Withstanding the economic recession: Examining the efficacy of manufacturing strategy alignment and process integration

Abstract

In this paper, through the lens of contingency theory, we examine how manufacturing strategic alignment and process integration affect manufacturing plant performance under two distinct environmental contexts presented by long-term macroeconomic instability. A large-scale dataset was specifically assembled for the purpose of this research investigation by combining plant-level survey data on practices and performance with secondary macroeconomic data for 14 countries from multiple sources. The results from multi-level regression analyses indicate that while manufacturing strategy alignment and process integration are beneficial for plant performance, they have distinct effects when the contingency factor, macroeconomic instability, is taken in consideration. Notably, when plants face high macroeconomic instability, process integration has a stronger effect on performance whereas in low instability environment manufacturing strategy alignment provides higher performance benefits. We discuss the theoretical and managerial implications of these findings and offer directions for future research.