Examining cumulative capabilities in a developing economy

Impact pathways: towards an adapted understanding of the development of operational capabilities

Purpose

This study is intended to motivate and guide future researchers to rethink and update their theories of operational capability development. By examining the extensive body of research on operational capabilities and working closely with an industry partner, the authors are iteratively developing new thinking about why our existing models seem to be failing and what aspects are likely to be useful in updating them.

Design/methodology/approach

This pathway paper is based on observations gained through a structured literature review, close collaboration with an industry partner and discussions with other industry partners and executives.

Findings

The authors identify ways in which the operations management community could begin to challenge and expand existing models of operational capability development. They provide reflections on the network structure of operational capabilities, i.e. their interconnectedness and interactions, which are likely to evolve dynamically over time and have not yet been part of the authors’ thinking about operational capability development.

Originality/value

The authors hope to stimulate new research through this pathway paper. By synthesizing their existing knowledge of operational capabilities and collaborating with an industry partner, the authors have attempted to highlight their limited knowledge of capability development. In addition, the authors offer several opportunities to rethink their existing models.

Mediating role of manufacturing strategy in the competitive strategy and firm performance: evidence from SMEs

Purpose

This paper examines the mediating role of manufacturing strategies in the relationship between competitive strategies and firm performance.

Design/methodology/approach

This study gathered 250 responses from firms in a developing country's key manufacturing sectors, including mechanical, electronics, automotive, textile and food. First, descriptive statistics were applied to fix outliers like respondent biases, missing values and normality issues. Second, exploratory factors analysis (EFA) ensured data adequacy and homogeneity through Kaiser–Meyer–Olkin (KMO) and Bartlett tests. Finally, confirmatory factors analysis (CFA) was used to identify the interactions (direct, indirect and total effects) between latent variables representing manufacturing strategies (quality, cost, delivery and flexibility), competitive strategies (cost-leadership and differentiation) and firms' performance (sales growth and profitability). In total, two structural equation modelling (SEM) models (SEM-I, SEM-II) were created to test the hypotheses.

Findings

Of the 40 items identified by the literature review, four were outliers, and three could not satisfy the EFA criteria (eigenvalue >1). Only 33 items could therefore reach CFA. SEM–I and SEM-II study results found no direct relationship between competitive strategies and firm performance (−0.03 = β = 0.08; p > 0.05). However, the findings revealed that cost-leadership could be an appropriate strategic choice and improved firms' performance if the quality and delivery are focussed (0.20 = β = 0.87; p < 0.001). While competitive strategies impact manufacturing strategies positively, the latter is only a mediator between the cost-leadership strategy and the firms' performance.

Originality/value

This research shows that the cost-leadership approach currently seems viable; however, flexibility and cost requirements were not satisfied due to infeasible product differentiation. These results will be beneficial to executives interested in investing in India's industries.

Extending cumulative capability models: the role of innovation in the accumulation of competitive performance

Purpose

Cumulative capability models are dominating frameworks explaining how manufacturing organizations gain their performance capabilities, such as quality, delivery, flexibility and cost. When innovation capabilities are excluded from the framework, the models are incapable of explaining how companies sustain substantive capabilities in a changing environment. Responding to this gap, the purpose of this paper is to propose and test a “sand cone” cumulative capability model that includes the innovation competitive performance alongside the competitive performance of quality, delivery flexibility and cost.

Design/methodology/approach

Two competing cumulative models were proposed. The extended cumulative capability model hypothesizes the development of innovation in sequence with other competitive performance dimensions. The affected with innovation cumulative model hypothesizes innovation performance as a predecessor of other performance dimensions. The models were tested using a multimethod approach on a representative sample of 500 manufacturing companies. An analysis of correlations among competitive performance, frequencies of plants following prescribed sequences, fit statistics of covariance-based structural equation modeling and analysis of strength and statistical significance of path coefficients enabled us to select a model that best represents the collected data.

Findings

The findings reveal that innovation competitive performance operates as a predecessor of quality, delivery, flexibility and cost and is developed in relation to these performance dimensions. The modified model also provides a theoretical explanation of how innovation performance helps to sustain reliable production systems that can perform consistently over time within a tolerable range of quality, delivery, flexibility and cost performance.

Practical implications

The results are significant for practitioners, especially for companies that are operating in volatile environments because the results provide insight on how to develop innovation competitive performance in relation to quality, delivery, flexibility and cost performance.

Originality/value

This study extends the cumulative capability models with innovation competitive performance. It advances the contingency approach on cumulative capability models.

