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International Journal of Quality & Reliability Management
Operational capabilities in an emerging country: quality and the cost trade-off effect
Marcia Regina Santiago Scarpin, Luiz Artur Ledur Brito,
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Marcia Regina Santiago Scarpin, Luiz Artur Ledur Brito, "Operational capabilities in an emerging country: quality and the
cost trade-off effect", International Journal of Quality & Reliability Management, https://doi.org/10.1108/IJQRM-04-2017-0061
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Operational capabilities in an emerging country: quality and the cost trade-off effect
Abstract
Purpose
The purpose of this paper is: a) to identify the operational capabilities in an emerging
country, and b) to analyze the trade-off effect between the quality capability and the cost
capability.
Design/methodology/approach
The empirical data were drawn from 160 firms in Brazil. Scales were validated using the Q-
sort method and confirmatory factor analysis (CFA). Different techniques were adopted to
reduce common method variance. Data were analyzed using multiple line regression.
Findings
The results showed that quality has a positive relationship with delivery, flexibility,
innovation, and sustainability capabilities. However, it was not possible to observe a positive
relationship between quality and cost that confirmed the presence of a trade-off between
these two capabilities.
Practical implications
An important practical contribution of this study is that it brings a new perspective to the
relationship between quality and cost. Although quality is an important capability for the
firm, emerging country managers need to understand that its implementation will take time
and money; quality does not indicate an immediate reduction in cost.
Originality
This study helps expand research into operational capabilities in lesser-developed countries,
such as Brazil. Most of the research on operational capabilities is conducted in industrialized
countries. The paper also discusses the tradeoff between the quality capability and cost
capability. The results show that quality does not always lead to a reduction in cost.
Keywords: Operational capabilities; Brazilian industry; Sand cone model; Quality capability,
Cost capability; Emerging countries.
Type: Research paper

Introduction
Over the years, the focus of operational capabilities has been on both the trade-off
process and whether there exists an ideal sequence for composing capabilities. Several
authors legitimized the so-called sand cone model (quality, delivery, flexibility, and cost),
while others sought new prospects for it (Noble, 1995, Flynn and Flynn, 2004, Schroeder et
al., 2011). Operational capabilities are considered to be a differentiator in operational
management. This topic has been discussed in several empirical studies (Kathuria, 2000,
Corbett and Whybark, 2001, Rosenzweig and Roth, 2004, Größler and Grübner, 2006,
Amoako-Gyampah and Meredith, 2007, Hallgren et al., 2011, Liu et al., 2011, Schoenherr et
al., 2012). Some of these studies suggest that operational capabilities are a source of
competitive advantage. For example, Flynn and Flynn (2004) and Kortmann et al. (2014)
found strong evidence linking operational capabilities and performance. Ferdows and Meyer
(1990) showed that plants which develop quality and reliable delivery systems respond more
quickly to the market, while still being able to maintain lower costs.
Recent studies have focused more on how the macroeconomic environment influences
the development of operational capabilities (Amoako-Gyampah and Meredith, 2007,
Mesquita et al., 2007, Schoenherr et al., 2012). Scholars have been paying attention to the
effect of operational capabilities considering the environment in which the firm is located.
Each country has its own specific operational capabilities.
Different countries, different results. Schoenherr et al. (2012) conducted research on
operational capabilities in industrialized countries (Australia, Austria, Canada, Finland,
Germany, Ireland, Italy, Sweden, Switzerland and USA), emerging countries (Brazil, China,
Hungary, South Korea, Mexico, Poland and Taiwan) and lesser-developed countries
(Albania, Ghana, Macedonia and Nigeria). According to the authors, operational capabilities
in industrialized countries might have already reached a level of maturity, and so they
would have less importance as a valuable, rare and inimitable resource.
Contingent factors, such as the type of industry in which the company operates, can
also differentiate the latter’s competitive factors. Mesquita et al. (2007) analyzed the
determinants of competitiveness for 182 Brazilian auto-part companies. They concluded that
when these companies are coordinated by institutional associations, they tend to have
superior resources and capabilities when compared to those companies that coordinate their
activities alone. The study also showed that isolated investments by companies are unable to
explain their competitiveness, particularly in emerging economies.
It is unlikely that there is a unique sequence of cumulative capabilities for all firms. It
will depend on the operational strategies and contingency factors resulting from the
organizational world. The external environment in which a company operates should be
noted when operational capabilities are being studied.
Operational capabilities are complex and many variables can influence their
development. Flynn and Flynn (2004) recognize that global competition inevitably affects
how companies accumulate their operational capabilities. Companies in different countries
require varying strategic initiatives that will influence the composition of their operational
capabilities.
This research investigates the use of operational capabilities in emerging economy

firms. Contrary to what typically occurs in an industrialized country, in lesser-developed
countries, such as Brazil, operational capabilities are still considered a powerful source of
competitive advantage. The lower maturity level of operational capabilities in these countries
creates more opportunities to advance them. For instance, quality tends to vary across the
globe’s cultural dimensions (Vecchi and Brennan, 2011). Cultural aspects, such as
performance orientation, uncertainty avoidance, power distance, and institutional collectivism
have a highly significant impact on quality practices. Brazil is a country with a high power
distance. Power distance is related to the degree of centralization of authority and autocratic
leadership, or the degree to which less powerful members of institutions and organizations
accept that power is distributed unequally (Hofstede, 1983). Moreover, managers tend to rely
more on procedure, routine, and inspection-driven quality management practices than their
counterparts in countries such as Argentina and Spain.
Research into operational capabilities in lesser-developed countries can make
various contributions to the operations area. First, sand cone model variables and their
sequence may not work in lesser-developed economies. Previous empirical research was
mainly conducted in large and highly industrialized countries (Bouranta and Psomas, 2017).
Second, quality management, which is considered the foundation of the sand cone model
cannot reduce the cost of the firma over time, as Ferdows and Meyer (1990) stated.
Although some authors have shown that better quality does not cost more, but rather
is a means for reducing cost (Kaynak and Hartley, 2008, Jiménez-Jiménez and Martínez-
Costa, 2009), in emerging economy countries this relationship may not be so straightforward.
In these countries, high levels of quality may mean more cost, because quality requires
constant investment, which companies are not always able to finance, especially in countries
such as Brazil, in which inspection-driven quality management practices are even more
powerless (Vecchi and Brennan, 2011).
This paper explores the environment in which firms operate and seeks to answer the
following questions: Which operational capabilities are present in lesser-developed
countries, such as Brazil? Is quality the foundation of operational capabilities? Is there a
trade-off between quality and cost in firms located in lesser-developed countries? The
purpose of this paper is: a) to identify operational capabilities in an emerging country, and b)
to analyze the trade-off effect between the quality capability and cost capability.
The remainder of the paper has the following structure. The introduction presents the
contextualization, problematization, and the objective of the research. Section 2 reviews the
literature. Section 3 presents methodological aspects, while Sections 4 and 5 discuss results
and final considerations respectively.
2. Literature review
This section presents the evolution of cumulative capabilities as well as their

