When should global manufacturers invest in production network upgrades? An empirical investigation

To focus or not: investigating the viability of the “focused factory” concept in firms facing service disruptions

Purpose

In this paper, the authors draw from the concept of a “focused factory” to examine whether a focused strategy provides superior performance over a non-focused strategy in firms experiencing service disruptions.

Design/methodology/approach

The authors test their hypotheses using panel data of the US domestic airline industry from 1998 to 2019.

Findings

Overall, the study findings show that a focused strategy provides superior financial performance over a non-focused strategy in both stable environments and unpredictable environments. The authors also find that the effect of service disruptions on profitability is less pronounced for firms following a focused strategy. This shows that focused firms need to grow over time to sustain profitability. Their post hoc analysis shows that for a non-focused strategy (but not for a focused strategy), firm size moderates the effect of service disruptions on profitability. This suggests that a firm pursuing a non-focused strategy can mitigate the negative effect of service disruptions by increasing its size.

Originality/value

This is the first study that examines the effectiveness of the focused strategy in mitigating service disruptions. The results provide further support for the effectiveness of the focused strategy in responding to service disruptions in service organizations.