Developing Effective Measures of Organizational Capability of Manufacturing Firms: An Exploratory Case Study of Japanese Manufacturing Firms

Takahiro Fujimoto, Mitsuhiro Fukuzawa, Young Won Park () and Paul Hong
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Takahiro Fujimoto: Institute for Business and Finance, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050, Japan
Mitsuhiro Fukuzawa: Faculty of Business Administration, Seikei University, 3-3-1 Kichijoji-Kitamachi, Tokyo 180-8633, Japan
Young Won Park: Graduate School of Humanities and Social Sciences, Saitama University, 255 Shimo-Okubo, Sakura-ku, Saitama 338-8570, Japan
Paul Hong: John B. and Lillian E. Neff College of Business and Innovation, The University of Toledo, Toledo, OH 43606, USA

Sustainability, 2022, vol. 14, issue 22, 1-20

Abstract: The present article explores the flow-oriented and routine-based concept of organizational capability in manufacturing and proposes a practical method of measuring it by using the flow map of material and information (FMMI), including the value stream map (VSM). The environment surrounding manufacturing companies is becoming increasingly turbulent, making it increasingly difficult for them to survive and prosper. For example, global companies face challenges on multiple fronts such as international trade tensions, pandemic lockdowns, and competitive challenges from firms in emerging economies. In addition, in digital markets, supply chain transparency and resiliency require visualizing the flow of materials and information across a wide range of global activities. Business activities are conceived as flows of design and control information from across functions for value creation and transfer. A high level of value creation is built on the excellence of vital function. In this context, this study aims to identify key characteristics of high-performance firms. In particular, the flow map of material and information (FMMI) assumes simultaneous execution of capability-building and capability-measuring. This research team reports the series of workshops and survey results based on (1) the work of the industry-university consortium, (2) the collaborative learning process through trust and information sharing among participating companies, (3) sharing improvement activities, and (4) identifying areas of poor flow (issues for each company). In addition, several selected case studies of Japanese firms highlight the impact of using FMMI for improving multiple performance outcomes and measuring their manufacturing capabilities at the same time. The lessons and implications are discussed.

Keywords: organizational capability; the flow map of material and information (FMMI); dynamic capability; industry-university consortium; mutual learning; measures of organizational capability; action research (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
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