operationalization in empirical studies.
2.1 Operational capabilities
Wheelwright (1984) was the first author to identify quality, delivery, flexibility,
and cost variables as competitive priorities. For this author, as well as for Skinner (1969),
firms have to choose a competitive priority and invest in it (even at the expense of other
priorities) vis-à-vis their competitors. This is the principle of trade-off.
In contrast to the principle of trade-off, Ferdows and Meyer (1990) developed a
model called the sand cone model (see Figure 1). This model uses the same variables
proposed by Wheelwright (1984). Depending on their complexity, operational capabilities
can change or even reinforce each other, thus becoming cumulative. The sequence begins
with quality, moves on to delivery and flexibility and ends in cost.
[Figure 1]
Quality is a precondition for all other operational capabilities in the sand cone
model, and forms the foundation model. It is considered a foundation capability, because
it affects different production processes, and helps develop the other capabilities. Once
quality begins to show results, the firm will continue expanding it, while simultaneously
beginning its efforts to obtain a reliable production process (delivery). When the firm has
established quality and reliable delivery, the next step is to add improvements related to
flexibility, considering the volume of products and the introduction of new products to
the market. Finally, after all these efforts, the operations area should invest in programs to
improve cost efficiencies. Cumulative operational continues to expand and
simultaneously reaches higher levels (Ferdows and Meyer, 1990). Table 1 shows some of
the studies that use quality, delivery, flexibility and cost as operational capabilities.
[Table 1]
Evidence supporting or opposing the sand cone model is found in the studies of
Kathuria (2000), Corbett and Whybark (2001), Rosenzweig and Roth (2004), Größler and
Grübner (2006), Amoako-Gyampah and Meredith (2007), Hallgren et al. (2011), Liu et
al. (2011), and Schoenherr et al. (2012). Corbett and Whybark (2001) compared firms
with high and low performance and concluded that both follow the same sequence
described in the sand cone model. Similarly, Rosenzweig and Roth (2004) and Größler
and Grübner (2006) presented empirical evidence showing that operational capabilities
are cumulative and develop gradually. The authors also said that they may indirectly
affect each other, as in the case of quality that positively affects flexibility (Größler and
Grübner, 2006). On the other hand, Kathuria (2000) presented three cumulative
operational clusters. The first, Efficient Conformers, places a significant emphasis on cost
and quality. The second, Speedy Conformers, focuses equally on delivery and quality,
and the last cluster, Do All, has four operational capabilities.
Differences in the sequence of the sand cone model were found in studies
conducted by (Hallgren et al., 2011). The authors developed a hybrid model in which
quality is the basis for delivery, but flexibility and cost are not sequential and can be
developed at the same time. Amoako-Gyampah and Meredith (2007) tested the sand cone
model in Ghana. The results supported the model, but introduced a significant change in
its sequence. The model has quality at its base, and cost above it. Delivery and flexibility
are at the top. According to the authors, the difference in sequence depends on the
economic conditions of the country. In Ghana, for example, cost is a strategy for
enterprises throughout the country (Amoako-Gyampah and Meredith, 2007).
To compare the behavior of operational capabilities by groups of countries,
Schoenherr et al. (2012) conducted a survey in industrialized, emerging and developing
countries. The main results found that operational capabilities have achieved a mature
level in industrialized countries. While operational capability is considered significant in
industrialized countries, it is less important as a source of competitive advantage. This is
contrary to what occurs in less developed countries, where operational capabilities are
considered a valuable resource and can leverage social and economic development in
those countries.
The studies analyzed demonstrate that the sand cone model is not a universal
model. Schroeder et al. (2010) showed that 33% of the sample in their study did not
follow the cumulative model, while 67% might eventually develop it. In addition, Liu et
al. (2011) argue that the cumulative model and trade-off model are not mutually
exclusive, and both can be found in evidence in the same operating process at different
times. The cumulative model is linked to effective operating practices, while the trade-off
model is related to the performance frontier in the innovation cycle.
Table 1 consists basically of studies about the sand cone model (Ferdows and
Meyer, 1990). Some authors have evidenced its existence empirically, while others
disagree with its cumulative process. But all of them use the same scale, quality, delivery,
flexibility, and cost.
In addition to studies that tested the original scale of (Wheelwright, 1984) and the
sand cone model (Ferdows and Meyer, 1990), there are those that altered it, by including
or removing variables. The search results are shown in [Table 2.
[Table 2]
Noble (1995) was one of the first authors to add new capabilities. The author
included dependability and innovation. The result of her study showed that firms
competing with multiple operational capabilities perform better than those that focused
only on one or two. The preferred strategy of firms located in different countries tends to
influence the result in the cumulative model.
Similarly, Flynn and Flynn (2004) included cycle time and the rate of new product
introduction in the original scale of the sand cone model. The database used was the
World Class Manufacturing (WCM, round II), involving firms from Germany, Italy,
Japan, the UK and the United States. The authors showed that operational capabilities
have a positive relationship with operational performance, suggesting that the
accumulation of operational capabilities can indeed generate a sequence, but not a
universal sequence, as recommended in some studies. Each country has its own unique
operational capabilities and this fact has an impact on their composition; it is unlikely that
the same sequence can serve all circumstances generated by a competitive environment.
For example, operational capabilities in Japan proved to be cumulative between
themselves, but in the case of the UK only the delivery operational capability had a
positive effect on quality (Flynn and Flynn, 2004).
Peng et al. (2008) tested the cumulative model by adding the innovation
variable. The database used was the World Class Manufacturing (WCM, round III). The
model was tested with 189 firms in Finland, Germany, Japan, Korea, Switzerland and the
United States. The results, which were similar to the findings of Flynn and Flynn (2004),
indicated that the sand cone model cannot be considered a unique phenomenon applied to
all firms, because changes in operational strategic choices and contingency factors can
influence its sequence. The authors additionally argue that the trade-off theory is
appropriate when production is close to the limit of efficiency, particularly when it is
static.
On the other hand, Avella et al. (2011) tested the cumulative model, including
variable environmental protection. The authors verified that operational capabilities can
occur gradually, without incompatibilities or trade-offs. The relationship between quality,
delivery, flexibility, environmental protection and cost has a positive and direct effect and
operational capabilities that are not adjacent have an indirect effect on their subsequent
operational capability, reinforcing the sequence of the sand cone model. Similarly,
Galeazzo and Klassen (2015), and Gold et al. (2017) included sustainability as another
traditional operational capability. Gold et al. (2017) found a difference in the model
sequence when they analyzed two plant samples from geographically different regions in
the European Union.
In addition to the cumulative model, other techniques were also employed for the
analysis of operational capabilities. Vickery et al. (1997) used factor analysis and
multiple regressions and tested operational capabilities in a single industry (furniture) to
avoid variability between different industries. The results identified four groups of
operational capabilities: (1) innovation; (2) delivery; (3) flexibility; and (4) value (a
combination of quality and cost). All groups were positively related to operational
performance. Rusjan (2005), by way of a simple regression, determined that the strategic
decision of the manager has an influence on the choice of competitive priorities. For this
author, the strategies chosen should meet the present situation of the firm, at the same
time as realizing possible changes that the firm hopes to achieve. Therefore, formal
periodic planning is necessary to determine which competitive priorities should be
considered, allowing for operational improvements and possible changes in the firm's
competitive environment.
Mapes et al. (2000) compared plants with high and low performance. The authors
concluded that for quality, productivity and delivery, plants with a high performance used
processes and procedures that were less variation and uncertain than plants with a poor
performance. Furthermore, the authors identified no differences between size, complexity,
volume of production and the industry, but found that high-performance plants tend to
belong to foreign groups.
It is still possible to find studies that use a mix of variables. Bouranta and Psomas (2017)
researched quality, flexibility, delivery, cost, innovation, and customers in their study;
flexibility was not supported. When comparing manufacturing and service industries,
quality is considered to be the most important capability. There are also studies that focus
on the influence of contingency factors in the formation of operational capabilities. They
show that a firm's ability to articulate its main operational capabilities and promote best
performance are more important than a possible ideal sequence. Bouranta and Psomas
(2017) argue that the competitive environment in which the company operates should be
considered in the development of operational capabilities.
2.2.1 Contingent factors in the cumulative effect of operational capabilities
Emerging economy countries oscillate between growth and crises. This generates
market instability that affect the strategy of companies in the country. When contingent
factors are considered in the cumulative effect of operational capabilities the results may be
different from the sequence of the sand cone model. Bouranta and Psomas (2017) showed
that the recent economic and political crisis in Greece affected company strategies and
development of their operational capabilities. The priority strategy was low-cost instead of
quality. The results of innovation and flexibility, despite their importance, were not
significant. Amoako-Gyampah and Meredith (2007) tested the sand cone model in Ghana
where the results supported the model, but with a significant change in its sequence. First,
they identified that quality followed cost, while at the top, delivery followed flexibility.
According to the authors, the economic conditions of Ghana influence the sequence of the
sand cone model, in which cost is one of the key strategic components for companies
operating in the country.
To compare the behavior of operational capabilities by groups of countries,
Schoenherr et al. (2012) conducted a survey in industrialized, emerging, and developing
countries. The main results indicate that in industrialized countries, operational capabilities
have reached a level of maturity and are less important as a source of competitive advantage,
which is contrary to what happens in less developed countries, where they are still considered
a valuable resource and can serve as a qualitative leap in the socioeconomic development of
the country. There is a lack of knowledge with regard the efforts of firms in developing
countries (Jayaram and Xu, 2016, Bouranta and Psomas, 2017).
The sand cone is not a universal model. For example, Schroeder et al. (2011) showed
that 33% of the sample did not follow the cumulative model, while 67% might eventually
develop it. In addition, Liu et al. (2011) argue that the cumulative model and trade-off are not
mutually exclusive, and both can be evidenced in the same operational process, but at
different stages; the cumulative model is linked to best operational practices and in a trade-off
is related to the performance frontier in the innovation cycle.
For a long time, quality, delivery, flexibility and cost have been operational
capabilities. Over the years, some scholars have added other dimensions, such as innovation,
process technology, and environmental protection (Rusjan, 2005, Peng et al., 2008, Avella
and Vázquez-Bustelo, 2010, Galeazzo and Klassen, 2015, Gold et al., 2017). Corbett and
Cutler (2000) believe in a considerable parallel between the way quality management
developed and the way environmental systems are now being developed in companies.
Quality management has been described as a way to enhance environmental performance, a
ready bridge to environmental excellence (Klassen and McLaughlin, 1993). Galeazzo and
Klassen (2015) also offered evidence supporting an important connection between a
sustainability-related manufacturing strategy and aspects of organizational context. They
noticed that operations managers consider their organizational context when they allocate
resources and time to develop operational capabilities.
Results are inconsistent, especially when contingent factors are considered, such
as market, type of industry, and country (Flynn and Flynn, 2004). The country-specific
context, such as business costs, competition, and market dynamism, can influence local
strategy, manufacturing competitiveness, manufacturing performance, and capabilities.
Gold et al. (2017) found differences in the sand cone model when they compared plants
in old members states (OMS), which are considered mature industrialized countries, and
new members states (NMS), which are considered to be newly industrialized countries in
the European Union. Plants in OMS follow a manufacturing strategy that focuses on
improving cost efficiency driven by process redesign. NMS, on the other hand, aim to
improve flexibility in terms of product variety and volume. Compared to OMS, NMS are
at an earlier stage in their development with relatively less-developed manufacturing
capabilities. There is also the fact that in some emerging countries education levels are
often quite low and cultural norms do not always support a zero-defect quality philosophy
(Fawcett et al., 2000)
H1. Sand cone model variables that include quality, delivery, flexibility, and cost are
found in manufacturing industries in Brazil.
H2. Innovation and sustainability can be added to the original sand cone model
variables.
2.2.2 Trade-off effect in quality and cost capabilities
Quality and Cost are the focus in operational management, because they are
demanded by consumers and are often the foundation on which other competitive
capabilities are built (Fawcett et al., 2000). Quality is listed as one of manufacturing’s top
operational capabilities, and considered a major competitive priority of manufacturing firms.
Scholars agree that quality management may be a source of competitive advantage (Bouranta
and Psomas, 2017, Elshaer and Augustyn, 2016). Quality practices capture and correct
defects before they leave the factory floor and reduce process variations in production
(Forker et al., 1996). According to Ferdows and Meyer (1990) quality is the basis;
improvements in quality can lead to cost efficiencies. A quality product can reduce costs,
attract and retain customers and increase sales and profit. Quality dimensions are highly
correlated with business performance. Various firms have experienced positive and superior
performance based on quality management (Forker et al., 1996, Cua, et al., 2001, McKone et
al., 2001, Jiménez-Jiménez and Martínez-Costa, 2009, Furlan et al., 2011).
On the other hand, there are also those firms that have not identified consistent results.
Not all TQM implementation achieves satisfactory results, since this relationship is not
straightforward. There have been many situations in which, despite the successful
implementation of quality management practices, operational performance improvement
could not be achieved (Vecchi and Brennan, 2011).
Even though quality is nowadays considered to be a critical success factor for
achieving competitiveness, studies also show a negative relationship with organizational
performance (Harari, 1993, Tatikonda and Tatikonda, 1996, Schiffauerova and Thomson,
2006). Negative results may be related to the investment that a firm needs for implementing
or maintaining quality management. The cost-of-quality approach is not fully appreciated
by organizations, and only a minority of them use formal quality costing methods. The
price of conformance is the cost involved in making certain things that are done right the
first time, while the price of non-conformance is the money wasted when work fails to
conform to customer requirements (Schiffauerova and Thomson, 2006).
The effects of quality management on competitive advantage may depend on the age
of the quality management program (Malik et al., 2016). Process management, quality data
and reporting may not help achieve a competitive advantage (Elshaer and Augustyn, 2016),
because in some cases the improvement in quality can only be achieved with a significant
increase in operating costs. Control charts, statistics, and cross-functional teams for
identifying and correcting special and common causes of process variability are investments
that are necessary and not always economic (Forker et al., 1996, Sower et al., 2007),
especially in lesser-developed countries where there is no quality culture. For example, in
Ghana, intense competition from cheap imports is forcing firms to seek cost reductions by
emphasizing the development of their cost capabilities instead of other operational
capabilities, such as quality (Amoako-Gyampah and Meredith, 2007). Although quality is
considered important in any type of environment, low cost may be more effective in stable
and predictable environments (Bouranta and Psomas, 2017).
In lesser-developed countries, increased competition is forcing firms to focus on goals
that have become order qualifiers as opposed to order winners (Wacker, 1996). Contrary to
the assertions of Ferdows and De Meyer (1990), operational capabilities might not be all
cumulative; trade-offs are eventually required (Pagell et al., 2000, Rosenzweig and Easton,
2010) depending on the market in which the firm operates. The market-winning strategy
seems to lay more emphasis on quality than cost. The country's economic situation has an
impact on customer's consumer preference. Due to drastic cuts in their wages and an increase
in unemployment, consumers are looking to find the right mix of quality and price (Bouranta
and Psomas, 2017)
H3. In lesser-developed countries, there is a trade-off between quality and cost.
3. Brazil - labor cost and productivity in the manufacturing industry
Firms located in emerging countries, such as Brazil, adopt fewer operational

