Management Competence: Resource-Based Management and Plant Performance

213 Pages·2004·4.709 MB·English

by  Dr. Andreas Enders (auth.)

Management Competence
Contributions to Management Science
H.DyckhofflU.Finke A.Scholl
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ModellingTechniquesfor Financial NewTrendsin BankingManagement
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H.Herbst ProjectScheduling with Time Windows
Business Rule-Oriented Conceptual 2002.ISBN3-7908-1516-0
Modeling
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OrganisationandWork Beyond 2000
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New OperationalApproachesfor
FinancialModelling M.Grossmann
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Discrete Choice Experimentsin Marketing H.M.Arnold
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CorporateFinancial Decisions and Market T.Ihde
Value DynamicAlliance Auctions
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Mittelstand ofFranchising Networks
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Andreas Enders
Management Competence
Resource-Based Management
and Plant Performance
With 17 Figures
and 70 Tables
Springer-Verlag Berlin Heidelberg GmbH
Series Editors
Wemer A. Miiller
Martina Bihn
Dr. Andreas Enders
WHU - Otto Beisheim Graduate School of Management
Burgplatz 2
56179 Vallendar
Germany
[email protected]
ISSN 1431-1941
ISBN 978-3-7908-0262-7 ISBN 978-3-7908-2690-6 (eBook)
DOI 10.1007/978-3-7908-2690-6
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Foreword
Eightyearsago,theproduction management department ofthe WHUlaunched the
industrycompetition ,Best Factory / Industrial Excellence Award' jointly withthe
media partner Wirtschaftswoche in Germany. Two years earlier, the competition
had been initiated successfully by INSEAD faculty inFrance. Over the years,the
jointresearchteamexperienced first-hand thatapplication ofManagementQuality
was a key driver ofcontinuous improvement along the firm's core business proc
esses. Moreover, those companies that exhibited the highest improvement rates
achieved mostly the best business results (compared to their industry bench
marks). Andreas Enders accompanied us for five rounds ofthe competition as
program manager for the German competition. His contributions - among others
the launchofourweb sitewww.beste-fabrik.de - aregreatly acknowledged bythe
academic advisory team.
The fmdings ofthe industry competition greatly influenced this thesis on Man
agement Competence. Initially, the main research question though wasto provide
a theoretic foundation and an empirical test for the seven-factor Management
Quality model (as defined in our recent book on Industrial Excellence).Manage
ment Quality consists of strategy formulation and deployment combined with
delegation oftasks to workers and their participation. In addition, measurement,
integration, communication andtraining complementthe main levers. Whilethere
exist numerous studies on superior business performance and key success factors,
therearefewsound empirical studies available todate onoperational performance
and sustained business success. In this context, the most famous reference and
management book is probably Peters and Waterman's bestseller In Search ofEx
cellence.
For the lEA competition, we developed questions to test whether Management
Quality isbeing applied to select business processes ofthe firm. Inparticular, our
main contribution to the field was that we operationalized the construct ofMan
agement Quality andprovided ageneric process model ofthe firm.Existing qual
ity awards genuinely lack a model of the firm and a management concept for
achieving (industrial) excellence. We believe that management ofresources (as
opposed tomarket positioning) isaprimary driver ofoperational performance and
consequently ofbusiness results. A number ofleading European firms, e.g., inthe
automotive, automotive supplier, consumer goods, electronics and machine tool
industry, participated in the annual competition and have won the lEA award. In
this way, the conceptual model ofManagement Quality has been exposed to a
"markettest" and is"validated" by a large number ofsenior executives invarious
industries.
VI Foreword
The approach taken inthis thesis isrelated but quite different. Andreas Enders
examines key strands inthe management literature, i.e.,Market-Oriented Theory,
the Resource-Based View and Dynamic Capabilities.New studies confirm a syn
thesis of the three literatures. In a nut shell, the main insight is that Management
Competence is the dynamic reallocation ofthe firm's resources towards market
needs (seechapter 2).Eventhough this ideamaysound simple, ithasneither been
thoroughly investigated nor well specified in research. For this reason, this doc
toral research can be viewed as a major contribution to the (operations) manage
mentandstrategy literature.
