Organizational Models for Industry 4.0

In this introductory chapter, we invite readers to look at the mundane manufacturing sector through the lens of neo-institutional theory. The global manufacturing field is being reshuffled due to emerging digital technologies and connectivity. Companies mimic digitally transformed ones. Countries and regions introduce Industry 4.0 policies to avoid deindustrialization and direct resources for manufacturing companies that adopt digital technologies. “Digitalization” becomes expected. It grants legitimacy, increased demand, talents, and other vital resources. In this chapter, we propose that digital innovations enable the introduction of new service-oriented business models and contribute to the advancement of the capabilities on which companies compete. These two trends—the emergence of new service-oriented firms in relation to more established lean and agile firms and the effects of digital innovations on the performance of organizations—are at the front and center of the book. We ground the research gaps and provide a theoretical–empirical framework. We introduce the effective empirical sample of 500 firms, which was collected as part of a European manufacturing survey. Finally, we argue that studying lean, agile, and service-oriented organizations in relation to each other could result in a more nuanced understanding of companies’ strategies and behavior in the context of Industry 4.0.

Lean, agile, and service-oriented templates of organizing constitute manufacturing companies’ most popular organizational forms. Despite their prevalence, these organizational forms are rarely analyzed in relation to each other. Even more, few have aimed to determine whether organizations adhering to these templates occur with any degree of regularity among the manufacturing firms. In this chapter, we conceptually compare lean, agile, and service-oriented templates to assess their compatibility. Further, we use a representative sample of 500 manufacturing companies to empirically identify companies adhering to the templates in relation to each other. The systematic review reveals the low compatibility of templates. Despite some overlap among practices, the templates are characterized by unique goals, the rationale of capturing the value, and resulting performance capabilities. The cluster analysis allows for identifying lean, agile, and service-oriented performers in relation to each other according to their performance dimensions. The results imply that it is easier to switch from the lean to the agile template and from the agile to the service-oriented template than from the lean to the service-oriented template. However, the study discourages the sequential approach toward the lean, agile, and service-oriented templates and treats these organizational forms as paradigmatically different.

Lean, agile, and service-oriented templates of organizing constitute manufacturing companies’ most popular organizational forms. Companies that adhere to the lean template differentiate on cost and quality competitive priorities, adopt a set of lean methods, and are characterized by superior cost and quality competitive performance. Despite huge attention, representative empirical studies of companies adhering to the lean template are rare. In this chapter, we use a representative sample of 500 manufacturing companies to reveal how lean template-related competitive priorities, methods, and performance capabilities are diffused. We also show whether using lean methods is contingent on internal and external factors and which lean methods contribute to cost and quality performance. The results show that quality competitive priorities and performance capabilities are far more prevalent than cost-related ones. Our findings reveal that manufacturing companies use lean methods extensively. We also discover that adopting the lean methods increases with the company’s size. Finally, our models reveal that pull of production, customer or product-oriented lines/cells, and development of suppliers positively contribute to the quality competitive performance. Pull of production positively influence the cost performance. Such findings contribute to a more nuanced understanding of lean template diffusion among manufacturing firms.

Agile, lean, and service-oriented templates of organizing constitute manufacturing companies’ most popular organizational forms. Companies that adhere to the agile template differentiate on flexibility or innovation competitive priorities, adopt a set of digital manufacturing innovations, and are characterized by superior flexibility or innovation performance. Despite huge attention, representative empirical studies of companies adhering to the agile template are rare. In this chapter, we use a representative sample of 500 manufacturing companies to reveal the diffusion of agile template-related characteristics. The results show that flexibility competitive priorities, and performance capabilities are far more prevalent than innovation-related ones. Our findings reveal that manufacturing companies use digital manufacturing innovations non-extensively. We also discover that large companies use digital innovations more extensively than SMEs. Our analysis reveals that engineering companies use more digital innovations than companies from other sectors. Finally, our models reveal that systems for automation and management of internal logistics, simulation for product design or product development, and remote monitoring of the operating status positively contribute to the flexibility performance. We cannot find any influence of digital innovations on innovation performance. Such findings contribute to a more nuanced understanding of agile template diffusion among manufacturing firms.

