Building Operational Performance using Strategic Agility through Competitive Capability: Roles of Innovation Capability and Talent Development in the Oil and Gas Industry

Conflicting findings remain in the relationship between strategic agility dimensions and performance. However, inadequate explanations exist. This leaves room for further debate. The study attempts to resolve this conflict. It contributes by introducing a mediator—competitive capability—and two conditional factors—innovation capability and talent development—leveraging the dynamic capability and human capital theories. This study collected and analysed quantitative data from 218 top executives across 175 oil and gas companies in Nigeria. The partial least square-structural equations modelling technique was used to analyse the data. The study found that competitive capability partially mediated in the relationship between strategic agility and operational performance. Innovation capability and talent development positively moderated the relationship between strategic agility and competitive capability. This study provides practical lessons for oil and gas company managers and boards. First, managers should invest in technologies and systems that enable quick data analysis and decision-making. For instance, they should invest in oil production facilities that alert managers to potential problems before they escalate. They should invest in security monitoring technologies to quickly identify theft, vandalism, or illegal bunkering attempts. Second, managers should invest in specific competitive capabilities. For instance, they should invest in 3D/4D seismic imaging technologies to minimise exploratory drilling failures and expand the reservoir description. Third, boards should design and implement reward systems that recognize and compensate innovation and risk-taking. This study contributes to the strategic management field by resolving the agility–performance inconsistency paradox using competitive capability. It challenges existing works that have assumed that the relationship between strategic agility and performance is straightforward. It is the first to show how innovation capability and talent development may be manipulated to enhance competitive capability in the context of agile operations. It provides contextual evidence from Nigeria’s oil and gas industry.