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Article
Publication date: 5 April 2013

Yung‐Chang Hsiao and Chung‐Jen Chen

This study attempts to investigate the relationships among organizational capabilities, strategic choice, and firm performance and examine three questions: What are the…

2522

Abstract

Purpose

This study attempts to investigate the relationships among organizational capabilities, strategic choice, and firm performance and examine three questions: What are the relationships between organizational capabilities and the firm's strategic choice – contract manufacturing and branding? Do branding firms perform better than contract manufacturing firms after controlling for endogeneity bias? Do firms usually choose their strategy (contract manufacturing/branding) appropriately to achieve a better performance under the conditions they encounter?

Design/methodology/approach

The empirical study employs a questionnaire approach to collect data from the population of the top 5,000 Taiwanese firms listed in the yearbook published by the China Credit Information Service Incorporation for testing the validity of the model and research hypotheses. This study uses a Heckman two‐step estimation procedure and follows the procedure proposed by Shaver to examine the economic implications of strategic choice on firm performance.

Findings

Firms are more likely to adopt the branding strategy when they have better marketing and R&D capabilities while they are more likely to choose the contract manufacturing strategy when they possess superior manufacturing and process capabilities; in general branding firms perform better than contract manufacturing firms after controlling for endogeneity bias; and firms achieve a better performance if their strategic choice (contract manufacturing/branding) fits the conditions they encounter.

Research limitations/implications

This study contributes to the marketing literature by exploring an important issue of strategic choice (contract manufacturing or branding) and contributes to the strategy literature by proposing the endogenous role of strategic choice in the relationship between organizational capabilities and firm performance.

Practical implications

Firms should take into account organizational capabilities when choosing a contract manufacturing strategy or branding strategy. Further, managers should not ignore matching their strategic choice (contract manufacturing/branding) with the conditions they encounter in order to optimize firm performance.

Originality/value

The strategic choice of branding or contract manufacturing is a prevalent phenomenon that has received little attention in the strategy and marketing literature. Based on the competence‐based perspective, this study examines the relationships among organizational capabilities, strategic choice, and firm performance.

Article
Publication date: 1 September 2002

Scott J. Mason, Michael H. Cole, Brian T. Ulrey and Li Yan

The highly competitive electronics manufacturing marketplace demands that suppliers provide low‐cost, high‐quality products to their customers in a timely fashion. Shortened…

6210

Abstract

The highly competitive electronics manufacturing marketplace demands that suppliers provide low‐cost, high‐quality products to their customers in a timely fashion. Shortened product life cycles and increasingly global competition have caused traditional manufacturers to focus on their company core competencies, such as product design and development, choosing to outsource the actual manufacturing of their products to contract manufacturers. Although the decision to outsource can have both positive and adverse effects on key areas of the manufacturing supply chain, one positive effect is that the manufacturer’s supply chain agility is increased. Outsourcing has caused an increase in the amount of information that is shared between supply chain partners. As a result, a greater reliance on suppliers and alliance partners has become essential for company survival. We examine the ways in which contract manufacturing has increased the agility of the electronics manufacturing supply chain.

Details

International Journal of Physical Distribution & Logistics Management, vol. 32 no. 7
Type: Research Article
ISSN: 0960-0035

Keywords

Article
Publication date: 21 November 2016

Esa Viitamo, Seppo Luoto and Timo Seppälä

This paper aims to contribute to the scholarly debate on the origins and nature of industrial servitization. By resorting to contract manufacturing (CM) as an empirical case, it…

Abstract

Purpose

This paper aims to contribute to the scholarly debate on the origins and nature of industrial servitization. By resorting to contract manufacturing (CM) as an empirical case, it is posited that any product-service solution that a manufacturing firm is capable of delivering on a competitive basis mirrors its goals in value creation and capture, positioning within its value networks and the pool of assets and competences it holds.

Design/methodology/approach

To support this argument, a comparative case study of two CM firms that represent polar cases in the industry was conducted. The primary data were collected through participatory methodology, observations and semi-structured interviews of company representatives. The business experiences of an industry practitioner provided a distinct contribution to the content analysis and modelling.

