Globalisation has made outsourcing to low-cost countries fashionable but firms face several challenges that fade outsourcing fashion.To survive in this outsourcing wave adopting proper sustainable strategy is needed.Using four case studies and four competitive strategies (‘‘Generic Strategies’’,‘‘Sandcone’’,‘‘Core Competences’’and ‘‘Value-Chain Analysis’’),this paper proposes sustainable
competitive advantage framework to over come quality issues in outsourcing to China.
An Analytic Network Process Modeling to Assess Technological Innovation Capab...drboon
To handle swift changes in global environment, Technological Innovation Capabilities (TICs) is one crucial and unique strategy to increase firms’ competitiveness. This research proposed a systematic framework of TICs assessment by employing Analytic Network Process (ANP) method for solving the complicate decision-making and assessing the interrelationship among various evaluation factors, whereas the relative important weight data were provided by industrial experts based on pair-wise comparison. With the novel TIC assessment model, high-level managers could easily gain management information to rationalizes the decision-making process based on the most important criteria which affect the firms’ competitive advantages and the highest priority factors which were needed to be handled. The last section also displayed the application of TICs assessment on three Thai automotive parts firms, as case study.
Best Manufacturing practice adoptions by Indian IndustriesIJERA Editor
The purpose of this study is to develop a new model to provide guidance and support for Indian manufacturing companies who aim to reach at global level standards both in maintenance and manufacturing processes through continual improvement. Based on this study, a strategic model was developed through conceptual integration of popular process improvement strategies, which are based on ISO, TQM, TPM , Lean Production, six-sigma & TPM. An attempt was made to analyze and address some major limitations of existing models to pave the way of achieving manufacturing excellence
Contribution to Collaborative Innovation Studies: Cases of SMES Moroccan Auto...IJAEMSJORNAL
The aim of this work is to study how collaborative innovation succeeds between a large enterprise and SME relationship (Manufacturer-Equipment) in automotive supply chain using case studies. Data were collected from semi-structured interviews with managers in nine firms. The main intention was to understand how these companies engaged collaborative innovation and what the factors were to make it successful. The study adopted a qualitative approach in the study of these factors. The results show the importance of the internal capacities of SMEs (management style, innovation capacities, knowledge management ...) in the success and valorization of such a project. The study provides important lessons on how these relationships can impact the way businesses operate and how they innovate.
DEVELOPMENT OF A SUPPLIER SELECTION MODEL FOR MAINTENANCE DEPARTMENT OF A THA...IAEME Publication
The purpose of this research is to establish a supplier selection model for
maintenance operations in the petrochemical industry in Thailand. The research
identifies six factors that could be relevant to supplier selection success, including cost,
quality, time, reliability, flexibility, and human resources. A survey was conducted of
experts in maintenance supplier management in one of Thailand’s large petrochemical
firms (n = 113). Results were tested using confirmatory factor analysis (CFA) and
structural equation modeling (SEM). The findings showed that there were significant
effects of cost, quality, flexibility, and human resources on the supplier selection
success. However, factors including time and reliability were not significant. The
implication of this research is that cost, quality, flexibility and human resources should
be used to select appropriate suppliers in petrochemical maintenance operations.
Limitations and opportunities for further research are also discussed for the findings.
An Analytic Network Process Modeling to Assess Technological Innovation Capab...drboon
To handle swift changes in global environment, Technological Innovation Capabilities (TICs) is one crucial and unique strategy to increase firms’ competitiveness. This research proposed a systematic framework of TICs assessment by employing Analytic Network Process (ANP) method for solving the complicate decision-making and assessing the interrelationship among various evaluation factors, whereas the relative important weight data were provided by industrial experts based on pair-wise comparison. With the novel TIC assessment model, high-level managers could easily gain management information to rationalizes the decision-making process based on the most important criteria which affect the firms’ competitive advantages and the highest priority factors which were needed to be handled. The last section also displayed the application of TICs assessment on three Thai automotive parts firms, as case study.
Best Manufacturing practice adoptions by Indian IndustriesIJERA Editor
The purpose of this study is to develop a new model to provide guidance and support for Indian manufacturing companies who aim to reach at global level standards both in maintenance and manufacturing processes through continual improvement. Based on this study, a strategic model was developed through conceptual integration of popular process improvement strategies, which are based on ISO, TQM, TPM , Lean Production, six-sigma & TPM. An attempt was made to analyze and address some major limitations of existing models to pave the way of achieving manufacturing excellence
Contribution to Collaborative Innovation Studies: Cases of SMES Moroccan Auto...IJAEMSJORNAL
The aim of this work is to study how collaborative innovation succeeds between a large enterprise and SME relationship (Manufacturer-Equipment) in automotive supply chain using case studies. Data were collected from semi-structured interviews with managers in nine firms. The main intention was to understand how these companies engaged collaborative innovation and what the factors were to make it successful. The study adopted a qualitative approach in the study of these factors. The results show the importance of the internal capacities of SMEs (management style, innovation capacities, knowledge management ...) in the success and valorization of such a project. The study provides important lessons on how these relationships can impact the way businesses operate and how they innovate.
DEVELOPMENT OF A SUPPLIER SELECTION MODEL FOR MAINTENANCE DEPARTMENT OF A THA...IAEME Publication
The purpose of this research is to establish a supplier selection model for
maintenance operations in the petrochemical industry in Thailand. The research
identifies six factors that could be relevant to supplier selection success, including cost,
quality, time, reliability, flexibility, and human resources. A survey was conducted of
experts in maintenance supplier management in one of Thailand’s large petrochemical
firms (n = 113). Results were tested using confirmatory factor analysis (CFA) and
structural equation modeling (SEM). The findings showed that there were significant
effects of cost, quality, flexibility, and human resources on the supplier selection
success. However, factors including time and reliability were not significant. The
implication of this research is that cost, quality, flexibility and human resources should
be used to select appropriate suppliers in petrochemical maintenance operations.
Limitations and opportunities for further research are also discussed for the findings.
Internationalization and Sustainable Operations: A Broad Investigation of Chi...Scientific Review SR
We investigate if internationalization behaviors encourage sustainable operations of China’s manufacturing firms due to their substantial impact on climate change and special governance modes, and organize a heterogeneity test to clarify what kind of internationalization behaviors can robustly influence such operations. We find that firms with abundant assets and heavy-polluting feature are more committed to sustainable operations. Getting close to international sustainability standards, international auditing standards, and international business all improve sustainable operations. Heterogeneity test further shows that compared with international standards, the positive impact of international business on sustainable operation lacks a robustness, which responds to an argument that for one country, international business acts as a double-edged sword. Overall, this paper reveals internationalization as a key indicator significantly influencing economic, ecological, and social spheres in manufacturing sectors of emerging markets, and complying with well-accepted international standards can be significantly embodied in a more optimistic sustainable operations. However, how to deal with international business in a right manner is a research highlight worthy of ongoing discussion. We focus on different types of internationalization behaviors, and this indicator can theoretically inspire future study to dialectically evaluate the role of internationalization in addressing sustainability problems in emerging markets’ pillar industries.
This presentation is based on case study on Benchmarking. This case study explains why there was a need of benchmarking and how Xerox benchmarked to come back in competition.
Understanding the effects of outsourcing: unpacking the total factor producti...Ian McCarthy
Research on why firms should outsource and how they should do it has proliferated in the past two decades, but few consistent findings have emerged concerning the benefits of outsourcing. We argue that this is in part due to the lack of an adequate framework for measuring the effects of outsourcing. To address this, we present such a framework based upon the Cobb–Douglas productivity function. We explain how our framework can be used to unpack one component of the Cobb–Douglas productivity function, the ‘total factor productivity’, which represents the other numerous sub-variables that affect outsourcing productivity, beyond the capital and labour expenditures. We also demonstrate the framework using a simple illustrative example.
A Study on Impact of Designation & Employment Role Consumption of Multi-Funct...inventionjournals
MFP leaders have been busy aggressively working on various strategies in order to retain leadership positions and break through the clustering in the leadership zone. MFP leaders need to focus on certain important characteristics that appeals to customers. This article is a maiden attempt to study some certain usage characteristics of individual customers in view of their working properties like designation level and vertical they belongs to. The study was done on 80 employees who belongs to supervisory level in their respective organizations. The data so collected through market survey analyzed through chi-square analysis and the study found that the study characteristics are independent of workplace characteristics in the companies.
Assembly Disruptions – Empirical Evidence in the Manufacturing Industry of Ge...IRJESJOURNAL
ABSTRACT: In this paper, we present the results of an empirical study in the manufacturing industry of Germany, Austria and Switzerland with over 100 participants, mainly from the mechanical engineering, automotive and machine tool businesses. The questionnaire-based study yielded original findings in the area of assembly disruptions and the management thereof. Major results include that assembly disruptions are widespread in the industry and lead to extensive economic damages. The reasons, durations and locations of assembly disruptions as well as their character are explored and the need for a new concept of efficient, preventive assembly disruption management is derived.
This paper developed an analytical background to scientific development conducted on the use of
Lean Manufacturing in the industries. Regarding the methodological approach to this research is exploratory and
did a literature review with a sample survey using technological resources search as a tool to perform the search
in this case, the component data bases Journals Portal Coordination and Training of Personnel Higher Level. For
this study bibliometric analysis and the selection of journals were made and the results show that the topic is
Lean Manufacturing on the rise internationally and that is a methodology mentioned in leading journals. The
scientific literature on the topic is not predominantly done by a single magazine or a single industry segment.
The contribution is in identifying the gaps of the segments of the industries with the greatest opportunities for
the application of Lean Thinking so that future studies can deepen effectively is opportunity.
Evaluation of Potential Manufacturing Suppliers Using Analytical Hierarchy Pr...CSCJournals
This paper proposes an assessment method for the potential outsourcees (suppliers) in agreement with the benchmark evaluated for a set of surveyed UK based companies. The results of the survey are ordered using Analytical Hierarchy Process (AHP) and Cluster Analysis (CA). The partial and total evaluation score of each supplier is compared with the benchmark. The outsourcee that achieves the highest total score could be considered as the most suitable match. The result of integrating AHP and CA may be applied as an effective method for matching and evaluating the right outsourcee in the manufacturing sector.
Strategic Cost and Activating Competitive Advantageijtsrd
This study aimed to identify the Role of Strategic Costs (SCs) in Activating Competitive Advantage (Field Study in the Paints Companies - Khartoum State). The study tested two hypotheses which are: There is a significant relation between (SCs) and the Activating of the Competitive Advantage in the Sudanese Paints Companies in Khartoum State, there is a significant relation between (SCs) and the reduction of production costs in the Sudanese Paints Companies in Khartoum State. Researchers distributed (40) questionnaire forms among some of the workers in the field selected randomly (33) Forms were collected as 83%. Statistical package of social sciences programmer (SPSS) used for analyzing data. The study reached some findings from which: the strategic costs contribute in reducing costs during the products design stage, the companies has awareness in analyzing the competitive advantage situation to the competitors costs structure, the paints companies in Khartoum work to improve its operations and products continuously to decrease costs, Some of the study recommended to: there is necessity in applying the strategic cost methods together to activate the competitive advantage continuously , to do more studies in all the Sudanese industrial companies to the benefit of adopting the strategic cost in decreasing costs and to support the competitive advantage. Dr. Abubkr Ahmed Elhadi Abdelraheem | Dr. Badreldin Elhadi Ahmed Serajeldin | Aldouma Abdallah Abdalrahman Jedo"Strategic Cost and Activating Competitive Advantage" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-1 | Issue-4 , June 2017, URL: http://www.ijtsrd.com/papers/ijtsrd147.pdf http://www.ijtsrd.com/management/accounting-and-finance/147/strategic-cost-and-activating-competitive-advantage/dr-abubkr-ahmed-elhadi-abdelraheem
Inter-firm alliances have been regarded as an effective mechanism for acquiring specialized complementary assets and achieving synergies. Although previous literatures have provided important insights on inter-firm technology alliances, few scholars have paid attention to the impact of types of R&D alliances, business similarity and relative size on the value creation for focal firms. Taking the listed firms involved in technological alliances in China’s IT industry as the sample, the article empirically investigated the impact of technological alliance announcements, and characteristics inter-firm technological alliances on the abnormal returns for focal firms is empirically discussed. The results show that technological alliance announcements may increase the abnormal returns for focal firms, and technological alliance announcements by relatively smaller firms can significantly increase their abnormal returns. While the declaration of the technological alliances of firms in similar industries have a significant impact on abnormal returns, while the declaration of dissimilar firms has an insignificant impact on abnormal returns.
The Extent of New Product Development Partnership between Universities and th...Dr. Amarjeet Singh
The importance of new product development in building both technological and technical capacity of university and firm cannot be overemphasized. Collaborations between HE and industry in NPD is conceived as mutual interaction for skills acquisition and economic improvement. The study was designed to determine the extent of new product development partnership between HEIs and the manufacturing firms. A survey was conducted, and a sample of 400 was drawn from both HE and industry; the data were then analyzed using structural equation modeling (SEM) software of EQS version 6.2.The results revealed that there is weak interaction between HE and industry, also there is no formal partnership between the two on new product development. in order to strengthen the mutual relationship, a conceptual model had been developed after a careful examination and assessment of the key factors of NPD and after preliminary CFA analysis conducted to establish the determinants of the main construct. A nine-factor model was then developed for university and industry. The study therefore recommends that higher education and industry adopt this new model for effective partnership on NPD.
