Planning, capabilities, and performance: an integrated value approach

Purpose - How do planning and capabilities affect operational performance? This paper aims to formulate hypotheses comprising correlations amongst those constructs in an integrated approach for industrial companies, considering the source, make and deliver process areas. Design/methodology/approach - Based on a survey of 164 Brazilian industrial companies, analysis of data was conducted including descriptive statistics, evaluation of a research model's internal scale reliability, statistical construct path analysis, and structural equation modeling. Findings - The findings indicate that planning and capabilities must be taken as inter-related initiatives that jointly influence operations performance. Significant correlations were found amongst these constructs in the source, make and deliver process areas. The model tested on this study was able to explain 84 percent of the variation in the overall performance of the companies sampled. Research limitations/implications - The reference model was tested using a diversified sample of Brazilian industrial organizations and did not include service or other types of organizations, thereby limiting the generalizability of the results and conclusions. The findings suggest a balanced weight of operations capabilities and planning. Both play an important role on performance. These results can drive organizational strategy, indicating that companies should look to their capabilities, but that developing planning activities driven to the market should be considered mandatory. Originality/value - Whereas some aspects of the relationship between planning and performance as well as the relationship between capabilities and performance have been reviewed in early contributions, few studies have addressed these complex mediations using an integrated process value approach.