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Externa integration and the need for manufacturing competence
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.).
2007 (English)Licentiate thesis, comprehensive summary (Other scientific)
Abstract [en]

For a number of years, manufacturers have increasingly focused on their perceived core competencies and outsourced activities not seen as such. In doing so there are an increasing number of competencies that fall outside the ‘core’ domain but are nonetheless required for effective product and process development. The proposed solution to this problem has been external integration with an emphasis on collaborative product or process development and also the wider concept of supply chain management. It is, however, not always easy to substitute internal competencies with customers’ and suppliers’ capabilities. Many authors have focused on finding the prerequisites for effective external integration and particularly on areas such as trust and power.

This thesis contributes to the literature by extending the concept of absorptive capacity into the manufacturing domain and in the context of external integration. A conceptual framework is developed, where different streams of the literature have been merged into one coherent model. Integral parts of this framework are the concept of absorptive capacity as well as a model of competitive priorities. Competitive priorities have been taken into account as firms differ; what contributes to competitive advantage for one firm may be irrelevant for another.

Three papers are included in the thesis. The first one uses survey data, from a representative sample of the Swedish manufacturing industry, in order to validate the concept of absorptive capacity in the manufacturing sector. The second paper also uses survey data but aims to shed some light on competitive priorities’ impact on both the extent and the outcome of internal and external integration. The third paper describes a case study of a first-tier supplier and aims to illustrate how absorptive capacity in a manufacturing firm may look in practice.

The thesis concludes that the conceptual framework is indeed useful for understanding the challenges of effective external integration. Internal manufacturing competencies may allow a firm to integrate more effectively external sources, but the required competencies may vary from firm to firm. This implies a need for a fit between companies’ competitive priorities, external integration and absorptive capacity. It also implies that companies may struggle to achieve competitive advantage by utilising their customers and suppliers if they do not simultaneously develop appropriate competencies in-house.

Place, publisher, year, edition, pages
Stockholm: KTH , 2007. , viii, 56 p.
Series
Trita-IEO, ISSN 1100-7982 ; 2007:6
National Category
Other Mechanical Engineering
Identifiers
URN: urn:nbn:se:kth:diva-4467ISBN: 978-91-7178-730-9 (print)OAI: oai:DiVA.org:kth-4467DiVA: diva2:12402
Presentation
2007-08-17, Seminarierum 443, plan 4, KTH, Lindstedtsvägen 30, Stockholm, 11:00
Opponent
Supervisors
Note
QC 20101122Available from: 2007-07-24 Created: 2007-07-24 Last updated: 2010-11-22Bibliographically approved
List of papers
1. Manufacturing competence: a key to successful supplier integration
Open this publication in new window or tab >>Manufacturing competence: a key to successful supplier integration
2009 (English)In: International Journal of Manufacturing Technology and Management (IJMTM), ISSN 1368-2148, E-ISSN 1741-5195, Vol. 16, no 3, 283-299 p.Article in journal (Refereed) Published
Abstract [en]

Extensive involvement of suppliers in new product development and manufacturing development has often been associated with superior performance. Some authors have also alleged that companies need comprehensive internal competencies, or absorptive capacity, in order to fully benefit from external expertise. This paper analyses this relationship on an operational level in manufacturing companies. Based on a large-scale survey it is shown that companies with greater internal manufacturing competencies gain significantly from supplier involvement in terms of most performance indicators, whereas those with lesser internal competencies have little to gain from such external cooperation.

Keyword
Absorptive capacity, Manufacturing, Supplier involvement
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:kth:diva-7387 (URN)10.1504/IJMTM.2009.022437 (DOI)
Note
Uppdaterad från accepted till published(20101122) QC 20101122Available from: 2007-07-24 Created: 2007-07-24 Last updated: 2017-12-14Bibliographically approved
2. Internal and external integration and its effect on manufacturing firms´ competitiveness
Open this publication in new window or tab >>Internal and external integration and its effect on manufacturing firms´ competitiveness
2006 (English)In: Proceedings of EurOMA Conference 2006 in Glasgow, June, 2006, and at the 7th International CINet Conference in Lucca, Italy, 10-12 September, 2006, 2006Conference paper, Published paper (Refereed)
Abstract [en]

Many authors highlight the importance of looking outside the focal firm for sources of innovation and future revenue. The failure to do so, can render the company less competitive in the short term, and prove lethal in case of disruptive shift in customer preferences or technology. The sources of innovation can also reside within the firm, and it is important to ensure frequent communication between different departments in order to harness effectively the firms’ inherent innovative capabilities. However, for integration to be desirable, the benefits from integrating various sources should support the overall objective of the firm. These benefits should be lower cost, for the price sensitive firms, and higher level of innovation for more innovative firms. Based on a large-scale survey, this paper will explore whether such integration does bring the intended benefits, and also if there is any other effect on several other performance indicators.

Keyword
Survey, Internal and External Integration, Manufacturing
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:kth:diva-7388 (URN)
Note
QC 20101122Available from: 2007-07-24 Created: 2007-07-24 Last updated: 2012-01-09Bibliographically approved
3. Manufacturing competence and external integration: absorptive capacity in a first-tier supplier
Open this publication in new window or tab >>Manufacturing competence and external integration: absorptive capacity in a first-tier supplier
2007 (English)In: 14th International Annual EurOMA Conference, Ankara, Turkey, June 17-20, 2007, 2007Conference paper, Published paper (Refereed)
Abstract [en]

There has been increasing interest in understanding the mechanisms for successful collaboration and learning in the supply chain. In a widely quoted paper, Cohen and Levinthal (1990) alleged that firms need to have absorptive capacity in order to benefit from external sources. The purpose of this paper is to extend the arguments to manufacturing, by illustrating how the dimensions of absorptive capacity are equally relevant in a manufacturing setting that includes customer and supplier integration in production processes. Based on a pilot case study of a Swedish firsttier supplier, it is shown that many of the fairly common manufacturing-related practices have an impact on the absorptive capacity of a small firm. This implies that manufacturing investment strategies not only influence the operations of the firm but also determine how effectively it can communicate with its external environment.

Keyword
absorptive capacity, manufacturing competence, external integration
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:kth:diva-7389 (URN)
Conference
14th International Annual EurOMA Conference, Ankara, Turkey, June 17-20, 2007
Note
QC 20101122Available from: 2007-07-24 Created: 2007-07-24 Last updated: 2012-01-09Bibliographically approved

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