Service-oriented, lean, and agile templates of organizing constitute manufacturing companies’ most popular organizational forms. Companies that adhere to the service-oriented template differentiate on services competitive priority, provide product and customer support services, and are characterized by superior service and digitalization performance. Despite huge attention, representative empirical studies of companies adhering to the service-oriented template are rare. In this chapter, we use a representative sample of 500 manufacturing companies to reveal the diffusion of service-oriented template-related characteristics. The results show that only 2.4% of companies compete on services competitive priority. 1.4% and 2.6% of companies claim better servitization and digitalization performance than their competitors. Our analysis reveals that engineering companies and companies which customize products provide more services than other companies. The results show that a mix of services contributes to service performance. Maintenance and repair, remote support for clients, online training, and taking over the management of maintenance activities are positively associated with service performance. In contrast, Full-service contracts and take-back services have a negative effect on service performance. Such findings contribute to a more nuanced understanding of Service-oriented template diffusion among manufacturing firms.

Long-standing debates about whether pursuing both lean and agile templates concurrently can be a performance-enhancing solution have become even more relevant for businesses operating in an increasingly uncertain environment. Based on the theoretical premise of performance enhancing-organizational ambidexterity, we tested the hypothesis that improved performance results from the fit between agile and lean capabilities. The deviation score approach (matching perspective) and fit as profile deviation were used to examine the performance-enhancing fit of lean (quality and delivery) and agile (flexibility and innovation)-related capabilities. The deviation score method did not reveal a significant relationship between misfit and profit. In contrast, the misfit and sales revenue growth rates were positively and significantly related, albeit not in the expected direction. The profile deviation strategic fit perspective revealed a nonsignificant negative relationship between non-adherence to the ideal profile and profit within the specific range of profile deviation. The current study relied on fit as matching and profile deviation, which denotes the combining approach of ambidexterity. Further research may thus broaden our understanding of the performance implications of lean-agile template compatibility, most notably conceptualizing the fit as an ambidexterity-related balancing approach in the pursuit of optimal levels of lean and agile capability configurations.

A framework of competitive capabilities connects intentions, actions, and performance at the organization’s strategic level. The decision about the sequence of obtaining capabilities is the question for the selection of operation strategy. This research explores four competitive dimensions: quality, cost, flexibility, and delivery in various sequences, i.e., trade-off, cumulative capabilities, non-competitive, and multiple models. We assume that factors such as competitive priority, manufacturing capacity utilization, product complexity, and others influence a particular sequence model. The survey results represent 500 Lithuanian manufacturing companies, according to the methodology of the European Manufacturing Survey. Our research confirmed all four operation strategy models in Lithuanian manufacturing organizations. The main results have shown that implementing the trade-off model and developing only one capability means the loss of innovations. On the contrary, the cumulative way of developing capabilities is positively associated with innovations, cooperation, digitalization in manufacturing, and better utilization of manufacturing capabilities. Organizations that embrace the multiple capabilities model mainly benefit from the main product customization and are the next ones in innovation. Non-competitive model organizations have been found to have low innovations and low digitalization. Furthermore, factor analysis has shown additional differences and similarities between the operation strategies.

In this last chapter, we summarize the findings and highlight the contribution of the research reported in this book. After characterizing the emerging service-oriented organizing template in relation to already established lean and agile templates, we suggest that the templates are characterized by a low degree of compatibility. The templates are constituted by contrasting goals, a partial overlap of practices and their adoption leads to unique competencies and performance capabilities. Further, our empirical research shows that lean template-related competitive priorities, practices and performance capabilities are diffused more extensively compared to agile and service-related ones. Finally, we reveal that lean, agile, and service-oriented practices and performance capabilities contribute to manufacturing firms’ operational and financial performance. We provide empirical evidence revealing that quality and innovation performance capabilities positively influence revenue growth while digitalization capability positively relates to the productivity of industrial organizations. The findings contribute to the lean, agile, and servitization literature and longstanding debate on the compatibility and effects of popular organizational forms.