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The purpose of this study is to explore the mediation effect of volatile economic conditions on performance benefits of successful kean manufacturing implementation (LMI). The mediating factor of economic volatility (EV) is constructed based on four macroeconomic dimensions – supplier uncertainty, market demand fluctuations, governmental policy changes and peer competition.

An attempt is made to build an exhaustive list of the internal operational manifests grouped into one human and three technical input factors. Similarly the benefits accrued are collated under two performance measures – customer satisfaction (CS) and organizational goal satisfaction (OGS). Based on data from the Indian manufacturing sector, structural equation modelling (SEM) and ordinary least square (OLS) analyses are carried out to validate the proposed model.

Results of the structural model validate the first six hypotheses posited in the model. Results of OLS further reveal the mediation effect of EV having negative impact on LMI–CS and LMI–OGS nexus.

This research offers a fair understanding of the internal operational lean factors and the effect of volatile macroeconomic conditions on lean benefits. The structural model will aid the academicians and lean implementers comprehend the dimensional structure underlying the lean practices and beliefs. This work further helps to understand the moderation effect of environmental complexity on the output measures of LMI in the Indian manufacturing sector.

This work is one of the very first empirical analyses of lean performance under contingent economic conditions. The paper presents a valuable recommendation to practitioners for considering the dynamism of external economic environment instead of simply adopting standalone internal lean parameters, if satisfactory levels of performance in terms of CS and OGS are to be achieved.