Operational capabilities in an emerging country: quality and the cost trade-off effect

Abstract

Purpose The purpose of this paper is to identify the operational capabilities in an emerging country, and 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. 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/value 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 trade-off between the quality capability and cost capability. The results show that quality does not always lead to a reduction in cost.