The empirical relationship between product variety, in-house capability and outsourcing capability: the case of a watch manufacturing firm in India

摘要

Product diversification may be achieved by developing and extending one's capabilities to build the foundation of new but related product families. This helps manufacturing firms to offer a large variety of products to suit individual customer requirements. Hence, a critical element of product diversification is managing the level of product variety and the extent of product development capabilities, particularly the 'in-house functional capability' and the 'outsourcing capability'. The research in this paper is directed at establishing empirical relationships between product variety and the in-house as well as outsourcing capabilities in manufacturing firms. A comprehensive methodology, which involves the use of the multi-attribute utility function approach, fuzzy analytical hierarchy method and multiple regression analysis, is developed in order to model the relationships between product variety and product development capability. The methodology developed is applied in a manufacturing firm to validate the model and the results are discussed.