Operational coordination and mass customization capability: the double-edged sword effect of customer need diversity

• DOI: https://doi.org/10.1108/IJLM-11-2020-0417
• Published date: 19 August 2021
• Date: 19 August 2021
• Pages: 289-310
• Subject Matter: Management science & operations,Logistics
• Author: Hongyan Sheng,Taiwen Feng,Lucheng Chen,Dianhui Chu

Operational coordination and mass

customization capability:

the double-edged sword effect of

customer need diversity

Hongyan Sheng

School of Management, Harbin Institute of Technology, Harbin, China

Taiwen Feng

School of Economics and Management, Harbin Institute of Technology (Weihai),

Weihai, China

Lucheng Chen

Qingdao Haier Industrial Intelligent Research Institute Co. LTD, Qingdao, China, and

Dianhui Chu

School of Computer Science and Technology, Harbin Institute of Technology,

Weihai, China

Abstract

Purpose –This study aims to explore how operational coordination affects mass customization capability

(MCC) via organizational agility, the double-edged sword effect of customer need diversity and the moderating

effect of competitive intensity based on dynamic capabilities perspective.

Design/methodology/approach –This study examines the research hypotheses using hierarchical

regression analysis by collecting data from 277 Chinese firms.

Findings –The results reveal that organizational agility partially mediates the impacts of operational

coordination on product-oriented and service-oriented MCC. Customer need diversity is positively related to

operational coordination, whereas negatively moderatesthe relationship between operationalcoordination and

organizational agility. Moreover, competitive intensity negatively moderates the relationship between

organizational agility and service-oriented MCC.

Research limitations/implications –This study mainly used perceptual scales to measure organizational

agility. There is a need to measure agility through Agility Index which consists of features’combination that

enables agility.

Practical implications –Managers would thus do well to integrate business activities with supply chain

partners and strive to foster an agile organization. Additionally, managers should take the leadership to assess

the customer need and invest time and resources to respond to it when needed even though the response may be

difficult.

Originality/value –Although the importance of MCC in meeting personalized customer needs has been

recognized, whether and how customer need diversity affects MCC remains unclear. This study provides a

framework to study the relationships between customer need diversity and MCC, which deepens our

understanding of how to enhance MCC to respond to diverse customer needs.

Keywords Customer need diversity, Mass customization capability, Operational coordination,

Organizational agility, Competitive intensity

Paper type Research paper

Mass

customization

capability

289

This work was partially supported by National Key Research and Development Program of China (No.

2018YFB1702900), Taishan Scholar Project of Shandong Province (No. tsqn201909154), Science and

Technology Program for Innovation of Shandong Universities (No. 2020RWG003) and Soft Science

Research Project in Shaanxi Province (No. 2020KRM159).

The current issue and full text archive of this journal is available on Emerald Insight at:

https://www.emerald.com/insight/0957-4093.htm

Received 3 November 2020

Revised 14 April 2021

21 June 2021

Accepted 4 August 2021

The International Journal of

Logistics Management

Vol. 33 No. 1, 2022

pp. 289-310

© Emerald Publishing Limited

0957-4093

DOI 10.1108/IJLM-11-2020-0417

1. Introduction

With the advent of the digital economy era, customer needs are fully released and

increasingly diverse (Luca and Atuahene, 2007;Zhang and Xiao, 2020). Existing studies have

demonstrated that customer need creates and influences the supply chain (Li et al., 2016).

Thus, enterprises should integrate meeting diverse customer needs in their objectives

(Timoshenko and Hauser, 2019). In order to produce new products or services which can

satisfy diverse customer needs, enterprises need to adopt new production paradigm such as

mass customization (Merle et al., 2010;Tu et al., 2001). Dell, for example, allows customers to

assemble computers through modular options and then produce them according to each

customer’s unique order. Due to the advantages of mass customization in cost and quality,

mass customization capability (MCC), which refers to the ability to rapidly design, produce

and deliver high-quality customized products or services to meet different customer needs at

a lower cost, has attracted the attention of researchers and managers (Zhang et al., 2014).

Although the previous literature has explored how to improve MCC to maintain a

competitive advantage (Huang et al., 2008;Jost and Suesser, 2020), most of them focus on

product-oriented MCC. However, in the fierce market competition, manufacturers are

increasingly turning from product-based to service-based for gaining competitive

advantages, which refers to servitization (Garcia et al., 2019;Neely, 2008;Yan et al., 2020).

Servitization is a significant channel to create value for customers, as the “benefit package”

containing product and service can better meet the customer’s need than pure product

(Qi et al., 2020;Wang et al., 2018). Given that an enterprise will provide customized products

and services simultaneously to distinguish themselves from competitors, we consider both

product-oriented MCC and service-oriented MCC.

In order to enhance MCC, enterprises can implement interorganizational collaboration

such as operational coordination. Operational coordination reflects the extent to which an

enterprise and its supply chain partners collaborate to carry out activities, define workflow

and make decisions (Leuschner et a l.,2013). Since the improvement of MCC is a

multidisciplinary effort, operational coordination enables enterprises to design, produce

and deliver mass-customized products or services in a systematic way (Gligor and Holcomb,

2012;He and Lai, 2012). Although operational coordination is critical to MCC, to the best of

our knowledge, less attention has been paid to how operational coordination affects MCC.

The dynamic capabilities perspective provides the theoretical basis for investigating how

operational coordination influences MCC. The theory proposes that dynamic capability can help

enterprises to reconfigure capabilities for a competitive advantage by improving, combining,

protecting and changing operational abilities (Teece and Pisano, 1994). Organizational agility

refers to the enterprises’abilityto rapidly adjustits supplychain strategyand operation (Shukor

et al., 2020;Swafford etal., 2006), which can be defined as the dynamic capability. This study

proposes that operational coordination can enhance organizational agility (Liu et al.,2016).

Organizational agility will further impact enterprise’s capability to mass-produce customized

products at a fast and low-price pattern (Yang, 2014). Hence, organizational agility may play a

mediator role in the relationships between operational coordination and MCC.

Furthermore, the previous literature has offered seemingly contradictory arguments to

explain the role of customer need diversity which reflects the range and breadth of customer

preference for products. One view suggests customer need diversity has greatly reduced

market visibility and increased uncertainty (Swafford et al., 2006). In order to better meet

diverse customer needs, enterprises need to integrate operational activities with suppliers

and customers (Martinelli and Tunisini, 2019). This view predicts a positive association

between customer need diversity and operational coordination. Another view stresses that a

high degree of diversity implies that customers have a broad range of preferences for product

features (Zhang and Xiao, 2020). This will bring greater burden to operational coordination.

Although these two views of customer need diversity have been suggested, previous studies

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