What operational factors can explain the performance differences between manufacturing firms? Scholars have produced a significant volume of research that examines the linkages between operational factors (resources and practices) and firm performance. There is agreement that organizational capabilities mediate the relationship between operational factors and firm performance. However, due to the numerous and sometimes contradictory definitions of organizational capabilities in the literature and because organizational capabilities includes non-operational factors, it has been suggested that operational capabilities, as a sub construct of organizational capabilities, is more appropriate for establishing an empirical relationship between operational factors and firm performance. Scholars have argued that process improvement practices facilitate the development of operational capabilities, which can consequently lead to improved firm performance. Other scholars have argued that process improvement practices facilitate organizational knowledge creation, which can also influence firm performance. We integrate these two theoretical perspectives into a single conceptual model that better explains the relationship between knowledge-creating practices and firm operational performance. Specifically, we argue that knowledge-creating practices play a significant role in developing a firm’s operational capabilities, which in turn, influence firm operational performance. This research investigates the existence of a relationship between organizational knowledge creation and firm operational performance that is mediated by operational capabilities.

What operational factors can explain the performance differences between manufacturing firms? Scholars have produced a significant volume of research that examines the linkages between operational factors (resources and practices) and firm performance. There is agreement that organizational capabilities mediate the relationship between operational factors and firm performance. However, due to the numerous and sometimes contradictory definitions of organizational capabilities in the literature and because organizational capabilities includes non-operational factors, it has been suggested that operational capabilities, as a sub construct of organizational capabilities, is more appropriate for establishing an empirical relationship between operational factors and firm performance. Scholars have argued that process improvement practices facilitate the development of operational capabilities, which can consequently lead to improved firm performance. Other scholars have argued that process improvement practices facilitate organizational knowledge creation, which can also influence firm performance. We integrate these two theoretical perspectives into a single conceptual model that better explains the relationship between knowledge-creating practices and firm operational performance. Specifically, we argue that knowledge-creating practices play a significant role in developing a firm’s operational capabilities, which in turn, influence firm operational performance. This research investigates the existence of a relationship between organizational knowledge creation and firm operational performance that is mediated by operational capabilities.

Operations capabilities provide the fundamental basis of competitive advantage for manufacturing firms. Thus, it is crucial for managers as well as researchers to understand the importance of operations capabilities within the respective market environment. This thesis evaluates the most important operations capability dimensions as well as operations capabilities for competitive manufacturing in a high-cost environment and how they differ based on manufacturing firm characteristics. Therefore, a quantitative survey was conducted within the high-cost environments Sweden and Germany. Empirical findings show that quality is the order-winning criterion in high-cost environments, followed by delivery, cost and flexibility. However, the importance highly differs across the various manufacturing firm characteristics. Managers of manufacturing firms in high-cost environments can use these findings to validate and adjust their operations strategy to achieve a competitive advantage.