DO INNOVATIVE ORGANISATIONS COMPETE ON SINGLE OR MULTIPLE OPERATIONAL CAPABILITIES?

Abstract

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.