The microfoundations of an operational capability in digital manufacturing

Abstract This article seeks insights into how individuals, processes, and structures interact to form the microfoundations of an operational capability in digital manufacturing. Using a knowledge‐based theory lens, we develop an empirical framework that explains how structures and processes encourage individuals to interact and share knowledge, and through these interactions, operating routines and operational capabilities emerge. The model is further refined using data collected from 40 interviews, steering committee meetings and participant observations at a high technology aerospace company. We find that discrete technologies, used in one component or subassembly, can be developed within authority‐based hierarchies using rigid new product development processes. We also find that whole system technologies that affect multiple aspects of the final product require flexible processes and consensus‐based hierarchical structures. Consensus‐based structures include centers of competence, which provide individuals the freedom to “learn through failure” and develop flexible ad hoc problem solving processes. Such flexible processes encourage individuals to learn from their mistakes and share new knowledge on a repetitive basis, leading to the emergence of operating routines. The paper contributes to the knowledge‐based view by empirically demonstrating how different types of new technology development programs, be they for discrete or whole system technologies, may benefit from different configurations of flexible/rigid processes and authority‐based/consensus‐based structures.