Testing an integrated model of operations capabilities: An empirical study of Australian airlines

Purpose: The purpose of this paper is to test the integrated model of operations strategy as proposed by Schmenner and Swink to explain whether firms trade-off or accumulate capabilities, taking into account their positions relative to their asset and operating frontiers. Design/methodology/approach: The four major airlines based in Australia were studied. The paper is based on longitudinal data obtained from secondary sources. The four operations capabilities cost, quality, delivery and flexibility, and asset and operating frontiers, were all measured with proxy variables. Findings: The study provides some support for the integrated model. Firms do appear to trade-off capabilities when their asset and operating frontiers are close to each other. Firms show signs of accumulation when the asset frontiers are expanding significantly over time. There is indirect evidence that firms could be accumulating capabilities when the gap between the two frontiers is large. Practical implications: The study provides insights into when firms trade-off or accumulate capabilities. A good understanding of asset and operating frontiers is important in this regard. Managers need to better identify, establish and combine their firms' capabilities in response to varying internal and external contingencies. Originality/value: The paper provides an original and detailed empirical validation of Schmenner and Swink's integrated model. In doing so, this study contributes to informing and clarifying the debate in the operations strategy area relating to the circumstances in which firms trade-off and/or accumulate capabilities.