Internationalization and Sustainable Operations: A Broad Investigation of Chi...Scientific Review SR
We investigate if internationalization behaviors encourage sustainable operations of China’s manufacturing firms due to their substantial impact on climate change and special governance modes, and organize a heterogeneity test to clarify what kind of internationalization behaviors can robustly influence such operations. We find that firms with abundant assets and heavy-polluting feature are more committed to sustainable operations. Getting close to international sustainability standards, international auditing standards, and international business all improve sustainable operations. Heterogeneity test further shows that compared with international standards, the positive impact of international business on sustainable operation lacks a robustness, which responds to an argument that for one country, international business acts as a double-edged sword. Overall, this paper reveals internationalization as a key indicator significantly influencing economic, ecological, and social spheres in manufacturing sectors of emerging markets, and complying with well-accepted international standards can be significantly embodied in a more optimistic sustainable operations. However, how to deal with international business in a right manner is a research highlight worthy of ongoing discussion. We focus on different types of internationalization behaviors, and this indicator can theoretically inspire future study to dialectically evaluate the role of internationalization in addressing sustainability problems in emerging markets’ pillar industries.
This presentation is based on case study on Benchmarking. This case study explains why there was a need of benchmarking and how Xerox benchmarked to come back in competition.
Understanding the effects of outsourcing: unpacking the total factor producti...Ian McCarthy
Research on why firms should outsource and how they should do it has proliferated in the past two decades, but few consistent findings have emerged concerning the benefits of outsourcing. We argue that this is in part due to the lack of an adequate framework for measuring the effects of outsourcing. To address this, we present such a framework based upon the Cobb–Douglas productivity function. We explain how our framework can be used to unpack one component of the Cobb–Douglas productivity function, the ‘total factor productivity’, which represents the other numerous sub-variables that affect outsourcing productivity, beyond the capital and labour expenditures. We also demonstrate the framework using a simple illustrative example.
A Study on Impact of Designation & Employment Role Consumption of Multi-Funct...inventionjournals
MFP leaders have been busy aggressively working on various strategies in order to retain leadership positions and break through the clustering in the leadership zone. MFP leaders need to focus on certain important characteristics that appeals to customers. This article is a maiden attempt to study some certain usage characteristics of individual customers in view of their working properties like designation level and vertical they belongs to. The study was done on 80 employees who belongs to supervisory level in their respective organizations. The data so collected through market survey analyzed through chi-square analysis and the study found that the study characteristics are independent of workplace characteristics in the companies.
Assembly Disruptions – Empirical Evidence in the Manufacturing Industry of Ge...IRJESJOURNAL
ABSTRACT: In this paper, we present the results of an empirical study in the manufacturing industry of Germany, Austria and Switzerland with over 100 participants, mainly from the mechanical engineering, automotive and machine tool businesses. The questionnaire-based study yielded original findings in the area of assembly disruptions and the management thereof. Major results include that assembly disruptions are widespread in the industry and lead to extensive economic damages. The reasons, durations and locations of assembly disruptions as well as their character are explored and the need for a new concept of efficient, preventive assembly disruption management is derived.
This paper developed an analytical background to scientific development conducted on the use of
Lean Manufacturing in the industries. Regarding the methodological approach to this research is exploratory and
did a literature review with a sample survey using technological resources search as a tool to perform the search
in this case, the component data bases Journals Portal Coordination and Training of Personnel Higher Level. For
this study bibliometric analysis and the selection of journals were made and the results show that the topic is
Lean Manufacturing on the rise internationally and that is a methodology mentioned in leading journals. The
scientific literature on the topic is not predominantly done by a single magazine or a single industry segment.
The contribution is in identifying the gaps of the segments of the industries with the greatest opportunities for
the application of Lean Thinking so that future studies can deepen effectively is opportunity.
Evaluation of Potential Manufacturing Suppliers Using Analytical Hierarchy Pr...CSCJournals
This paper proposes an assessment method for the potential outsourcees (suppliers) in agreement with the benchmark evaluated for a set of surveyed UK based companies. The results of the survey are ordered using Analytical Hierarchy Process (AHP) and Cluster Analysis (CA). The partial and total evaluation score of each supplier is compared with the benchmark. The outsourcee that achieves the highest total score could be considered as the most suitable match. The result of integrating AHP and CA may be applied as an effective method for matching and evaluating the right outsourcee in the manufacturing sector.
Strategic Cost and Activating Competitive Advantageijtsrd
This study aimed to identify the Role of Strategic Costs (SCs) in Activating Competitive Advantage (Field Study in the Paints Companies - Khartoum State). The study tested two hypotheses which are: There is a significant relation between (SCs) and the Activating of the Competitive Advantage in the Sudanese Paints Companies in Khartoum State, there is a significant relation between (SCs) and the reduction of production costs in the Sudanese Paints Companies in Khartoum State. Researchers distributed (40) questionnaire forms among some of the workers in the field selected randomly (33) Forms were collected as 83%. Statistical package of social sciences programmer (SPSS) used for analyzing data. The study reached some findings from which: the strategic costs contribute in reducing costs during the products design stage, the companies has awareness in analyzing the competitive advantage situation to the competitors costs structure, the paints companies in Khartoum work to improve its operations and products continuously to decrease costs, Some of the study recommended to: there is necessity in applying the strategic cost methods together to activate the competitive advantage continuously , to do more studies in all the Sudanese industrial companies to the benefit of adopting the strategic cost in decreasing costs and to support the competitive advantage. Dr. Abubkr Ahmed Elhadi Abdelraheem | Dr. Badreldin Elhadi Ahmed Serajeldin | Aldouma Abdallah Abdalrahman Jedo"Strategic Cost and Activating Competitive Advantage" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-1 | Issue-4 , June 2017, URL: http://www.ijtsrd.com/papers/ijtsrd147.pdf http://www.ijtsrd.com/management/accounting-and-finance/147/strategic-cost-and-activating-competitive-advantage/dr-abubkr-ahmed-elhadi-abdelraheem
Inter-firm alliances have been regarded as an effective mechanism for acquiring specialized complementary assets and achieving synergies. Although previous literatures have provided important insights on inter-firm technology alliances, few scholars have paid attention to the impact of types of R&D alliances, business similarity and relative size on the value creation for focal firms. Taking the listed firms involved in technological alliances in China’s IT industry as the sample, the article empirically investigated the impact of technological alliance announcements, and characteristics inter-firm technological alliances on the abnormal returns for focal firms is empirically discussed. The results show that technological alliance announcements may increase the abnormal returns for focal firms, and technological alliance announcements by relatively smaller firms can significantly increase their abnormal returns. While the declaration of the technological alliances of firms in similar industries have a significant impact on abnormal returns, while the declaration of dissimilar firms has an insignificant impact on abnormal returns.
The Extent of New Product Development Partnership between Universities and th...Dr. Amarjeet Singh
The importance of new product development in building both technological and technical capacity of university and firm cannot be overemphasized. Collaborations between HE and industry in NPD is conceived as mutual interaction for skills acquisition and economic improvement. The study was designed to determine the extent of new product development partnership between HEIs and the manufacturing firms. A survey was conducted, and a sample of 400 was drawn from both HE and industry; the data were then analyzed using structural equation modeling (SEM) software of EQS version 6.2.The results revealed that there is weak interaction between HE and industry, also there is no formal partnership between the two on new product development. in order to strengthen the mutual relationship, a conceptual model had been developed after a careful examination and assessment of the key factors of NPD and after preliminary CFA analysis conducted to establish the determinants of the main construct. A nine-factor model was then developed for university and industry. The study therefore recommends that higher education and industry adopt this new model for effective partnership on NPD.
Organisational diversity, evolution and cladistic classificationsIan McCarthy
This article presents a case for the construction of a formal classification of manufacturing systems using cladistics, a technique from the biological school of classification. A seven-stage framework for roducing a manufacturing cladogram is presented, along with a pilot case study example. This article describes the role that classification plays in the pure and applied sciences, the social sciences and reviews the status of existing manufacturing classifications. If organisational diversity and organisational change processes are governed by evolutionary mechanisms, studies of organisations based on an evolutionary approach such as cladistics could have potential, because as March [March JG. The evolution of evolution. In: Baum JAC, Singh JV, editors. Evolutionary dynamics of organizations. Oxford University Press, 1994. p. 39±52], page 45, states ``there is natural speculation that organisations, like species can be engineered by understanding the evolutionary processes well enough to intervene and produce competitive organisational effects''. It is suggested that a cladistic study could provide organisations with a ``knowledge map'' of the ecosystem in which they exist and by using this phylogenetic and situational analysis, they could determine coherent and appropriate action for the specification of change.
Innovation in manufacturing as an evolutionary complex systemIan McCarthy
The focus of this paper is on innovation in terms of the new product development processes and to discuss its main features. This is followed by a presentation of the new ideas emerging from complex systems science. It is then demonstrated how complex systems provides an overall conceptual framework for thinking about innovation and for considering how this helps to provide understanding and advice for the organisation of new product development in different circumstances. Three case studies are quoted which illustrate the application of these new ideas.
When customers get clever: Managerial approaches to dealing with creative con...Ian McCarthy
Creative consumers (defined as customers who adapt, modify, or transform a proprietary offering) represent an intriguing paradox for business. On
one hand, they can signify a black hole for future revenue, with breach of copyright and intellectual property. On the other hand, they represent a gold mine of ideas and business opportunities. Central to business is the need to create and capture value, and creative consumers demand a shift in the mindsets and business models of how firms accomplish both. Based upon their attitude and action toward customer innovation, we develop a typology of firms’ stances toward creative consumers. We then consider the implications of the stances model for corporate strategy and
examine a three-step approach to dealing with creative consumers: awareness, analysis, and response.
Complex adaptive system mechanisms, adaptive management practices, and firm p...Ian McCarthy
As a fascinating concept, the mechanisms of complex adaptive system (CAS) attracted many researchers from a variety of disciplines. Nevertheless, how the mechanism-related variables, such as strategic resonance, accreting nodes, pattern forming, and catalytic behavior of organization, impact the firm product innovativeness is rarely addressed empirically in the new product development (NPD) literature. Also, there exist limited studies on the antecedents of the mechanisms of CAS in the NPD literature. In this respect, we identified and operationalized the adaptive management practices, which involve bonding, nonlinear, and attractor behaviors of management, as antecedents of mechanisms and firm product innovativeness. By studying 235 firms, we found that (1) strategic resonance and accreting nodes are positively related to firm product innovativeness, (2) bonding, nonlinear, and attractor behaviors of management positively influence the mechanism variables, and (3) market and technology turbulence impact the adaptive management practices. We also found that mechanisms of CAS partially mediate the relationship between adaptive management practices and firm product innovativeness.
New Product Development as a Complex Adaptive System of DecisionsIan McCarthy
Early research on new product development (NPD) has produced descriptive frameworks and models that view the process as a linear system with sequential and discrete stages. More recently, recursive and chaotic frameworks of NPD have been developed, both of which acknowledge that NPD progresses through a series of stages, but with overlaps, feedback loops, and resulting behaviors that resist reductionism
and linear analysis. This article extends the linear, recursive, and chaotic frameworks by viewing NPD as a complex adaptive system (CAS) governed by three levels of decision making — in-stage, review, and strategic—and the accompanying decision rules. The research develops and presents propositions that predict how the configuration and organization of NPD decision-making agents will influence
the potential for three mutually dependent CAS phenomena: nonlinearity, selforganization, and emergence. Together these phenomena underpin the potential for NPD process adaptability and congruence. To support and to verify the propositions, this study uses comparative case studies, which show that NPD process adaptability occurs and that it is dependent on the number and variety of agents, their corresponding connections and interactions, and the ordering or disordering effect of the decision levels and rules. Thus, the CAS framework developed within this article maintains a fit among descriptive stance, system behavior, and innovation type, as it considers individual NPD processes to be capable of switching or toggling between different behaviors — linear to chaotic — to produce corresponding innovation outputs that range from incremental to radical in accord with market expectations.
Technology Management - A Complex Adaptive Systems ApproachIan McCarthy
There are systems methods and evolutionary processes that can help organisations understand the innovative patterns and competitive mechanisms that influence the creation, management and exploitation of technology. This paper presents a specific model based on the evolutionary processes of variation, selection, retention and struggle, coupled with fitness landscape theory. This latter concept is a complex adaptive systems theory that has attained recognition as an approach for visually mapping the strategic options an evolving system could pursue. The relevance and utility of fitness landscape theory to the strategic management of technology is explored, and a definition and model of technological fitness provided. The complex adaptive systems perspective adopted by this paper, views organisations as evolving systems that formulate strategies by classifying, selecting, adopting and exploiting various combinations of technological capabilities. A model called the strategy configuration chain is presented to illustrate this strategic process.
