Assessment of the Lean effect on business performance: the case of manufacturing SMEs

Abstract

Purpose

The purpose of this paper is to research the way in which Lean practices are affecting the performance of manufacturing small and medium enterprises (SMEs), analyzing the effects of Lean practices on companies’ operational, financial and market performance.

Design/methodology/approach

An online questionnaire was distributed among Portuguese organizations that fitted the category of SMEs and belonged to the manufacturing sector. A sample of 329 enterprises was analyzed with partial least squares–structural equation modelling. Four hypotheses on the impact of Lean practices on company performance were tested.

Findings

The results show that the effects of Lean on performance are positive, which stresses the benefits attainable with the implementation of Lean practices. The aggregated implementation of Lean practices, namely, customer involvement, statistical process, continuous flow and total productive maintenance leads to improvements in company’s global performance measured by market, financial and operational performance measures, and also improves each of these performance measures individually. It was also noticed that financial capability is one of the indispensable factors for the successful implementation of Lean practices.

Research limitations/implications

The results contribute to the investigation on the topic, broadening the literature on the implementation of Lean practices in companies around the world.

Practical implications

The research outcomes may be used as a motivation for other SMEs to implement Lean practices by acknowledging the positive impact on their performance. Furthermore, the degree of Lean implementation in the particular industry may constitute a signal for government and/or economic decision makers to define incentives such as fiscal benefits for companies that engage in Lean implementation programmes, partly financing workers cross-training, among other necessary investments.

Originality/value

This is the first study that examines the impact of the effect of Lean on operational, financial and market performance in a discriminated and simultaneous way.

Citation

Valente, C.M., Sousa, P.S.A. and Moreira, M.R.A. (2020), "Assessment of the Lean effect on business performance: the case of manufacturing SMEs", Journal of Manufacturing Technology Management, Vol. 31 No. 3, pp. 501-523. https://doi.org/10.1108/JMTM-04-2019-0137