Advanced Manufacturing Technology: Organizational Design and Strategic Flexibility

David Lei, Michael A. Hitt, Joel D. Goldhar

Organization Studies · 1996 · Volume 17 · Issue 3

Abstract

This paper explains how investments in flexible, advanced manufacturing tech nologies (AMT) have special properties that can transform organization design and the economic bases of strategic flexibility. Investments in AMT that pro vide significant economies of scope (i.e. low-volume/low-cost manufacturing) produce strategic options that allow the firm to place a 'call' on related markets that it may potentially enter. The value of AMT investments grow with the increasing changes in the environment. In addition, CAD/CAM networks, a vital component of most AMT systems, enable the firm to work selectively with external designers, suppliers, customers and other firms to rapidly com press the product development and commercialization process. Firms seeking to maximize economies of scope and the option value of AMT need to recon figure their organizations into loosely coupled systems with a modular, open systems perspective. Flexible AMT systems facilitate the pursuit of emergent, product-based strategies based on the selective exercise of the process techno logy's option value. Furthemiore, AMT helps firms develop more complex competitive strategies (e.g. integrated low cost and differentiation) necessary for strategic competitiveness in global markets. Finally, AMT can facilitate the development of a learning laboratory in organizations.

Keywords

Descriptors: computer-integrated manufacturing, computer-aided design, modular organizations, options, economies of scope, loose coupling

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