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This study focuses on the connections among operational capabilities, productivity, and innovation performance. Specifically, the study investigates whether preceding operational capabilities, particularly human, time management, and financing capabilities, affect total productivity, labor productivity, and innovation performance. Using data from 203 Finnish small- and medium-sized enterprises, this study shows that human and time management capabilities affect total productivity, whereas only human capabilities affect labor productivity. Both human and time management capabilities affect innovation performance. Hence, this study makes two main contributions to existing research on operational capabilities. As a first contribution, the study introduces three preceding operational capabilities—human, time management, and financing capabilities—as crucial elements to realize operational resources and practices, on one hand, and to establish operational capabilities, on the other hand. As a second contribution, this research adds to the literature a comprehensive investigation of the links of preceding operational capabilities with productivity (i.e., total productivity and labor productivity) and innovation performance.

Preceding operational capabilities as antecedents for productivity and innovation performance