The Fit between Capabilities and Priorities and its Impact on Performance Improvement : Revisiting and Extending the Theory of Production Competence

This paper revisits and extends the theory of production competence, which has received wide attention in the operations and production management literature. As such, considering the aspects of quality, delivery, flexibility and cost, we develop two novel measures that assess the concept of production competence, which is conceptualized as the fit between production and operations management (POM) capabilities and production and operations management priorities. Inherent to both measures is their multi-dimensional conceptualization of POM capabilities. We then investigate the influence of the production competence measures on the improvement in plant productivity and plant responsiveness, which are more immediate outcomes compared to what had been utilized in prior production competence research. Furthermore, we investigate a range of control variables, an omission in extant production competence research. In addition, we assess the relationship based on data collected recently in a large-scale, multi-national survey encompassing a multitude of industries. Results consistently confirm the impact of the production competence measures on plant productivity improvement, and partially support the relationship to the improvement in plant responsiveness. The importance of this research is emphasized by the fundamental nature of the theory of production competence to the field of production research, and by limitations in prior studies examining this concept. Most notably, the current research contributes to the theory of production competence by its investigation with two novel measures among a dataset that is much more recent and global in scope compared to prior studies. Our investigation thus contributes to the generalizability of the theory of production competence. Implications for practitioners and academics studying production research are provided