Toward a Phylogenetic Reconstruction of Organizational LifeIan McCarthy
Classification is an important activity that facilitates theory development in many academic disciplines. Scholars in fields such as organizational science, management science and economics and have long recognized that classification offers an approach for ordering and understanding the diversity of organizational taxa (groups of one or more similar organizational entities). However, even the most prominent organizational classifications have limited utility, as they tend to be shaped by a specific research bias, inadequate units of analysis and a standard neoclassical economic view that does not naturally accommodate the disequilibrium dynamics of modern competition. The result is a relatively large number of individual and unconnected organizational classifications, which tend to ignore the processes of change responsible for organizational diversity. Collectively they fail to provide any sort of universal system for ordering, compiling and presenting knowledge on organizational diversity. This paper has two purposes. First, it reviews the general status of the major theoretical approaches to biological and organizational classification and compares the methods and resulting classifications derived from each approach. Definitions of key terms and a discussion on the three principal schools of biological classification (evolutionary systematics, phenetics and cladistics) are included in this review. Second, this paper aims to encourage critical thinking and debate about the use of the cladistic classification approach for inferring and representing the historical relationships underpinning organizational diversity. This involves examining the feasibility of applying the logic of common ancestry to populations of organizations. Consequently, this paper is exploratory and preparatory in style, with illustrations and assertions concerning the study and classification of organizational diversity.
Understanding outsourcing contexts through information asymmetry and capabili...Ian McCarthy
Outsourcing is a strategic activity that has long been central to operations management research and practice. Yet, there are still many outsourcing management challenges that remain. In this article, we explore two of the outsourcing challenges that motivated this special issue and are central to the 10 articles included. To do this, we develop a theoretical model that examines how variations in capability fit and information asymmetry combine to present firms with four different outsourcing contexts. We then explain how each of the articles included in this special issue relate to our theoretical model and explore several avenues for future research.
The ability of current statistical classifications to separateservices and ma...Ian McCarthy
This paper explores the performance of current statistical classification systems in classifying firms and, in particular, their ability to distinguish between firms that provide services and firms that provide manufacturing. We find that a large share of firms, almost 20%, are not classified as expected based on a comparison of their statements of activities with the assigned industry codes. This result is robust to analyses on different levels of aggregation and is validated in an additional survey. It is well known from earlier literature that industry classification systems are not perfect. This paper provides a quantification of the flaws in classifications of firms. Moreover, it is explained why the classifications of firms are imprecise. The increasing complexity of production, inertia in changes to statistical systems and the increasing integration of manufacturing products and services are some of the primary and interrelated explanations for this lack of precision. We emphasise, however, that such classification problems are not resolved using a ‘technical fix’. Any statistical classification method involves a number of tradeoffs.
Achieving Agility Using Cladistics: An Evolutionary AnalysisIan McCarthy
To achieve the status of an agile manufacturer, organisations need to clearly understand the concept of agility, relative to their industrial and business circumstances and to then identify and acquire the appropriate characteristics which will result in an agile manufacturing organisation. This paper is not simply another discussion on the definition of agility, or a philosophical debate on the drivers and characteristics of agility. This paper presents an evolutionary modelling technique (cladistics) which could enable organisations to systematically manage and understand the emergence of new manufacturing forms within their business environment. This fundamental, but important insight is valuable for achieving successful organisational design and change. Thus, regardless of the industrial sector, managers could use cladistics as an evolutionary analysis technique for determining ``where they have been and where they are now''. Moving from a non-agile manufacture to an agile manufacture is a process of organisational change and evolutionary development. This evolutionary method will enable organisations to understand the landscape of manufacturing possibilities that exist, to identify appropriate agile forms and to successfully navigate that landscape.
Why do some patents get licensed while others do not?Ian McCarthy
To understand why some patents get licensed and others do not, we estimate a portfolio of firm- and patent-level determinants for why a particular licensor’s patent was licensed over all technologically similar patents held by other licensors. Using data for licensed biopharmaceutical patents, we build a set of alternate patents that could have been licensed-in using topic modeling techniques. This provides a more sophisticated way of controlling for patent characteristics and analyzing the attractiveness of a licensor and the characteristics of the patent itself. We find that patents owned by licensors with technological prestige, experience at licensing, and combined technological depth and breadth have a greater chance at being chosen by licensees. This suggests that a licensor’s standing and organizational learning rather than the quality of its patent alone influence the success of outward licensing.
Achieving contextual ambidexterity in R&D organizations: a management control...Ian McCarthy
Research on how managers control R&D activities has tended to focus on the performance measurement systems used to exploit existing knowledge and capabilities. This focus has been at the expense of how broader forms of management control could be used to enable R&D contextual ambidexterity, the capacity to attain appropriate levels of exploitation and exploration behaviors in the same R&D organizational unit. In this paper, we develop a conceptual framework for understanding how different types of control system, guided by different R&D strategic goals, can be used to induce and balance both exploitation and exploration. We illustrate the elements of this framework and their relations using data from biotechnology firms, and then discuss how the framework provides a basis to empirically examine a number of important control relationships and phenomena.
Making a face: Graphical illustrations of managerial stances toward customer ...Ian McCarthy
Creative consumers – consumers who adapt, modify or transform a proprietary offering – represent an intriguing paradox for business. On the one hand they can be a black hole for future revenue, with breach of copyright and intellectual property, while on the other hand they represent a gold mine of ideas and business opportunities. This problem is central to business – business needs to both create and capture value; the problem is that creative consumers demand a shift in the mindsets and business models of how firms both create and capture value. We develop a typology of firms’ stances to creative consumers based upon their attitude and action towards customer innovation. We then consider the implications of the stances model for corporate strategy, and examine a three-step approach to dealing with creative consumers, namely, awareness, analysis and response.
Unpacking the Social Media Phenomenon: Towards a Research AgendaIan McCarthy
In this paper, we highlight some of the challenges and opportunities that social media presents to researchers, and offer relevant theoretical avenues to be explored. To do this, we present a model that unpacks social media by using a honeycomb of seven functional building blocks. We then examine each of the seven building blocks and, through appropriate social and socio-technical theories, raise questions that warrant further in-depth research to advance the conceptualization of social media in public affairs research. Finally, we combine the individual research questions for each building block back into the honeycomb model to illustrate how the theories in combination provide a powerful macro-lens for research on social media dynamics.
Game on: Engaging customers and employees through gamificationIan McCarthy
Managers are frequently tasked with increasing the engagement levels of key stakeholders, such as customers and employees. Gamification - defined as the application of game design principles to change behavior in non-gaming contexts - is a tool that, if crafted and implemented properly, can increase engagement. In this article we discuss how gamification can aid customer and employee engagement, and delineate between four different types of customers and employees who act as ‘players’ in gamified experiences. We include illustrative examples of gamification and conclude by presenting five lessons for managers who wish to utilize gamification.
Using DEMATEL Method to Analyze the Causal Relations on Technological Innovat...drboon
This study analyzes the technology innovation capabilities (TICs) evaluation factors of enterprises by applying the Decision Making Trial and Evaluation Laboratory (DEMATEL) method. Based on the literature reviews, six main perspectives and sixteen criteria were extracted and then validated by six experts. A questionnaire was constructed and answered by eleven experts. Then the DEMATEL method was applied to analyze the importance of criteria and the casual relations among the criteria were constructed. The result showed that the innovation management capability perspective was the most important perspective and influenced the remaining perspectives. This work also presents the significant criteria for each perspective.
The purpose of this study is to enhance the understanding of the relationship between Lean’s soft factors on Lean’s hard factors and operational excellence of Malaysia manufacturing companies. The study will focus on deployment within Lean’s hard factors included the Lean operation and Lean supply chain under Lean deployment.
Research framework for theimpact of total qualitymanagem.docxverad6
Research framework for the
impact of total quality
management on
competitive advantage
The mediating role of innovation performance
Van Cang Nguyen and Ngoc Tuan Chau
Faculty of Statistics – Informatics, University of Economics
The University of Danang, Vietnam
Abstract
Purpose – The purpose of this paper is to apply a more accurate competitive advantage construct to study
the impact of total quality management on firms’ competitive advantage in the context of the weakening of the
competitive advantage of firms that are renowned for the excellent quality management. It also aims to find a
better explanation for the source of competitive advantage through mediating constructs.
Design/methodology/approach – The authors use iterative methodology by reviewing, analyzing,
synthesizing and refining the current state of the literature and propose a research framework which allows
for overcoming the limitation encountered in previous empirical research.
Findings – The use of two second-order constructs including the incremental innovation performance and
radical innovation performance which enable the researchers to have a better explanation about the mediating
role of innovation performance.
Practical implications – This study is seeking to contribute to the practice of total quality management
area of research. Specifically, this study applies two second-order measurement scales of innovation in use,
actualize the use of the new measurement scale of competitive advantage and explain clearly the role of total
quality management on competitive advantage in the current context.
Originality/value – This is one of the few papers investigating the impact of total quality management on
competitive advantage, developing the conceptual model that examines the mediating role of innovation
performance.
Keywords Competitive advantage, Total quality management, Radical innovation,
Incremental innovation
Paper type Research paper
1. Introduction
The weakening of many Japanese firms that are well-known worldwide because of their
excellent quality management, along with the strong rise of Korean and Chinese firms that
tend to innovate rapidly, is currently shaking the confidence in the philosophy of total
quality management (TQM). The success of global companies such as BMW, LG Electronics,
Nintendo, Nokia, Samsung, Tata and Toyota has often been attributed to their innovative
product offerings and systematized approach to use R&D for product development (Colvin,
2009). Innovation is an important source of competitive advantage in the knowledge
economy era (Daghfous, 2004; Prajogo and Ahmed, 2006). Numerous companies which have
benefited from innovation increased their profits and market share, but the important point
is that, a firm cannot be successful with innovation if it cannot produce products that meet
acceptable quality standards (Nowak, 1997).
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldin.
Yasser Al Mimar - Etisalat and IT OutsourcingYasser Al Mimar
As industries become competitive, firms and organizations have been using their core competencies to gain competitive advantage. Outsourcing has become one of the strategies adopted by businesses to manage their Information systems. In the same time using blue ocean strategy to create uncontested market space and make the competition irrelevant is considered a magic framework for company's growth and success.
InstructionsUsing the attached Case Analysis Template Complete .docxcarliotwaycave
Instructions:
Using the attached Case Analysis Template Complete write and submit a graduate caliber paper analyzing the E&J Gallo caset. It is required that you reference course learning (Found below under required text). Referencing outside sources, as appropriate, is encouraged, though not required. Use the weblink for a reference also. All the needed info can be found there.
https://casetext.com/case/e-j-gallo-winery-v-pasatiempos-gallo
Required Text:
Peter, J. Paul and Donnelly, James H. Marketing Management: Knowledge and Skills, 11th ed., New York, NY: McGraw-Hill, 2013. ISBN-13: 978-0077861056; ISBN-10: 0077861051.
STRATEGIC PLANNING, ORAL PRESENTATION, AND CAGE ANALYSIS
Assignment Overview
Jack Devereux is a manager for Company XYZ. He has been with the company for about seven
years and was recruited from Company XYZ’s main competitor. Jack is a forward-thinking
individual and wants to figure out ways to help retain “star” employees. He is noticing that
many of his better employees have left the company because of better job offers. He decides
that it is time to have a serious conversation with his employees.
After holding a town hall meeting with his employees, he learns that employees feel that they
are being micro-managed and that they are being overworked. One employee mentions that
she does not agree with the “zero tolerance for cyberloafing” policy and that several of her
colleagues left this company because of this unnecessary policy. Cyberloafing is a term used to
describe the actions of employees who use their Internet access at work for personal use while
pretending to do legitimate work. Jack didn’t think his “zero tolerance for cyberloafing” policy
was such a bad idea when it was first implemented a year ago. After the meeting, Jack shares
the newly revealed information with the CEO who asks him to consider revisiting the policy.
Jack is hesitant about revising the policy for a number of reasons.
Jack decides to call his old college Business Professor and discuss this issue affecting retention
levels. His old college professor is disappointed with the zero tolerance for cyberloafing policy.
He explains, “Employees deserve some autonomy at work.” Jack thanks him for his time and
decides to consider all feasible options.
Some specific articles on this topic to get you started:
Kim, K., Del Carmen Triana, M., Chung, K., & Oh, N. (2016). When Do Employees Cyberloaf? An
Interactionist Perspective Examining Personality, Justice, and Empowerment. Human Resource
Management, 55(6), 1041-1058. doi:10.1002/hrm.21699
Huma, Z., Hussain, S., Thurasamy, R., & Malik, M. I. (2017). Determinants of cyberloafing: A
comparative study of a public and private sector organization. Internet Research, 27(1), 97-117.
Retrieved from https://search-proquest-
com.ezproxy.trident.edu/docview/1857362107?accountid=28844
Lim, V. K. G. (2002). The IT way of loafing on the job: Cyberloafing, neutralizing and
organiza ...
Currently, firm’s dynamics urges management strategies to meet globalized market requirements. This study
analyzes the impact of Logistics Flexibility on Competitiveness of Mexican manufacturing SMEs. By using the
structural equations modeling and path diagram techniques, it shows the effects of the relationship hypothesized.
Managerial significance of results strengthens decision taking and public policy making, providing essential
information to managers, owners and human capital of firms' internal capacities and allocation of their strategical
resources
A roadmap for a leanness company to emerge as a true lean organizationLeandro Silvério
The problem this work aims to solve is the improvement of the leanness level of a company jeopardized by the lack of lean engagement. The objectives of the research are to present a method based on a lean self-assessment approach, consisted of a qualitative self-assessment method based on lean elements that drives an index definition associated with a roadmap. The method consists in providing a roadmap for the assessed enterprise composed by the company’s lean index, recommendations and countermeasures deriving from Delphi and Kendall Coefficient of Concordance (W) application among lean experts, leading the assessed enterprise to achieve results in terms of lean engagement, autonomy, and decision support criteria for future resource allocation. The results demonstrated that method can highlight gaps where additional improvements and investments would be necessary in the assessed enterprise. Finally, the work concludes that the lean performance identification associated to a lean roadmap in a company can be a highly effective tool to improve lean adoption in a leanness organization.
