Operational capabilities and competences not only generate value for business itself but also for its customers and suppliers. This study intended to investigate the effect of operational capabilities on financial performance of Indonesian pharmaceutical firms with moderating role of supply chain management practices. The data was collected from managing directors, managers of supply chain, planning managers and operational managers of pharmaceutical firms in Indonesia by using survey questionnaire method. Collected data was analysed by PLS statistical software in two steps. In first step, reliability and validity was inspected and in second step proposed relationship between constructs was investigated. This study found that new product design, just-in-time and total quality management have significant and positivity association with financial performance of pharmaceutical firms in Indonesia. Furthermore, supply chain management practices significantly moderate the relationship of just- in-time and total quality management with financial performance of pharmaceutical firms in Indonesia. However, supply chain management practices have no moderating role on the relationship of new product design with financial performance of firms. Findings of this study provide guideline to managers of pharmaceutical firms in Indonesia regarding the role of operational capabilities and supply chain management practices.
Key words: Operational capabilities, Supply chain management practices, financial Performance.
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