Productivity in Textiles: How to Correctly Measure the Impact of Mergers and Outsourcing.

Abstract

The purpose of the research has been to investigate how merger and outsourcing activities impact the way productivity is measured on five categories of company resources: human, physical, knowledge, capital, and infrastructure resources. This research involves: an assessment of productivity measures with the goal of determining which resource category are key areas to monitor after merger activity, an evaluation of profitable textile mergers with the goal of delineating the execution of the merger strategies, an analysis of the effect of increased outsourcing on productivity growth with respect to the textile industry, and an evaluation of the adequacy of productivity measures in representing the economic competitiveness of the US Textile Industry. For the sample of textile companies, merger activity impacts the productivity of capital and knowledge resources the most. The most common strategies employed during successful textile mergers targeted the improvement of: corporate structure, product differentiation and speed to market. The influence of outsourcing on productivity growth in the textile industry was found to be negligible when comparing productivity measures that include and exclude outsourcing. In order to get a better understanding of competitiveness, companies are not looking solely at productivity, but are pairing productivity with other measures mainly profitability measures. Of all the resource categories, the productivity of knowledge resources is the leading contributor to competitiveness. However, one difficulty is that knowledge resources are also the category for which there were not concrete measures productivity that denote how well this resource was being used.