The Impact of Technology Changes in the Relationship between Lean Manufacturing and Performance of Manufacturing Firms

This paper examines a question of long standing: How can one obtain operational indexes of inventive and innovative activity and technical change? Specifically, for a sample of fifty-seven pharmaceutical manufacturing firms, we attempt to determine how well a simple count of invention patents serves as a surrogate for two alternative measures of technical change: the number of research and development personnel employed, reflecting inputs into the innovative process, and the value of new product sales, which reflects outputs of the process.

The object of this research is the impact of technological changes on the dynamics of economic development of enterprises. The main hypothesis is the assumption of the presence of such an impact for a significant number of companies. The implementation of this research made it possible to make a certain contribution to the process of solving the problem of finding ways to accelerate the economic development of business entities. At the same time, technological changes were divided into three groups, namely: resource-saving; changes that ensure the improvement of the quality of the enterprise's products; changes that ensure the improvement of management, sales and other processes at enterprises. A methodological approach to assessing the impact of technological changes on the dynamics of economic development of companies was also developed. This approach involves the implementation of two main methods of assessment, namely: establishing the presence or absence of such an impact and determining the magnitude of the impact of technological changes on the dynamics of economic development of enterprises. The testing of the developed tool on a sample of industrial enterprises showed that the impact of technological changes on the dynamics of their economic development exists and is statistically significant. At the same time, the average impact of technological changes on the growth of financial results of enterprises is quite high. In particular, the average values of the indicator of the impact of technological changes on the net profit of those enterprises that have undergone at least two types of such changes, by type of economic activity, range from 11.25% to 13.32%. Since a significant number of the enterprises studied have not carried out technological changes in recent years, at least some of these enterprises may have significant potential to accelerate their economic development. The developed toolkit for assessing the impact of technological changes on the dynamics of economic development of enterprises can be used to establish the presence and extent of such an impact both at the level of an individual company and at the industry level. This will allow owners and managers of enterprises to increase the validity of the strategies for technological renewal of these enterprises.

The objective of the current research study was to examine the mediating effects of supply chain operations on the associations of lean manufacturing and firm performance in manufacturing companies in Pakistan. The research study was based on quantitative research methods to investigate the associations of the exogenous and endogenous variables with the mediating factors of the supply chain operations. The current research study was applied to analyze the developed hypotheses through Structural Equation Modeling (SEM). The lean manufacturing approach is positively associated with the operations of supply chain management, and the current research study provides significance greater understanding, and better relationships between the lean manufacturing approach and the operations of supply chain management in the manufacturing industry in Pakistan. The results indicate that the independent variables of quick setups, uniform production level, quality control level, and supplier networks are positively associated with lead time reduction, inventory minimization, and productivity. However, the supplier networks are not positively associated with lead time reduction or inventory minimization. The supplier networks are positively associated with productivity, cost reduction, lead time, positive impact on firm performance, and inventory minimization positively related to firm performance. Productivity has a positive effect on firm performance. The results indicate that productivity mediates the relationships of quick setups, uniform production levels, supplier networks, and firm performance. The results suggest that cost reduction mediates the associations of the factors of quick setups, uniform production level, quality control, and supplier networks with the firm performance. However, the Inventory minimization mediates the relationship between the supplier networks and the firm performance not supported. The Lead time reduction mediates the relationship between the supplier networks and the firm performance, but it does not mediate.

Prior research has found mixed results of leanness, with a counter idea being that slack allows flexibility to improve firm financial performance. We first seek to confirm empirically that leanness in manufacturing does in fact contribute to both lower environmental damage and to improve firm financial performance. With increased awareness of global environmental issues, we incorporate environmental damage measures from Trucost to assess how they may affect firm performance and are affected by leanness. The measures of leanness are calculated based on publically available financial data from Compustat. Based on a final sample of 406 manufacturing firms representing 3594 firm-year observations from 2002 to 2013, the proposed relationships of leanness to firm outcomes and environmental damaged are investigated. A key finding of this study is that a firm should aim its lean efforts to reducing environmental damage, which in turn has more of an effect on improving financial performance than other lean initiatives.