The thesis then makes the effort to classify the firm's relevant resources (see
chapter 3). The statistical details ofa causal model in which internal and external
resources driveboth operational performance aswell asdirectly and indirectly the
firm's business results are discussed inchapter 4. Inchapter 5,anempirical test of
the causal model- when applied to a large data set ofthe German electronics in
dustry- isanalyzed. A unique feature ofthe survey is- based ona suggestion by
our colleague Prof. Dr. Holger Ernst from the WHU - that both managers and
team leaders are being interviewed as key informants. This greatly improves the
validity ofthe study. A further key feature ofthis research is the distinction be
tween firmscompetinginstatic asopposed to dynamic branches ofone industries.
One would expect that firms operating inmarkets with frequent product introduc
tions andtechnology changeovers areoutperformedby firms operating inlesstur
bulentenvironments.
The results ofthe empirical research are very interesting and counter-intuitive.
On the one hand, it is confirmed that resource management exhibits a significant
impact on operational and business performance. Onthe other hand, firms operat
ing inturbulent - as opposed to static - industries lead inthe degree ofdevelop
ment ofManagement Competence skills and exhibit a higher degree ofbusiness
performance. This is a rather surprising and unexpected result and has implica
tions forthewayfirmsarebeingevaluated, e.g.,forcreditratingpurposes.
This research study is very well written and has a clear focus. It aims at ex
plaining the drivers ofoperational excellence and superior business performance.
The technical parts ofthethesis caneasily be skipped. The resultsoftheempirical
study are ofgreat interest to both academics and (operations) managers. It pro
vides academics with the basis for further research on operational effectiveness
and sustainable business performance. Practitioners can utilize the insights from
the causal model to focus their improvement efforts on the management ofspe
cificinternalandexternal resources.
While the study is unique in its kind and opens a new field in empirical re
search for operations manager, it provides (statistically confirmed) answers to the
search ofexcellence question. Therefore, it can also be viewed as revealing the
Secrets of(Industrial) Excellence.
VallendarlFontainebleau, March2004 Prof Dr.ArndHuchzermeier
Prof LukN. VanWassenhove
Acknowledgements
The research on management competence, which is summarized in the present
treatise, was conducted inview ofthe fulfillment ofthe requirements forthe doc
toral degree at the WHU, Otto-Beisheim Graduate School ofManagement, at the
Production Management department, chaired by Professor Dr. Arnd Huchzer
meier. The study originates from the Industrial Excellence Award which I have
accompaniedfor manyyears. TheanalysisofEurope's bestmanaged factories has
been an invaluable experience forthis research.This booktakes the Industrial Ex
cellence Award one step further inthe search for the characteristics oftrue man
agement competence.
Iamgreatly indepted to mythesis advisors Professor Arnd Huchzermeier, Profes
sor Luk van Wassenhove from INSEAD and Professor Holger Ernst from the
WHU for their highly competent as well as personal guidance throughout the re
search project. Withouttheir continuous supervision, this research would not have
beensucha success. Ican nowproudly lookback oninteresting results onafasci
nating topic. Thisresearch hastrulynurtured myfascination fortheacademic field
ofoperations strategy.
Moreover, 1would also liketo especially thank myparents Dr. Hans-Joachim and
Loni Enders who have supported me in a wonderful and unique way throughout
all stages ofmy life. I would also like to thank my lovely friend Juliane Bergert
who has accompanied my way for a longtime as well as my colleagues from the
WHU Rolf Hellermann, Jtirgen Mihm, Stefan Spinier, Andreas Trautwein and
Claus van der Yelden, who have been ofgreat help whenever necessary. Last but
not least, I would like to thank my dearest friends Dnal Drovs, David Steinbeck
andAndre Bernemann whohas beenagreathelp incarrying outtheIndustrial Ex
cellence Award.
