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Manufacturing strategy in SMEs and its performance implications
Lappeenranta University of Technology, Finland.
University of Turku, Finland.
Jönköping University, School of Engineering, JTH, Industrial Engineering and Management. Jönköping University, School of Engineering, JTH. Research area Industrial Production.
University of Turku, Finland.
2015 (English)In: Industrial management + data systems, ISSN 0263-5577, E-ISSN 1758-5783, Vol. 115, no 6, 1004-1021 p.Article in journal (Refereed) Published
Abstract [en]

Purpose– West European manufacturing has been going through challenging times after the global financial crisis of 2008-2009. Some countries (e.g. Sweden and Germany) have recovered from the crisis, while in others problems and job loss still persist. One of these problem countries is Finland. The purpose of this paper is to examine manufacturing strategy priorities and their performance implications in this country.

Design/methodology/approach– During the spring of 2014, a web-based survey was conducted, targeting Finnish manufacturing companies. In this study we focus on small- and medium-sized (SMEs) companies and link survey responses to financial performance data, which is available in audited annual reports.

Findings– Research results indicate that SME manufacturers in Finland put less emphasis in new product development, broadness of product line and after sales service, while showing high priority in delivery speed and punctuality. As the manufacturing strategy dimensions are connected to audited financial data, regression analyses reveal that superior quality is at central place for achieving higher revenues and profits. After sales service has a positive impact on revenues and new product development ability is connected to higher profits. Managing quality to meet specifications (minimum quality level), leads only into higher employment. Some evidence is shown in support of flexibility in terms of product changes having negative impact on revenue, while volume flexibility is connected to lower profits.

Research limitations/implications– This research is limited to a single country, and is cross-sectional in nature. The primary data were combined with profit and loss statements in order to reduce common method bias.

Practical implications– It is evident that SMEs may adapt their manufacturing strategy, with emphasis on superior quality together with properly managed after sales service and new product development activity. However, it is worrying that head count in manufacturing SMEs is not connected to same factors, as are revenue and profit. It is suggested that flexibility in labour contracts and other regulatory support measures are needed to support flexible manufacturing.

Originality/value– Advanced economies and their remaining manufacturing companies have been receiving minor levels of interest in research. This is especially the case with SMEs, where this research tries to fill important research gap.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2015. Vol. 115, no 6, 1004-1021 p.
National Category
Other Engineering and Technologies not elsewhere specified
Identifiers
URN: urn:nbn:se:hj:diva-28148DOI: 10.1108/IMDS-12-2014-0380ISI: 000359055200002Scopus ID: 2-s2.0-84933567831Local ID: JTHIndustriellISOAI: oai:DiVA.org:hj-28148DiVA: diva2:860067
Available from: 2015-10-09 Created: 2015-10-09 Last updated: 2016-01-12Bibliographically approved

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Citation style
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