In this article, we examined strategic issues in technology and innovation as they impact environmental scanning, strategy formulation, and strategy implementation. It also examines issues in creating new businesses by properly managing new technology and innovative concepts. It hopes to illuminate issues for Nigerian businesses as to be competitive in today‘s modern world.
Effects of the External (Macro) And Internal (Micro) Source (Factors) of Inno...inventionjournals
In an attempt to use the resource-based theoretical approach, this article tried to empirically investigate the influence and impact of theinternal (micro) and external (macro) environmental factors of innovation performance using a sample of small and medium sized firms in the telecommunication cluster in Ghana with the main focus on examining variables such as customer inputs, the intensive role of R&D, cooperative networks, the uncertain environment and the complex environment of the firm. A sample of 31 SMEs in the telecommunication cluster was selected with 109 questionnaires administered. The results indicate that the macro environmental sources as cooperative network and customer inputs actually impact positively on the innovation performance of SMEs in the communication cluster in Ghana. However, firm size, network size and complex environment were shown to be negatively related to firm innovation performance.
Similar to Quality issues in outsourcing to China: Is it still a sustainable competitive advantage? (20)
The open academic: Why and how business academics should use social media to ...Ian McCarthy
Abstract: The mission of many business schools and their researchers is to produce research that that impacts how business leaders, entrepreneurs, managers, and innovators, think and act. However, this mission remains an elusive ideal for many business school academics because they struggle to design and produce research capable of overcoming the "research-practice gap." To help those scholars address this gap, we explain why and how they should use social media to be more 'open' to connecting with, learning from, and working with academics and other stakeholders outside of their field. We describe how social media can be used as a boundary-spanning technology to help bridge the research-practice gap. To do this, we present a process model of five research activities: networking, framing, investigating, dissemination, and assessment. Using recently published research as an illustrative example, we describe how social media was used to make each activity more open. We conclude with a framework of different social media-enabled open academic approaches (connector, observer, promoter, and influencer) and some dos and don'ts for engaging in each approach. This paper aims to help business academics rethink and change their practices so that our profession is more widely regarded for how its research positively impacts practice and societal well-being more generally.
Big Data for Creating and Capturing Value in the Digitalized Environment: Unp...Ian McCarthy
Despite significant academic and managerial interest in big data, there is a dearth of research on how big data impacts
the long-term firm performance. Reasons for this gap include a lack of objective indices to measure big data
availability and its impact, and the tendency of studies to ignore the costs associated with collecting and analyzing
big data, assuming that big data automatically delivers benefits to firms. Focusing on how firms create and capture
value from big data about customers, we use the resource-based view and three dimensions of big data (i.e., volume,
variety, and veracity) to understand when the benefits outweigh the costs. Relying on the number of downloads of
mobile device applications, we find that volume of big data has a negative effect on firm performance. This result
suggests that the “bigness” of big data alone does not ensure value creation for a firm, and could even constitute a
“dark side” of big data. Because big data variety—measured as the number of types of information taken per each
application—moderates the negative effects of big data volume, simultaneous high values of volume and variety
allow firms to create value that positively affects their performance. In addition, high levels of veracity (i.e., a high
percentage of employees devoted to big data analysis), are linked to firms benefiting from big data via value capture.
These findings shed light on the circumstances in which big data can be beneficial for firms, contributing to a better
theoretical understanding of the opportunities and challenges and providing useful indications to managers.
Standardization in a Digital and Global World: State-of-the-Art and Future Pe...Ian McCarthy
We discuss how the standards emerge from an interaction between three main sources, the standards standard-setting organizations (SSOs), the competitive market forces, and the government. We present a framework (see Table I) that highlights how these sources differ and work together to shape the standardization in a digital and global context. Also, using this framework, we introduce the contribution of each article of this issue and their contribution to some of the major issues that the standardization is facing today in a digital and global world. We conclude with the suggestions of avenues for future research on this topic.
Open branding: Managing the unauthorized use of brand-related intellectual pr...Ian McCarthy
Consumers often innovate with brand-related intellectual property (IP) without permission. Although firms often respond by exercising their legal right to stop such activity, there are a variety of situations in which consumers’ unauthorized use of brand-related IP can be desirable for a brand or in which enforcing IP rights can adversely affect a brand. This article illustrates situations in which managers may benefit from choosing to forgo exercising their IP rights. To assist managers, this article contributes a framework for understanding the managerial approaches to situations in which consumers use IP without permission.
Does getting along matter? Tourist-tourist rapport in guided group activitiesIan McCarthy
Guided group activities, where tourists consume with other tourists, are common and important. Although the
tourism and services literature suggests customer-employee rapport impacts customer satisfaction, the composition
and impact of tourist-tourist rapport in guided group activities have received minimal attention. We use a
three-study mixed method approach to conceptualize and examine tourist-tourist rapport in guided group activities.
Study 1 identifies two recognized dyadic dimensions of tourist-tourist rapport (enjoyable interaction and
personal connection) and two new group-based dimensions (group attentiveness and service congruity). Study 2
(video experiment) and Study 3 (field experiment) find that enjoyable interaction and personal connection
mediate the relationship between group attentiveness and service congruity with satisfaction. Thus, touristtourist
rapport in a group context is more multidimensional and complex than previously conceptualized for
customer-employee rapport and non-group contexts. Further, we find tourist-tourist rapport is a critical service
factor such that high levels satisfy, while low levels dissatisfy.
Social media? It's serious! Understanding the dark side of social mediaIan McCarthy
Research and practice have mostly focused on the “bright side” of social media, aiming to understand and help in leveraging the manifold opportunities afforded by this technology. However, it is increasingly observable that social media present enormous risks for individuals, communities, firms, and even for society as a whole. Examples for this “dark side” of social media include cyberbullying, addictive use, trolling, online witch hunts, fake news, and privacy abuse. In this article, we aim to illustrate the multidimensionality of the dark side of social media and describe the related various undesirable outcomes. To do this, we adapt the established social media honeycomb framework to explain the dark side implications of each of the seven functional building blocks: conversations, sharing, presence, relationships, reputation, groups, and identity. On the basis of these reflections, we present a number of avenues for future research, so as to facilitate a better understanding and use of social media.
Leveraging social capital in university-industry knowledge transfer strategie...Ian McCarthy
University-industry partnerships emphasise the transformation of knowledge into products and processes which can be commercially exploited. This paper presents a framework for understanding how social capital in university-industry partnerships affect knowledge transfer strategies, which impacts on collaborative innovation developments. University-industry partnerships in three different countries, all from regions at varying stages of development, are compared using the proposed framework. These include a developed region (Canada), a transition region (Malta), and a developing region (South Africa). Structural, relational and cognitive social capital dimensions are mapped against the knowledge transfer strategy that the university-industry partnership employed: leveraging existing knowledge or appropriating new knowledge. Exploring the comparative presence of social capital in knowledge transfer strategies assists in better understanding how university-industry partnerships can position themselves to facilitate innovation. The paper proposes a link between social capital and knowledge transfer strategy by illustrating how it impacts the competitive positioning of the university-industry partners involved.
Do your employees think your slogan is “fake news?” A framework for understan...Ian McCarthy
Purpose – This article explores how employees can perceive and be impacted by the fakeness of their company slogans.
Design/methodology/approach – This conceptual study draws on the established literature on company slogans, employee audiences, and fake news to create a framework through which to understand fake company slogans.
Findings – Employees attend to two important dimensions of slogans: whether they accurately reflect a company’s (1) values and (2) value proposition. These dimensions combine to form a typology of four ways in which employees can perceive their company’s slogans: namely, authentic, narcissistic, foreign, or corrupt.
Research limitations/implications – This paper outlines how the typology provides a theoretical basis for more refined empirical research on how company slogans influence a key stakeholder: their employees. Future research could test the arguments about how certain characteristics of slogans are more or less likely to cause employees to conclude that slogans are fake news. Those conclusions will, in turn, have implications for the
morale and engagement of employees. The ideas herein can also enable a more comprehensive assessment of the impact of slogans.
Practical implications – Employees can view three types of slogans as fake news (narcissistic, foreign, and corrupt slogans). This paper identifies the implications of each type and explains how companies can go about developing authentic slogans.
Originality/value – This paper explores the impact of slogan fakeness on employees: an important audience that has been neglected by studies to
date. Thus, the insights and implications specific to this internal stakeholder are novel.
Making sense of text: artificial intelligence-enabled content analysisIan McCarthy
Purpose – The purpose of this paper is to introduce, apply and compare how artificial intelligence (AI), and specifically the IBM Watson system, can be used for content analysis in marketing research relative to manual and computer-aided (non-AI) approaches to content analysis.
Design/methodology/approach – To illustrate the use of AI enabled content analysis, this paper examines the text of leadership speeches, content related to organizational brand. The process and results of using AI are compared to manual and computer-aided approaches by using three performance factors for content analysis: reliability, validity and efficiency.
Findings – Relative to manual and computer-aided approaches, AI-enabled content analysis provides clear advantages with high reliability, high validity and moderate efficiency.
Research limitations/implications – This paper offers three contributions. First, it highlights the continued importance of the content analysis research method, particularly with the explosive growth of natural language-based user-generated content. Second, it provides a road map of how to use AI-enabled content analysis. Third, it applies and compares AI-enabled content analysis to manual and computer-aided, using leadership speeches.
Practical implications – For each of the three approaches, nine steps are outlined and described to allow for replicability of this study. The advantages and disadvantages of using AI for content analysis are discussed. Together these are intended to motivate and guide researchers to apply and develop AI-enabled content analysis for research in marketing and other disciplines.
Originality/value – To the best of the authors’ knowledge, this paper is among the first to introduce, apply and compare how AI can be used for content analysis.
Confronting indifference toward truth: Dealing with workplace bullshitIan McCarthy
Abstract Many organizations are drowning in a flood of corporate bullshit, and this is particularly true of organizations in trouble, whose managers tend to make up stuff on the fly and with little regard for future consequences. Bullshitting and lying are not synonymous. While the liar knows the truth and wittingly bends it to suit their purpose, the bullshitter simply does not care about the truth. Managers can actually do something about organizational bullshit, and this Executive Digest provides a sequential framework that enables them to do so. They can comprehend it, they can recognize it for what it is, they can act against it, and they can take steps to prevent it from happening in the future. While it is unlikely that any organization will ever be able to rid itself of bullshit entirely, this article argues that by taking these steps, astute managers can work toward stemming its flood.
The Promise of Digitalization: Unpacking the Effects of Big Data Volume, Vari...Ian McCarthy
Despite significant academic and managerial interest in big data, there is a dearth of research on how big data impacts long-term firm performance. Reasons for this gap include a lack of objective indices to measure big data availability and its impact, and the tendency of studies to ignore the costs associated with collecting and analyzing big data, assuming that big data automatically delivers benefits to firms. Focusing on how firms create and capture value from big data about customers, we use the resource-based view (RBV) and three dimensions of big data (i.e., volume, variety and veracity) to understand when the benefits outweigh the costs. Relying on the number of downloads of mobile device applications, we find that volume of big data has a negative effect on firm performance. This result suggests that the ‘bigness’ of big data alone does not ensure value creation for a firm, and could even constitute a ‘dark side’ of big data. Because big data variety – measured as the number of types of information taken per each application – moderates the negative effects of big data volume, simultaneous high values of volume and variety allow firms to create value that positively affects their performance. In addition, high levels of veracity (i.e., a high percentage of employees devoted to big data analysis), are linked to firms benefiting from big data via value capture. These findings shed light on the circumstances in which big data can be beneficial for firms, contributing to a better theoretical understanding of the opportunities and challenges and providing useful indications to managers.
Masterclass: Confronting indifference to truthIan McCarthy
Many organizations are drowning in a flood of corporate bullshit, and this is particularly true of organizations in trouble, whose managers tend to make up stuff on the fly and with little regard for future consequences. Bullshitting and lying are not synonymous. While the liar knows the truth and wittingly bends it to suit their purpose, the bullshitter simply does not care about the truth. Managers can actually do something about organizational bullshit, and this Executive Digest provides a sequential framework that enables them to do so. They can comprehend it, they can recognize it for what it is, they can act against it, and they can take steps to prevent it from happening in the future. While it is unlikely that any organization will ever be able to rid itself of bullshit entirely, this article argues that by taking these steps, astute managers can work toward stemming its flood.
Confronting indifference toward truth: Dealing with workplace bullshitIan McCarthy
Many organizations are drowning in a flood of corporate bullshit, and this is particularly true of organizations in trouble, whose managers tend to make up stuff on the fly and with little regard for future consequences. Bullshitting and lying are not synonymous. While the liar knows the truth and wittingly bends it to suit their purpose, the bullshitter simply does not care about the truth. Managers can actually do something about organizational bullshit, and this Executive Digest provides a sequential framework that enables them to do so. They can comprehend it, they can recognize it for what it is, they can act against it, and they can take steps to prevent it from happening in the future. While it is unlikely that any organization will ever be able to rid itself of bullshit entirely, this article argues that by taking these steps, astute managers can work toward stemming its flood.
