Towards a Technology-Oriented Theory of Production

Manufacturing companies in high-wage countries—one of the pillars of the European national economies—are particularly exposed to changes in global markets and rising market volatility. It is therefore necessary that manufacturers in these countries not only focus on reducing costs, but instead address the entire set of commonly defined operational capabilities: cost, quality, flexibility, and delivery performance. Although the optimization of these factors has been viewed since long as being largely mutually exclusive, we argue that advances in modern production technology might enable the resolution of the involved dichotomous relationships. In this chapter, we hence aim at presenting a technology-oriented theory of production that operationalizes the link between technological advances and possibilities to strengthen the four competitive priorities of manufacturing companies. For this purpose, existing production theories are first reviewed to ground and classify our theory. We subsequently formalize the technology-oriented theory by adopting a profitability assessment perspective derived from the insights of all projects within the Cluster of Excellence Integrative Production for High-Wage Countries.