The Impact of Adoption of Flexible Manufacturing Technology on Price Cost Margin of Malaysian Manufacturing Industry

Don Ajith Rohana Dolage, Abu Bakar Sade

Faculty of Management, Multimedia University, Cyberjaya, Malaysia.
International Graduate School of Business, University of South Australia, Adelaide, Australia.

DOI: 10.4236/ti.2012.31005                

Abstract

This paper explores the impact of the adoption of Flexible Manufacturing Technology (FMT) on the Malaysian Manu-facturing 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 cover-ing the years 2000-2005. The results obtained from the two scenarios, 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 PCM. The study provides sufficient evi-dence to conclude that FMT has a direct and moderately significant relationship with PCM.

Keywords

Flexible Manufacturing Technology; Price Cost Margin; Mass Customisation

Conflicts of Interest

The authors declare no conflicts of interest.

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