Although manipulations of visual and auditory media are as old as the media themselves, the recent entrance of deepfakes has marked a turning point in the creation of fake content. Powered by latest technological advances in AI and machine learning, they offer automated procedures to create fake content that is harder and harder to detect to human observers. The possibilities to deceive are endless, including manipulated pictures, videos and audio, that will have large societal impact. Because of this, organizations need to understand the inner workings of the underlying techniques, as well as their strengths and limitations. This article provides a working definition of deepfakes together with an overview of the underlying technology. We classify different deepfake types: photo (face- and body-swapping), audio (voice-swapping, text to speech), video (face-swapping, face-morphing, full body puppetry) and audio & video (lip-synching), and identify risks and opportunities to help organizations think about the future of deepfakes. Finally, we propose the R.E.A.L. framework to manage deepfake risks: Record original content to assure deniability, Expose deepfakes early, Advocate for legal protection and Leverage trust to counter credulity. Following these principles, we hope that our society can be more prepared to counter the deepfake tricks as we appreciate its treats.
Social media? It’s serious! Understanding the dark side of social mediaIan McCarthy
Research and practice have mostly focused on the “bright side” of social media, aiming to understand and help in leveraging the manifold opportunities afforded by this technology. However, it is increasingly observable that social media present enormous risks for individuals, communities, firms, and even the whole of society. Examples for this “dark side” of social media include cyberbullying, addictive use, trolling, online witch hunts, fake news, and privacy abuse. In this article, we aim to illustrate the multidimensionality of the dark side of social media and describe the related various undesirable outcomes. To do this, we adapt the established social media honeycomb framework to explain the dark side implications of each of the seven functional building blocks: conversations, sharing, presence, relationships, reputation, groups, and identity. On the basis of these reflections, we present a number of avenues for future research, so as to facilitate a better understanding and use of social media.
The propensity and speed of technology licensing: at LUISS Guido Carli Univer...Ian McCarthy
Licensing speed: There has been much research interest in the speed of innovation, although few consistent findings have emerged. In this study, we unpack the innovation process and focus on the commercialization stage to examine two questions: Which licensor and patent characteristics determine the speed of licensing? How does the speed of licensing impact the royalties and lumpsum payments to licensors? We addressed these questions by proposing that licensing speed is influenced by variables for licensor prominence (size and experience), licensor knowledge structuration (technological depth, technological breadth and experience), and patent appeal (forward citations, scope and complexity). We predict and find that these variables work to increase the size, complexity and duration of the licensing-out task, while also allowing licensors to take their time to review, negotiate and select agreements with higher royalty rates. These findings are counter to arguments for a fast-paced innovation strategy, as it suggests that for the commercialization stage of the innovation process the relationship between licensing speed and licensor royalty
rates rewards a ‘less haste, greater payoff approach.
Seven steps for framing and testing a research paperIan McCarthy
I use the steps in this presentation to:
(i) test research ideas for research papers,
(ii) shape research papers, and
(iii) help draft the Introduction section of a research paper.
For each step I draft one or two concise paragraphs.
I then present and share these with co-authors, collaborators and colleagues to test the ideas and get feedback on how interesting and valid they are.
I consider and work through these steps several times during the life of a research paper framed.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
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Quality issues in outsourcing to China: Is it still a sustainable competitive advantage?
1. Quality issues in outsourcing to China: Is it still a
sustainable competitive advantage?
Ruta Armalyte a
, Nachiappan Subramanian a,
*,
Angappa Gunasekaran b
a
Nottingham University Business School China, The University of Nottingham Ningbo China, 199 Taikang
East Road, Ningbo 315 100, China
b
Department of Decision and Information Sciences, Charlton College of Business, University of Massachusetts
– Dartmouth, 285 Old Westport Road, North Dartmouth, MA 02747-2300, USA
Introduction
In the recent years, outsourcing to China has become an important business strategy. Firms achieve
competitive advantage by producing or sourcing products and services more effectively from a low
cost country. Other than cost reductions, firms gain competitive advantage through premium quality,
improved flexibility and dependability according to changing business environment and market
demand (Kakabadse and Kakabadse, 2000; Jennings, 2002; Lynch, 2004; Fallah and Lechler, 2008).
Therefore, outsourcing is one of the ways created by the globalisation as a fashionable strategy. China
presents enormous business opportunities for the Western countries, not only as a low-cost labour
country for cheap production, but also as a growing giant for potential market and high profits. Today
J. Eng. Technol. Manage. xxx (2013) xxx–xxx
A R T I C L E I N F O
Keywords:
Outsourcing
Sustainable competitive advantage
Quality issues
A B S T R A C T
Globalisation has made outsourcing to low-cost countries fashion-
able but firms face several challenges that fade outsourcing fashion.
To survive in this outsourcing wave adopting proper sustainable
strategy is needed. Using four case studies and four competitive
strategies (‘‘Generic Strategies’’, ‘‘Sandcone’’, ‘‘Core Competences’’
and ‘‘Value-Chain Analysis’’), this paper proposes sustainable
competitive advantage framework to overcome quality issues in
outsourcing to China.
ß 2013 Elsevier B.V.Elsevier B.V. All rights reserved.
* Corresponding author. Tel.: +86 574 8818 0197.
E-mail addresses: zx09969@nottingham.edu.cn (R. Armalyte), nachiappan.subramanian@nottingham.edu.cn,
sp_nachi@yahoo.com (N. Subramanian), agunasekaran@umassd.edu (A. Gunasekaran).
G Models
ENGTEC-1382; No. of Pages 19
Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
Contents lists available at ScienceDirect
Journal of Engineering and
Technology Management
journal homepage: www.elsevier.com/locate/jengtecman
0923-4748/$ – see front matter ß 2013 Elsevier B.V.Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.jengtecman.2013.07.003
2. China is the fastest growing market in the world and until now it is regarded as ‘‘the world’s factory
floor’’ (The Economist, 2005).
However, outsourcing can also lead to loss of competitive advantage. Ting (2004) reported that
‘‘Outsourcing to China helped many firms to save money, but it would be frustrating if not done
right’’. China is classified as a risky and demands a tight control over poor intellectual property
protection, fading quality of production and high level of corruption by many firms (The
Economist, 2005). Due to increased global competition and the need for cost reductions, many
international companies outsourced or established their production to China, however not all of
them managed to achieve success, resulting in many issues, such as quality fade and loss of
competitive advantage.
Plethora of studies have been carried out to understand the motivation and benefits associated
with outsourcing to China in different industries starting from manufacturing to information
technology and financial industries (Bon and Hughes, 2009; Chadee and Raman, 2009; Contractor
et al., 2010; Andersen, 2008). In addition to this, few studies reported major hiccups to the firms that
outsourced to China (Kakabadse and Kakabadse, 2000; Kliem, 1999). Furthermore, few researchers
specifically stated the management control and quality issues as dominant issues in manufacturing
industry (Freytag et al., 2012; Fleisher et al., 2010). Even though there were many media reports about
quality issues in manufacturing industries in the recent years, however, there was no adequate study
which discusses on how to overcome quality issues within the specific manufacturing sector of the
Chinese operations.
Furthermore, enormous efforts have been made by researchers to understand why companies
should backshore its production from China (Kinkel and Maloca, 2009). However not much was done
to identify how to survive in China without quality and financial losses and to maintain its
competitive and sustainable strategy. Hence, this paper aims to answer the following research
questions.
How a firm within a specific industry transforms Chinese operations (fashionable outsourcing) into
competitive and sustainable strategy?
How to overcome the quality issues with the Chinese operations?
The major contributions of this study are twofold: theoretically this is a contextual perspective
study to suggest guidelines to succeed and to develop a sustainable competitive advantage
framework. Practically this study serves as a guide to those companies on how to survive in the
Chinese market. Furthermore, this research also can help new entrants on how to deal with quality
issues if they prefer to source or operate in China.
The reminder of the paper is structured as follows. The background for the research is presented
next, followed by competitive advantage theoretical perspective and research methodology. Results,
discussion and managerial implications are then presented respectively.
Background for the research
A large number of studies have analysed the issues associated with Chinese outsourcing through
theoretical and empirical perspective (Deloitte, 2005; Freytag et al., 2012; Chou and Chou, 2011;
Harland et al., 2005). Outsourcing or operations in low cost country would lead to increased
competition and loss of innovation due to gained knowledge by its contractors (Hoecht and Trott,
2006). Power et al. (2007) claimed that many organisations and its subcontractors failed to provide full
commitment, loyalty and discipline, in order to gain from outsourcing. It leads to the
misunderstanding of the employees, processes and methods of outsourcing. Jennings (2002) in his
findings states that outsourcing can lead to leakage of critical knowledge, which would then increase
the competition. Furthermore, Domberger (1998) concluded that the loss of cross-functional skills or
development of wrong skills and the loss of the control of the suppliers are the main concerns of
outsourcing.
Beaumont and Sohal (2004) state that outsourcing can lead to decreased flexibility by the company,
due to its contractual agreement, which in case of the business environment or demand change cannot
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Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
3. be adjusted as quickly as it could have been by the managerial fiat. According to Dankbaar (2007),
outsourcing can damage industrialisation and innovation capability of the firm. Furthermore,
Plambeck and Taylor (2005) claims that although contract manufacturing can lead to lower costs, it
can result in quality fade and weaken the incentives for innovation, by shifting the focus from
innovation to costs.
Kakabadse and Kakabadse (2000) in their study signalled that the companies must understand
their own business processes and problems associated with it when souring or operating in different
locations. In addition to this, the supplier also needs a greater understanding of its client’s service.
Otherwise outsourcing to third party can lead to increased costs and unfilled service quality
expectations. This was further discussed and proved by Kliem (1999) that a firm’s dependency of the
outside supplier can lead to hidden costs such as managing failing relationships and other critical
success factors of the company. Another study related to information systems outsourcing stated that
outsourcing can have hidden costs associated with hiring, training and transferring staff, searching
and contracting the vendor or cost of switching vendors (Gonzalez et al., 2005). In addition to this,
Barthe´lemy (2003) states that outsourcing can encounter additional costs when managing the transfer
of products, knowledge and equipment to the outsourcing partner.
In manufacturing industry, McIvor and Humphreys (2000) through cost and benefit analysis found
that increased outsourcing of components which were previously made in-house can result in
increase of unexpected costs due to company’s operations becoming more dependent on much wider
range of suppliers. This is due to the fact that many companies have inadequate costing systems, such
as direct labour hours being used for allocating overheads, even though the production process is
highly automated. This incorrect costing system leads to overpricing profitable products and
expanding unprofitable production lines (Lutz and Ritter, 2009).
Other problems, such as difficulties in coordination of global supply chains and the loss of
intellectual property rights due to legal and political issues in China, need to be taken into
consideration when choosing outsourcing location (Meixell and Gargeya, 2005; Lutz and Ritter, 2009).
Finally, issues associated with communication challenges and misunderstandings, due to cultural
differences, were also discussed in the literature (Campbell, 1995). Lutz and Ritter (2009) through
empirical evidence showed that lack of communication and cultural understanding between
international companies and the Chinese suppliers leads to incorrect orders, loss of flexibility,
increased costs and loss of competitive advantage (Domberger, 1998; McCarthy and Anagnostou,
2004).
Our study views the causes of quality issues using Gordon et al. (2009) six main categories
classification. Six major causes are human default, machinery failure, poor quality of raw materials,
management and control issues, legal issues and communication problems.
Human resource failure
Most of the quality issues are associated with human resource failure. This is primarily due to lack
of motivation and interest, shortage of skilled people, lack of skills and training needed to process the
tasks (Campbell, 1995). Most common human resource failure occurs due to human ‘cut-corners’
philosophy. Chinese suppliers in general to increase their profits in short period cut quality and do not
see beyond the next order. Furthermore, evidence of ‘product fade’ is a common issue of human error,
where the owner of the factory ensures that the first few orders meet the required standards and in the
following orders the quality of the goods decreases as material inputs are replaced with cheaper ones
in order to cut costs (The Economist, 2007).
Machinery failure
Machinery failure is another important reason why quality of the goods does not reach their
standards. Problems associated with machinery are lack of maintenance, lack of new technology
needed to produce the goods or improper setup. Furthermore, most industrial centres lack capital,
which is needed for updated technology in order to meet the product requirements (Gordon et al.,
2009).
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Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
4. Material inadequacy
30% of defaults occur due to wrong or default raw materials being bought from suppliers (UNIDO,
2006). Furthermore, manufacturers often subcontract to other companies for supply of raw materials;
hence the quality of it may vary depending on the supplier (Forward Forever, 2011).
Management and control issues
It is important for the companies to understand that only reliance of Chinese manufacturers are
not enough to ensure good product quality. Importing companies should take careful steps when
contracting a Chinese supplier; understand the quality control and safety testing procedures of the
manufacturers (Waldmeir, 2007). Furthermore, increased on-site monitoring should be used by
international companies who want to establish a long term presence in China. Furthermore, if foreign
companies do not focus on establishing long-term relationships and implementing quality
processes, but only concentrate on cost savings, suppliers will continue cut-corners in quality,
resulting in some very unpleasant import quality issues (Industry Week, 2008). Management and
control are essential factors for quality assurance, hence additional supervision such as detail reports
about the product design, its production process, representations and warranties regarding the
product quality as well as specifications of product design, its prototypes and samples need to be
established (Fremlin, 2008).
