Operations capability, productivity and business performance: The moderating effect of environmental dynamism

The purpose of this paper is to investigate the relationships between operations capability, productivity, and business performance in the context of environmental dynamism.

A proposed conceptual framework grounded in the resource-based view (RBV) and dynamic capability view (DCV) is analyzed using archival data from 193 automakers in the UK.

The results show that operations capability, as an important dynamic capability, has a significant positive effect on productivity, which in turn leads to improved business performance. The results also suggest that productivity fully mediates the relationship between operations capability and business performance, and that environmental dynamism significantly moderates the relationship between operations capability and productivity.

The research findings provide practical insights that will help managers develop operations capability to gain greater productivity and business performance in a dynamic environment.

Addressing the two important issues of moderation (i.e. environmental dynamism) and mediation (i.e. productivity), this study makes important contributions to the field of operations management by applying the RBV and DCV.