PurposeThe purpose of this paper is to examine how utilization of non‐financial manufacturing performance (NFMP) measures impacts the lean manufacturing/financial performance relationship.Design/methodology/approachA structural equation model (SEM) is estimated using data provided by 121 US manufacturing executives. In addition to examining direct effects, the study examines whether NFMP measurement mediates or moderates the lean manufacturing/financial performance relationship.FindingsThe results provide substantial evidence that utilization of NFMP measures mediates the relationship between lean manufacturing and financial performance.Research limitations/implicationsThe study's findings regarding NFMP measurement suggest that the mixed results of prior studies of the lean manufacturing/financial performance relationship may be due in part to a failure to account for NFMP measurement. Limitations of the study are the non‐random sample and its small sample size, relative to the SEM estimated.Practical implicationsManagers who implement lean manufacturing without utilizing supportive NFMP measures may experience disappointing financial results.Originality/valueThis is the first known study that adopts a SEM framework to examine: how NFMP measurement affects the relationship between lean production and profitability; the direct relationship between NFMP measurement and firm performance; and the impact of lean manufacturing on externally audited, objective measures of firm performance.

The relationship of operational innovation and financial performance—A critical perspective

<abstract> <p>It is becoming increasingly apparent that businesses must consider the impact they have on the environment and society while pursuing profit maximization. As a result, there is a growing need to incorporate sustainable frameworks into business decision-making. By focusing on sustainable performance at the firm level, we addressed a significant gap in understanding how environmental and social Sustainable Development Goals (SDGs) impact bottom-line performance and the crucial role that effective country governance plays in implementing sustainability at the organization level. In 2015, the United Nations established Sustainable Development Goals (SDGs), where firms are encouraged to practice in the strategic operation of their businesses. In addition, country governance can play a significant role in adopting sustainable practices and policies that can impact bottom-line performance. In this study, we examined the relationship between environmental and social Sustainable Development Goals (SDGs) practices, country governance, and firms' financial performance from 2017 to 2021. The sample data set consisted of top-listed firms in the finance, manufacturing, and technology industries of 100 companies from 17 countries in developed and developing and emerging economies. We utilized content analysis to account for the qualitative aspects of how firms implement social and environmental SDGs. Ten environmental SDGs and eight social SDGs were incorporated in this study as a means of measuring sustainable development goals' impact on a firm's financial performance. We adopted return on assets (ROA) to measure the firm's financial performance. We adopted government effectiveness and regulatory quality to moderate the relationship between social and environmental sustainability practices and firm performance. The panel regression method was exercised to find out the relationship between environmental and social SDGs' impact on financial performance. In addition, we measured the interaction effect between environmental and social SDGs and country governance on firms' performance. We also deployed two-stage least squares (2SLS) regression estimation to mitigate endogeneity concerns. We found that environmental SDGs had a positive and significant impact on firms' financial performance. The coefficient of social SDGs on firm performance was negative and statistically significant. We observed that the coefficient of interaction terms between environmental SDGs and country governance was positive and statistically significant. Moreover, the coefficient interaction terms between social SDGs and country governance were positive and statistically significant, lessening the negative impact of social SDGs on firm financial performance. Finally, we also performed a robustness test on our analysis based on the firm's average capital and average assets. The findings almost held the same.</p> </abstract>

