Linking Routines to Operations Capabilities: A New Perspective

Journal of Operations Management, Vol. 26, No. 6, pp. 730-748, 2008

42 Pages Posted: 20 Feb 2011 Last revised: 18 Oct 2011

See all articles by David Xiaosong Peng

David Xiaosong Peng

University of Houston - C.T. Bauer College of Business

Roger Glenn Schroeder

University of Minnesota - Twin Cities - Department of Operations and Management Science

Rachna Shah

University of Minnesota - Twin Cities - Department of Operations and Management Science

Date Written: February 17, 2011

Abstract

A typical approach to studying capabilities in the operations management literature is to assess the intended or realized competitive operational performance and their contribution to business and organizational objectives. While it is crucial to identify the operational performance that helps create competitive advantage, it is equally important to understand the means for delivering the needed performance at the operational level. Drawing on the resource-based view (RBV), we argue that routines are a critical source of operations capabilities and subsequently investigate operations capabilities by means of their underlying routines. Because a common problem to studying capabilities is the ambiguous and confusing definitions, we conduct an extensive literature review to address the semantic confusion among various definitions of capabilities and delineate it from other related terms. We identify improvement and innovation as two critical plant level capabilities, each consisting of a bundle of interrelated yet distinct routines. We then empirically measure the two capabilities as second-order latent variables and estimate their effects on a set of operational performance measures. The results suggest that routines form internally consistent bundles which are significantly related to operational performance. This supports our notion of “capabilities as routine bundles” that are difficult to imitate and thus a source of competitive advantage.

Keywords: Capabilities, Routines, Improvement Capability, Innovation Capability, Resource-Based View

JEL Classification: D20, M11, M, L23

Suggested Citation

Peng, David Xiaosong and Schroeder, Roger Glenn and Shah, Rachna, Linking Routines to Operations Capabilities: A New Perspective (February 17, 2011). Journal of Operations Management, Vol. 26, No. 6, pp. 730-748, 2008. Available at SSRN: https://ssrn.com/abstract=1763429

David Xiaosong Peng (Contact Author)

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States

Roger Glenn Schroeder

University of Minnesota - Twin Cities - Department of Operations and Management Science ( email )

Minneapolis, MN 55455
United States

Rachna Shah

University of Minnesota - Twin Cities - Department of Operations and Management Science ( email )

Minneapolis, MN 55455
United States

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