Fontainebleau, March2004 AndreasEnders
Contents
1Introduction 1
1.1Starting Point ofOur Research 1
1.2ObjectivesofOur Study 2
1.3ResearchAgenda 4
2 Literature Overview 7
2.1 Introduction and ChapterStructure 7
2.2 Business Strategy 8
2.2.1 Market-OrientedTheory 8
2.2.2 The Theory ofthe Resource-BasedView 12
2.2.3 ASynthesis ofMOT and RBV 25
2.2.4 Industry Dynamics 30
2.3 Towards Resource Management.. 31
2.3.1 ManagementinaSituationalContext 31
2.3.2 Defining Capabilities 32
2.3.3Towards aTheoryon DynamicCapabilities 35
2.3.4 Summary onRBV and Dynamic Capabilities 37
2.3.5 The CurrentStateofthe Art 38
2.3.6 Outlook 40
2.4 Onto Operations 42
2.4.1 AStrong CompetitiveWeapon 42
2.4.2CompetitivePriorities 46
2.4.3Summary 49
2.4.4 Outlook 52
2.5TowardsIndustrialExcellence 52
2.5.1CompetitivePrioritiesandPerformance 52
2.5.2 The INSEAD-WHUIndustrialExcellenceAward 54
3ManagementCompetenceModel.......................................•............................59
3.1 BaseModel 59
3.2Competenceand PerformanceDimensions 61
3.2.1 CompetenceDimensions 61
3.2.2 Performance Dimensions 70
3.2.3EnvironmentalDynamism 72
3.3Dependencies 73
3.4 ModeratedDependenceAnalysis 74
3.5Summary 75
X Contents
4Methodology 77
4.1QualitativeAnalysis 78
4.1.1 Conceptualization 78
4.1.2Pre-testingPhase 78
4.1.3DataGeneration 80
4.1.4Sample 81
4.2QuantitativeAnalysis 85
4.2.1 FundamentalMethodologicalAspects 85
4.2.2Construct Quality 86
4.2.3Criteriaofthe Firstand SecondGeneration 88
4.2.4 Multitrait-MultimethodAnalysis 101
4.2.5DependenceAnalysis 107
4.2.6ModeratedDependenceAnalysis 110
5EmpiricalResults ~ 115
5.1Factor Analysis 115
5.1.1CompetenceDimensions 116
5.1.2Performance Dimensions 144
5.1.3EnvironmentalFactors 152
5.2 Multitrait-Multimethod Analysis 155
5.2.1Factors 156
5.2.2ComparisonofEstimation Models 156
5.2.3ConfirmatoryFactorAnalysis(CFA) 157
5.2.4Conclusion 159
5.3 Dependence Analysis 160
5.3.1Conclusion 162
5.4 Moderated Model 162
5.4.1ClusterAnalysis 163
5.4.2Moderated RegressionAnalysis 165
5.4.3 Conclusion 170
6Conclusion 171
6.1Central Results : 171
6.2Scientific Review 174
6.3 ScientificRestrictions 175
6.4 Managerial Implications 176
References 177
Appendix- Questionnaires 193
List of Abbreviations
General Abbreviations
AMT AdvancedManufacturingTechnology
CA CompetitiveAdvantage
lEA IndustrialExcel1ence Award
IOE IndustrialOrganization Economics
JIT Just InTime
MBNQA MalcolmBaldrigeNationalQualityAward
MOT Market-Oriented Theory
MTMM Multrait-Multimethod(analysis)
OE OperationalEffectiveness
PPM Parts Per Million
PWP Plant WithinaPlant(concept)
QDCF QualityDependabilityCost Flexibility(priorities)
RBV Resource-BasedView
SBU Strategic BusinessUnit
SCP StructureConductPerformance(paradigm)
SWOT StrengthWeaknessOpportunityThreat(framework)
TDC Theoryon DynamicCapabilities
TPM TotalProductiveMaintenance
TQM Total QualityManagement
ZVEI Zentralverbandder Elektrotechnik-und Elektronikindustrie e.V.
Methodological Abbreviations
AGFI Adjusted GoodnessofFit Index
AVE Average Variance Explained
CFA ConfirmatoryFactorAnalysis
CFI ComparativeFit Index
CU CorrelatedUniqueness(model)
DP DirectProduct(model)
FR FactorReliability
GFI GoodnessofFit Index
GLS GeneralizedLeast Squares
IR IndicatorReliability