Logistics and supply chain management research in Africa

Purpose

The purpose of this paper is to review the literature on logistics and supply chain management (SCM) in Africa over the last few decades. It provides a comprehensive assessment of theory application regarding the research articles published between 1994 and 2016.

Design/methodology/approach

In this structured systematic literature review, a set of 110 articles on SCM research in Africa is assessed.

Findings

The authors present the state-of-the-art review on logistics and SCM research in Africa. Extant literature shows that most research works focused on operational aspects of logistics and SCM and that papers drew heavily on theories inspired by strategic management, marketing, micro/macroeconomics and organizational behavior theories. Also, most of the papers with theoretical background can be categorized into theory matching and theory dressing and only a minority of theoretical papers belongs to theory suggestion category. Furthermore, based on the findings, the authors present a framework to characterize the peculiar aspects of Africa-based SCM and logistics practices and provide research propositions related to underexplored aspects of logistics and SCM in Africa.

Research limitations/implications

This study has a number of implications. Practitioners and researchers will gain a greater understanding of how logistics and SCM are carried out in Africa and the type of issues that have been addressed. Furthermore, researchers will be able to identify areas that need greater research attention in Africa.

Originality/value

This study is one of the first literature reviews of publications on logistics and SCM in Africa. It presents an overarching map of the research to date and a series of propositions to inform future research.

Operational capabilities in an emerging country: quality and the cost trade-off effect

Purpose

The purpose of this paper is to identify the operational capabilities in an emerging country, and to analyze the trade-off effect between the quality capability and the cost capability.

Design/methodology/approach

The empirical data were drawn from 160 firms in Brazil. Scales were validated using the Q-sort method and confirmatory factor analysis. Different techniques were adopted to reduce common method variance. Data were analyzed using multiple line regression.

Findings

The results showed that quality has a positive relationship with delivery, flexibility, innovation and sustainability capabilities. However, it was not possible to observe a positive relationship between quality and cost that confirmed the presence of a trade-off between these two capabilities.

Practical implications

An important practical contribution of this study is that it brings a new perspective to the relationship between quality and cost. Although quality is an important capability for the firm, emerging country managers need to understand that its implementation will take time and money; quality does not indicate an immediate reduction in cost.

Originality/value

This study helps expand research into operational capabilities in lesser-developed countries, such as Brazil. Most of the research on operational capabilities is conducted in industrialized countries. The paper also discusses the trade-off between the quality capability and cost capability. The results show that quality does not always lead to a reduction in cost.

Corporate social responsibility and firm’s performance: empirical evidence

Purpose

The concept of corporate social responsibility (CSR) has emerged over the past 30 years to occupy a significant role in certain aspects of the organizational theory. The purpose of this paper is to examine the impact of CSR and firm’s operational competitive performance in terms of cost, quality, flexibility and delivery, as well as the overall performance, from a developing country’s environment.

Design/methodology/approach

Structural equation modeling was used to study the relationship between CSR, competitive operational capabilities and the overall organizational performance using a survey of informants.

Findings

Using data from firms in Ghana, the work demonstrates that CSR initiative by firms will have a positive relationship with firm’s operational competitive performance in terms of cost, quality, flexibility and delivery performance, as well as overall performance. Furthermore, the study demonstrates that competitive operational capabilities in terms of cost and flexibility will lead to firms’ overall performance from the Ghanaian business environment, whereas delivery and quality seems to have no positive effect on overall performance.

Research limitations/implications

The results indicate the relevance and the implications of CSR initiatives on firms’ performance in a developing country such as Ghana. Specifically, the results indicate that when organizations invest in CSR initiatives, they are likely to achieve cost reductions, improved quality, flexibility, improved delivery and overall performance.

Practical implications

The research shows how CSR initiatives can enhance firm’s operational competitive performance and overall performance.

Originality/value

The work illustrates and provides some insights and builds on the literature in the area of CSR in a developing country’s environment.

Ambidexterity, performance and environmental dynamism

Purpose

The purpose of this paper is to examine the relationship between organizational ambidexterity, the ability of companies to explore new and to exploit existing processes simultaneously, and manufacturing performance as represented by the sand cone model. Moreover, the paper analyses the impact of stable and dynamic environments on this relationship.

Design/methodology/approach

A set of research questions are tested using structural equation modeling on a sample of 231 Spanish manufacturing companies.

