The impact of conflict on manufacturing decisions and company performance

Although the organization psychology literature is replete with an ongoing debate on the impact of conflict on organizational performance, the operations management literature has provided few empirical studies to examine this issue. In this study we adapt the Amason and Schwieger (1994) framework to investigate the impact of conflict on operational decisions and company performance. We test operational decisions made in two different contexts - physically efficient condition (functional products) and market responsive conditions (innovative products). Although not empirically tested, these two decision scenarios have been characterized as the antecedents of two supply chain designs based on product offerings (Fisher, 1997). We conduct a survey of manufacturing managers in the USA and analyze 392 valid responses using partial least square regression. Our results indicate that when conflict arises in a manufacturing decision, cognitive conflict would lead to a higher level of company performance particularly when the decision scenario is based on a market responsive situation (innovative products). Consistent with previous studies, affective conflict tends to have adverse effects on performance regardless of the decision scenario. This study contributes to our understanding of situations in which conflict can facilitate or hamper company performance in an operational decision-making setting.