Longitudinal analysis of production process variability: an organizational information processing theory perspective

Abstract

Purpose

This study applies organizational information processing theory (OIPT) to investigate managing production process variability in uncertain environments using information technology (IT) capabilities.

Design/methodology/approach

We conduct an empirical analysis using the three-stage least squares (3SLS) technique on 1,612 manufacturing firms over ten years.

Findings

The findings show that IT capability plays a dual role: it reduces the positive impact of environmental uncertainty on production process variability and mitigates the negative relationship between production process variability and operational performance.

Practical implications

Our findings suggest that managers should focus on reducing production process variability by strengthening their firms' IT capabilities. This is particularly crucial in volatile environments where external uncertainties can significantly impact operational processes.

Originality/value

Variability in the production process is a significant source of inefficiency and disruption within business processes. Using OIPT, our study contributes to the field by empirically analyzing the role of IT capabilities in reducing production process variability under environmental uncertainty.