THE INFLUENCE OF MANUFACTURING STRATEGIES AND ENVIRONMENTAL MUNIFICENCE AS MODERATORS OF TECHNOLOGY-MANUFACTURING PERFORMANCE RELATIONSHIP: An Evidence From Indonesia

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Abstract: During the past twenty years, we have witnessed a wide array of advanced manufacturing  technology,  computer  based  technology,  and  new  management practices implemented in varying degree of success. A growing body of research in manufacturing  and  technology  management  literatures  suggest  that  firms  are investing  considerable  sums  into  advanced  manufacturing  systems  (hard technology)  and  new  management  practices  (soft  technology)  to  deal  with  fast changing product and fragmentation of traditional market, and to learn new process technologies that are important for shaping future industry evolution AMT systems, when  properly  understood  and  implemented,  can  help  firms  compete  along dimensions  of  cost,  quality,  flexibility,  delivery  speed,  productivity  and  even profitability of the firms. There is an abundant of literatures that have analyzed the relationship  between  technology  adoption  and  performance  (Porter,  1985;  Morone, 1989; Higgins, 1995; Hottenstein & Dean, 1995). Maidique and Patch (1988) argued that  technology  is  a  critical  force  for  a  business  organization  in  a  competitive environment.    Morone  (1989)  viewed  technology  as  a  source  of  competitive advantage.  While  Stacey  and  Aston  (1990)  argued  that  technology  advancement plays  a  vital  role  in  long-term  profitability,  and  Higgins,  (1995)  identified technology as a contributing factor to successful operations.   Prior  studies  on  technology  adoption  found  that  the  increased  use  of advanced manufacturing technologies (AMT) and new management practices cannot be  directly  related  to  higher  performance    (Sweene,  1991;  Kotha  &  Orne,  1989; Schroeder, et al., 1995). Significant benefits can be reaped by the firms that integrate technology  and  innovations  considerations  with  strategic  corporate  development (Shariff,  1997).  Scholars  have  argued  that  strategy  must  be  viewed  as  a  major moderating variable and the success of business organizations depend on the ability of new technologies to support the competitive strategy. Another issue raised on the relationship  between  technology  and  competitive  advantage  is  whether  the relationship  is  the  same  in  all  environmental  context.  Relating  to  this  issue inconclusive  results  have  been  found  on  the  impact  of  environmental  munificence on the technology-performance relationship. Meyer and Goes (1988) and Shcroeder and Sohal (1999) found that the relationship between technological innovations and performance will be stronger for bigger organizations that have abundant resources, whereas, Irwin et al. (1998) found that the impact of technology on performance is greater for those organizations operating in less munificent environment, where the  resources  are  scare.  This  study  is  conducted  to  investigate  the  moderating  role  of strategy  and  environmental  munificence  on  the  technology-manufacturing performance  relationship,  other  than  to  investigate  the  impact  of  the  level  of technological  adoption  on  manufacturing  performance  of  the  Indonesian  medium and large manufacturing firms.
Author: Lena Ellitan
Journal Code: jpmanajemengg070003

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