practices than firms located in industrialized countries. One possible explanation is that
these firms have certain culture characteristics that reduce the attractiveness of adopting a
wider set of practices. In addition, in countries with precarious education, - Brazil tops
the ranking among developing countries - (OECD, 2016), employees are normally poorly
qualified, making it difficult for them to learn and exchange knowledge. The firm needs
to train its employees, but before it does so, it needs to provide them with access to
education, which generates additional costs.
Brazil has an economic context in which labor costs in manufacturing exceed
those in most developing countries - with which Brazilian industry competes directly -,
and its productivity is lower. Poor education/training and high turnover also impede the
competitiveness of the business sector and economic growth.
Labor costs in the manufacturing industry in Brazil haves been growing
systematically since the early 2000s. Data collected from international organizations show a
growth of more than 250% over the period between 2002 and 2012. This is a reflection of a
broad set of factors that involve exchange rates, levels of innovation, labor qualification, and
the regulation of labor relations. Costs directly affect labor productivity in Brazil, which is
less than a fifth of US productivity, and still lower than that of developing countries such as
the Russian Federation, Mexico, Argentina, and South Africa. Labor turnover also has a
negative impact on productivity levels, discourages investment in training and reduces the
worker's commitment to long-term company performance. Statistics show that, in Brazil,
labor turnover is particularly high; between 2003 and 2009 it was approximately 36%. The
replacement of workers implies a loss of investments made in training and a reduction in
productivity associated with employees who are not yet experienced (CNI, 2014).
4. Research method
In developing this research, a framework was established that was taken from several
past studies. The questionnaire was based on a detailed review of the literature. Articles were
selected and their abstracts were evaluated in order to remove those that did not address
operational capability. From this initial screening there remained 89 (eighty-nine) articles,
which were re-evaluated, leaving 31 articles. They were analyzed in detail considering their
references, constructs and metrics. After this review five constructs were selected and some
questions for each construct were established (see Table 3). To ensure reliability, the terms
were reviewed and the scale validated by way of the Q-sort method. Five individuals were
involved in this stage; two professors of operational management, and three managers
from the manufacturing industry. The level of reliability of some of the items in the first
round was low. Nahm et al. (2002) argue that scores are excellent (0.76 - 1.00), fair to
moderate (0.40 - 0.75), and poor (0.39 or less).Thus, some questions were discarded. The
final questionnaire contained six constructs and twenty questions.
[Table 3]
To test the hypotheses proposed in the theoretical model (Figure 2), the level of
analysis is the manufacturing plant. The populations in this study are Brazilian manufacturing
industries. Just as in other studies, data have been collected using the convenience sampling
method (Kumar et al., 2010, Ali et al., 2015). A total of 500 small, medium-size and large
manufacturing plants in of the food, textile, wood, paper, plastics, pharmaceutical, chemical,
metal, machinery, and equipment industry segments were contacted. The survey was carried
out for the 2014-2015 period. Responses were collected by way of questionnaires that were
sent directly via email to the potential respondents. In total, 500 emails were sent, but 55
returned because the email addresses were wrong. We tried to get the correct email addresses
and resend the questionnaire, but due to limitations resulting from wrong telephone numbers
and companies that had shut down, only 21 emails were resent. Due to the low level of
response, less than 17, the strategy was to call plant operations managers. Three or more calls
were made to each respondent. On the first call, we told them about the research and the
email sent previously. In some cases, it was possible to carry out the interview at the same
time, while in others a time was scheduled with the respondent. Even with the scheduling,
however, in many cases several other calls had to be made before we were able to talk to the
operations manager. The final sample includes 160 manufacturing plants, representing a
response rate of 32%. The non-responder bias was evaluated by ANOVA for each item,
comparing the first half of the respondents with the second half; the results were satisfactory
(Armstrong and Overton, 1977).
[Figure 2]
To reduce the threat of common method variance, the following measures were
adopted: the anonymity and confidentiality of respondents was guaranteed, different scales
were used for the dependent and independent variables, the Q-Sort method was used to
reduce the ambiguity of the items, as was the Harman single factor test (Podsakoff et al.,
2003), with factor analysis being performed on all items to see if there was a general factor.
Seven factors were found with more than 1 (one) eigenvalue; the first factor alone accounted
for 33.1 % of the total variance.

