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The influence of Flexible Manufacturing Technology adoption on productivity of Malaysian manufacturing industry

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Author Info

  • Dolage, D.A.R.
  • Sade, Abu Bakar
  • Ahmed, Elsadig Musa

Abstract

This paper investigates the influence of the adoption of Flexible Manufacturing Technology (FMT) on the Total factor Productivity Growth (TFPG) of Malaysia Manufacturing Industry. The Principal Component Analysis has been adopted to extract the most appropriate underlying dimensions of FMT to use in place of the eight FMT variables owing to the potential multicollinearity. The study has been conducted within FMT intensively adopted 16 three-digit industries that encompass 50 five-digit industries covering the years 2000-2005. The results obtained from the two situations, one, including the industry fixed effects dummy variables and the other without these, are contrasted. It is established that the model that included the industry fixed effect dummy variables has a greater explanatory power. The two principal components that account for the greater variation in FMT show positive and moderately significant relationship with TFPG. The study provides sufficient evidence to conclude that FMT has a direct and moderately significant relationship with TFPG.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 27 (2010)
Issue (Month): 1 (January)
Pages: 395-403

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Handle: RePEc:eee:ecmode:v:27:y:2010:i:1:p:395-403

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Flexible Manufacturing Technology Total factor productivity growth Mass customisation;

References

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  1. Kishor Sharma & Sisira Kumara Jayasuriya & Edward Oczkowski, 1997. "Liberalization and Productivity Growth: The Case of Manufacturing Industry in Nepal," Working Papers 1997.16, School of Economics, La Trobe University.
  2. Lars-Hendrik Röller & Mihkel M. Tombak, 1993. "Competition and Investment in Flexible Technologies," Management Science, INFORMS, vol. 39(1), pages 107-114, January.
  3. Robert Mcguckin & Mary Streitwieser & Mark Doms, 1998. "The Effect Of Technology Use On Productivity Growth," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 7(1), pages 1-26.
  4. Charles H. Fine & Robert M. Freund, 1990. "Optimal Investment in Product-Flexible Manufacturing Capacity," Management Science, INFORMS, vol. 36(4), pages 449-466, April.
  5. Berndt, Ernst R. & Morrison, Catherine J., 1995. "High-tech capital formation and economic performance in U.S. manufacturing industries An exploratory analysis," Journal of Econometrics, Elsevier, vol. 65(1), pages 9-43, January.
  6. Rao, P S & Preston, R S, 1984. "Inter-factor Substitution, Economies of Scale and Technical Change: Evidence from Canadian Industries," Empirical Economics, Springer, vol. 9(2), pages 87-111.
  7. H. M. Leung, 1997. "Total factor productivity growth in Singapore's manufacturing industries," Applied Economics Letters, Taylor & Francis Journals, vol. 4(8), pages 525-528.
  8. Menon, Jayant, 1998. "Total factor productivity growth in foreign and domestic firms in Malaysian manufacturing," Journal of Asian Economics, Elsevier, vol. 9(2), pages 251-280.
  9. Mao Zhi & Goh Bee Hua & Shou Qing Wang & George Ofori, 2003. "Total factor productivity growth accounting in the construction industry of Singapore," Construction Management and Economics, Taylor & Francis Journals, vol. 21(7), pages 707-718.
  10. Louis Amato & Christie Amato, 2000. "The Impact of High Tech Production Techniques on Productivity and Profitability in Selected U.S. Manufacturing Industries," Review of Industrial Organization, Springer, vol. 16(4), pages 327-342, June.
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