The relationship between investments in lean practices and operational performance: exploring the moderating effects of operational intellectual capital

Abstract

Prior research has shown that operational intellectual capital (OIC) and investments in lean practices (ILP) lead to better operational performance. However, there has been no empirical studies on the synergetic effects between OIC components and ILP. More specifically, the question: can the efficacy of ILP be increased through OIC has not been studied. Accordingly, the purpose of this study is to report the empirical results of potential synergetic effects between operational intellectual capital (OIC), as a knowledge-based resource, and ILP. The empirical data used for this study was drawn from the fifth round of the Global Manufacturing Research Group (GMRG) survey project (with data collected from 528 manufacturing plants). The hypotheses are empirically tested using three ordinary least square (OLS) models. Our findings highlight the importance of leveraging a system of complementary knowledge based resources (OIC dimensions) and addresses the need for the reformulation of lean theory in terms of the emergent knowledge-based view (KBV) of the firm. The results facilitate greater understanding of the complex relationship between ILP and operational performance. Building on the contribution of Menor et al. (2007), we argue that OIC represents a strategic knowledge based resource that is valuable, hard to imitate or substitute and when leveraged effectively, generates superior operational and competitive advantage.From a managerial standpoint, this study provides guidelines for managers on how to leverage OIC to enhance the efficacy of ILP. We argue that firms consider investing in OIC to increase the return from ILP, which in turn will enhance their operational performance and provide competitive advantage. Our findings provide strong evidence of the importance of human, social and structural capital to enhance the efficacy of ILP. This is the first research paper that extends the application of intellectual capital theory in lean literature, and argues that the operational intellectual capital contributes to the efficacy of ILP. The analysis facilitates greater understanding of the complex relationship between OIC dimensions, ILP and operational performance.