Most research in strategic management ope rationalizes firm financial performance by using either accounting‐or market‐based measures. Recently, some have suggested that subjective measures may be useful in assessing a firm's financial performance. We argue that there is a theoretical basis for viewing firm financial performance as having a higher order structure consisting of three separate yet distinct dimensions. Using second‐order confirmatory factor analysis, we found that while differences exist among accounting, market, and subjective measures of firm financial performance, there is evidence to support the concept of a single underlying construct. While our findings are statistically significant and thus support our hypotheses, the substantive nature of our results suggests that much more research is needed before we fully understand the dimensionality of firm financial performance.RésuméDans la majorité des recherches en gestion stratégique, on opérationnalise la performance financière d'une entreprise au moyen de mesures fondées sur la comptabilité ou le marché. Récemment, certains ont suggéré que des mesures subjectives pourraient ětre utiles dans l'évaluation de la performance financière d'une entreprise. Nous avançons l'hypothèse qu'il existe une base théorique pour considérer que la performance financière d'une entreprise consiste en une structure supérieure de trois dimensions séparées et distinctes. Par l'analyse des facteurs de confirmation secondaires, on a trouvé qu'il existe des différences dans les mesures de performance financière d'une entreprise, que ce soit la mesure de comptabilité, de marché ou subjective, et on peut prouver le concept d'une base unique commune. Bien qu'ils soient statistiquement significatifs et prouvent nos hypothèses, nos résultats suggèrent qu'il faut effectuer des recherches plus poussées avant de comprendre tout à fait la dimension de la performance financière d'une entreprise.

This study examines the relationships between lean manufacturing, green supply chain management (GSCM), supply chain resilience (SCR), and firm performance in Thai manufacturing companies. Using data from 322 employees across various industries, the research employs co-variance-based structural equation modelling to test a series of hypotheses. The findings reveal that lean manufacturing has significant positive effects on both GSCM practices and firm performance. GSCM practices demonstrate a strong positive impact on SCR. However, contrary to expectations, the study finds no significant direct relationship between GSCM practices and firm performance, nor between SCR and firm performance. The hypothesized mediating roles of GSCM practices and SCR in the relationship between lean manufacturing and firm performance are not supported. These results suggest that while lean manufacturing and GSCM practices contribute to improved operational efficiency and environmental sustainability, their translation into enhanced financial performance may be more complex than previously thought. The study contributes to existing literature by providing empirical evidence from the Thai manufacturing context and highlights the need for further research into how operational improvements in lean and green practices can be converted into tangible financial outcomes.

PurposeThis study aims to examine the impact of lean manufacturing (LM) on the financial performance of companies affected by emergency situations. It additionally explores the role of advanced manufacturing technologies (AMTs) in complementing LM to enhance financial performance in emergency and non-emergency situations.Design/methodology/approachBoth survey and archival data were collected from 219 manufacturing companies in China. With longitudinal data collected before and after an emergency situation (i.e. Typhoon Rumbia), regression analysis was conducted to investigate the effects of LM and AMTs on financial performance in different contexts.FindingsOur results reveal an inverted U-shaped relationship between LM and financial performance in the context of emergency. We also found that AMTs exerted a positive moderation effect on the inverted U-shaped relationship, indicating high levels of AMTs that mitigated the inefficiency of LM in coping with supply chain emergencies.Research limitations/implicationsThrough simultaneous investigation of LM and AMTs as bundles of practices and their fit with different contexts, this study takes a systems approach to fit that advances the application of contingency theory in the Operations Management literature to more complex patterns of fit.Originality/valueThis study illuminates how AMTs support LM practices in facilitating organizational performance in different contexts. Specifically, this study unravels the interaction mechanisms between AMTs and LM in influencing financial performance in emergency and non-emergency situations.

This present research seeks to explore SCM practices by Indonesian SMEs and to empirically examine the impact of the SCM practices on firm financial performance. Empirical data was collected in 2013 through a survey using structured face-to-face interviews. Thirty-nine SMEs producing food, handicraft, clothing and leather in Yogyakarta, Indonesia, are taken as studied cases. Structural equation modelling was applied to test the causation relationship between the SCM practices and the financial performance. Findings generally confirm that the SMEs put high importance on operational efficiency particularly high on downstream but with less attention on the supplier side, which is consistent with previous studies. The findings also demonstrate the significant positive causal relationship between the SCM practices and the financial performance, implying that higher implementation levels of the SCM practices lead to better financial performance. Customer relationship management, supplier relationship, and information system, are found to be the three most practices which contribute significantly to the firm performance. Potential improvement areas and their associated strategies (e.g., horizontal collaboration and vertical partnership) are also discussed.

How does organizational leadership contribute to the firm performance through social responsibility strategies?

