Creating the competitive edge: A new relationship between operations management and industrial policy

• Author: Katy Mason,Alan Hughes,Paul McCaffrey,Martin Spring
• DOI: http://doi.org/10.1016/j.jom.2016.12.003
• Date: 01 March 2017
• Published date: 01 March 2017

Creating the competitive edge: A new relationship between

operations management and industrial policy

Martin Spring

a

,

*

, Alan Hughes

b

, Katy Mason

c

, Paul McCaffrey

d

a

Centre for Productivity and Efficiency, Lancaster University Management School, UK

b

Imperial College Business School, London, UK, Centre for Business Research, University of Cambridge, UK and Lancaster University Management School, UK

c

Lancaster University Management School, UK

d

UK Government, Department for International Trade, UK

article info

Article history:

Accepted 12 December 2016

Available online 1 February 2017

Accepted by Mikko Ketokivi.

abstract

Policy interventions by governments to alter the structure of economic activity have either been dis-

missed or ignored by operations management (OM) scholars. However, in recent years, such ‘industrial

policy’measures have gained increasing support in developed economies, particularly in relation to

manufacturing. This paper argues that contemporary manufacturing in high-cost economies is rooted in

technological innovation. As such, it can be enhanced by industrial policy interventions that prevent

systems failures in the process of turning technological innovation into commercially viable products. In

particular, we argue that this can be achieved by establishing non-firm, intermediate research organi-

zations and by other measures to change the institu tional architecture of an economy. We disagree with

claims in earlier OM literature that industrial policy is all but irrelevant to manuf acturing firms and to

OM. Instead, we argue that OM must broaden its conceptual scope so as to encompass activeengagement

with non-firm network participants such as government-supported intermediate research organizations,

and that, as well as learning to be effective users of industrial policy, OM practitioners and academics

should engage actively in the development of industrial policy. In this way, high-value,high-productivity

manufacturing can be viable in high-cost economic environments.

©2017 Elsevier B.V. All rights reserved.

1. Introduction

The offshoring of manufacturing has been a serious concern in

developed economies in the past decade (Blinder, 2006; OECD,

2007; Harrison and McMillan, 2010) As a result, there has been

growing support for policy interventions to reverse this trend,

particularly since the 2007-8 global financial crisis. In the US, the

Obama administration established the Advanced Manufacturing

National Program Office (AMPSC, 2012). In the UK, the 2010e2015

Government developed an ‘industrial strategy’to help rebalance

the economy, away from financial services and back toward

manufacturing: in the words of Peter Mandelson, the UK Secretary

of State for Business from 2008 to 2010, “less financial engineering

and a lot more real engineering”.

1

In 2016, the US Presidential

Election and the UK's referendum on membership of the European

Union have both made the global location of manufacturing and the

idea of industrial strategy even more important in the political

sphere.

Competitive threats from developing economies are, of course,

nothing new. The rise of Japanese manufacturing during the 1970s

was a particular cause forconcern in the US and UK, and gave rise to

a great deal of activity in operations management (OM) research on

topics such as JIT, lean, quality management and supply manage-

ment. Various forms of industrial policy responses were also

developed. In this regard, senior operations managers and policy-

makers have been concerned with many of the same phenom-

ena: the changing nature of manufacturing processes, organiza-

tions, markets and supply networks, and the evolution of our

understanding of them. Whereas thirty or forty years ago the pri-

mary unit of analysis for both policy and OM would have been firms

and domestic sectors, both communities are now faced with un-

derstanding how to capture value from product and process

innovation in complex, globally-dispersed manufacturing value

chains (Hughes, 2012). Despite these many common concerns,

*Corresponding author.

E-mail address: m.spring@lancaster.ac.uk (M. Spring).

1

Labour Party Conference 2009 http://www.labour.org.uk/peter-mandelson-

speech-conference.

Contents lists available at ScienceDirect

Journal of Operations Management

journal homepage: www.elsevier.com/locate/jom

http://dx.doi.org/10.1016/j.jom.2016.12.003

0272-6963/©2017Elsevier B.V. All rights reserved.

Journal of Operations Management 49-51 (2017)6e19