Dynamic Capabilities in Operations Management: An Empirically Grounded Model

Modern manufacturers run product mixes in which different products are subjected to very different economic environments that can fluctuate dramatically over time. Profitability for many manufacturers is thus contingent upon dynamic capabilities - the ability to reconfigure assets rapidly in response to environmental change. An empirically grounded model of a semiconductor manufacturing facility's production plan provides insight into the nature of these dynamic capabilities. The model suggests that a knowledge infrastructure rather than dynamic capabilities is the true source of competitive advantage.