Process Innovation and Operational Performance : The Complementary Role of Process and Technology Competences

Organizations invest and engage in various process innovation activities to achieve superior operational performance and gain strategic advantage. While research has examined the impacts of such activities on organizational outcomes, few studies have focused on organizational competences that lead to effective execution of process innovation activities and subsequent organizational performance. This paper investigates the direct and complementary effects of two important organizational competences—i.e., process improving competence (internally and externally oriented) and information technology (IT) leveraging competence—on process innovation in manufacturing organizations. It also examines how and why IT leveraging competence and process innovation influence a variety of operational performances (e.g., capacity utilization, sales, and other financial performances). Using a dataset of 1,528 manufacturing firms, we found strong support for our hypotheses. Findings related to the complementarity between improving process and leveraging IT competences indicate the importance of developing synergy between operations (e.g., process capabilities) and IT (e.g., IT competences) in organizations. The collaborative and effective execution of process innovation activities and practices can thus lead to enhanced operational performance