The descriptive analysis of the items showed no significant deviations from univariate
normality. The asymmetry index ranged from -0.523 to 0.722, and kurtosis between -0.892
and 0.389. Kline (2005, p. 49-50) suggests maximum permissible values of 3 and 10 for
skewness and kurtosis respectively, so the data from this study fell within a normal range.
Absolute adjustment measures were used in selected dimensions, such as the chi-
square likelihood ratio (χ2) and root mean squared residue, in order to ensure adequate
representation of the entire set of casual relationships. The value of the chi-square of 197.159,
with 137 degrees of freedom, is statistically significant at 0.00. A nonsignificant chi-square
value is expected because H0 indicates that the data fit the model. However, it is possible to
divide the chi-square value for degrees of freedom (χ²/GL) resulting in a value of 1.43, which
is a measure less than 3 and, therefore, acceptable according to Kline (2005). Incremental fit
measures (RMSEA, CFI, IFI and NFI) were also performed to demonstrate the levels of fit of
the model. Convergent and discriminant validity was performed by way of Cronbach’s
Alpha, VIF, AVE, and ∆ χ2. The good fit of the model and the generation tool based on the
literature procedure indicate the unidimensionality of the constructs and contribute to content
validity (see details in the next section). Data were analyzed using multiple linear regression
with SPSS software (Statistical Package for Social Sciences), version 22.
5. Data Analysis
The unidimensionality of the key constructs were assessed by confirmatory factor

