Designing strategic capabilities production model: An approach of structural equation model (a Case Study at SAIPA Automobile Manufacturing)

Importance of manufacturing capabilities for achieving competitive advantage was raised by Skinner. He stated that manufacturing function typically is either a competitive weapon or a corporate millstone. This paradigm set forth by Skinner and refined by scholars who followed him, express that in order to plan successful strategies, managers should pay attention to effects of manufacturing capabilities (Quality, Delivery, Flexibility and cost). Because of trade-off among level of each capability, they should set to the point which has most profitability for the firm. Empirical works of Ferdows, Demeyer and Nakane proceeding The Cumulative Model, this theory suggest that trade-off among capabilities isn’t always feasible, but firms follow a pre-specified order for building manufacturing capabilities as first quality, then dependable delivery, third cost reduction and finally flexibility, where effect of improving each capability on other capabilities could transit to supportive effect. In researches on manufacturing capabilities based on cumulative capabilities theory, effect of innovation is missed, and by studying literature review, we found that innovation can play a key role in creating sustainable competitive advantages. On the other hand, globalization and shorter products and technology life cycle, results in paying a lot more attention to innovation. In our study, we added innovation to the previous model which exists in the field of cumulative capabilities. The aim of this research is to find out the relationship between manufacturing capabilities using structural equation modeling on Saipa Corporation.