Findings

Results illustrate a significant relationship between ambidexterity as the basis and enabler for manufacturing performance improvements, building on the sand cone model and its dimensions of quality, delivery, cost, and flexibility. This relationship is further emphasized when companies work in a dynamic environment.

Practical implications

The study contributes to practice by investigating the important and yet under-explored relationships of ambidexterity, the sand cone model, performance, and a company’s wider market environment. Findings suggest a positive relationship between the sand cone model and ambidexterity capability.

Originality/value

This study adds to the limited theoretical and empirical understanding of the relationships between ambidexterity, the sand cone model, environmental dynamism, and performance. It also contributes through a set of empirical data derived from Spanish manufacturing companies.

Rethinking Skinner’s model: strategic trade-offs in products and services

Purpose

The purpose of this paper is to further clarify the link between the theoretical and practical/real-life implications of a seminal topic in the strategic operations management field: Wickham Skinner’s strategic trade-offs model. This will help researchers, practitioners and students to realize the “everyday life” consequences of this highly influential model.

Design/methodology/approach

A theoretical analysis is made of previous research dealing with the strategic trade-offs model. Building on these investigations, a Popperian approach is used to logically develop the model, and the authors demonstrate how it can be empirically tested.

Findings

Previous investigations on Skinner’s model mainly focus on trade-offs between competitive capabilities (e.g. cost, quality, delivery) at the firm level. This paper demonstrates that the implications of this model necessarily should include consideration of the strategic trade-offs between the competitive characteristics of products/services that practitioners, students and the general public can observe.

Originality/value

While previous investigations have provided necessary clarifications, no paper has addressed the issue of the existence of strategic trade-offs between the competitive characteristics of products/services. This paper offers guidelines for researchers and practitioners on the way that the strategic trade-offs model can be conceptualized, understood and tested.

Themes of study in manufacturing strategy literature

Purpose

– A literature review within the manufacturing strategy (MS) discipline with a focus on thematic developments is provided. Based on recent studies, a set of challenges posed to manufacturing enterprise of the future are summarized, and thematic areas are analyzed in relation to meeting those challenges. The paper aims to discuss these issues.

Design/methodology/approach

– Based on a select set of 506 articles published in top-ranked refereed international journals in the discipline of operations management, major and subthemes are identified and the publication trends in these themes are provided with time and across geographical regions, namely: North America, Europe, and other parts of the world.

Findings

– MS literature is predominantly focussed on the economic objectives of firms without a due focus on the social and environmental perspectives. MS literature covers 11 major thematic areas, namely: MS components and paradigms, manufacturing capabilities (MCs), strategic choices (SCs), best practices (BPs), the strategy process (SP), supply-chain management (SCM), performance measurement, transnational comparisons, global manufacturing, environmental/green manufacturing, and literature reviews. The research in two areas – SCs, and MCs – has been in decline, while the research in BPs, the SP, and transnational comparisons is growing (in absolute figures). Various research opportunities for future studies are identified.

Research limitations/implications

– The literature review is limited in its selection of articles and journals, however, the identified trends clarify the state of research by the MS research community at large.

Practical implications

– For researchers, multiple new research directions are identified in order to advance knowledge in the field of MS. The publication trends also highlight thematic areas where most of the MS body of knowledge is currently available and can be utilized by practitioners.

Originality/value

– The paper’s novelty comes from: first, a broader and deeper review of thematic areas that has not been researched before, second, trends in thematic areas by time, across geographical regions, and including time-region dyads, and third, coverage provided by MS literature in meeting challenges posed to manufacturing enterprise of the future.

DO INNOVATIVE ORGANISATIONS COMPETE ON SINGLE OR MULTIPLE OPERATIONAL CAPABILITIES?

Organisations lack clear guidance on how they can become more innovative at the operational level. The operations strategy literature shows that organisations compete on four generic capabilities: cost efficiency, quality of products or services, speed of delivery, and flexibility of operations. Should organisations choose between these capabilities, i.e., engage in trading-off these capabilities and focussing on one capability ("trade-off" model), or combine them, thereby competing on multiple capabilities simultaneously ("cumulative capabilities" model), remains an unresolved issue. Our paper addresses this by empirically testing the relationship between the four operations capabilities and innovation performance through a large-scale global study of manufacturing plants. Our results show support for the cumulative capabilities model and not the trade-off model. Furthermore, both delivery and flexibility capabilities are comparatively stronger predictors of innovativeness than cost efficiency and quality capabilities. This study provides interesting insights for practitioners and managers in generating clearer guidelines as to what organisations need to do with their key operational capabilities, in order to become more innovative.