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Management article
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Reference no. 95506
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 1995

Abstract

Few managers of high-technology companies view manufacturing as a primary souce of competitive advantage. Indeed, companies in high-tech industries increasingly outsource manufacturing completely. In so doing, they hope to avoid the risks of investing in expensive manufacturing plants and losing sight of what they see as their true source of advantage: product research and development. The authors'' research in the health care industry over the past decade suggests that such thinking is often costly and potentially dangerous to the competitive health of high- tech companies. In fact, it is not only possible but also necessary to excel at developing new products and new manufacturing processes simultaneously. In many high-tech markets in which product technology is rapidly evolving, manufacturing process innovation is becoming an increasingly critical capability for product innovation.

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Abstract

Few managers of high-technology companies view manufacturing as a primary souce of competitive advantage. Indeed, companies in high-tech industries increasingly outsource manufacturing completely. In so doing, they hope to avoid the risks of investing in expensive manufacturing plants and losing sight of what they see as their true source of advantage: product research and development. The authors'' research in the health care industry over the past decade suggests that such thinking is often costly and potentially dangerous to the competitive health of high- tech companies. In fact, it is not only possible but also necessary to excel at developing new products and new manufacturing processes simultaneously. In many high-tech markets in which product technology is rapidly evolving, manufacturing process innovation is becoming an increasingly critical capability for product innovation.

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