Developing an instrumental capacity model for industry

Discusses the difficulties of measuring, defining and managing capacity; and develops a model which splits it into two components (resource and ability) plus several sub‐components, and recognizes the interfaces between them. Illustrates and defines the sub‐components and identifies three states of capacity loading: resource‐loaded (over‐resourced), ability‐loaded (e.g. over‐qualified staff) and even‐capacity (i.e. resources compatible with ability). Asserts that the relative capacities of firms within an industry form a “capacity curve” with ability‐loaded small firms, medium firms at even capacity and large firms resource‐loaded. Analyses 1994‐1997 data for the US electronics and electrical equipment industry to plot its capacity curve, explains the methodology used, and shows how the regression model can be applied to individual firms within the industry to improve capacity management. Recognizes the limitations of the study.