Summary
The study examines the perceptions of general managers (GMs) and manufacturing managers (MMs) regarding manufacturing priorities of their business units (alignment) on manufacturing unit performance in Indonesia. Specifically, this study tests whether the performance of the manufacturing unit is enhanced when GMs and MMs agree on what are the most important strategic priorities. Further, this study tests the alignment effects on performance under high and low levels of decentralization. A sample of matched pairs of GMs and MMs is surveyed from 84 manufacturing plants. The hypotheses regarding the alignment-performance relationship is tested. This study finds that alignment of priorities is positively related to manufacturing performance. Furthermore, high levels of decentralization strengthen the positive alignment-performance relationship. Implications of the results and suggestions for future research are discussed.
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Extract
An Evaluation of the Relationship Between Alignment of Strategic Priorities and Manufacturing Performance
Introduction
The study of alignment of manufacturing priorities and its relationship with performance is currently receiving much scholarly attention. An increasing number of researchers frequently posit that maximum benefit will accrue if there is a fit between environment and strategy in different contexts. They found that lack of fit has significant effects on performance (Boyer & McDermott, 1999; Venkatraman & Prescott, 1990). Skinner (1974) cited in Joshi et al. (2003) had implicitly conceptualized the need for "strategic consensus" or "alignment" of competitive priorities throughout the manufacturing organization. Strategy must not only be well-fitted to its competitive priorities but it also must be communicated and widely understood throughout the manufacturing organization. According to Boyer and McDermott (1999) strategic consen...See the full content of this document
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