analysis (CFA). There are various statistical indexes of overall model fit, but there is a
minimal set of fit indexes that should be reported and interpreted when reporting the
results of SEM analyses, such as, the values of the normed fit index (NFI); the
Incremental Fit Index (IFI); the Tucker-Lewis Index (TLI); and the Comparative Fit
Index (CFI) that were all evaluated; the recommended values are over 0.80 (Hu and
Bentler, 1999). For the root mean square error of approximation (RMSEA), the
recommended value is < 1. These fit index values indicate the overall fit of a model.
The first Cumulative Capabilities group confirmatory model resulted in a poor
model fit: the Chi-square value with 422.431 degrees of freedom is 237 (p = 0.00); the
Chi-square ratio to the degrees of freedom = 2.036), NFI = 0.79; IFI = 0.88, TLI = 0.86;
CFI = 0.88, and RMSEA = 0.08. Eight items (QUAL03, FLEX09, COST14, INNO17,
INNO20) show an unacceptably large variance in measurement error or low indicator

loadings. These items were deleted one by one from the measurement model. The revised
model provided a good model fit: the Chi-square value with 197.159 degrees of freedom
is 137 (p = 0.001; the Chi-square ratio to the degrees of freedom = 1.439). Some
researchers divide its value by the degrees of freedom (χM2 /dfM), due to adjustment
problems with Chi-square, such as sample and correlations size. This is called the normed
chi-square (NC). Values of the NC of 2.0 have been generally recommended as indicating
reasonable fit (Kline, 2005).
The fit indices are greater than the 0.90 benchmark, with NFI = 0.89, IFI = 0.96,
TLI = 0.95; CFI = 0.96. All these indexes assess the relative improvement in fit of the
researcher’s model compared with a baseline model. These indices indicate that the model
fits the data perfectly. The RMSEA-value is 0.05. It measures the error of approximation;
RMSEA ≤ 0.05 indicates close approximate fit (Kline, 2005).
Reliability, content, convergent and discriminant validity were performed. First, in
order to establish content validity a rigorous process was used to develop and validate the
survey instrument, which was modeled on previous empirical studies (e.g. Boyer and
Pagell, 2000, Kathuria, 2000, Wu et al., 2010, Peng et al., 2008, Schoenherr et al., 2012,
Avella et al., 2011). Besides the previous literature, a pilot test was carried out to
establish validity. To establish reliability and convergent validity, exploratory factor
analysis (EFA) was employed to ensure the unidimensionality of the scales, followed by
Cronbach’s Alpha for assessing construct reliability. The limit for Cronbach’s Alpha is
0.70 (Nunnally and Bernstein, 1994). Cronbach’s Alpha values in Table 4 indicate that all
constructs are reliable, which is why each variable can be explained by other variables
(Hair et al., 1998). Next, the possibility of multicollinearity among the remaining items
was examined by computing the variance inflation factor (VIF), which evaluates the
degree to which the VIFs indicated a lack of evidence of multicollinearity. Additionally,
to evaluate convergent validity the average variance extracted (AVE) was calculated for
each construct (see Table 4) (Fornell and Larcker, 1981).
[Table 4]
Finally, discriminant validity was tested. A constrained CFA model was used for
each possible pair of constructs in which the correlations between this pair of constructs
are fixed at 1. This model was subsequently compared to the original unconstrained
model, in which the correlations between constructs are freely estimated (O’Leary-Kelly
and Vokurka, 1998). Table 5 shows the discriminant validity analysis.
[Table 5]
All the differences of χ2 between the fixed and unconstrained model were
significant in this study at 0.01. The constructs are different. After confirmatory factor
analysis, the averages and correlations presented in Table 6 and Table 7 were run.
Considering the model fit and accuracy in choosing the items, the scales are validated and
reliable, ensuring that the scales used adequately represent the latent constructs
[Table 6]
[Table 7]
4.1 Statistical technique
In this phase, the relationship between the operational capabilities, quality,

delivery, flexibility, innovation, sustainability, and cost, were analyzed. The data were
analyzed using linear regressions. The dependent variable was quality. Independent
variables were delivery, flexibility, innovation, sustainability, and cost. The control
variable was size. Size was controlled since larger firms might have access to more and/or
better resources than smaller firms to develop their operational capabilities, while smaller
firms may be more flexible and have the ability to develop operational capabilities more
quickly (Nelson and Winter, 1982).The statistical software used was SPSS (Statistical
Package for Social Sciences).
[Table 8]
Table 8 shows that most respondents belong to companies with 20 to 99 employees

(45%) and 100 to 499 employees (49.38%). It was seen that the sample comprises
predominantly small and medium-size companies. Table 9 presents the data from
respondents.
[Table 9]
Table 9 shows that most respondents are classified as production managers and/or
industrial managers (74.9%). Second, with 23.8% appear the directors. This is an important
aspect, since they are in positions of leadership and decision makers. With regard to the
average time that employees work in their companies, it was observed that in most cases the
respondents are long-time employees, with 58.76% having more than 10 years’ experience,
and 17.5% between 5 and 10 years. Table 9 also shows that with regard to the average time of
the employees in their position, the respondents’ sample remained balanced. Although the
respondents have spent extensive periods of time in their companies, almost half of them are
new in their particular jobs. Since the respondents also have more than 10 years’ experience
in the industry in which they are currently working, this shows that they are fully capable of
responding to this survey. Mean, standard deviations, and correlations are presented in Table
10.
[Table 10]
The averages shown in Table 10 suggest that the constructs investigated have been
properly noted by the respondents in their place of work. Table 10 also shows that quality
(4.15), delivery (3.74), flexibility (3.57), cost (3.01), innovation (3.23) and sustainability
(3.54) had the highest averages, following the pattern of the sand cone model of Ferdows and
De Meyer (1990).
4.2 Regression Analysis
[Table 11]
Regression analysis shows different relationships between quality and other

