Decision Sciences Volume 36 Number 3 August 2005 Printed in the U.S.A. Manufacturing Practices and Strategy Integration: Effects on Cost Efficiency, Flexibility, and Market-Based Performance Morgan Swink † Department of Marketing and Supply Chain Management, Eli Broad College of Business, Michigan State University, East Lansing, MI 48824, e-mail: swinkm@msu.edu Ram Narasimhan Department of Marketing and Supply Chain Management, Eli Broad College of Business, Michigan State University, East Lansing, MI 48824, e-mail: narasimh@msu.edu Soo Wook Kim College of Business Administration, Seoul National University, San 56-1, Sillim-dong, Kwanak-gu, Seoul, Korea 151-742, e-mail: kimsoo2@snu.ac.kr ABSTRACT Manufacturing plant managers have sought performance improvements through imple- menting best practices discussed in World Class Manufacturing literature. However, our collective understanding of linkages between practices and performance remains incomplete. This study seeks a more complete theory, advancing the idea that strat- egy integration and enhanced manufacturing capabilities such as cost efficiency and flexibility serve as intermediaries by which practices affect performance. Hypotheses related to this thesis are tested using data from 57 North American manufacturing plants that are past winners and finalists in Industry Week’s “America’s Best” competition (Drickhamer, 2001). The results suggest that strategy integration plays a strong, central role in the creation of manufacturing cost efficiency and new product flexibility capa- bilities. Furthermore, strategy integration moderates the influences of product-process development, supplier relationship management, workforce development, just-in-time flow, and process quality management practices on certain manufacturing capabilities. In turn, manufacturing cost efficiency and new product flexibility capabilities mediate the influence of strategy integration on market-based performance. These findings have implications for practice and for future research. Subject Areas: Operations Strategy and Survey Research. INTRODUCTION Many manufacturing managers have placed their faith in best practices, hoping that they will bring about desired improvements in manufacturing capabilities and performance. The linkages between manufacturing practices, capabilities, and † Corresponding author. 427