Does Lean Manufacturing Practices Improve Firm Performance: Mediating Role of Competitive Advantages?

In today’s rapidly evolving and competitive business environment, manufacturing enterprises are striving to enhance productivity, reduce waste and maintain sustainable competitiveness. Lean manufacturing has emerged as a vital approach that focuses on maximizing value while minimizing the use of resources, thereby improving operational efficiency and firm performance. This study examines the impact of lean manufacturing practices on firm performance through the mediating role of competitive advantage. Data were collected from 248 manufacturing firms in Northern Vietnam and analysed using Smart PLS 4 software to test the proposed research model. The findings indicate that five of the seven dimensions of lean manufacturing, including process and equipment, planning and control, human resource management, product design and supplier relationships, significantly improve firm performance. Furthermore, the results confirm that competitive advantage mediates the relationship between lean manufacturing and firm performance, showing that lean practices contribute to better performance by strengthening a firm’s competitive position. These results also highlight the importance of integrating lean principles into strategic decision-making, particularly in emerging economies where resource constraints and operational inefficiencies are common challenges. By adopting lean tools and techniques, firms can streamline workflows, enhance coordination across departments and foster a culture of continuous improvement. Additionally, the study underscores the role of collaboration with suppliers and investment in workforce capabilities as essential drivers of sustainable operational excellence.