Asian Review of Mechanical Engineering (ARME)
A Research on Organizational Capability and Their Strategic Impact on Manufacturing Industry
Author : Sandeep Singh Dev, Ankur Gill and Supinderjit SinghVolume 7 No.2 July-December 2018 pp 70-75
Abstract
Organizational capabilities can be viewed as the organizational context in which the organization members work in order to contribute to growth, service or other organizational goals. The research seeks to achieve in-depth understanding of impact of various organization capabilities on firm performance. Quantitative survey method was adopted for research and data was collected from 41 small and medium scale manufacturing organizations of Punjab. This paper explores how R&D capabilities, human resource capabilities, process innovation capabilities, product innovation capabilities and manufacturing capabilities influence the performance of organizations. Descriptive analysis has been derived from the study, followed by regression analysis, pearson correlation analysis, cronbach alpha and analytical hierarchy process (AHP). The findings suggest that there is significant and positive relationship between organization capabilities and firm performance. Firm performance is measure of two variables namely sales performance and financial performance. The results reveal that R&D capabilities and process innovation capabilities play vital role in achieving better sales performance whereas better financial performance can be achieved from process innovation capabilities and product innovation capabilities.
Keywords
Manufacturing industries, Punjab, Technological capabilities, Innovative capabilities, Organization capabilities, Dynamic capabilities, Firm performance
Full Text:
References
[1] A.Z. Acar, and P. Acar, “The effects of organizational culture and innovativeness on business performance in healthcare industry”, Procedia- Social and Behavioral Sciences, Vol. 58, pp. 683-692, 2012.
[2] S.A.Z. Acar, “Organizational culture, leadership styles and organizational commitment in Turkish logistics industry”, Procedia- Social and Behavioral Sciences, Vol. 58, pp. 217-226, 2012.
[3] M. Atalay, N. Anafarta, and F. Sarvan, “The relationship between innovation and firm performance: An empirical evidence from
Turkish Supplier Industry”, Procedia- Social and Behavioral Sciences, Vol. 75, pp. 226-235, 2013.
[4] M. Birasnav, “Knowledge management and organizational performance in the service industry: The role of transformational leadership beyond the effects of transactional leadership”, Journal of Business Research, Vol.67, No. 8, pp. 1622-1629, 2014.
[5] N. Bontis, M.M. Crossan, and J. Hulland, “Managing an organization learning system by aligning stocks and flows”, Journal of Management Study, Vol. 39, No. 4, pp. 437-469, 2002.
[6] C. Caminson, and A.V. Lopez, “Non-technical innovation: Organizational memory and learning capabilities as antecedent factors with effects on sustained competitive advantage”, Industrial Marketing Management, Vol. 40 No. 8, pp. 1294-1304, 2011.
[7] C. Camison, and A.V. Lopez, “Organizational innovation as an enabler of technological innovation capabilities and firm performance”, Journal of Business Research, Vol. 67, No. 1, pp. 2891-2902, 2014.
[8] J-L. Chen, “The synergistic effects of IT-enabled resources on organizational capabilities and firm performance”, Information and Management, Vol. 49, No. 3-4, pp. 142-150, 2012.
[9] F. Damanpour, K.A. Szabat, Evan, “The relationship between types of innovation W.M. and organizational performance”, Journal of Management Study, Vol. 26, No. 6, pp. 587-602, 1989.
[10] F. Damanpour, R.M. Walker, and C.N. Avallaneda, “Combinative effects of innovation types and organizational performance: A longitudinal study of service organizations”, Journal of Management Studies, Vol. 46, No. 4, pp.650-675, 2009.
[11] A. Darroch, R. Mcnaughton, “Examining the link between knowledge management practices and types of innovation”, Journal of Intellectual Capability, Vol. 3, No. 3, pp.210-222, 2002.
[12] M. Dodgson, “Organizational learning: a review of some literatures”, Organization study, Vol. 14, No. 3, pp.375-394, 1993.
[13] V.J. Garcia-Morales, M.M. Jimenaz-Barrionuevo, and Gutierrez- L. Gutierrez, “Transformational leadership influence on organizational performance through organizational learning and innovation”, Journal of Business Research, Vol. 65, No. 7, pp. 1040-1050, 2012.
[14] R.M. Grant, “The resource-based theory of Competitive advantage”, California Management Review, Vol. 33, pp. 114-135, 1991.
[15] A. Gunsel, E. Siachou A. Z. Acar, “Knowledge Management and Learning Capability to enhance organization innovativeness”, Procedia- Social and Behavioral Sciences, Vol. 24, pp. 880-888, 2011.
[16] Y-H. Hsu, and W. Fang, “Intellectual capital and new product development performance: The mediating role of organizational learning capability”, Technical Forecasting and Social Change, Vol. 76, No. 5, pp. 664-677, 2009.
[17] P. Jerez-Gomez, J. Cespedes-Lorente, and R. Valle-Cabrera, “Organziational learning capability: a proposal of measurement”, Journal of Business Research, Vol. 58, No. 6, pp. 715-725, 2005.
[18] D.J. Jimenaz, and R.S. Valle, “Innovation, organizational learning, and performance”, Journal of Business Research, Vol. 64, No. 4, pp.408-417, 2011.
[19] W.Q. Judge, and D. Elenkov, “Organizational capacity for change and environmental performance an empirical assessment of Bulgarian firms”, Journal of Business Research, Vol. 58, No. 7, pp. 893-901, 2005.
[20] X. Koufteros, G. Lu, R.C. Peters, K-H. Lai, C.W.Y. Wong, and T.C.E. Ching, “Product development practices, manufacturing practices, and performance: A mediational perspective”, International Journal of Production Economics, Vol. 156, pp. 83-97, 2014.