Findings

It was concluded that servitization becomes endogenous as contract manufacturers aim for higher profitability through the insource of customer activities and hence extend their offering downstream in the supply chain. The findings suggest that the way out of the servitization trap is a shift toward original design and manufacturing business, where high value-adding modules are insourced and integrated into replicable solutions for various types of customers and market segments.

Research limitations/implications

The generalization of the conclusion is constrained by the limited focus on two cases only. More industry and company data are therefore required to further validate this argument. Particularly valuable will be the data on the intermediate business models between the two polar cases.

Originality/value

Building on contested business practices, this paper outlines the logic of competitive strategy in CM on the basis of specific characteristics and implications of the various business concepts. In this case, the principal drivers of servitization are the acquisition of supporting capabilities and insourcing of customer activities. The case study method integrates theory with academic observation and managerial experiences.

Details

Strategic Outsourcing: An International Journal, vol. 9 no. 3
Type: Research Article
ISSN: 1753-8297

Keywords

Article
Publication date: 1 November 2006

John Noonan and Michael Wallace

The purpose of this paper is to present a framework for advanced relationship planning between a contract manufacturer and the other key players within the supply chain. In doing…

2114

Abstract

Purpose

The purpose of this paper is to present a framework for advanced relationship planning between a contract manufacturer and the other key players within the supply chain. In doing so it allows the contract manufacturer to achieve improved optimisation through better insight into current and future supply chain activity.

Design/methodology/approach

The research commences with a literature review that synthesises across total quality management (TQM), customer focus and contemporary business excellence to create a framework specific to contract manufacturing. The major elements were verified by surveys. Applicability and exploitability was validated using action research.

Findings

The paper confirms that horizontal alliances in either collaborative or cooperative form are in their infancy as regards contract manufacturing. The framework presented makes it possible for contract manufacturers to identify, evaluate and form relationships with competitors and complementor companies towards understanding the interdependence between all supply chain players.

Research limitations/implications

Further refinements are possible and could include the determination of formal avenues for relationship development and guidance while operating within supply chains at different levels of development.

Practical implications

Understanding how supply players interact in the field of contract manufacturing will assist in determining the influence of cooperation and competition or a mixture of both. The framework presented will provide direction in unravelling the intricacies of the connections and therefore provide the contract manufacturer with a valuable tool for relationship planning.

Originality/value

The Advanced Relationship Planning Framework described offers a unique supply management approach from the supplier of contract manufacture viewpoint that synthesises across the TQM, Customer focus and business excellence.

Details

Supply Chain Management: An International Journal, vol. 11 no. 6
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 1 September 2004

John Noonan and Michael Wallace

Contract manufacturers differ from the traditional manufacturing model in that they build a variety of products for various clients, whereas original equipment manufacturers build…

2162

Abstract

Contract manufacturers differ from the traditional manufacturing model in that they build a variety of products for various clients, whereas original equipment manufacturers build only proprietary products. To achieve seamless supply the contract manufacturer must slip in and out of each client's network of suppliers who together build the entire product. This paper describes the development of a diagnostic instrument for contract manufacturers to align core competencies to developing value criteria. A value‐focused diagnostic instrument is created specific to contract manufacturing. The major elements were verified by surveys. Applicability and exploitability of the diagnostic instrument was validated using action research. The instrument provides sequential analysis to assist contract manufacturers in the formulation of effective value‐based strategies. Suppliers of contract manufacture who display proficiency at value delivery will enhance prospects for inclusion on client preferred supplier lists. The system offers a supply management approach from the supplier viewpoint that synthesises across TQM, customer focus and business excellence.