operational capabilities. Multiple regression analysis is a statistical technique that analyzes
the relationship between a single dependent variable and multiple independent variables.
Each independent variable is weighted by the regression analysis procedure to ensure
maximum prediction from the set of independent variables (Hair et al., 1998). Different
studies have tested the variables of the sand cone model and shown inconsistent results, see
(Kathuria, 2000, Corbett and Whybark, 2001, Rosenzweig and Roth, 2004, Größler and
Grübner, 2006, Amoako-Gyampah and Meredith, 2007, Hallgren et al., 2011, Liu et al.,
2011, and Schoenherr et al., 2012, Gold et al., 2017). Many of these studies have positive
relationship between operational capabilities, at a significantly positive level.
The focus in this study was on the original sand cone model variables, to which
were added innovation and sustainability. These two operational capabilities are part of
the operational strategy and can positively impact the firm's performance (Noble, 1995,
Flynn and Flynn, 2004, Peng et al., 2008, Avella, et al., 2011). In total, six operational
capabilities were tested, quality, delivery, flexibility, cost, innovation, and sustainability.
From examining the correlations in Table 7 between six operational capabilities
it can be seen that not all operational capabilities have significant pairs of correlations.
Cost was not related to quality and delivery. Table 11 reinforces these results, showing a
positive and significant relationship between quality and delivery (.406***), quality and
flexibility (.212***), quality and innovation (.252***), and, quality and sustainability
(.292***). It also shows that the correlation between quality and cost is not significant
(0.56). Thus, H1 was partially confirmed.
Quality is considered the foundation of operational capabilities (Ferdows and De
Meyer, 1990, Flynn and Flynn, 2004). It was considered to be an independent variable,
with positive relationships with delivery and flexibility. However, quality did not prove to
have a significant relationship with cost. Table 11 also provides evidence to support H2,
which was confirmed in this study. The innovation (.252***) and sustainability (.292***)
variables have been added to the regression and both showed a positive relationship with
quality. Note that delivery has a stronger link between its β coefficient and quality (.406***).
Next, sustainability (.292***), innovation (.252***), and flexibility (.212***) have β
coefficients that are really close to quality.
Table 11 shows evidence supporting H3. The relationship between quality and cost
was not significant (0.56). Quality was not a predictor of cost in this sample. Most studies
show that this is a logical and positive relationship (Peng et al., 2008, Flynn and Flynn ,
2004, Avella et al., 2011). Quality management, however, involves investments that can
negatively affect cost, and first-time costs can have a performance that is contrary to what is
expected, by remaining the same, or even increasing (Forker et al., 1996, Elshaer and
Augustyn, 2016). For example, if a manager chooses quality improvement programs in order
to reach a zero-defect quality level (non-conformance cost), he/she must expend considerable
effort in measuring and monitoring failure and other non-conformance, no matter what the
cost. If the firm's strategic choice is for conformance costs, however, less attention will be
paid to in the quality management programs, with moderate results for the firm
(Schiffauerova and Thomson, 2006).
Evidence that total CoQ (cost of quality) is lower at higher levels of overall quality
is provided by Plewa et al. (2016). For them, the cost of failure diminishes at higher overall
quality levels, while prevention and appraisal costs are not observed to be significantly higher
at higher overall quality levels. However, higher quality levels require exponentially higher
prevention and appraisal spending, while the cost of failure decreases (Plewa et al., 2016,
Malik et al., 2016). Even when a firms’ quality system matures, the proportion of total
quality cost spent on prevention activities increases while the costs of external failure
decrease, a possible explanation begin the lack of involvement of top management in the
development of a quality culture (Sower et al., 2007). Quality cost are most effective when
there is a culture in which both cost control successes and difficulties can be discussed
openly, without fear of reprisal (Bamford and Land, 2006).
The absence of a quality management culture can lead to a trade-off between quality
and cost (Amoako-Gyampah and Meredith, 2007, Bouranta and Psomas, 2017), making it
difficult to achieve positive results between these two variables. Limitations, such as a lack of
resources, the availability of required information, and employees expertise for gathering and
analyzing such information completely may make a positive relationship between quality and
low cost difficult (Bamford and Land, 2006).
Firms operating in developing countries face internal and external quality problems.
The lack of good suppliers forces firms to buy from locally-available suppliers, which in
some cases are more profit than profitability, i.e. more profit by mixing low quality raw
material in their lots (Malik et al., 2016). In Ethiopia, US$ 272 million are spent every year
dealing with quality problems, 99% of which are incurred because of the non-conformance
cost of export products. Total conformance are estimated to be less than 1% of the non-
conformance costs (Birhanu et al., 2017).
In Brazil there is not a quality management culture operating, and this was reflected
in this survey. The uses of quality tools require financial and human investment, and this is
not always associated with cost reduction. Moreover, in the sand cone model, quality is far
from cost, so it is possible that other operational capabilities, not quality, may have positive
results with cost, such as innovation.
6. Discussion and conclusion
Studies about operational capabilities provide a variety of results. The research

initially had the objective of identifying whether Brazilian companies were able to develop
the operational capabilities proposed by Ferdows and De Meyer (1990). Some studies support
the sand cone model whilst others do not.
Flynn and Flynn (2004), Amoako-Gyampah and Meredith (2007) and Schoroeder et
al. (2011) showed that organizational strategy and contingency factors affect this process,
and that it is not always possible to adopt the same sequence universally. Moreover, even if
the effect is cumulative, there will be changes according to the type of company, sector or
country in which the company is located. Kathuria (2000), for example, presented three
clusters of cumulative capabilities in Indian companies. The first group, called ‘Efficient
conformers’ lays a significant emphasis on cost and quality. The second group, 'Speedy
conformers', focuses equally on delivery and quality, and the third group, 'Do All',
emphasizes the four operational capabilities. Amoako-Gyampah and Meredith (2007) found
results that supported the sand cone model, but with a significant difference in its sequence.
The model found quality followed by cost and then delivery and flexibility. This difference,
according to the authors, is due to the recurrent economic conditions in the country, where
cost is a strategic element for companies.
The study’s aim was to identify operational capabilities in emerging countries and to
analyze the trade-off effect between the quality capability and cost capability. Our results
showed that quality has a positive relationship with delivery, flexibility, innovation, and
sustainability capabilities. Delivery in some cases implies trusting the information system and
justifying its proximity to quality. The inferior quality of a product can also affect delivery,
resulting in rework and negatively affecting customer satisfaction. Flexibility can be
incorporated in various ways, such as in production volume, changes in the production
system and the designer, and product customization. Innovation is very close to the flexibility
construct, since its concept is the speed and frequency with which new products are created
and marketed, depending on the flexibility of the production capacity to produce satisfactory
results. Innovation requires a short product life-cycle and the speed at which new products
are created and implemented can affect their quality, as every change requires adaptation and
errors may occur during this learning process, thus having an impact on the company’s
established quality level.
There is also a logical relationship between quality and sustainability. Quality
management is an antecedent of environmental systems. Companies with a philosophy that
includes the quality management paradigm seek to transfer it to their fledgling environmental
management systems, thus facilitating its implementation. Quality management provides
opportunities for learning and can influence other capabilities. For example, the TQM system
drove the development of a range of skills, introduced a set of improvement activities and
encouraged a culture of involvement and commitment at all levels of staff, because it
comprises elements such as leadership, customer focus, full employee involvement and
commitment, and a philosophy of continuous improvement.
It was not possible, however, to observe a positive relationship between quality and
cost. There is a trade-off between quality and cost. Quality needs investments and these
aspects in the short term may have an impact on operating costs. Cost may be a positioning of
the company's operational strategy and is linked to the ability to minimize the total cost of
production (labor, operating materials and costs) through efficient processes, technology, and
economies of scale. Despite this, all of the investment in quality is to achieve good financial
results, and initially it may increase company costs.
Firms in emerging countries are characterized by their high growth, significant
learning, economies of scale, and the potential for product differentiation. They are
recognized for both their low-cost and differentiation strategies, and constantly try to extend
the learning curve to achieve a minimum cost position (Hill, 1988).
The manufacturing industry in Brazil accounts for 15% of all formal employment, and
11% of the Gross Domestic Product (GDP). As the CNI [National Confederation of Industry]
reports (2014), these numbers have been falling over time, due to high labor costs and low
productivity. These are key elements for a country's competitiveness. Labor costs in the
manufacturing industry in Brazil are higher than in most developing countries, while labor
productivity is lower.
There are several macro and microeconomic factors that contribute to this result. Our
research focused on microeconomic factors, and demonstrated that Brazilian manufacturing
industries are not managing to balance quality with low costs, which makes it difficult for
them to be competitive. This is an important result, with important practical and social
contributions.
Our study makes two practical contributions. First, although quality is an important
capability for the firm, emerging country managers need to understand that its
implementation will take time and resources, and that having established quality does not
indicate an immediate reduction in cost. Second, it reveals that despite the Brazilian
government's initiative to implement quality practices in the in Brazilian companies - the
Brazilian government through the Fundação Nacional da Qualidade (FNQ, 2017) promotes
the National Quality Award -, it may not be able to promote good practices for reducing
operating costs.
In our study, we recommend that the Brazilian government includes the Cost of
Quality as one of the National Quality Award guidelines, thus encouraging companies to
control and especially to know their quality costs. The manufacturing industry has
contributed to society in terms of job creation, economic growth, reducing regional
inequalities, and technology development and innovation. The industry is also a major
employer and will continue to hire workers both in production and non-production roles, but
it will remain under pressure from global competition, where emerging countries compete
with industrialized countries. Continuous improvements in operations to improve quality,
reduce cost and increase productivity will help the Brazilian manufacturing industry become
more competitive and continue to contribute to the country's economic and social progress.
We expect Brazilian transformation firms to understand the importance of developing all
their operational capabilities, while improving their control over operating costs, increasing
their competitiveness and, consequently, increasing employment.
Even though the cumulative effect was observed in several studies, there are issues
that are beginning to emerge and provide suggestions for future research. First, with respect
to quality, delivery, flexibility and cost – what is the correct composition of operational
capabilities? Would the cumulative effect be the best way to investigate them? Finally, what
resources does the company need in order to invest and develop operational capabilities in its
production process?
Another question arising from previous studies is that surveys have formed the
majority of the research methods selected, which can to some extent limit the results. So a
study with a qualitative approach, focusing on the development of operational capabilities,
can result in findings that should contribute to the evolution of the theme in the area of
operations.
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Cost
Flexibility
Delivery
Quality
Figura 1 – Sand Cone Model

