A Theory of Production Competence Revisited*

Abstract

A recent article [3] proposed a definable relationship between production competence and business performance and presented empirical evidence to support the relationship. The purpose of this note is four‐fold. First, it corrects the authors' numerical measure of production competence. The correction changes the nature of the relationship between competence and performance. Second, this note suggests an improved numerical measure of business performance (the dependent variable in the study). The authors of [3] defined performance in a manner which inadvertently captures elements used to measure production competence (the independent variable). The result is a deceptively close fit of the authors' model with the data. The third purpose of the note is to introduce a more appropriate theoretical framework for the production competence construct. It is shown that production competence is closely related to the formulation and implementation of manufacturing strategy and can best be understood within that context. Last, an alternative conceptual model of the relationship between business strategy, production competence, and business performance is presented. The new model includes a construct which measures the “fit” of a firm's business strategy to its external, competitive environment.

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