Details

Supply Chain Management: An International Journal, vol. 9 no. 4
Type: Research Article
ISSN: 1359-8546

Keywords

Article
Publication date: 31 May 2019

Debabrata Ghosh, Peeyush Mehta and Balram Avittathur

The purpose of this paper is to understand the practices and policies unique to high-tech manufacturing start-ups in emerging economies, such as India. The study analyzes the main…

1090

Abstract

Purpose

The purpose of this paper is to understand the practices and policies unique to high-tech manufacturing start-ups in emerging economies, such as India. The study analyzes the main features and challenges of the high-tech manufacturing sector, and the way in which enabling environment including policy making, supply chain capability and related technologies through Industry 4.0 could be leveraged to foster growth.

Design/methodology/approach

The paper undertakes an exploratory approach through in-depth semi-structured interviews conducted with high-tech manufacturing firms in various stages of their growth. The paper provides evidence of the challenges that high-tech manufacturing firms face in India, the strategies they adopt and highlights the role of institutional structures and policies.

Findings

Findings show that high-tech manufacturing start-ups in India face various challenges in the upstream, production and downstream supply chain processes. Further, issues related to availability of quality material, quality suppliers, contracts, funding and access to markets remain. Results also show that enabling operational and financial levers could be created by policy makers and other stakeholders to help the high-tech manufacturing start-ups scale faster and create value.

Originality/value

This paper contributes to the R&D intensive industry and high-tech manufacturing literature in the context of emerging economies, such as India, and provides a rigorous overview of the start-up ecosystem in high-tech manufacturing.

Details

Benchmarking: An International Journal, vol. 28 no. 5
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 19 June 2007

Jui‐Chin Jiang, Ming‐Li Shiu and Mao‐Hsiung Tu

The purpose of this paper is to present an overall review of quality function deployment (QFD) in the past nearly 30 years; to clarify widespread misperceptions about QFD; to…

2810

Abstract

Purpose

The purpose of this paper is to present an overall review of quality function deployment (QFD) in the past nearly 30 years; to clarify widespread misperceptions about QFD; to adapt its use to the product development model of contract manufacturing; and to simplify the complexity of QFD and effectively integrate its contents.

Design/methodology/approach

This paper adopts “action research” (AR) as its research methodology. The action research was conducted using a “research/consultant strategy” in a series of projects of collaboration with contract manufacturing companies.

Findings

The paper corrects widespread misperceptions about QFD, and adapts QFD to a specific product development model.

Research limitations/implications

The paper uses a participatory and interpretive approach to develop and explain the new QFD model, but the authors are restricted by the highly confidential nature of the R&D information, and not authorized to publish actual case study data. The research value lies in the discussion of quality deployment and narrowly defined QFD, and the focus on comprehensive reorganization of the QFD structure on which there have been very few English‐language publications.

Practical implications

The paper makes an adaptation of QFD so that it can be effectively used in contract manufacturing in a suitable form for modern supply chain. The paper also clarifies how QFD can be implemented by a systems approach, rather than a project approach.

Originality/value

The paper simplifies the complexity of QFD and effectively integrates its contents through the proposition of a quality deployment system and a quality assurance system. The distinguishing features of the former reside in five main differences from the original quality deployment system. The latter is subdivided into 17 subsystems, which form the design framework for quality assurance activities.

Details

The TQM Magazine, vol. 19 no. 4
Type: Research Article
ISSN: 0954-478X

Keywords

Article
Publication date: 1 January 1989

Joseph L. Cavinato

Outsourcing, or contract manufacturing, is becoming an increasinglypopular alternative to in‐house production. It has wide implications forthe firm. Since logistics is evolving to…

Abstract

Outsourcing, or contract manufacturing, is becoming an increasingly popular alternative to in‐house production. It has wide implications for the firm. Since logistics is evolving to include inbound material movements, it stands to play a central role in this trend. Outsourcing arrangements require inventory, timing, storage, transportation and other decisions pertaining to the facets of flow control. Outsourcing, why it is used, and why logistics plays a logical role in it, are examined, some key managerial issues and concerns that outsourcing presents to the firm and to logistics are provided.

