Abstract In theory, strategic priorities at the functional level align with and support business level strategies. Alignment of priorities is presumed to contribute to enhanced organizational performance, just as misalignment is expected to undermine performance. This study further develops and tests these theoretical conventions by examining the perceptions of general managers and manufacturing managers regarding manufacturing priorities of their business units. Based on a sample of matched pairs of manufacturing managers and general managers from 98 manufacturing plants, the hypotheses regarding the alignment–performance relationship are tested. Specifically, we tested whether the performance of the manufacturing unit is enhanced when general managers and manufacturing managers agree on strategic priorities. Furthermore, the influence of organizational factors on the relationship between alignment and performance of the manufacturing unit is studied. Results support our hypotheses that certain organizational variables moderate the relationship between alignment of priorities and manufacturing performance.