Operational Capabilities: The Secret Ingredient

Abstract

We develop a theoretical definition of operational capabilities, based on the strategic management and operations management literature, and differentiate this construct from the related constructs of resources and operational practices, drawing upon the resourcebased view of the firm as our foundation. We illustrate the key features of operational capabilities using the illustration of a restaurant kitchen. Because the traits of operational capabilities are distinct, they create a barrier to imitation, making them a potential source of competitive advantage. However, operational capabilities are particularly challenging to measure, because they emerge gradually and are tacit, embedded, and manifested differently across firms. In solving this measurement conundrum, we draw upon similar situations experienced by Schein (2004) and Eisenhardt and Martin (2000) in operationalizing organizational culture and dynamic capabilities. A taxonomy of six emergent operational capabilities is developed: operational improvement, operational innovation, operational customization, operational cooperation, operational responsiveness, and operational reconfiguration. A set of measurement scales is developed, in order to measure each of the operational capabilities, and validated using two different datasets. This allows replication of the psychometric properties of the multi-item scales and helps to ensure the validity of the resulting measures.

Customer orientation and innovation: A comparative study of manufacturing and service firms

“…Specifically, we study a welldocumented strategic driver of innovation performance-customer orientation-and two factors that mediate this relationship-supplier collaboration and technological capability-from the perspectives of service-dominant logic (SDL) Lusch 2004, 2008) and the resource-based view (RBV) of the firm (Barney, 1991). Previous research has indicated that customer orientation may influence innovation performance indirectly rather than directly (Keskin, 2006), whereas operational processes and capability-building activities (Peng et al, 2008;Wu et al, 2010) may facilitate the implementation of organizational strategy and thus mediate the relationship between customer orientation and innovation performance. To enable the comparison of service and manufacturing firms, innovation performance is captured by measuring the general innovativeness of each firm's offering-portfolio.…”

Short-term versus long-term benefits: Balanced sustainability framework and research propositions

“…According to Barney (1991), a capability is an intangible form of resource. Some researchers tend to separate capabilities from resources from a routine-based perspective (Peng, Schroeder and Shah, 2008;Wu, Melnyk and Flynn, 2010). According to Peng, Schroeder and Shah (2008, p.732), resources are "tangible and intangible firm assets that could be put into productive use".…”

A Measurement Model of Operational Capabilities in Application Software Firms

“…Our starting points are researches conducted by Flynn, Wu et al (2010), Wu, Melnyk et al (2010;, and Pavlou and El Sawy (2011). This study in regard to dimensions of OC applies the approaches proposed by their works since different labels about OC have been applied in preceding research to refer to related practices, routines, and OC, and then merged several conceptual labels from practical and theoretical reviews, and classified them to a parsimonious set in order to propose OC conceptualization, its own interpretation in this study.…”

“…15-16). Wu et al (2010) suggested operational responsiveness as the quick response to handle tangible or intangible to consistently meet customer requirements. In the context of new product development, developing software units need more immediate responses to current unexpected incidents or changing environmental work conditions to achieve efficient short-term effects with organized activities, especially, in operating process in product or service development.…”

“…Wu et al (2010) assert that OC have "firm-specific sets of skills, processes, and routines" (p. 726) to deal with facing problems so that can reconfigure resources. In order to overcome of obstacles with these classifications and measuring indicators (Eisenhardt & Martin, 2000;Helfat & Winter, 2011), this study tries to develop conceptual framework of OC in the context of application software development firms based upon some analogous to Wu et al (2010) study. It divides into three sub-capabilities of OC which involves organizing, managing, and technical capabilities.…”