponse to changing market conditions (Gupta and Goyal, 1989). Thus, acceleratingtechnology adoption into systems and routines generates manufacturing flexibility byupgrading the operational competitiveness from the existing level to the required levelby giving entry barrier to competitors (Kotha, 1995).The goal of this paper is to present the conceptual model of strategic flexibility inmanufacturingfirm,andtodiscusssomequantitativemeasurementsoftheflexibilitybytheexistingofleadershiprolestoinducetechnologyadoption.Thus,variousanalysesontheeffectofleadershiprole,manufacturingstrategyandresourcesallocationtostrategicflexibility of a firm and its strategic benefit are the focus of this paper. In particular, westudy the model for two different economic situation of before and during economiccrisis. The benefit of this study is that managers can identify what sensitive decisionvariables that should be carefully controlled in growing up business in prosperity. Weuse an example of a Chinese State-Owned Manufacturing Enterprise (CSOME) thatproduce majority of Chinese GDP (e.g. over 75 percent in 2007) to stand most of thecompaniesintheCSOMEinthetop500companiesinChina.Furthermore,thesimilarityofthecompanies’characteristicisalsooneadvantageforstudyingtheCSOMEsincetheresult represents CSOME manufacturing strategy and leadership roles.The structure of this paper is as follow. Section 2 introduces supporting literatures.Section 3 models the integration of manufacturing strategy and transformationalleadership including technology level to evaluate overall competitiveness. Section 4analyzes the case example before and during crisis. Section 5 draws the conclusion andgives some future research opportunities. 2. Literature review It is increasingly evident that the era of mass production is being replaced by the era of market niches. The key to creating products that can meet the demands of a diversified Technologyadoption 199  customer base is a short development cycle yielding low cost, high quality goods insufficient quantity to meet demand. This makes flexibility an increasingly importantattribute of manufacturing. Manufacturing technology selection has been an area of great interest for academics and industrial managers alike because of the constantdevelopments in the manufacturing technology and the industrial implications of theserapid developments (Farooq and O’Brien, 2010).According to Chryssolouris and Lee (1992), flexibility of a manufacturing system isdetermined by its sensitivity to change’ while Nagarur (1992), defines flexibility as theability of the system to quickly adjust to any change in relevant factors like product,process, loads and machine failure. Flexibility, however, cannot be properly consideredinthedecision-makingprocessifitisnotappropriatelydefinedinaquantitativemanner(ChryssolourisandLee,1992).Seriesofapproacheshavebeenproposedintheliteraturefor measuring several types of flexibility, such as machine, process, product, routing,volume, expansion, operation and production. The entropy concept (Kumar, 1987) anditsrevisedversion(Chang etal. ,2001)fromthermodynamicsprovidesomesimilaritiestothe flexibility measures. Model of Petri nets that can provide estimates of the timesystem needs to adapt to random interruptions and can be used as flexibilitymeasurements, as described in Barad and Sipper (1988). Alternatively it is suggestedthatflexibilitycanbeestimatedrelativelytoareferencetaskset(BrillandMandelbaum,1989). Principles from mechanical system’s dynamics have been used for modeling andassessingmanufacturingsystem’sflexibility(Chryssolouris  etal. ,1998).Tsourveloudisand Phillis (1998) and Beskese  et al.  (2004) employ fuzzy logic rules that includeengineers’ and managers’ expertise for measuring manufacturing flexibility. Thus, thevalueofflexibilityhasbeenalsobeusedinfinancialterms(Ramasesh etal. ,2001)wherethey suggest an aggregate metric for flexibility in terms of the expected net presentvalue of all relevant cash flows associated with a system’s response to random,unanticipated changes. According to Khouja (1998) volume flexibility of a system isstudied by examining the shape of the cost per piece curve of the system for differentproduction volumes while Jack and Raturi (2002) stated that an extensive list of driversand sources regarding volume flexibility has been presented. Finally, Kurtoglu (2004)studiedthe flexibility oftwo assembly lines, bycalculating the manufacturing costs forchanging a system to produce new products. Thorough reviews on approaches forassessingflexibilitycanbefoundinSethi andSethi(1990),DeToniandTonchia (1998),Beach  et al.  (2000) and Giachetti  et al.  (2003).When making manufacturing decisions, according to Chryssoloris (1996) thereare four classes of manufacturing attributes and these includes: cost, time, qualityandflexibility.Thus,itlooksimpossibletoconcurrentlyoptimizecost,time,qualityandflexibility,thereforetheoverallresultsorbenefitsofmanufacturingdecisionisgovernedby trade-offs between the different manufacturing attributes. However, flexibilityremains a major competitive factor for manufacturing industry.Manufacturing flexibility quantification, however, has been the focus of academicwork, but industrial applications have been few. A classification of the different typesof manufacturing flexibility (Browne  et al. , 1984; Gerwin, 1993) includes: .  