PurposeThe purpose of this paper is to examine the simultaneous effects of two process variables: functional involvement in strategy formulation, and manufacturing improvement programs, on manufacturing performance and financial performance of manufacturing firms in China.Design/methodology/approachRigorous empirical research methods are used to ensure proper data collection process, and reliability and validity of constructs. Structural equation modeling is used to examine the relationships between functional involvement, improvement programs, manufacturing performance and financial performance.FindingsIt was found that involvement of marketing, finance and operations in strategy formulation have an effect on cost and quality whereas the involvement of emerging functions such as human resources, public relations, research and development and information technology have an effect on all aspects of manufacturing performance.Originality/valueStudies of manufacturing strategy have primarily focused on choices and plans that denote strategic intent, rather than on the process of formulating and realizing strategy. Typical studies have used data from developed countries, such as Europe and North America. Insufficient attention has been paid to the process variables of manufacturing strategy and their effects on manufacturing performance. The study addresses these gaps in the literature using data collected from Chinese firms.

This paper uses the carbon emission trading policy as a quasi-natural experiment to comprehensively investigate its impact on the financial and market performance of firms. The study uses data from A-share listed companies for the period from 2009 to 2022 and adopts the difference-in-differences model for a rigorous analysis. The mediating effect of financing constraints and the moderating role of managerial capabilities are examined with respect to the influencing mechanisms; heterogeneity was also analyzed in terms of carbon allowance allocation methods, carbon prices, environmental enforcement efforts, and type of industry. The results of the study show that the carbon trading policy has a significant effect on improving the financial performance of firms, while also inhibiting their market performance. The feasibility of the findings was further validated after conducting robustness tests such as propensity score matching and placebo tests. The mechanism analysis finds that financing constraints play a masking effect on the impact of carbon trading policies on firms’ financial performance; managerial competence can positively moderate firms’ market performance. Heterogeneity analysis shows that the inhibitory effect of emissions trading policies on market performance is more significant for firms in regions with a smaller share of free allowances. For companies in high carbon price regions, carbon trading policies have a more significant impact on financial performance. For companies located in regions with higher levels of environmental enforcement, the positive effect of carbon trading policies on financial performance is unchanged, but the dampening effect on market performance is more significant. Carbon trading policies have a stronger positive effect on the financial performance of high-polluting firms, but a more significant dampening effect on the market performance of low-polluting firms. The findings of this study enhance China’s research framework on the economic impacts of carbon trading policies on micro-enterprises, promoting sustainable business development and serving as a useful reference for policy sustainability.

Purpose- In order to recognize and adapt to the changing demands and desires of their customers, businesses must become more inventive. This is made necessary by the quickly evolving multinational business environment and the extraordinary technological breakthroughs. Due to assure firm performance, these intelligence businesses must be able to respond to the complex dynamics in the global marketplace successfully, accurately, efficiently, and fast. Open innovation can be created to enhance performance by using knowledge learned about outside projects, rival businesses, clients, and new technologies. The purpose of this study is to ascertain the impact of business intelligence on a firm's performance with the mediation effect of open innovation on financial performance. Methodology- The statistical population for this study consists of 200 managers from internet technology and software enterprises. There are 132 company managers in the sample. A questionnaire that was distributed and gathered using a non-probability sampling technique is the data collection tool in this study. The research data were also examined using Smart-PLS and SPSS software. In this study, both descriptive and inferential analyses were used. Findings- Data analysis using PLS software and research findings demonstrate that business intelligence and open innovation have a positive influence on financial and firm performance. The findings also show that open innovation and financial performance play the roles of mediators. Conclusion- The results demonstrate that higher business intelligence levels enhance firm performance. In today's fast-paced and competitive company world, managing and optimizing business performance is essential for maintaining viability as well as maximizing firm profitability. In order to access performance, effective business performance management will combine business analytics with open innovation. Business intelligence can therefore offer a foundation for comprehending which data is pertinent for open innovation and company business improvement. Keywords: Business intelligence, firm performance, financial performance, open innovation JEL Codes: M20, L25, O36