The role of executive problem solving in knowledge accumulation and manufacturing improvements

Abstract

This study investigates how strategic leaders influence knowledge stocks and manufacturing improvements in firms. In doing so, we identify two related but distinct problem-solving orientations among senior executives. The first orientation uses short-term remedies to control and contain the impact of a problem, which we label as symptomatic problem solving (SPS). The other orientation addresses a problem situation with the objective of developing new understanding and skills, and we label it as generative problem solving (GPS). We test our theoretical framework using two waves of survey data from a sample of metal casting manufacturers (metal foundries) in the United States. Our analysis shows that GPS positively affects both internal and external knowledge stocks, while SPS negatively influences internal knowledge stock. Knowledge stocks, in turn, facilitate incremental and radical manufacturing improvements. Our results suggest that the two executive problem-solving orientations can potentially counteract each other in enhancing and depreciating knowledge stocks, and subsequently affect a manufacturer's ability to attain improvements both in the short and long terms