Strategic aspects of flexible production technologies: Theory and evidence

In this paper the authors examine the innovative manufacturing technologies known as ‘Flexible Manufacturing Systems’ (FMS). They begin with a description of these systems and the industries in which they are used. The authors then review several theoretical models which analyze the decision process to invest in FMS. These models illustrate the importance of such market factors as product differentiation, differences in cost and market size, degree of competition, and market dynamics. In the second part of the paper the authors present some new empirical evidence using a database of almost 3,000 business units. This empirical evidence is shown to be consistent with the theory.