Performance effects of early and late Six Sigma adoptions

• Date: 01 May 2015
• Author: Kevin Linderman,Morgan Swink,Brian W. Jacobs
• Published date: 01 May 2015
• DOI: http://doi.org/10.1016/j.jom.2015.01.002

Journal of Operations Management 36 (2015) 244–257

Contents lists available at ScienceDirect

Journal of Operations Management

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

Performance effects of early and late Six Sigma adoptions

Brian W. Jacobsa,∗, Morgan Swink b,1, Kevin Lindermanc,2

aMichigan State University, Eli Broad College of Business, 632 Bogue Street N370, East Lansing, MI 48824, United States

bTexas Christian University, Neeley Business School, PO Box 298530, Fort Worth, TX 76129, United States

cUniversity of Minnesota, Carlson School of Management, 321 19th Ave. S., Minneapolis, MN 55455, United States

article info

Article history:

Received 21 July 2014

Received in revised form 2 December 2014

Accepted 15 January 2015

Available online 29 January 2015

Accepted by Thomas Younghoon Choi

Keywords:

Six Sigma

Quality management

Administrative innovation

Adoption timing

Organizational learning

Empirical research

abstract

Operations managers confront the challenge of deciding when to implement various administrative inno-

vations such as Six Sigma, ISO 9000, and Lean. This research examines the operating performance effects

of early versus late adoption of Six Sigma process improvement. Using theories of organizational learn-

ing and knowledge transfer, we develop hypotheses describing the advantages of late adoption, and

factors that affect a firm’s ability to benefit from Six Sigma either as an early or late adopter. We test

our hypotheses using an event study methodology. The empirical results show that, on average, late

adopters in our sample enjoy significantly greater performance gains than early adopters. However, the

analysis also shows that the advantages of late adopters tend to be moderated by certain environmental

and structural characteristics of a firm. Specifically, late adoption has been favorable when firms operate

in low-velocity industries, when they primarily sell in business-to-business markets, when they have

good financial performance prior to adoption, and when they are large. Conversely, when adopters oper-

ate in conditions that have the opposite characteristics, then early adoption appears to have produced

better results. Understanding the effects of these factors can enhance managers’ abilities to determine

appropriate adoption timing to increase performance.

© 2015 Elsevier B.V. All rights reserved.

1. Introduction

Managers continuously search for administrative innovations

that can potentially improve their business processes and enhance

operating performance. Defined by Teece (1980, p. 464) as

“improvements in administrative techniques and in the organi-

zation of economic activity”, administrative innovations include

practices such as quality management, matrix management, and

zero-based budgeting (Westphal et al., 1997), and certifications

such as ISO 9000, ISO 14000, and C-TPAT (Ritchie and Melnyk,

2012). In this study, we focus on Six Sigma as an administrative

innovation. While managers search for new administrative innova-

tions like Six Sigma to improve performance, they face advertise-

ments and proposals from vendors, business consultants, and other

purveyors of such improvement methodologies. In a fast moving

world, managers have to decide whether, when, and how they

should adopt new innovations. Such decisions can significantly

∗Corresponding author. Tel.: +1 517 884 6370; fax: +1 517 432 1112.

E-mail addresses: jacobsb@broad.msu.edu (B.W. Jacobs),

m.swink@tcu.edu (M. Swink), linde037@umn.edu (K. Linderman).

1Tel: +1 817 257 7463; fax: +1 817 257 7227.

2Tel: +1 612 626 8632; fax: +1 612 624 8804.

impact an organization’s competitive standing, because they

affect the organization’s ability to maintain parity or even create

advantages over competitors. This study examines the important

question of when to adopt administrative innovations by study-

ing the impacts of early and late adoption of a widely diffused

innovative program, Six Sigma.

Administrative innovations like Six Sigma typically require

major reassignments of tasks and responsibilities across an organi-

zation; they can therefore be expensive and disruptive to adopt

(Teece, 1980). Accordingly, researchers have examined whether

such innovation adoptions lead to operating performance improve-

ments that exceed these investments. Examples include studies

of the performance effects of TQM (Yeung et al., 2006), ISO 9000

(Corbett et al., 2005), JIT (Kinney and Wempe, 2002), and Six

Sigma (Swink and Jacobs, 2012; Shafer and Moeller, 2012). On the

whole, these studies found that the decision to adopt administra-

tive innovations yields significant performance benefits. However,

the benefits may vary depending on when organizations decide

to adopt the administrative innovation. Importantly, the ease and

effectiveness of implementation may be influenced by the adop-

tion timing. Administrative innovations may be more difficult to

implement during early stages of diffusion, since little experi-

ence or knowledge has accumulated to guide adoptions. Without

such knowledge, organizations rely on learning-by-doing, which

http://dx.doi.org/10.1016/j.jom.2015.01.002

0272-6963/© 2015 Elsevier B.V. All rights reserved.