Innovation and business performance - a provisional multi-regional analysis



Annex 1: Defining two cluster use variables

In the MPPDS we asked firms a series of questions relating to their use of a range of
managerial and IT-based production systems. These original variables were then used
to form two composite indicators of the internal resources of the business. The first of
these related to the use of IT-based production techniques by the firm and covered
CNC, CAD, CAM, AMH, CIM and robotics. Three clusters of businesses were
identified using the SPSS k-means cluster procedure. The results define three groups
of firms; firms with
Integrated IT across the range of design (i.e. CAD) and
manufacturing functions; firms with
IT Production systems but no computerised
design capability; and, a third group with
Low IT Use across both manufacturing and
design functions.

Table A1: IT-based Production Clusters

Technique

No of ob.

Cluster 1

Integrated IT

1172_________

Cluster 2

IT Production

263__________

Cluster 3

Low IT Use

655___________

CNC

62.0

100.0

0.00

ROBOTICS

26.3

17.1

6.7

AMH

29.4

34.6

17.3

CAD

100.0

0.00

0.00

CAM

41.9

30.8

20.2

CIM

24.5

19.4

11.0

The second internal resource indicator is based on four variables designed to reflect
firms' use of managerial systems: quality certification, total quality management,
quality circles and just-in-time. Again three clusters were identified using the k-means
cluster procedure in SPSS. The three clusters can be identified as follows: an
Informal
Management
grouping with low adoption rates of each technique; a Total Quality
group each of which has implemented a total quality management approach; and, a
Certified Quality group which have some form of quality certification but not TQM.

Table A1.2: Management Systems Clusters

Technique

No of observations.

Cluster 1

Informal Management

1466_____________

Cluster 2

Total Quality

345________

Cluster 3
Certified Quality
279__________

Quality Certification

47.1

83.2

92.8

Total Quality

14.3

100.0

0.0

Management

Quality Circles

2.2

62.0

50.5

Just-In-Time________

6.5__________________

78.3________

76.7__________

22



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