Ferdows and De Meyer (1990)

Figure 2 – Theoretical framework

Table 1 – Operational Capabilities _Group 1
Variables Classification Authors Year
Competitive Priorities Wheelwright 1984

Operational Capabilities Ferdows & DeMeyer 1990
Competitive Priorities Kathuria 2000
Cumulative Capabilities Corbett & Whybark 2001
Quality Competitive Capabilities Rosenzweig & Roth 2004
Delivery Strategic Capabilities Größler & Grübne 2006
Flexibility Cumulative Capabilities Amoako-Gyampah & Meredith 2007

Cost Cumulative Capabilities Schroeder, Shah & Peng 2010
Competitive Capabilities Rosenzweig & Easton 2010
Competitive Capabilities Hallgren, Olhager & Schroeder 2011
Competitive Capabilities Liu, Roth & Rabinovich 2011
Competitive Capabilities Schoenherr, Power, Narasimhan & Samson 2012
Table 1 – Scale with variations in operational capabilities_group 2
Classification Authors Year
Variables
Quality, confidence in the production system, Operational Noble 1995

delivery, cost, flexibility, innovation cumulative
Product flexibility (customization),process flexibility, Competitive Vickery, Dröge & 1997
volume flexibility, low production costs, introduction priorities Markland
of new products, speed of delivery, delivery
reliability, quality specification, confidence in the
product, quality design (innovation).
Consistency of quality, high productivity, delivery Operational Mapes, Szwejczewski 2000

speed, reliability of delivery. Performance & New
Quality-based process, quality based on the market, Operational Flynn & Flynn 2004
on-time delivery, fast delivery, product flexibility, cumulative
volume flexibility, cost, cycle time, speed with new
products.
Quality, delivery speed, reliability of delivery, Competitive Rusjan 2005
flexibility, cost, innovation in new products, priorities
conformity with product specifications, workforce,
process technology, materials, planning,
organization, control of production.
Quality, delivery (fast delivery, on-time delivery and Operational Peng , Schroeder & 2008
manufacturing cycle), flexibility (volume and mix cumulative Shah
change), cost, innovation.
Quality, delivery, flexibility, cost, environmental Operational Avella, Vazquez- 2011
protection cumulative Bustelo & Fernandez
Table 3 – Operational Capabilities and concept
Operational Questions Author
Capabilities
Quality Provide high performance products Boyer and Pagell (2000)
Offer consistency, reliable quality
Meeting and exceeding customer needs and Kathuria (2000)

preferences
Product overall quality Wu, Melnyk, and Flynn (2010)
Delivery Meet deliveries promises Boyer and Pagell (2000)
Provide fast deliveries
Delivery accuracy (on time delivery) Wu, Melnyk, and Flynn (2010)
Delivery quality
Flexibility Offer a large degree of produt variety Boyer and Pagell (2000)
Make rapid design changes
Make rapid volume changes
Adjust capacity quickly
Cost Manufacturing overhead cost Wu, Melnyk, and Flynn (2010)
Inventory turnover (dropped afterereliabitity Peng, Schroeder, and Shah (2008)

analysis)
Reduce production costs Boyer and Pagell (2000)
Schoenherr, Power, Narasimhan, and

Total product costs Samson (2012)
Innovation Rapid new product introductions Peng, Schroeder, and Shah (2008)
Frequency of new product introduction
New technology in industry
To anticipate the potential of new
manufacturing practices and technologies
To thinking of the next generation of
manufacturing technology
Sustainability Low materials consumption Terjesen, Patel, and Covi (2011)
Low energy consumption
Low air pollution emissions
Table 4 - Standardized factor loadings, composite reliability, and AVEs for the measurement
model
Capabilities Indicator Loadings VIF Cronbach’s alpha AVE
<5 >.70 >.50

Quality QUAL01 0.78 2.42 0.847 0.66
QUAL02 0.75 2.33
QUAL04 0.91 3.07
Delivery DELI05 0.88 4.21 0.924 0.76

DELI06 0.86 3.67
DELI07 0.81 3.26
DELI08 0.94 5.65
Flexibility FLEX10 0.70 1.98 0.770 0.56

FLEX11 0.68 1.81
FLEX12 0.87 2.31
Cost COST13 0.82 2.44 0.875 0.70
COST15 0.83 2.58

COST16 0.88 2.86
INNO18 0.66 2.11 0.792 0.63

Innovation INNO19 0.74 2.35
INNO21 0.97 3.20
Sustentability SUST22 0.75 1.95 0.732 0.50

SUST23 0.81 1.88
SUST24 0.54 1.41
Table 5 - Discriminant validity analysis
Construct pairs Unconstrained Constrained ∆ χ2
χ2 df χ2 Df
Quality x Delivery 37.76 13 226.90 14 189.14***
Quality x Flexibility 10.95 8 150.07 9 139.12***
Quality x Innovation 14.53 8 198.09 9 183.56***
Quality x Sustentability 10.88 8 107.53 9 96.64***
Quality x Cost 10.22 8 260.11 9 249.88***
Delivery x Flexibility 33.73 13 173.97 14 140.24***
Delivery x Innovation 30.01 13 228.10 14 198.08***