[21] Y. Lin, and L-Y. Wu, “Exploring the role of dynamic capabilities in firm performance under the resource-based view framework”, Journal of Business Research, Vol. 67, No. 3, pp. 403-417, 2014.
[22] J. Luo, M. Fan, and H. Zhang, “Information technology and organizational capabilities: A longitudinal study of the apparel industry”, Decision Support System, Vol.53, No. 1, pp. 186-194, 2012.
[23] H. Makkonen, M. Pohjola, R. Olkkonen, and A. Koponen, “Dynamic capabilities and firm performance in a financial crisis”, Journal of Business Research, Vol. 67 No. 1, pp. 2707-2719, 2014.
[24] S. Martelo, C. Barroso, and G. Cepeda, “The use of organizational capabilities to increase customer value” Journal of Business Research”, Vol. 66, No. 10, pp. 2042-2050, 2013.
[25] M. Mazanti, P. Pini, and E. Tortia, “Organizational innovation, human resources and firm performance: The Emilia- Romagna Food Sector”, The Journal of Socio-Economics, Vol. 35, No. 1, pp. 123-141, 2006.
[26] J. Nieves, and S. Haller, “Building dynamic capabilities through knowledge resources”, Tourism management, Vol. 40, pp. 224-232, 2014.
[27] G. Ray, J.B. Barney, and W.A. Muhanna, “Capabilities, business processes, and competitive advantage: choosing the dependent variable in empirical tests of the resource-based view”, Journal of Strategic Management, Vol. 25 No. 1, pp. 23-37, 2004.
[28] M.V. Russo, and P.A. Fouts, “A resource-based perspective on corporate environmental performance and profitability”, Academy of Management Journal, Vol. 40, No. 3, pp. 534-559, 1997.
[29] P. Sanchez-Sallero, J. Rosell-Martinez, and J.M. Garcia-Vazqueez, “Absorptive capacity from foreign direct investments in Spanish manufacturing firms”, International Business Review, Vol. 23 No. 2, pp. 429-439, 2014.
[30] M.L. Santos-Vijande, J.A. Lopez- Sanchez, and J.A. Trespalacios, “How organizational learning affects a firm‟s flexibility, competitive strategy, and performance”, Journal of Business Research, Vol. 65, No. 8, pp. 1079-1089, 2012.
[31] R.G. Schroeder, K.A. Bates, and M.A. Junttila, “A resource-based view of manufacturing strategy and the relationship to manufacturing performance”, Journal of Strategic Management, Vol. 23, No. 2, pp. 105-117, 2002.
[32] H. Singh, and R. Mahmood, “Aligning Manufacturing Strategy to Export Performance of Manufacturing Small and Medium Enterprises in Malaysia”, Procedia- Social and Behavioral Sciences, Vol. 130, pp. 85-95, 2014.
[33] H-C. Su, and Y-S. Chen, “Unpacking the relationships between learning mechanisms, culture types, and plant performance”, International Journal of Production Economics, Vol. 146, No. 2, pp.728-737, 2013.
[34] D.J. Teece, G. Pisano and A. Shuen,” Dynamic capabilities and strategic management”, Strategic Management Journal, Vol. 18, No. 7, pp. 509-533, 1997.
[35] H. Tohidi, and M.M. Jabbari, “Main factors of Organizational Learning Capabilities on Product Innovation Performance”, Procedia Technology, Vol. 1, pp. 544-547, 2012.
[36] H. Tohidi, and M.M. Jabbari, “Measuring organizational learning capability”, Procedia- Social and Behavioral Sciences, Vol. 31, pp. 428-432, 2012.
[37] M.V. Turker, “A model proposal oriented to measure technological innovation capabilities of business firms- a research on automotive industry”, Procedia- Social and Behavioral Sciences, Vol. 41, pp. 147-159, 2012.
[38] S. Wang, J-Y. Mao, and N. Archer, “On the performance of B2B e-markets: An analysis of organizational capabilities and market opportunities”, Electronic Commerce Research and Applications, Vol. 11, No. 1, pp. 59-74, 2012.
[39] J. Weerawardena, A. O‟Cass, and C. Julian, “Does industry matter? Examining the role of industry structure and organizational learning in innovation and brand performance”, Journal of Business Research, Vol. 59, No. 1, pp. 37-45, 2006.
[40] R.E. Wright, J.C. Palmer, and D. Perkins, “Types of innovations on small business performance in hostile and benign environments”, Journal of Small Business Strategy, Vol. 15, No. 2, pp. 33-44, 2005.
[41] R.C.M. Yam, W. Lo, E.P.Y. Tang and A.K.W. Lau, “Analysis of sources of innovation, technological innovation capabilities, and performance: An empirical study of Hong Kong manufacturing industries”, Research policy, Vol. 40, No. 3, pp. 391-402, 2011.
[42] S. Yamin, F. Movondo, A. Gunasekaran, and A.C. Sarros, “A study of competitive strategy, organizational innovation and organizational performance among Australian manufacturing companies”, International Journal of Production Economics, Vol. 52, No. 1-2, pp. 161-172, 1997.
[43] W. Zheng, B. Yang, and G.N. McLean, “Linking organizational culture, structure, strategy, and organizational effectiveness: mediating role of knowledge management”, Journal of Business Research, Vol. 63 No. 7, pp, 763-771, 2010.
[44] I.I. Zoiopoulos, “Organizational configurations and project capability development: Lessons from construction”, Procedia- Social and Behavioral Sciences, Vol. 74, pp. 81-90, 2013.
[45] M. Zollo, and S.G. Winter, “Delibrate learning and the evolution of dynamic capabilities”, Organization Science, Vol. 13, No. 3, pp. 339-351, 2002.