Legal issues
China is still in its early age of development and product-liability or product-recall systems
are not fully established in China. This leads manufacturers abuse the system and not be
punished for it (Reisman, 2006; Wharton, 2012). According to USA trade statistics, in 2009 the US
copyright and software industry lost $48 billion due to intellectual property rights (IPR)
infringement in China. Furthermore, this is not a problem only for international, but also
for domestic companies in China. An official study in Beijing states that pirated software cost
$20.9 billion for domestic companies in 2010 (Tandon, 2011). It is generally reported that greedy
and cut-throat owners of the manufactures take advantage of the weak legal enforcement and
even encourage cheating as a business culture, where corruption and bribery are flourishing
(Barboza, 2007).
Communication issues
An essential part of any business is to clarify the requirements and manufacturing processes
that depends on the quality and production of the final goods. To achieve this, close relationship
between manufacturing and management has to be established and constant communication is
required. However, when companies produces from China, the time difference, distance and
language barriers become the biggest issues to communicate (Blackerby, 2003). As a result,
communication becomes an issue and can result in a quality fade, if the supplier does not speak
international language or does not fully understand the requirements (Campbell, 1995).
Furthermore, some issues cannot be solved by communicating through phone or email and
hence it has to be solved on site, however due to the distance this option becomes limited and can
lead to further complications. Due to reliance on communication through phone or email may
result in lower productivity, choice of poor raw material quality or incorrect manufacturing
processes (Wharton, 2007) (Table 1).
Competitive advantage theoretical perspective
Our study considers four different competitive strategies that indicate four different ways of how
a company can achieve and maintain its sustainable competitive advantage when outsourcing to
China.
R. Armalyte et al. / Journal of Engineering and Technology Management xxx (2013) xxx–xxx4
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ENGTEC-1382; No. of Pages 19
Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
5. Focus on single objective–‘‘Generic Strategies’’
Porter (1980) believed that in order to be competitive in the market, companies should achieve
sustainable competitive advantage through differentiation theory, proposed in 1980. Porter (1980)
named three generic strategies for firms to be successful: cost leadership, differentiation or focus. Cost
leadership attempts the firm to be the lowest-costs producers of goods and services in the industry.
The firm with the lowest costs would achieve the highest profits and outperform its competitors
(Devaraj et al., 2004). Differentiation strategy occurs when a firm offers unique products and hence, it
can often charge a premium price for it in the market. Furthermore, a focus strategy occurs when a firm
concentrate on specific niche in the market and produce specialised goods for this niche market.
Competitive advantage can be achieved through focusing on the differentiation or leadership
approach with regard to the focus strategy (Eonsoo et al., 2004).
It is important to note that Porter (1980) warns the firms not to be stuck between two chairs. By
this phrase Porter (1980) refers to differentiation and cost leadership strategies, which cannot be
achieved simultaneously and therefore a company should decide whether they want to be the
‘cheapest’ or the ‘best’ in the market. There is an argument that if the firm adopts both differentiation
and cost leadership strategies do not have a competitive advantage and therefore has a poor financial
performance. However, Dess (1984) has proved that even if companies combine the generic strategies,
they can still be successful and profitable.
Few firms use Porter’s generic strategies to gain advantage such as differentiation or cost reduction
by sourcing part of their business (Eonsoo et al., 2004). According to McIvor (2005) outsourcing,
manufacturing or administrative parts of the business leads to the cost structure of the business. On
the other hand, outsourcing creative part of the business such as design is done to gain differentiation
purposes (Eonsoo et al., 2004). It is claimed that regardless the reason for outsourcing, it has to be
aligned with the overall strategy of the business (McIvor, 2005).
Table 1
Issues and consequences of outsourcing to China.
Issues Consequences Source
Human Resource Failure Quality loss UNIDO (2006), Wharton (2007), Freytag et al.
(2012), Campbell (1995)Delays in shipment
Failure to realise the
cost of outsourcing
Machinery Failure Loss of profit Beaumont and Sohal (2004), Gordon et al. (2009),
Lynch (2007)Loss of flexibility
Material Inadequacy Hidden costs Kakabadse and Kakabadse (2000)
Failure to realise the cost
of outsourcing
Kliem (1999), Gonzalez et al. (2005), Harland
et al. (2005), McIvor and Humphreys (2000),
McCarthy and Anagnostou (2004)Increased operating costs
Loss of Management
and Control
Quality fade Hoecht and Trott (2006), Power et al. (2007),
Jennings (2002), Domberger (1998), Dankbaar
(2007), Plambeck and Taylor (2005), Freytag et al.
(2012), Fremlin (2008), Yamashita (2010),
Dabhilkar et al. (2009)
Inaccurate work
Loss of core competences
Increased competition
Leak of knowledge
Risk of losing customers
Loss of innovation
Loss of competitive advantage
Legal Issues Loss of competitive advantage Meixell and Gargeya (2005), McCarthy and
Anagnostou (2004), Gordon et al. (2009), Tandon
(2011), Barboza (2007)
Loss of core competences
Loss of intellectual property
Loss of Communication Incorrect execution of processes Blackerby (2003), Wharton (2007), McCarthy and
Anagnostou (2004), Lutz and Ritter (2009),
Campbell (1995)
Improper material usage
Delays in shipment
Loss in efficiency
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Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
6. Satisfy all five dimensions – ‘‘Sandcone’’
Ferdows and De Meyer (1990) suggest that there is a specific order for the competitive measures
and if the company follows it, the competitive measures will reinforce each other rather than replacing
each other as suggested by Skinner (1974). It claims that quality in regards to customer’s expectations
associated with the brand is the crucial and most important factor in order to be competitive, and then
comes dependability, flexibility, cost and innovation. Ferdows and De Meyer (1990) claim that until the
solid ground for quality expected from consumers is not implemented then there is no use to reduce
costs and increase flexibility. Furthermore, Ferdows and De Meyer (1990) identified that for the
companies who competeonthehighquality, premium costdisadvantageisonlyanillusion. Ferdowsand
De Meyer (1990) argued that before the technological boom, trade-off between cost and flexibly might
be an issue, but due to current innovation and high technology era, any kind of mix in the production is
possible. It is obvious that increased dependability can eventually lead to higher flexibility. This is due to
the reason that when a company has all its processes under control (wholly owned subsidiary), it might
then find it much easier to meet sudden change in the order rather than request this from an outside
supplier who might have already problems delivering the regular order on time.
‘‘Sandcone’’ model states that companies can and must compete on several dimensions
simultaneously. Combining ‘‘Sandcone’’ and Hill (1988) suggestions, a company to achieve
competitive advantage has to compete on several dimensions such as quality and dependability
has to be maintained within the customers expected standards.
Concentrate on core competences – ‘‘Core Competences’’
Prahalad and Hamel (1990) suggest that core competences are the wellspring of the new business
strategy and are achieved through collective learning in cooperation, paying special attention on how
to coordinate diverse production abilities and integrate compound stream technologies. They argue
that only if the company is considered as a hierarchy of core competences, core products and market
focused business units then it will be ready to fight and succeed.
Outsource non-value adding activities ‘‘Value-Chain Analysis’’
According to Porter (1985) value chain analysis will enable the organisations to improve overall
performance and increase their profit margin of the company, by performing activities efficiently, so
that the value the customer will be willing to pay exceeds the cost of the activities in the value chain.
Value chain analysis distinguishes core activities of the firm (value added activities that provide
competitive advantage over its competitors) from the secondary activities (necessary for the
organisations presence) which do not add-value to the company. Those activities might be costly for
the company and thus company might want to reduce the fixed costs by outsourcing them to the third
party.
A company can then create a cost advantage over its competitors by evaluating cost of each activity
in the value chain. The efficiency can be achieved through reducing costs of individual value chain
activities or by reconfiguring the value chain (outsourcing some parts of it). A firm may specialise in
one or more value chain activities and outsource the rest, depending on the strengths and weaknesses
in each activity in terms of cost and differentiation. Understanding the linkages between the
individual activities can help the managers to make a better make-or-buy decision that can result in
cost reduction or differentiation advantage (Chang and Hwang, 2002).
Research methodology
Research design and setting
The purpose of this study is to develop a new theoretical framework based on the research and
existing literature on quality issues when outsourcing to China. Due to the nature of the research topic,
case studies were appropriate for the theory building, because it allowed us to answer ‘how’ questions
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Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
7. about the contemporary set of events in which we are and ‘why’ questions in order to understand the
scope of the problem.
As a result, we conducted in-depth case studies with interviews in order to explore and interpret
the phenomena from real world experience and try to answer the question of why companies still
keeps its production in China, when the quality of the production affected them negatively.
We conducted an in-depth case study of four companies which are in automotive and toy
industries which are important and more sensitive to human being if there are quality issues.
Company A is most recognised for its quality and design brand toys in the world. Furthermore,
amongst the toys collectors it is best known for its pricey and highly collectible teddy bears. Company
B on the other hand is now known as the biggest designer and manufacturer of broad variety of toys. It
produces all the toys overseas with many wholly owned manufacturing facilities in China, Malaysia,
Indonesia, Mexico and Italy.
Other two companies were chosen from the automotive industry. Company C is a world’s leading
automotive manufacturer and supplier for driveline and chassis technology and Company D is a
diversified global provider of power tools and accessories, hardware and home improvement products
as well as technology based fastening systems.
Table 2 provides an overview of the respondent profiles and their experiences. Furthermore,
additional four Chinese manufacturing companies were interviewed and the feedback was
incorporated in this study to get a more profound general idea about the causes of quality fail in
China. From Table 2 it can be concluded that all the respondents had experience with at least 4 years in
the company and somehow related to the quality issues of outsourcing. It is important to note that
some of the respondents were unwilling to disclose information about their firms. Therefore some
interpretation was made in regards to their answers. Finally, none of the interviewees wanted their
names or their work positions to be disclosed for sensitivity of the research topic and confidentiality
reasons, therefore no names will be mentioned in the analysis.
Data collection and analysis
The choices of four case studies were based on Eisenhardt (1989) argument that multiple cases are
better to extend external validity and give a more objective assessment of the phenomena. In
particular 4–10 case studies are likely to create more robust and testable theory.
The four companies were collected in a way to have different scenarios of outsourcing success or
failure. This helps to compare and contrast the broader spectrum of the issue considered for the study.
First of all, all four companies selected for this research produce consumer durables. In addition to this,
the studied activities had to cover the definition of outsourcing identified in the research, which stated
that all companies should have been outsourced at least part of its production process to a foreign
Table 2
Respondents and the industry details.
Company Respondent position Industry/main products
Company A Reporter
Supervisor in supply chain
Toys industry: stuffed animals, especially teddy
bears
Company B Supervisor
Branch Manager
Toys industry: games for children, collection toys,
toys from famous children TV programmes and
movies
Company C Manager
Supervisor
Automotive industry: parts for cars
Company D Branch Manager
Manager of Quality Assurance
Manager of Engineering Department
Power tools and accessories: drills, home
durables
Chinese Manufacturer 1 Manager Petrochemicals
Chinese Manufacturer 2 Director Cement industries, construction materials
Chinese Manufacturer 3 Director Medicine and medical products
Chinese Manufacturer 4 Manager Industrial. IT and home technology (printers,
scanners, industrial paper machines)
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Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
8. country (our case China), by contracting its portion of activities to the third party or creating a wholly
owned subsidiary, in order to analyse the quality issues of manufacturing processes. In addition to
this, the critical events of outsourcing have already taken place and the chosen cases should have
different outcomes of it (Gadde and Ha˚ kansson, 2001). Therefore, two companies were chosen to
represent the negative outcome of outsourcing whereas other two companies were selected to
represent successful outsourcing to the Chinese situation. This selection of the companies enabled to
identify different causes of quality issues and diverse competitive strategies.
The data on the four case studies were collected through primary and secondary data sources,
because evidence from multiple sources is considered to be more appealing and robust (Yin, 1994).
Secondary data included academic journals and books, corporate reports of the case companies and
media publications. In addition to that primary data incorporated semi-structured interviews per
telephone, email and face-to-face consultations. Furthermore, open discussion questions were
preferred in order to understand the issues from different angles and follow the theoretical literature
used for this paper. The explanatory interviews comprised two to three respondents from different
departments within the case companies, who had direct or indirect involvement in the problematic or
successful outsourcing strategy, in order to gain different opinions about the quality issues and
companies’ failure or success. In addition to this, we attempted to verify individual reports by asking
similar questions to multiple informants such as Chinese directors and managers from different
manufacturing companies (international companies and Chinese suppliers for international
companies). However, it has to be noted that some linguistic problems was encountered, therefore
translation from English to Chinese had to be done simultaneously, in order to process the interview.
The responses were then transcribed and incorporated in the analysis, which gave valuable input to
further evaluation of quality fade phenomena when outsourcing to China in the future.
All the primary and secondary data collected were used to analyse the quality issues and the effect
on case company’s competitive advantage and its success/failure in China. Finally, the findings from
the case studies and interviews were then synthesised together to develop a sustainable competitive
advantage theoretical framework. The compare and contrast method was also applied in order to
relate the findings of the case studies and interviews to identify patterns and to provide suggestions
about outsourcing phenomena in China.
Results
Observations in case Company A
Due to very competitive business environment, in 2004 company’s management decided to move
some of its production to China in order to reduce costs. This was done through a Chinese contractor.
However it experienced quality issues and transportation delays like every other company that
outsourced to China. Furthermore, the biggest issue was the nature of the product itself. It was not just
about making a high quality teddy bear; it was about being very precise. Furthermore, the long
distance offshore production plant became biggest disadvantage when some of its production reached
the retail stores 3 months after the initial deadline and there were drop in sales. In order to get a better
understanding of the quality failure, the main points from the interviews are summarised in Table 3.
