Selecting manufacturing business practices for maximum competitive advantage

The purpose of this paper is to test for complementarities between 26 advanced manufacturing technologies (AMT) in Canadian manufacturing plants.

Constrained regression analysis with labor productivity and profitability as dependent variables for 11 industries and three size classes are used. Supermodularity and submodularity constraints are applied in order to conduct pair‐wise tests of business practices used to support AMT.

The results demonstrate that the selection of complementary practices can have a significant impact on plant profitability and labor productivity, resulting in a competitive advantage. The optimal bundle of complementary and substitute practices are unique for each industry and size class.

The data are for one year only.

Complementary and substitute business practices to support AMT are identified at the plant level for specific size classes and industries. Lattices (graphically) are created as an example of how to present the results to managers.