Details

International Journal of Physical Distribution & Materials Management, vol. 19 no. 1
Type: Research Article
ISSN: 0269-8218

Keywords

Article
Publication date: 13 March 2017

Zsuzsanna Szalkai and Mária Magyar

The purpose of this paper is to investigate the strategy of contract manufacturers (CMs). The research question is the following: how can the strategy of CMs be explained? The…

Abstract

Purpose

The purpose of this paper is to investigate the strategy of contract manufacturers (CMs). The research question is the following: how can the strategy of CMs be explained? The purpose is to better understand this activity though using different theoretical approaches and analyzing two customer relationships of a Hungarian CM, Videoton Holding.

Design/methodology/approach

The primary theoretical background is the relational view of strategy, and the concept of the business model is used for the analysis. The authors confront the literature about this topic in strategic management using the industrial marketing and purchasing approach to strategy; namely, strategizing. Through the case study of Videoton the authors explore how the company became a highly developed CM from its origins as an original equipment manufacturer company.

Findings

Through comparing theory the authors have created a research framework which is adapted to the empirical findings. In the CM’s strategy it is crucial to understand how partners are able to synchronize key propositions, key resources and key actors while taking the network of the firms into consideration.

Originality/value

The paper is novel in that the authors investigate the strategy of a supplier from their own perspective, not that of a customer. Applying and contrasting different theoretical approaches to this particular topic may considered to be valuable as well.

Details

IMP Journal, vol. 11 no. 1
Type: Research Article
ISSN: 2059-1403

Keywords

Article
Publication date: 7 November 2016

John G. Wacker, Chenlung Yang and Chwen Sheu

As outsourcing continues to grow, supplier management becomes critical to the success of manufacturing firms. Transaction cost economics (TCE) suggests that firms should choose…

3346

Abstract

Purpose

As outsourcing continues to grow, supplier management becomes critical to the success of manufacturing firms. Transaction cost economics (TCE) suggests that firms should choose supplier governance mechanisms to ensure fulfillment of contractual obligations and safeguard against opportunism for their outsourcing activities. Accordingly, the purpose of this paper is to examine how buying organizations govern supplier contracts to improve manufacturing competitiveness and financial performance. The relative effectiveness of two primary governance mechanisms, contractual governance (CG), and relational governance, are examined.

Design/methodology/approach

Expanding upon previous studies, this study delineates three relational governance mechanisms (negotiation efficiency (NE), problem solving relations, and information sharing (IS)) that are conceptually, statistically and pragmatically different. Based on the TCE literature, a conceptual model is developed to decipher the relationships between pre-contract conditions (supplier asset specificity and environmental uncertainty (EU)), governance mechanisms, performance ambiguity (PA), and performance. Using the data collected from 987 firms, the statistical results present several important findings that would advance current theory and practice in outsourcing.

Findings

The authors find empirical support for the effects of contractual and relational governance in improving manufacturing and financial performance. The governance of supplier contracts clearly facilitates manufacturers’ ability to leverage their resources to improve performance. The relative effectiveness of these two governance mechanisms is related to the levels of EU and supplier asset specificity. Relational governance displays greater influence on performance than CG does. However, CG appears to be complementary to relational governance.

Research limitations/implications

The interplays between supplier asset specificity and EU should be examined in the future. The relationships among NE, IS, and problem solving should also be examined to facilitate the development of relational governance.

Practical implications

Managers should be aware of the situational performance of governance mechanisms. Moreover, it is important to realize how differently each of the three relational governance mechanisms and CG contribute to performance.

Originality/value

This study extends the academic discussion of supplier governance by investigating the alignment of governance mechanisms (relational governance and CG) with pre-contract conditions to reduce PA and, thereby, enhance manufacturing performance. Under the theoretical framework of TCE, the direct and indirect effects of pre-contract conditions and governance variables are fully examined and discussed. Moreover, relational governance involves multiple mechanisms that are conceptually and pragmatically different, and future studies should not treat it as one single construct.

Details

International Journal of Operations & Production Management, vol. 36 no. 11
Type: Research Article
ISSN: 0144-3577

Keywords

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