According to the reporter, who was directly involved in case Company A noted that Company A
encountered quality failures, because the pattern sheets were too complicated for the Chinese sewers
and could not accomplish specified quality as in home country. Furthermore, the training of how to
sew using this specific pattern took too long time to make them learn. In addition to this, the accuracy
was especially important in this manual work, because very small errors in knitting resulted in teddy
bear eyes being misapplied, hence making the bears look to sinister for the western customers. The
reporter also mentioned that there was no guarantee or restriction to keep the workers after they have
been trained to do the work, when there is a better opportunity the workers moved to high payers
without any notice. This led to further problems such as delays in production shipments.
With respect to management and control issue, both the reporter and the ex-worker in supply
chain agreed that lack of control over the production process due to the ownership structure and
management communication issues led to many products being produced incorrectly. The quality
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a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
9. problem could only be detected once the products reach Europe, hence increasing company’s overall
costs, because the teddy bears could not be sold in the market.
From the interviews it can be concluded that tight control over the quality and production of the
teddy bears was crucial for company’s success. Furthermore, manual work requires special skills and
experience which can be obtained with continuous training, however it takes long time to achieve,
therefore outsourcing may not always be the most feasible option.
Overall we can see that Company A outsourcing strategy in terms of quality did sacrifice to an
extent that it led the company to move back its production to Europe. However it is important to note
that different from other companies, by outsourcing to China, Company A did not aim to enter Chinese
market. Several theories suggest that competitive advantage can be achieved only by being close to its
target market (KPMG, 2012). Furthermore, by having the production close to its market, quality
assurance is easier to achieve. Company A’s primary markets are Europe and USA, when it moved its
certain operations to non-marketing destination lead to loss of control on management and hence it
encountered issues in production quality. However, it is arguable and more study is needed to
understand how far quality loss could have been offset by gaining the entrance to a huge potential
Asian market with increased profits, which Company A did not considered to do.
Observation in case Company B
According to the worker in Company B, the main issue with quality errors is the human resource
problem, because some Chinese suppliers try to ‘cut corners’ by providing lower quality materials and
resulting in poor quality production of toys.
However, there is no doubt that Company B will stay in China and even though the recent quality
issues brought a lot of damage to the company’s reputation and hurt its sales, Asia market accounts a
large part of sales. According to the worker, China is a huge market for enormous profits in the next
decade; therefore Company B plans to expand its international footprint in Asian markets by building
new franchises and entertainment partnerships in order to achieve sustainable growth. Even if the
quality reduces and more attention has to be paid to the supervision and management of the
production, there is no doubt that this sacrifices will only be a smaller concern with the development
of Chinese economy and increase in the consumption of goods.
On the other hand, the worker argued that Company B outsourced to China due to low cost
production and the reason why Company B still keeps its production in China is also due to its lower
labour costs (Table 4).
With the raising demand for toys, the ability to create the toys and meet the demand became the
biggest concern for Company B. Toys business is lucrative whereas it depends on how firms are going
Table 3
Quality issues reported by Company A.
Cause of
quality
issues
Human
resource
Machinery Raw
materials
Management
and control
Communication Legal
Reporter Employees were
not trained enough.
Complicated
knitting
techniques, to slow
in learning
N/A N/A No control over
production due to
loss of ownership
Not
understanding
the need for
accuracy
No guaranties or
restrictions to keep
the workers after
they have been
trained
Ex worker
in supply
chain
Employees did not
have the skills
N/A N/A There was no
control over
production, not
enough
instructions and
training due to
change in
employees
Not being able
to explain the
accuracy need
N/A
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a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
10. to handle inconsistency in production volumes, seasonality and market life of less than a year. These
non-core production toys were a huge pool for high profits, however dependability was crucial to its
success. Due to these high demand fluctuations, non-core toy production was outsourced to China.
Company B operated through network of approx. 35 vendors that were contracted to manufacture
Company B’s production. The manager in China selected the vendors very carefully depending on the
expected time to market, political expertise and price. During that time, this was a very successful
strategy for Company B, due to its low investment costs (no capital needed for wholly owned
manufacturing) and increased flexibility due to demand variability. The relationship between the
manager and the vendors was of the crucial importance for the quality reliability, due to its complexity
and high volume production where a lot of the emphasis was put on the price but not quality.
In 2007 Company B recalled 1.5 million toys which contained lead-paint and were produced in
China. Several weeks later, Company B had to make another announcement and recall 9 million more
China-made toys. The problem arose when the subcontractor of Company B outsourced the work of
painting parts of the toys to an outside vendor, who in order to save costs acquired the paint from a
non-authorised supplier. It is important to note that the third party supplier had close relationships
with subcontractor, hence it was believed by subcontractor to be a trustworthy supplier. It led to the
production of final goods which contained ‘‘impermissible levels of lead’’. These recalls lead not only to
a drastic reduction in Company B sales, but also it damaged Company B reputation and
trustworthiness. Even though Company B understood the importance of quality control in its
outsourcing strategy, due to its cost leadership strategy they did not put enough emphasis on quality.
Hence the product recalls showed that the quality issues outperformed cost leadership advantage.
According to the report made by Xinhua, who was the spokesman of China’s general administration of
quality supervision and inspection, Company B did not establish tight quality supervision over its
production in China and the manufacturers were doing what the importers requested. Regardless of all
the quality issues and production recalls, Company B keeps its outsourcing option in China and does
not consider any other relocation of manufacturing plant in the near future. To improve the quality
Company B has to follow ‘‘Sandcone’’ model instead of cost leadership strategy to satisfy the order
winning criteria.
Observations in case Company C
Company C entered Chinese market in early 1980s by engaging in sales and service licence
agreements with two Chinese manufacturers of clutch and shock absorber. Later Company C opened
its representative office in Shanghai through joint venture and carried out its look-and-see strategy in
order to understand Chinese market and risks associated with it. The company’s strategy towards
Chinese operations is not a short-term cut-cost option rather than it is a long-term strategy with full
commitment to Chinese market in terms of RD, manufacturing and sales.
In 1998 Chinese Government relaxed its regulations and allowed ownership of foreign affiliates in
the automotive industry. During that time Company C quickly took advantage and successfully
Table 4
Quality issues reported by Company B.
Cause of
quality
issues
Human
resource
Machinery Raw
materials
Management
and control
Communication Legal
Subcontractor
in China
N/A N/A Due to cost
savings poor
quality
materials can be
chosen
Lack of
instructions and
control
Lack of
communication
between the
management
and supplier
N/A
Worker Do not pay
attention to
details. Trying
to ‘cut corners’
N/A N/A N/A N/A N/A
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a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
11. established a fully owned production plant which was crucial for its later development. ‘‘Customer-
oriented’’ focus with customised production and research and development is considered to be the
successful strategy for Company C.
Today Company C is a leader in chassis and powertrain business and continues its growth with
astonishing results. Furthermore, engineering departments being located in China, many new
innovative applications are developed and distributed to other countries. Company C values more the
quality of its products and process efficiency. Dependability and top quality are the ultimate criteria
and it is achieved through standardisation.
In order to ensure high quality, Company C’s production group has a highly qualified team with a
superb command of material and processes. Furthermore the whole value chain activities such as
manufacturing, engineering, logistics and quality assurance are integrated into the processes from
very beginning. Moreover, high automation ensures highest level of efficiency and dependability.
Cutting-edge technology is used for production and quality assurance which is integrated into the
production process. Furthermore, quality circle teams are essential part of quality control and
improvement. The highest efforts are put into ensuring error free production.
According to the supervisor of quality assurance department, the main reason that causes quality
issues are lack of understanding of design and manufacturing requirements. However they avoided
quality issues through high manufacturing process automation. Furthermore, full control to the
ownership structure helped them to keep all the processes under strict quality checks in every part of
the production process.
The manager of the Chinese operations agreed that management and control skills are the key
factors to overcome quality issues. Chinese operations started incorporating quality into company’s
strategy. Furthermore, the manager believes that China has the ability to compete in the world for
quality production through tight quality control. In conclusion, the manager argues that cost
advantage in China is diminishing, therefore for Company C China is an important market for the sales
of their production, that is why they believe most of the companies still prefer to stay in China
(Table 5).
Company C experiences reveal that China is a huge pool of opportunities and development.
Implementation of quality assurance in every step of the process lead Company C to be the leaders and
experts in its production all over the world.
Observation in case Company D
In the past decade Company D’s strongest competitors are able to produce at lower cost due to their
location strategy and supply standardised products worldwide. Therefore, Company D continuously
started losing its market share and had to react to increasing production costs as soon as possible in
order to sustain its competitive advantage. Therefore, Company D decided to adopt global cost
leadership strategy and as a consequence in 2002 they shifted some of its production and operations to
China by subcontracting and also establishing a wholly owned subsidiary. Due to its standardised
production restructuring with high automation, new products are produced quicker which ultimately
Table 5
Quality issues reported by Company C.
Cause of
quality
issues
Human
resource
Machinery Raw
materials
Management
and control
Communication Legal
Subcontractor
in China
N/A For high
standardised
products it is
important
N/A Could cause if
management
and control is
not good
N/A N/A
Supervisor in
quality safety
N/A N/A N/A N/A Not being able to explain
the instructions face to
face, misunderstanding
occurs
N/A
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j.jengtecman.2013.07.003
12. increases company’s flexibility. Functional managers were further given coordination responsibility
with country’s management. Furthermore, Company D implemented new point of sales software
application system with strict supply and demand control for all the products manufactured in China.
With its new software system, Company D managed to capture demand changes on time and respond
to it quickly (Table 6).
Based on the interview and the data collected through questionnaire, it can be concluded that
Company D does not encounter any huge quality issues due to strict quality control and inspection, not
only in production process, but also when the goods are shipped to Europe and America. Furthermore,
some respondents agreed that minor quality issues occur due to human resource failure, more
precisely due to lack of responsibility in fulfilling all the requirements by the Chinese workers.
Therefore, according to the respondent from quality assurance department, a lot of additional
investment in training has to be devoted in order to maintain approximately the same quality
standards as in other manufacturing locations. Furthermore, incentives such as quality bonuses for the
managers are the encouraging ways to ensure that there will be no leak in quality of the production. In
addition to this, quality production double check, plant audits and on site quality inspectors are
needed to ensure error free production: ‘‘The quality is maintained especially with additional resources
for quality inspections’’. On the other hand, standardised and highly automated production of goods
Table 6
Quality issues reported by Company D.
Cause of
quality
issues
Human
resource
Machinery Raw
materials
Management
and control
Communication Legal
Branch
Manager
Some issues
occur due to
unskilled
workers who
sometimes do
not pay enough
attention to
details
N/A N/A No control over
third party supply
sometimes cause
minor quality
errors
Due to German–
English–
Chinese
language mix
some important
issues are not
understood
N/A
Manager Never admitted
to having made
a mistake
N/A N/A Important to keep
very high control
and give incentives
for good work such
as quality bonuses.
Important to keep
responsible QS
managers on the
site.
Very important
to communicate
regularly in
order to
monitor actions
to eliminate the
root of failure.
If some
problems
occurred
Chinese
manufacturers
did not take any
responsibility
for it, nor did
they put effort
to help
Manager of
Quality
Assurance
Department
It has to be put a
lot of additional
training for
human resource
in order to
overcome
quality issues
N/A N/A The quality was not
hurt mainly due to
additional
resources which
were allocated for
quality inspection
N/A N/A
Manager of
Engineering
Department
Some minor
quality errors
occur because
workers
sometimes do
not follow the
strict
instructions in
production
process
No quality
issues because
products are
standardised
and very little
human interface
is needed in the
production
process. High
automation
N/A Some quality issues
can occur due to
inability for the
engineers to be on
site all the time.
However it does
not happen very
often, but
additional
resources for
inspection is crucial
N/A N/A
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j.jengtecman.2013.07.003
13. leads Company D to minimize human interface and to ensure quality. Since the early 90s Company D
has never encountered any big quality issues.
Overall it can be concluded that Company D case study show some evidence when compared to all
the above mentioned competitive advantage theories. However, it is important to note that in a
dynamic environment focusing only on one competence is not enough to be competitive. The
company has to focus all the five factors (quality, cost, flexibility, dependability and innovation)
through strict implementation of control and management.
Sustainable competitive advantage framework
Overall insights to deal with quality issues
Based on the case studies observations it is obvious that outsourcing to China does not have any
negative effect on production quality. Most of the respondents agreed that quality fade can be avoided
with strict controls and checks. On the other hand, Chinese manufacturer 3 agreed that outsourcing to
China does have a negative effect on quality because some Chinese suppliers put ‘‘cost control’’ on
their orders and to gain margins they find ways to reduce quality in order to minimise costs.
Furthermore, from Company’s A and B responses, it can be determined that outsourcing to China can
have radical consequences.
From the consolidated observations summary shown in Table 7, it can be emphasised that common
cause of quality issues in China are due to the unskilled or unspecialised workers (human resource)
with lack of accuracy and responsibility in their work. It is to be noted that management and control
(Lack of coordination and regulation) is also the major significant factor that causes quality issues in the
production. Few respondents highlighted, if production is not automated then additional control and
guidance is needed to meet the requirements. However this is not always possible to achieve due to
distance, language barriers or prohibition of control over the processes and ownership structures.
