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Process innovation can allow both efficiency and effectiveness gains and is a key source of long-term competitive advantage in manufacturing firms. However, the literature on managing process innovation is broad and fragmented, and it has not yet been systematically reviewed in the scholarly literature. Drawing on a capability-based perspective, the aim of this paper is to provide a systematic review of the process innovation literature. We synthesize our findings into a conceptual framework displaying the antecedents and consequences of firms' process innovation capability. First, a parsimonious review of the process innovation literature is conducted. Second, a conceptual framework of firms' process innovation capability is developed to synthesize the literature and to advance knowledge about managing process innovation. A principal distinction between a firm's potential and realized process innovation capability is drawn, and it is argued that high-quality realization mechanisms are critical for achieving desired process innovation outcomes. Finally, implications for theory, management practice, and recommendations for future research are provided.
Date of Publication: Nov. 2012