Deploying AMT for Scale Versus Scope: A Contingency Approach

Abstract

Flexibility and efficiency are twin capabilities of advanced manufacturing technologies (AMT). Much research has focused on AMT’s role in bolstering manufacturing flexibility. Meanwhile, AMT’s potential for efficiency is often disregarded, even proscribed by researchers, because that dampens the effect on flexibility. Yet, research shows that practitioners frequently implement AMT to pursue efficiency over flexibility. This problem has not been addressed in the literature. We approach this problem by viewing AMT through a strategic lens and examining AMT at the deployment level. Firms with different strategic goals must deploy AMT differently due to flexibility and efficiency often being opposite ends of a tradeoff. We identify two modes of deployment – AMT_Scale versus AMT_Scope – with characteristically different features, which explains AMT’s ability to support opposed strategies. Our unique conceptualization puts into proper perspective the mixed empirical results reported in the literature. Drawing on the contingency theory, we find that firms deploying AMT_Scope (to support a ‘differentiation’ strategy) derive flexibility, while firms deploying AMT_Scale (to support a ‘cost-leadership’ strategy) sacrifice flexibility.