The study of operations strategy has been of interest to researchers, given its role in maintaining best performance. One of the objectives of research on operations strategy is to identify the drivers of high performance and also, more recently, the sustainability of competitive advantage (Beckman & Rosenfield 2008). The importance of the operational function at the strategic level, particularly for manufacturing operations, can be traced back to Skinner (1969). This was the first exploration of the competitive potential of the firm’s operations capabilities and the need to link these to its strategic decisions. Skinner (1974) developed some of this thinking in line with his concept of the focused factory and linked it to how firms could compete by using their in-house capabilities. Early research explored operations strategy as a series of trade-off decisions (Hayes & Wheelwright 1984; Skinner
38 1974). More recently, however, operations strategy has been presented as an incremental process of cumulative capability development (Brown et al. 2010; Ferdows & De Meyer 1990; Rosenzweig & Roth 2004).
A key trend in operations strategy that has received much attention in recent years is the move towards an agile approach. Agility is emerging as an essential competency for organisations to deal with the uncertainties in today’s fast-changing business. It is recognised by many organisations as a means by which they can gain competitive advantage and improve business results (Blackmon & Brown 2005; Koh & Simpson 2007). The term ‘agility’ means having a comprehensive ability to respond to the business challenges of profiting from rapidly changing, continually fragmenting markets and highly customer- configured goods and services (DeVor et al. 1997; Glodman et al. 1995). According to Sharifi and Zhang (2001), agile capabilities enable firms to respond to change in appropriate ways and benefit from business opportunities.
Although the influence of agile capabilities on a range of performance outcomes is undisputed (Bernardes & Hanna 2009; Hooper et al. 2001; Jin-Hai et al. 2003; Kidd 1994; Sharifi & Zhang 2001; Vokurka & Fliedner 1998), there is uncertainty about the relationship between agile capabilities and organisational performance (Vazquez-Bustelo et al. 2007). Despite the substantial body of work that has explored agile capabilities (Bernardes & Hanna 2009; Bottani 2010; Brown & Bessant 2003; Eshlaghy et al. 2010; Gagnon 1999; Hasana et al. 2012; Ismail et al. 2011; Matawale et al. 2013; Yusuf & Adeleye 2002), only a few studies have explored the enablers of agility and the impact of agile capabilities on organisational performance (e.g. Ramasesh et al. 2001; Elmoselhy 2013; Narasimhana et al. 2006; Vazquez- Bustelo et al. 2007; Chang et al. 2013). This provides a significant research opportunity to
39 explore the links between how organisations formulate agile operations strategy and subsequent organisational performance.
Finding links between strategy formulation and its success remains one of the ‘holy grails’ of the strategy literature (Golden & Powell 2000; Kaplan & Norton 2004). Clearly, to assume that there will be a linear relationship between strategy formulation and consequent success is suspect (Mintzberg et al. 2000). However, to assume that a set of dynamic capabilities (Teece et al. 1997) will be in place purely by chance, both in the firm and with partners in complex networks, is also problematic (Blackmon & Brown 2005). Brown et al. (2010) suggested that operational capabilities do not happen by accident but are developed by specific strategies whereby in-house operations and business mainstream strategies including supply chain become closely linked in both planning and implementation.
The last decade has seen much more research interest in strategies that have been implemented and what the results were (Barry & Elmes 1997; Dangayach & Deshmukh 2001; Oke et al. 2008; Pettigrew 1992; Whittington 1996, 2001). Along the same lines, Hayes and Wheelwright (1984) conceptualised a set of world-class manufacturing practices as being the best practices for achieving superior performance. The authors listed the following practices: the skills and capacity of the workforce; managerial technical competence to meet clients’ expectations regarding quality; workforce participation; investment in strategic development; and developing flexible operations that are capable of responding quickly to demands and changes in the market (Drohomeretski et al. 2014). An interest in the practice of operations strategy, however, remains minimal (Anderson et al. 1989; Barnes 2001, 2002; Dangayach & Deshmukh 2001; Minor III et al. 1994). This is despite the operations management field’s avowedly practitioner-centric nature and research suggesting that firms with formulated operations strategies achieve higher performance impact associated with
40 alignment between business and operations strategies (Joshi et al. 2003; Papke-Shields & Malhotra 2001; Sun & Hong 2002).
Scholars have presented arguments on why practices matter. According to Ketokivi and Schroeder (2004), what we do affects the outcome, so the link between practice and performance is an analytic truth, not a synthetic statement for empirical scrutiny. Nonetheless, the challenge is in justifying and examining why and in what conditions practices have competitive value. The typical dependent variable in a practice-performance study is some kind of competitive performance, whether financial or operational; therefore, the competitive impact must be considered (Brown et al. 2010; Drohomeretski et al. 2014). In order to determine the importance of practices, theoretical perspectives are required to establish a theoretical argument (Ketokovi & Schroeder 2004).
This study adopts the Resource-Based View (RBV) (Wernerfelt 1984) of the firm and the Dynamic Capability View (DCV) (Teece et al. 1997) to highlight the importance of resources and capabilities to firm performance. These theories have significantly influenced academic research in the area of production and operations strategy. Both RBV and DCV focus on resources and capabilities for establishing sustained competitive advantage. Since this study focuses on organisational practices and how they contribute to the development of agile capabilities, these theories seems best fit for this study. A discussion of these theories is presented in the next section.