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Determinants of the Optimal Network Configuration and the Implications for Coordination


Author Info

  • Patricia Deflorin

    (Department of Business Administration (IBW), University of Zurich)

  • Helmut M. Dietl

    (Department of Business Administration (IBW), University of Zurich)

  • Markus Lang

    (Department of Business Administration (IBW), University of Zurich)

  • Eric Lucas

    (Department of Business Administration (IBW), University of Zurich)


This paper develops a simulation model to compare the performance of two stylized manufacturing networks: the lead factory network (LFN) and the archetype network (AN). The model identifies the optimal network configuration and its implications for coordination mechanisms. Using an NK simulation model to diffierentiate between exogenous factors (configuration) and endogenous factors (coordination), we find low complexity of the production process, low transfer costs and high search costs, as well as a larger number of manufacturing plants benefit LFN compared to AN. Optimally coordinating the chosen network configuration of LFN might require to fully transfer knowledge in the short run but to transfer nothing in the long run. Moreover, a late knowledge transfer from the lead factory to the plants increases the pre-transfer performance of LFN but results in a larger performance drop, yielding a lower short-run but a higher long-run performance of LFN.

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Bibliographic Info

Paper provided by University of Zurich, Department of Business Administration (IBW) in its series Working Papers with number 314.

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Length: 40 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:zrh:wpaper:314

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Related research

Keywords: Manufacturing network; Manufacturing plant; Global operations management; Lead factory; Knowledge transfer;

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  1. Patricia Deflorin & Helmut Dietl & Markus Lang & Maike Scherrer-Rathje, 2010. "The Lead Factory Concept: Benefiting from an Efficient Knowledge Transfer," Working Papers, University of Zurich, Institute for Strategy and Business Economics (ISU) 0127, University of Zurich, Institute for Strategy and Business Economics (ISU).
  2. Ernst, Dieter & Kim, Linsu, 2002. "Global production networks, knowledge diffusion, and local capability formation," Research Policy, Elsevier, Elsevier, vol. 31(8-9), pages 1417-1429, December.
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