Machine flexibility. Theeaseofmaking changesrequiredtoproduceagiven setof part types. .  Process flexibility.  The ability to produce a given set of part types, possibly usingdifferent materials, in different ways.  JMTM23,2 200  .  Product flexibility.  The ability to change over to produce new (set of) productsvery economically and quickly. .  Routing flexibility.  The ability to handle break-downs and to continue producinga given set of part types. . Volumeflexibility. Theabilitytooperateprofitablyatdifferentproductionvolumes. .  Expansion flexibility.  The ability to expand the system easily and in a modularfashion. . Operation flexibility.  The ability to interchange ordering of several operations foreach part type. .  Production flexibility.  The universe of part types that the manufacturing systemcan produce.Table I shows some possible types of manufacturing flexibility where the changing of those uncertainties creates strategic adaptability through manufacturing flexibility(Gerwin, 1993). Furthermore, Table I suggests a manufacturing firm to considertechnology adoption to the manufacturing resources of people, information technology,process and organization to generate manufacturing flexibility.In strategic level, manufacturing flexibility should support strategic flexibility.Since strategic flexibility comprises strategic leadership, dynamic core competencies,human capital, manufacturing resources and information technology (Hitt  et al. , 1988),then manufacturing capabilities should be aligned with technology adoption andstrategic leadership. This strategic flexibility is more required to hedge againstenvironment uncertainty during crisis (Grewal and Tansuhaj, 2001). This alignmenttakes benefit to manufacturing firms by providing faster suitable technology adoptionas a result of suitable leadership policy.Managing strategic flexibility and benefit in manufacturing firm open afuture opportunities for embedding the role of leadership to knowledge creation bylinking labor and organizational learning to productivity (Mooradian  et al. , 2006). Thedominoeffectofthismanagementisthatexploitingknowledgehasgreaterpotentialforcreating competitive advantage because once technical knowledge or technology isadopted it is easily replicated (Conner and Prahalad, 1996; Starbuck, 1992). Thisknowledge exploitation is strongly supported by transformational leaders that helptheir subordinates to learn and develop as individuals, by encouraging and motivating Type of uncertainty Strategic objective Flexibility dimensionProduct configuration Diverse product line MixLength of product life cycle Product innovation ChangeoverSpecification productcharacteristicsResponsiveness to customerspecificationsModificationAggregate product demand Market share VolumeMachine down time Customer’s due date ReroutingCharacteristics of material Product quality Material Source:  Rewritten from Gerwin (1993) Table I. Manufacturing flexibility Technologyadoption 201  them with versatile repertoire of behavioral and decision making capability (Bass andAvolio, 1994; Bass, 1997).In conclusion, this paper uses the related case studies of previous publications(Takala  et al. , 2005, 2006; Takala, 2008) to benchmark the strategic flexibility of CSOMEcase CN_WG group which emphasize more on the effect of manufacturing strategy,leadership role, and technology adoption to manufacturing resources adjustments beforeand during crisis. Thus, readers can compare the effect of different strategies(manufacturing strategy, leadership role, and technology adoption to manufacturingresources)ofdifferentsubsidiariesCN_WGtotheCN_WGstrategicflexibilityandbenefit. 3. Conceptual model development This section exploits the benefit of product architecture to generate operationalflexibility. In supporting the objective, then flexibility that is related to the sensitivityto change is based on three inputs: parameters of stiffness, inertia, and damping.Consider the evaluation of strategic flexibility for a manufacturing system (Figure 1).Strategic flexibility reflects the ability of the system to respond environmental changewith the certain role of technology adoption in the manufacturing system as a result of leadership role.Figure 1 shows the analogy between mechanical system and manufacturing systemas generic flexible spring-mass-damper system, and then we have the problemstatement as follows:M – Inertia or resources entropy to represent the flow of technology adoption toother resources of leadership (Figure 2).S – Spring constant (stiffness) to represent the passive leadership. Figure 1. Analogy betweenmanufacturing andmechanical systems Benefit of technologyadoption and leadership styleMechanical system MS IIL 1 Inertia level I t or technicaltechnology IgF D Manufacturing systemInputStrategicflexibilityTechnology andleadershipManufacturingresourcesflexibility  JMTM23,2 202
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