Delivery x Sustentability 30.23 13 129.20 14 98.97***
Delivery x Cost 24.09 13 276.53 14 252.44***
Flexibility x Innovation 33.29 8 115.29 9 81.99***
Flexibility x Sustentability 12.26 8 147.08 9 134.82***
Flexibility x Cost 07.31 8 143.61 9 136.30***
Innovation x Sustentability 10.54 8 112.33 9 101.79***
Innovation x Cost 09.11 8 248.04 9 239.28***
Sustentability x Cost 01.15 8 104.95 9 103.79***
*p<0.10, ** p<0.05, ***p<0.01
Table 6 – Operational Capabilities Mean
Capabilities N Mean Std. Deviation
Quality 160 4.15 .58
Delivery 160 3.74 .72
Flexibility 160 3.57 .67
Cost 160 3.01 .59
Innovation 160 3.23 .69
Sustentability 160 3.54 .59
Table 7 – Correlation
Pearson Correlation Quality Delivery Flexibility Cost Innovation Sustentability

N=160
Quality
Delivery .339***
Flexibility .195** .164**
Cost .070 .065 .207***
Innovation .241*** .101 .527*** .277***
Sustentability .283*** .253*** .211*** .209*** .283***
*p<0.10, ** p<0.05, ***p<0.01
Table 8 - Firm data
Size Frequency %
up to 19 employees 6 3.75%
20 to 99 employees 72 45%
100 to 499 employees 79 49.38%
More than 500 employees 3 1.87%
Total 160 100%
Table 9 - Respondents data
Post Frequency %
President 0 0%
Director 38 23.8%
Manager 2 1.3%
Production manager 31 19.4%
Industrial manager 89 55.5%
Total 160 100,0%
Company time Frequency %

up to 2 years 17 10.62%
2.1 – 3.0 7 4.37%
3.1 – 5.0 14 8.75%
5.1 – 10.0 28 17.5%
More than 10.0 94 58.76%
Total 160 100%
Post time Frequency %
up to 2 years 46 28.75%
2.1 – 3.0 17 10.62%
3.1 – 5.0 25 15.62%
5.1 – 10.0 34 21.25%
More than 10.0 38 23.76%
Total 160 100%
Time in the industry Frequency %
Up to 2 years 2 1.25%
2.1 – 3.0 2 1.25%
3.1 – 5.0 7 4.37%
5.1 – 10.0 23 14.37%
More than 10.0 126 78.76%
Total 160 100%

Table 10 - Means, standard deviations and correlations
Mean SD Quality Delivery Flexibility Cost Innovation Sustainability
Quality 4.15 .58
Delivery 3.74 .72 .339***
Flexibility 3.57 .67 .195** .164**
Cost 3.01 .59 .070 .065 .207***
Innovation 3.23 .69 .241*** .101 .527*** .277***
Sustainability 3.54 .59 .283*** .253*** .211*** .209*** .283***

*p<0.10, ** p<0.05, ***p<0.01

Table 11 – Regression Analysis
Independent Dependent Variables

Variables Delivery Flexibility Cost Innovation Sustainability
Model1 Model 2 Model 1 Model 2 Model 1 Model 2 Model 1 Model 2 Model 1 Model 2
Size .145 .076 .099 .063 .093 .084 .230** .187** .023 -.026
Quality .406*** .212*** .056 .252*** .292***
R2 Square .014 .119 .008 .041 .009 .012 .039 .083 .001 .080
Adjusted R2
.008 .107 .002 .029 .003 .001 .033 .071 .000 .069
Square
F 2.295 10.573 1.242 3.360 1.407 .934 6.454 7.119 .085 6.871
p-value .132 .000 .267 .037 .237 .395 .012 .001 .771 .001
2
Change R .105 .033 .003 .044 .079
Change in F 8.278 2.118 -.473 .665 6.786
p-value (change) -.132 -.230 .158 -.011 -.770
*p<0.10, ** p<0.05, ***p<0.01

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Type: Research paper

This research investigates the use of operational capabilities in emerging economy

This section presents the evolution of cumulative capabilities as well as their

2.1 Operational capabilities

2.2.2 Trade-off effect in quality and cost capabilities

3. Brazil - labor cost and productivity in the manufacturing industry

Firms located in emerging countries, such as Brazil, adopt fewer operational

for 33.1 % of the total variance.

The unidimensionality of the key constructs were assessed by confirmatory factor

INNO20) show an unacceptably large variance in measurement error or low indicator

4.1 Statistical technique

In this phase, the relationship between the operational capabilities, quality,

Table 8 shows that most respondents belong to companies with 20 to 99 employees

Regression analysis shows different relationships between quality and other

6. Discussion and conclusion

Studies about operational capabilities provide a variety of results. The research

20trabalho%20e%20produtividade.pdf (accessed 01 August 2017).

Journal of Cleaner Production, Vol. 108, pp. 158-168.

ed.). New York: The Guilford Press.

among Manufacturing Plants in Developing, Emerging, and Industrialized Countries: A

Figura 1 – Sand Cone Model

Ferdows and De Meyer (1990)

Figure 2 – Theoretical framework

Variables Classification Authors Year

Competitive Priorities Wheelwright 1984

Flexibility Cumulative Capabilities Amoako-Gyampah & Meredith 2007

Quality, confidence in the production system, Operational Noble 1995

Consistency of quality, high productivity, delivery Operational Mapes, Szwejczewski 2000

Meeting and exceeding customer needs and Kathuria (2000)

Inventory turnover (dropped afterereliabitity Peng, Schroeder, and Shah (2008)

Reduce production costs Boyer and Pagell (2000)

Schoenherr, Power, Narasimhan, and

<5 >.70 >.50

Delivery DELI05 0.88 4.21 0.924 0.76

Flexibility FLEX10 0.70 1.98 0.770 0.56

Cost COST13 0.82 2.44 0.875 0.70

COST15 0.83 2.58

INNO18 0.66 2.11 0.792 0.63

Sustentability SUST22 0.75 1.95 0.732 0.50

Delivery x Innovation 30.01 13 228.10 14 198.08***

Pearson Correlation Quality Delivery Flexibility Cost Innovation Sustentability

Total 160 100,0%

Company time Frequency %

Total 160 100%

Post time Frequency %

Total 160 100%

Time in the industry Frequency %

Total 160 100%

Mean SD Quality Delivery Flexibility Cost Innovation Sustainability

Quality 4.15 .58

Delivery 3.74 .72 .339***

Flexibility 3.57 .67 .195** .164**

Cost 3.01 .59 .070 .065 .207***

Innovation 3.23 .69 .241*** .101 .527*** .277***

Sustainability 3.54 .59 .283*** .253*** .211*** .209*** .283***

*p<0.10, ** p<0.05, ***p<0.01

Table 11 – Regression Analysis

Independent Dependent Variables

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Flexibility 3.57 .67 .195 .164

Innovation 3.23 .69 .241* .101 .527* .277***

Sustainability 3.54 .59 .283* .253* .211* .209* .283***

p<0.10, p<0.05, p<0.01