Evaluating Product-Centric Continuous Improvements: Impact on Competitive Capabilities and Business Performance

Product-centric continuous improvements (CIs) are actions via which firms modify the design of a product after the start of its production and release into the market. Product-centric CIs are initiated to help build competitive capabilities and sustain competitive advantage throughout the product life cycle. This study complements the perspective pervasive in the extant literature that actions related to product-centric CIs can be disruptive to firms and be associated with negative performance consequences. It investigates a topic that is relatively much less researched, namely the upside potential of product-centric CIs. The empirical analysis is based on data collected from 144 plants in the United States representing process and discrete part manufacturing industries. Specifically, the study analyzes the impact of product-centric CIs on competitive capabilities and business performance. The results of the empirical analysis indicate the following: First, there exist two categories of product-centric CIs: (1) actions for quality improvement and (2) actions for cost reduction. Second, while there is a positive association between each type of CI and the intended competitive capability, there also is a trade-offi.e., actions for quality improvement increase quality capability but reduce cost capability, and vice versa. Third, there is a strong linkage between business performance and quality capability, but not cost capability. All in all, the study presents empirical evidence that product-centric CIs have a significant impact on competitive capabilities related to quality and cost, and, in turn, have an impact on business performance. From the standpoint of practice, the study suggests that product-centric CIs should be managed to develop competitive capabilities and improve business performance.