Morgan Swink

This paper discusses the merits of purchasing firms of pursuing a focused commitment strategy (FCS) with suppliers. An FCS involves committing long-term investments with a limited number of suppliers to achieve superior performance. Drawing upon transaction cost theory, agency theory and the knowledge-based view, a basis is provided for comparisons of the benefits and risks of such a strategy. Using data gathered from 224 US manufacturing firms, support for the hypothesized trade-offs associated with an FCS is examined. The findings support such trade-offs, suggesting that operational benefits accrue from increasing levels of focused commitment beyond unfocused levels — but only up to a point. The results indicate that firms pursuing above-average levels of focused commitment may be subject to risks that offset transactional and scale-related benefits. Detriments from too much focused commitment erode the firm's manufacturing-based competitive performance. In addition, the evidence indicates that profitability and market share growth also suffer. The paper discusses the implications of these findings for managers and for future research.

Manufacturing plant managers have sought performance improvements through implementing best practices discussed in World Class Manufacturing literature. However, our collective understanding of linkages between practices and performance remains incomplete. This study seeks a more complete theory, advancing the idea that strategy integration and enhanced manufacturing capabilities such as cost efficiency and flexibility serve as intermediaries by which practices affect performance. Hypotheses related to this thesis are tested using data from 57 North American manufacturing plants that are past winners and finalists in Industry Week's“America's Best” competition (Drickhamer, 2001). The results suggest that strategy integration plays a strong, central role in the creation of manufacturing cost efficiency and new product flexibility capabilities. Furthermore, strategy integration moderates the influences of product‐process development, supplier relationship management, workforce development, just‐in‐time flow, and process quality management practices on certain manufacturing capabilities. In turn, manufacturing cost efficiency and new product flexibility capabilities mediate the influence of strategy integration on market‐based performance. These findings have implications for practice and for future research.