Management and Marketing - Theses
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ItemDo firms trade-off or accumulate operations capabilities? Some evidence from Australian service and manufacturing industries( 2012)How organisations compete based on their operations function has been an area of strong research interest in the operations management field. A major stream of research in this area relates to how organisations develop core operations capabilities, these being cost efficiency, quality, flexibility and speed of delivery. Two competing models have been proposed: the ‘trade-off’ model and the ‘cumulative capabilities’ model. Despite several conceptual and empirical studies, debate persists on which model is more effective when it comes to achieving superior organisational performance and competitive advantage. The way in which organisations develop and combine the different capabilities therefore needs to be further clarified. This study tests a number of models that have been proposed in the literature that explain how organisations treat their key operations capabilities. The study examines these issues from the perspective of the dynamic capabilities view and the theory of performance frontiers. These two theories are applied as a means of understanding how and why capabilities of organisations are combined or are traded-off (integrated model). The integrated theoretical perspective therefore assists to focus the empirical testing and make sense of the findings. The links amongst the four capabilities is systematically analysed using published secondary data on organisations in the airline, automobile manufacturing and grocery retail industries in Australia. These data, which is in longitudinal panel form, are empirically analysed to test the various models. The results show some evidence that organisations accumulate capabilities over time, but this is relevant mostly to quality and delivery capabilities. Additionally, results indicate that multiple capabilities had a stronger bearing on overall performance, instead of a singular focus on one capability. Also, the integrated model seemed to be applicable to only one of the three industry settings. The results of this study provide useful insights into a significant and challenging question in the operations management and strategy literature. First, this study outlines how capabilities changed over time for organisations and the instances when capabilities were traded off and accumulated. Second, from a practical viewpoint, this study enhances the understanding of managers on operational areas to focus and pursue improvements in performance. This knowledge can therefore assist organisations in general to be able to allocate valuable resources as well as achieve closer alignment to their business strategies for competitive advantage.