The Adoption of Advanced Manufacturing Technology and Strategice Complexity

The properties inherent in Advanced Manufacturing Technology (AMT), create new opportunities for firms, and in particular small firms. The capability of these technologies to modify production specifications quickly and accurately means that firms can customise their products and attain economies of scope based on low volume and low cost production. While traditionally technology has been perceived merely as a tool in implementing business strategy, this paper suggests that AMT has the potential to directly affect firm’s strategy choices. To date however, empirical analysis to examine the technology-strategy relationship has not been forthcoming. This paper addresses this gap in the literature by synthesising current perspectives on the factors that determine strategy choice and so, integrate technology into the analysis. The paper finds that AMT is an important determinant of strategy choice. Yet, AMT does not behave uniformly, but instead the gains from lower-order technologies and their effect on firms’ strategies differ markedly from higher-order technologies. In addition, firms’ must have an operational structure and that is conducive to the adoption of higher order AMTs, otherwise this will lead to a narrowing of their business strategy and act as a constraint on growth. Alternatively, for firms pursuing a complex strategy, the introduction of AMTs will improve their strategic position by leading to flexibility gains and business growth.