Process Management Practices and Performance: Competition and the Moderating Effect of Technological Capabilities

Attention to processes has increased, as thousands of organizations have adopted processfocused practices, including TQM and ISO 9000. Proponents of such programs stress the promise of improved efficiency and profitability. But research has not consistently borne out these prospects. Moreover, the expectation of universal benefits is not consistent with research highlighting the important role of firm-specific capabilities in sustaining competitive advantage. In this paper, we use longitudinal panel data for firms in the auto supplier industry to study two new issues. First, we find that, with the majority of firms within an industry adopting process management practices, late adopters no longer gain financial benefits from these practices. Second, we explore how firm technological capabilities moderate the performance advantages of process management. We find that firms that are very narrowly- or broadly- oriented have fewer opportunities for complementary interactions that arise from process management practices and thus benefit less than those with limited breadth in technologically related activities.