Other problems such as machinery and legal disputes play only minor roles with respect to quality
issues in China.
Most of the respondents agreed that cheap labour costs are still a significant motivation for
international companies to have their presence in China regardless of quality issues associated with it.
However, some respondents argued that rapidly increasing labour costs and continuously appearing
quality issues make China as a less attractive destination. However, many companies prefer to keep its
operation in China to capture the bug Asian market which is a significant profit pool for international
companies. Company D followed a step by step approach, at the very beginning the company
outsourced some of its production to China because of the cost reasons and subsequently established a
wholly owned subsidiary based on the market potential and it started sales to the Asia market.
Overall it can be said that both international and Chinese manufacturers believe that quality issues
with respect to human failures can be dealt with strict quality check systems in the production
process. Furthermore, it is essential to train specialised workforce for manual manufacturing
processes and naturally with more time and effort. Finally, Chinese manufacturers emphasised that
quality does play a crucial role in company’s competitive advantage and only by achieving the quality
standards the firms can be successful in the developing markets. A respondent highlighted that on
supply side Chinese market is saturated with cheap low quality production whereas the fast growing
economy makes the demand side more attractive with high affordability of Chinese customers for
good quality products. In addition to this, a report prepared by chief executive of Bangkok bank stated
that Chinese customers have the capability and are also willing to pay higher price for the quality
goods, therefore companies which are entering into the Chinese market should ensure good quality to
sustain and outperform the competitors (Songwanich, 2009).
Overall insights based on competitive strategies
Table 8 shows that Company A encountered huge quality issues when outsourcing to China,
because it followed Generic strategies. Before the outsourcing Company A competed based on quality.
However, by outsourcing to China, they gave up quality priority and tried to compete on cost factor.
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j.jengtecman.2013.07.003
14. Table 7
Case companies responses.
Company Does outsourcing to
China compromise
product quality?
To what extent?
Causes of quality
issues in China?
Reasons of having
presence in China even
though it has quality
issues and generate
huge losses to them?
Additional comments
A Yes, had to move back
to Europe
Human resource,
Management and
Control,
Communication, Legal
Moved back to Europe.
Company A did not sell
its production to
Chinese market
The stuffed teddy
bears could not be
made accurate enough.
For manual production
China is not the best
option
B Yes, many recalled
toys, damaged
reputation
Human resource,
unsuitable Raw
Material Management
and Control,
Communication
Low labour cost, access
to certain materials
new sales market
‘Made in China’ is
moving towards high
end of the market
C No, because of
implemented quality
checks
Poor quality control
and management,
communication
Entry to huge potential
market, because cost
advantage in China is
diminishing
Quality in China is
improving due to
continuous training
provided by Company
C. China still needs to
learn a lot from
western companies.
Only products with
good quality can
survive in the market
competition
D Not necessary, if the
quality control is
reliable and strict big
quality issues can be
overcome. However,
additional resources
have to be allocated to
it. Incentives for
quality such as quality
bonuses work well
Do not encounter
quality issues due to
quality control
technologies. However
minor errors occur due
to Human Resource of
the third party
suppliers. Lack of legal
agreements between
parties may give
incentives to cheat on
quality standards
At the moment still for
lower cost reasons
Quality is an issue due
to the Chinese mind-
set of ‘cut corners’ and
achieve short term
profits. The quality
was kept
approximately the
same due to additional
resources to quality
inspection
Chinese
manufacturer 1
Not necessarily. China
has capability to
produce low quality
and high quality goods
Communication and
management issues
New market China has the ability to
produce low and high
quality goods. The
quality is improving
Chinese
manufacturer 2
No. Quality has been
improving in China
Keeping up with new
technology in
machinery,
communication
Enter the market Quality in China is
improving
Chinese
manufacturer 3
Yes, it has got worse
due to increased
labour and material
costs
Lack of quality control Cheap labour is a big
attraction
Some products
improve in quality, but
many are even less
trustworthy due to
‘cost control’
Chinese
manufacturer 4
No, very high quality
control checks ensure
the highest quality.
China has the
technology to make
good quality goods
Under capacity of
specialised workers
Still for cost reduction The products we
produce are perfect
substitute of imported
products from the
perspective of
technology, quality
and customer
recognition
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15. This led to a huge failure, because consumers’ expectation of the product quality was not only not
maintained, but deteriorated due to lack of specialised workers and absence of quality control when
outsourcing to China.
From the Company B point of view, it attempted to embrace ‘‘Generic Strategies’’, ‘‘Core
Competences’’ and ‘‘Value Chain’’ competitive strategies. Still it encountered quality issues because of
lack of implementation of quality control standards. Even though Company B’s focus is towards cost
leadership it compromised quality standards which are the basic in Sandcone Model. It can be
concluded that if Company B followed ‘‘Sandcone’’ Model, the quality issues may not have occurred
and outsourcing to China would have been successful.
Company C followed quality differentiation strategy and sustained with it to be successful in the
Chinese outsourcing. Company C reveals that ‘‘Sandcone’’ Model in a dynamic business
environment is crucial to maintain its competitive advantage and firms should concentrate on
several dimensions in order to succeed. Furthermore, it supports the theory that quality assurance
does not always require higher costs, because Company C managed to achieve cost reduction
without hurting quality. Company D also supports ‘‘Sandcone’’ Model and revealed that even
though quality is not a prime factor they have to maintain (qualifying aspect) it to a desired level to
gain competitive advantage.
Overall it can be concluded that ‘‘Sandcone’’ Model shows the highest importance when
outsourcing to China. Through the observations from literature and case studies it is obvious that
concentrating on one factor (Generic Strategies) or focus on ‘‘Core Competences’’ keeping its value
adding activities in-house might still lead to quality issues in China. This then can not only damage
company’s reputation, but also reduce its profits and decrease or even diminish its competitive
advantage in the global world.
Table 8
Competitive strategies pattern in the case companies.
Competitive
advantage strategy
Case Company A Case Company B Case Company C Case Company D Importance
of the model
in terms of
quality
when
outsourcing
‘Generic Strategies’
Model by Porter
(1980)
Did not follow
after
outsourcing
Followed by
choosing cost
leadership
strategy
Followed by
choosing to
compete on Quality
Followed by
choosing cost
leadership
strategy
Moderate
importance
‘Sandcome’ by
Ferdows and
De Meyer (1990)
Did not follow
because quality
standards was
not safeguarded
Did not follow,
by not
maintaining
quality
expectation
standards
Followed by
ensuring quality
standards before
flexibility and
competitive costs
was achieved
Followed by
maintaining
expected quality
as the basement
High
importance
‘Core Competences’
by Prahalad and
Hamel (1990)
Did not follow Followed by
keeping
concentrating
on its core
competences
Did not follow by
outsourcing its core
competences (RD,
engineering
manufacturing) to
China
Followed by
keeping its core
competences
(engineering,
RD)
Moderate/
low
importance
‘Value Chain’ by
Porter (1985)
Did not follow Followed by
keeping its
value adding
activities in-
house
Did not follow
because most
value-adding
activities was
outsourced to
China
Followed by
keeping its most
value added
activities (RD,
engineering,
design) in house
Moderate/
low
importance
Overall result Failed in terms
of quality
outsourcing to
China
Failed in terms
of quality when
outsourcing to
China
Succeed in terms of
quality when
outsourcing to
China
Succeed in terms
of quality when
outsourcing to
China
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16. Based on the above discussions we have highlighted the survival aspects to encounter quality
issues while outsourcing to China and the corresponding survival approach (see Table 9). Based on the
findings of this study, the following propositions are made:
Proposition 1To be successful in the Chinese operations companies should compete on several
dimensions simultaneously and maintain quality standards.
Proposition 2Outsourcing to China because of cost savings has no negative effect on quality.
Proposition 3The entry into new potential market through Chinese operations is the main determining
factor for the multinational companies regardless of quality issues and raising labour costs.
Managerial implications and limitations
Study findings reveal that manufacturing companies have to manage their Chinese operations
efficiently to avoid potential loss due to quality issues and to enter into the largest market. This is a
way in which a huge pool of new sales can be generated and potential loss in quality may be offset by
the profits (Deloitte, 2012). Furthermore, managers should realise that by producing abroad, a more
sophisticated management needs to be established, since the manufacturing and delivery of the goods
beyond international boarders require advanced knowledge and precise planning. Furthermore, as we
can see from Company A that long distance supply chains are much more vulnerable and exact
schedule of the delivery is not always possible to set. This has to be taken into consideration especially
for those companies, which production is very seasonal. Being close to company’s market add
additional advantage. Furthermore, It has to be well accounted with the costs advantage considering
the risk of missing the time line when the sales has to be done.
Another important implication for those managers’ aims to achieve competitive advantage
through quality differentiation strategy has to produce with high automated technology and use
standardised approach. However, if they prefer to produce goods manually then they have to provide
intensive customised training. Other factors such as absence of employer protection, ‘cut-corner’
concept, corruption and communication problems have to be taken into consideration when
outsourcing or keeping production in China. Managers should expect the staff to leave the job without
notice and as result raise additional costs for the company in terms of hiring and training new staff. On
top of that, as Company B case study shows, even long-term relationships can be abused due to
Chinese strategy of ‘cutting-corners’ in order to offset the constantly raising raw material and labour
costs. Finally, due to the political system and high corruption, it is very hard to find the ‘ends’ when
something goes wrong. Besides quality criticism, most of the firms outsourced to China or has its
presence in China are successful.
Table 9
Sustainable competitive advantage framework.
Survival aspects Survival approach
Competitive strategy
Sand-cone theory:
focus on five
dimensions
Quality, dependability, flexibility, cost and innovation
Better quality
Human resources Focus more on selection of skilled workers, contextualised training and reduce attrition rate
through protecting employees
Machinery Continuous improvement approaches and automation if possible
Raw material Good governing policy to avoid cut-corners, integrate value chain activities such as
manufacturing, engineering, logistics and quality assurance
Management and
control
Well defined ownership structure, transparent supplier evaluation policies, good
understanding of quality control and testing procedure
Communication Good relationship between manufacturing and top management to overcome time
difference, distance and language barriers
Legal Educate employees about IPR threat, product liability and product recall system. Not to take
advantage of non-existent of well-developed legal system
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Please cite this article in press as: Armalyte, R., et al., Quality issues in outsourcing to China: Is it still
a sustainable competitive advantage?. J. Eng. Technol. Manage. (2013), http://dx.doi.org/10.1016/
j.jengtecman.2013.07.003
17. Qualitative research has some limitations and they are personal disposition of researcher, his
beliefs, reactions, cultural and religious background will, indeed, effect the interpretation and
investigation of the data (Russell, 2005). Furthermore, verbal and linguistic discrepancies can affect
the study since qualitative research is collected through one-to-one interviews rather than
standardised questionnaires (Miles and Huberman, 1994). Few limitations of the study are as follows.
This study focused only on international companies which outsourced their production to China or
have their presence in China. Other issues and benefits regarding financial performance, research and
development, information technology and other influencing factors were not taken into consideration
when analysing company’s success and competitive advantage. Furthermore, in this study the quality
issues are analysed at an organisational level, i.e. risks were tied to the organisation. The focus was on
both European/American companies who had outsourced at least part of their production to China
either by contracting or by establishing subsidiaries (FDI).
In qualitative method there are subjective and perceptive interpretations of the information. They
are mainly from few interviews and public available sources such as academic literature and media
reports. Since the population interviewed for each case study is rather low, these results cannot be
representative for the whole population. Furthermore, the interviewees might have had only limited
amount of information and they might not disclosed some particular issues regarding their production
quality or did interpreted the issues in their own understanding, thus, the trustworthiness of the
empirical data should not be interpreted as exact and thus, is expected to be different if the
interviewees were asked the same questions after 1 year time frame.
Furthermore, due to limited amount of case studies the findings give only a broad picture of the
problem, however, in order to prove or reject the quality issues detailed survey based study needs to
be undertaken with bigger sample size.
Concluding remarks
This study proposed a sustainable competitive advantage framework for multinational firms to
adapt and prosper in China. The study listed the major causes of quality and how to overcome them in
order to prosper. Four competitive strategy theories (‘‘Generic Strategies’’, ‘‘Sandcone’’, ‘‘Core
Competences’’ and ‘‘Value-Chain Analysis’’) were used to interpret the Chinese operations and to
develop a sustainable competitive framework. As per the proposed framework, to gain competence
firms have to focus on five dimensions viz. quality, cost, dependability, flexibility and innovation. The
dominant quality issues that need attention are human resource, management and control and legal
aspects.
Furthermore, it is very hard to make a judgement of the cause of the quality issues on such broad-
spectrum of business operations. This is due to the fact that each industry within manufacturing sector
has unique issues which can cause quality fade and cannot be combined and generalised for overall
manufacturing industry. Therefore, detailed empirical survey based study is essential to verify the
proposed propositions in different manufacturing sectors. It is also suggested to extend the study to
service industries which gains prominence in China. It would also be interesting to carry out further
research on what causes the quality issues, when European companies outsource their production to
East or Middle East Europe. Then it would be interesting to compare and see how the quality issues
affect company’s competitive advantage.
Acknowledgements
The authors wish to thank the three anonymous reviewers for their excellent and insightful
comments. We are sure that the readability of our paper has improved considerably after carrying out
these modifications. We thank the special issue editors for their encouragement.
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