Revisiting the theory of production competence: Extensions and cross-validations Roger W. Schmenner * , Gyula Vastag 1 Kelley School of Business, Indiana University, 801 W. Michigan Street, Indianapolis, IN 46202, USA Received 25 November 2003; received in revised form 20 December 2004; accepted 30 September 2005 Available online 28 December 2005 Abstract This paper examines a widely cited work in operations management, the theory of production competence, advanced initially by Cleveland, Schroeder, and Anderson (CSA). This intuitively appealing proposition asserts that production competence leads to improved business performance. However, CSA’s empirical work has been criticized by Vickery and her collaborators and by Safizadeh, Ritzman, and Mallick (SRM). Moreover, SRM’s own empirical work suggested that the CSA proposition only holds for batch processes. Using data from two large studies, we avoid the problems that plagued CSA’s analysis, improve on their result, and call into question the SRM finding that restricts that result to batch operations. # 2005 Elsevier B.V. All rights reserved. Keywords: Production competence; Global operations; Regression; Set correlation 1. Introduction The theory of production competence (Cleveland et al., 1989) and the ensuing papers directly related to its critical examination and extensions (Vickery, 1991; Vickery et al., 1993; Dro ¨ ge et al., 1994; Safizadeh et al., 2000) have become one of the most widely cited research streams in the operations management literature. Cleveland, Schroeder, and Anderson (CSA) argued the appealing proposition that production competence directly affects the performance of the company. Moreover, they employed data to develop a linear regression model that related an index of competence to an index of performance where each index was derived from a broader set of variables. The resulting association was found to be a strong one. However, the data were culled from just six case studies. Not surprisingly, while the intent of the empirical work has been sympathetically received, the empirical work itself has been challenged and extended, especially by Vickery and her collaborators, and later by Safizadeh, Ritzman, and Mallick (SRM). CSA reduced the wealth of variables they collected from their field work into single variables, or indexes, that they developed to capture both production com- petence and business performance. In so doing, they grouped the independent variables they had information on into nine distinct categories, where ‘‘strength or weakness would mean the difference between success or failure of the business plan’’ (p. 657). In a similar fashion, they also fused several variables into a workable dependent variable. This reduction of data left CSA open to criticism both on conceptual and technical grounds. www.elsevier.com/locate/jom Journal of Operations Management 24 (2006) 893–909 * Corresponding author. Tel.: +1 317 274 2481. E-mail addresses: rschmenn@iupui.edu (R.W. Schmenner), gvastag@iupui.edu (G. Vastag). 1 Tel.: +1 317 278 3681. 0272-6963/$ – see front matter # 2005 Elsevier B.V. All rights reserved. doi:10.1016/j.jom.2005.11.002